Effects of globalization on the Kenyan economy

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Topic: Effects of globalization on the Kenyan economy

The effects of globalization in Kenya are wide reaching. Being a growing economy, the country has been forced by global market forces to become part of the larger global village. The ensuing results have been both positive and negative depending on the perspective they are viewed from. The ambiguity in distinguishing the pros and cons of globalization arises due to self-interests that most activists and scholars use as the yard stick. In the case of Kenya, the effects of globalization can be juxtaposed to gauge the magnitude of the applicability or inapplicability of the global village.

The homogenization of the global economy has greatly impacted on the Kenyan economy. There are many opportunities for free trade due to the laissez faire economic policies. The period between independence (1963) and 1970s for instance saw the manufacturing value added increasing by 44% (World Bank 2007). This was the period when Kenya like many other African countries was trying to woo foreign investment through investments. The World Bank-IMF’s Structural Adjustment Programs of the 1980s and 1990s are also credited with having accelerated liberalization of Kenya’s economy just like that of many African countries to the benefit of domestic and international capital. This brought multinationals which exploit raw materials and also human resources from the country. Companies such as Coca Cola, Unilever, Del Monte and B.A.T employ a large number of Kenyans thus reducing poverty and increasing purchasing power among the populace. In addition, it has led to upgrading of skills and personnel through workplace interactions. There has also been an increase in trade between Kenya and other countries since independence. Between 1993 and 1998, the exports to Europe grew by 41% with the exports to other African countries during the same period almost tripling (Economic survey, Republic of Kenya 1993-1998). The horticulture industry remains one of the highest foreign income earners. In the period between 1990 and 2006, earnings from fruits and vegetables rose from $79 million to $322 million while flowers income rose from $13 million to $313 million over the same period (Gertz 11). Studies show an improvement in the standards of living among the workers (McCulloch and Ota). Another economic benefit arising from globalization has been the flow of foreign aid into the country. International organizations such as IMF and World Bank have been very influential in formulation of financial policies in the country. More importantly, they have helped to fund infrastructural projects among others. Other organizations such JICA, USAID and GTZ have also helped Kenya greatly since independence. Most of the road infrastructure in the country has been realized through the cooperation of these organizations and other development partners. This has led to a better transport system leading to more economic growth. The financial, communication and investment linkages between Kenya and other countries have greatly helped her to rise as the economic hub of the region. One of the most important positive effects of structural adjustments is the opening of borders between the African counties. The structural adjustment programmmes changed the balance between the global and regional markets. The devaluation of the African currencies Kenya included has made it possible to earn foreign currency through trade with the neighboring countries.

Globalization as a concept can also be attributed with the opening up of democratic space in Kenya. The internationalization of politics into one mass has necessitated fair political practices in order to attract foreign investment. Most developed economies consider democratization as a catalyst to success of any country and the Kenyan political leadership has accepted the mantra. Kenya has is a signatory to all major international treaties on human rights and justice. This shows that the world is slowly moving to being administered by uniform laws. There is less impunity unlike the 1980s and early 90s when the country was at loggerheads with most of its international business partners. This democratization has also been linked to free trade practices which have led to interactions between Kenya and more open countries such as the US. Increased demand for goods from these countries has led to diversification in the political marketplace and in effect, the level of democracy has risen. (Doces, 8- 13). The presence of both local and international civil society groups is another result closely linked to globalization. During the oppressive regimes after independence, such groups would be considered subversive. The switch to a multi-party democracy state 1992 was enhanced by intervention or influence from the international communities. However, the current leadership is open to criticism. These groups are evidence of the strides made in the political facet of life due to globalization. Such groups include Transparency International, Kenya Human Rights Commission among others.

Technological advancement is another effect of globalization in Kenya. This is especially evident in the telecommunication sector. The penetration of the internet has grown rapidly in Kenya thus enabling easier and faster flow of information in the country. Global events now occur simultaneously through the advances in telecommunications, computers, audio visual media, satellites and the like anywhere in the world including Kenya, (Scholte 1996, 45). The daily and weekly internet usage in Kenya has doubled since 2008 whereas monthly usage has grown by 80% in the same period. In addition, there are over 4 million internet users in the country just a few years after the service became available (Synnovate research 2010). This has led to a higher rate of literacy and more information flow. The number of mobile phone subscribers has grown to almost 20 million within a span of 10 years which is an indicator of the birth of a digital era in the country. The mobile phone providers in Kenya are subsidiaries of larger entities from Asia and Britain again a clear pointer to the global village powered by high speed technologies envisaged in the 1960s by many scholars ((McLuhan 103).the ease in flow of information has also led to educational advances such as e-learning. Many international institutions now offer online courses and Kenyans have taken up these opportunities in droves. Away from telecommunications, there have been tremendous improvements in the production practices imported from development partners. These have led to faster production of goods either for export or local consumption making Kenya one of the largest economies in east and central African region.

Multiculturalism is another effect of globalization on the Kenyan society. The advances made in telecommunication has led to flow free of ideas and this has led to a change in lifestyles especially among the youth. The proliferation of western ideas through social sites such as facebook and twitter has led to an incursion of foreign practices especially in the lifestyle changes. Globalization has joined different cultures thus making Kenya a country where citizens freely interact with others from other countries freely. English language is widely used firstly among the Kenyan s and also among those visiting the country. The fact that a foreign language has been incorporated as a national language indicates the impact that globalization has had on Kenya. Other UN languages such as Chinese and Spanish are popular in most colleges within the country. A close look at the country among the youth reveals a general prevalence for western lifestyles including dressing, food and reading cultures among others. The amalgamation of cultures has led to more appreciation of indigenous cultures as the country comes up against more advanced western cultures. Numerous cultural centers have been set up in heritage areas such as Lamu and Nairobi to assist in the conservation of histories once buried under. The Kenya national museum still remains one of the major attractions for tourists as they seek to experience the cradle of humanity. The integration of all cultures eventually resulted in dual citizenship in the new constitutional dispensation.

In spite of the gains made through a globalized economy, many critics have faulted the concept especially within developing countries. There has been a downside over the lopsided trade practices. Kenya was arm twisted into opening its market with no control systems in place. The structural adjustment programmes (SAPs) initiated by IMF changed the economic policies abruptly without prioritizing the important areas. This has led to dumping of cheap imports in the country. The spiraling effect has been the collapse of indigenous companies due to high costs of production leading to job cuts. Companies such as Raymond textiles were forced out due to cheaper textile products from Pakistan and China. The economic superiority of the country’s trade partners has led to a situation similar to economic imperialism where the larger economies bully the smaller ones. Kenya’s products such as milk and vegetables have at times met high tariff walls set by her European and American partners. The international aid organizations also keep shifting goal posts for aid disbursement thus hurting the economy. In 1990, Kenya experienced a depression which can be attributed suspension of foreign aid among other reasons (Gertz 6). This reliance of aid has been perpetuated in most developing and is another negative effect of globalization thus cultivating a culture of underdevelopment an dependency. Kenya has also become a reservoir of cheap labor and raw materials while the western world has restricted the flow of human resources to their countries. The SAPs also recommended privatization at a time when the country was taking off .This resulted in job cuts, increase in poverty and a decline in per-capita income. The expected influx in investment happened but only benefitted the foreign investors who were protected by hastily drafted regulations. The employees in these multinationals are also treated as second rate employees. Their remuneration is not commensurate with their input and in most cases, the expatriates earn higher salaries.

The country has also suffered from cultural erosion due to the new trends or multiculturalism. The deeply held African cultures and customs are slowly collapsing as new ideas continuously bombard the social fabric. The growth of digital media including the internet has led to breakage of cultural borders. Foreign lifestyles in music, dressing and other spheres are now accepted as part of the Kenyan psyche. Controversial ideas such as homosexuality are now being accepted in the country’s rote of culturally accepted norms. The internet has increasingly contributed to immorality through access to pornography especially among the youth and other obnoxious behaviors. The country’s leadership has presently decried the annihilation of African cultures due to the new trends or globalization of culture. Many critics have labeled this as a colonial mentality where the citizens feel the urge to blindly copy the culture of their colonizers or the more developed nations.

Another negative effect of globalization is environmental degradation. The need for more land has led to deforestation in most of the country. Large swathes are cleared to give way for settlements or factories. This is necessitated by the urgent need for food as the population grows rapidly. The government is also forced to provide cheap land as an incentive for new companies wishing to invest in the country. as more factories are set up, the rates of carbon emission have risen. This has led to diseases related to such emissions especially in western Kenya.

The country has also witnessed a loss of sovereignty precipitated by the international community’s influence. Like most developing countries, Kenya’s budget factor’s the donor’s input every year. This dependency has increased the influence of international bodies such as IMF and the World Bank. The western powers such as Britain and America largely determine Kenya’s fiscal policies. The country’s leadership seems to have lost its mandate to the Kenyan people and instead follows the policies determined by its development partners. These countries are quick to put their opinion on any changes in the governance policies. A good example is in the implementation of the new constitution. Most western governments openly funded its drafting and even aided in the campaigns to pass it. This great influence indicates that the government’s independence is slowly being eroded as the sphere of governance becomes internationalized.

The free flow of manpower has also led to high levels of brain drain in the country. Kenya has lost a lot of high ranking professionals to the developed world. This is attributed to the fact that there are better working conditions in the western countries. The country currently suffers shortages in most crucial faculties especially the medical sector. Better pay packages in South Africa and America has robbed Kenya its best intellectuals.

Works cited

African Development Report 1999, oxford university press

Doces J.A, Globalization and Democracy: An Empirical Analysis Using a Simultaneous Equation Approach, Princeton University Press: Priceton , 2006 ,(pp 8-13)

Gertz, G. Kenyas Trade Liberalization of the 1980s and 1990s : policies , impacts and implications, Nairobi, 2007 ( pp 6-14)

HYPERLINK “http://dictionary.oed.com/cgi/entry/50297775?single=1&query_type=word&queryword=Globalization&first=1&max_to_show=10″ Globalization”. Oxford English Dictionary Online. September 2009. HYPERLINK “http://dictionary.oed.com/cgi/entry/50297775?single=1&query_type=word&queryword=Globalization&first=1&max_to_show=10” http://dictionary.oed.com/cgi/entry/50297775?single=1&query_type=word&queryword=Globalization&first=1&max_to_show=10. Retrieved 12 December 2010.

Kenya Republic of, various years : Economic survey, Nairobi :government press

McLuhan, Marshall, 1964, Understanding Media: The Extensions of Man, New York: McGraw Hill. (pp 103)

Scholte, Jan Aart, 2000, Globalization: A Critical Introduction, New York: St. Martin’s. (pp 45)