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President Ruto eyes trade deals with South Korea

William Ruto and Samia Suluhu Hassan

President William Ruto with Tanzanian President Samia Suluhu Hassan in Dar es Salaam on October 10, 2022.

Photo credit: Pool

What you need to know:

  • Some 54 African leaders or their representatives began arriving in Seoul on Saturday.
  • African leaders could also be bargaining power to determine which country gets what.

President William Ruto is expected to arrive on Monday evening in Seoul, South Korea, to join several other leaders for a crucial Summit, even as he eyes a new bilateral trade deal with the hosts.

The trip is for the first-ever Korea-Africa Summit, as Seoul becomes the latest major capital to invite African leaders.

Some 54 African leaders or their representatives began arriving in Seoul on Saturday.

Tanzanian President Samia Suluhu Hassan and Rwanda’s Paul Kagame indicated they had already arrived.

Uganda is being represented by Vice President Jessica Alupo.

State House in Nairobi said the visit offers Kenya an opportunity to discuss an Economic Partnership Agreement with South Korea to help balance their trade and investments.

“The trip will also set the stage for Kenya and South Korea to initiate negotiations for an Economic Partnership Agreement (EPA) between the two countries,” a dispatch said on Sunday.

President Ruto will be returning to South Korea for the second time, having made a trip there in November 2022.

Creative economy sector

At the time, the two sides agreed to a line of credit worth up to $1 billion (Sh132 billion) for various sectors under what was known as the Framework Arrangement Partnership.

However, the actual disbursement depends on the Korean parliament approving every funding request.

President Ruto had called on South Korean lawmakers to pass legislation that will ease trade restrictions on Kenya, and Africa in general.

“The imbalance of trade favours Korea and Parliament can be instrumental in addressing this situation,” President Ruto said after meeting South Korean legislators back then.

Kenya imported some Sh50 billion worth of goods but only sold to South Korea about 10 per cent of that value, 2022 official figures show.

This time, Kenya said agreements worth Sh40 billion will be concluded “to create opportunities in Kenya’s creative economy sector, and Sh25 billion for water and irrigation projects.”

“Kenya will engage South Korea in exploring technology opportunities, including developing its semiconductor industry. Additionally, Kenya will join the International Vaccine Institute (IVI) to advance its vaccine manufacturing goals.”

The Summit itself is being held under the theme of ‘The Future We Make Together: Shared Growth, Sustainability, and Solidarity’ and will be chaired by South Korean President Yoon Suk Yeol and Mauritanian counterpart Mohamed El Ghazouanu who is also the African Union Chairman.

Koreans have indicated it begins “a new comprehensive strategy to engage more deeply with the Global South” and want to help “foster a mutually beneficial, sustainable, and strategic long-term partnership with Africa.”

Free trade agreement

Critics, however, have said Korea was arriving late to the party and must catch up by taking a different pattern to other rivals like China.

“The best bet is to push for a collective African free trade agreement (FTA). The Republic of Korea has no free trade agreement (FTA) with Africa, which make African agricultural products uncompetitive. For example, the Korean import duty for a mango is 30 per cent,” observed Ngovi Kitau, a former Kenyan Ambassador to South Korea.

That is higher than even the US, India and Canada.

“Keep in mind that the Korean population is similar to that of Kenya, 50 million. That limits demand for consumables. A Korean EPA is not the same as the EU, and would be viable only if you can supply intermediate content for manufacturing.”

The Summit, he added, should also come up with a formula for crafting Africa-ROK policy, aligned with Agenda 2063, to upgrade current relations to a Comprehensive Strategic Partnership at par with US, China, Japan, EU, EU Member States, UK, ASEAN and India. 

Koreans have said in pamphlets circulated ahead of the Summit that they want to align with AU’s Agenda 2063.

African leaders could also be bargaining power to determine which country gets what.

For instance, Kenya and Tanzania are eyeing to benefit from Korea’s Labour Migration Programme.

Strategic relationship

When President Ruto was in Seoul in 2022, they spoke of roping Nairobi into the South Korea's Employment Permit System (EPS) Programme which could see Kenya’s creative producers get contracted in Korea’s film industry, for instance.

Tanzania too is pursuing a similar arrangement. On Sunday, President Samia Suluhu Hassan’s office said they had already launched discussions for an Economic Partnership Agreement (EPA).

An EPA is supposed to guide on issues of quality, sanitation, taxation and exemptions of exports, as well as decide quotas for imports.

Kenya has an EPA with the United Kingdom, as well as the European Union bloc and is negotiating another with the United States.

Tanzania sees the EPA as a way to elevate its ties with South Korea as well, to a strategic relationship, and is eyeing investments in the blue economy, development of natural gas, and the creative industry such as film, transport and labour exports. 

“A Memorandum of Understanding (MoU) on strategic minerals signed during the official visit will enhance Tanzania and Korea cooperation on geological survey, mining investment and beneficiation of critical minerals such as nickel, lithium and graphite,” said a dispatch from Ikulu in Tanzania.

Kenya is looking for engagements on Agriculture, ICT, Health, Energy, Infrastructure, Education, affordable housing and urban transport, a dispatch showed.

Meanwhile, Tanzania said it had signed a Framework Agreement to secure a $2.5 billion concessional loan from the Korea Economic Development Cooperation Fund (EDCF). The money is to be disbursed over the next five years.