Kenyans’ long walk to earning billions will start from commodities trading

A woman picks coffee beans in Nyeri. Kenya should enter into the commodities trading game to earn more. Photo/FILE  NATION MEDIA GROUP

By Wallace Kantai

In Summary

• Mr Ivan Glasenberg is the head honcho at Glencore Xstrata, and his presence at the St. Petersburg International Economic Forum showed with what regard he and his company are held in global affairs
• Glencore trades in many of the world’s commodities
• Kenya produces quite a few commodities that the world needs or at least is in love with. Our coffee and tea are world-class, so will our oil and gas.
• But as every student who has studied economic geography in school will tell you, we get very little out of the eventual value of the commodities we sell to the world

In June last year, I went to St. Petersburg in Russia for a conference. The most remarkable thing about it was not that the sun was up all night, or the bacchanalia festival in midsummer.

It was the fact that we got stuck in an hour of traffic on the taxiway of St. Pete’s airport, because of the number of private jets that had landed before us. They bore grandees of all kinds— from Henry Kissinger to Lloyd Blankfein and others.

One of the luminaries who had so clogged up that airport with his personal aircraft was one of the most powerful men you might have never heard of, but who encapsulates where the real economic power in the world lies.

And what makes it all the more remarkable is that the man is an African (well, he started off as one anyway), and he has more influence over the global economy than his bland looks could ever capture.

Mr Ivan Glasenberg is the head honcho at Glencore Xstrata, and his presence at the St. Petersburg International Economic Forum (which was what the conference was, and is President Vladimir Putin’s attempt at a riposte to the World Economic Forum at Davos) showed with what regard he and his company are held in global affairs.

Glencore —at the time, Mr Glasenberg was busy putting together the deal to acquire Xstrata— trades in many of the world’s commodities.

The company is one of the few that has cornered the global market on such crucial commodities as iron ore, copper, coal and oil.

Mr Glasenberg can easily be caricatured as the classic Bond villain (not least because at different points in his life, he has held South African, Israeli, Swiss and Australian citizenship; and has done business in places like Katanga in the DRC; and is worth north of $8 billion).

But his movie-worthy existence (and the fact that he left a certain African journalist star-struck by giving him his mobile number) is not the reason why he matters to us here in Kenya.

Kenya produces quite a few commodities that the world needs or at least is in love with. Our coffee and tea are world-class, so will our oil and gas.

But as every student who has studied economic geography in school will tell you, we get very little out of the eventual value of the commodities we sell to the world.

Much of that has been blamed on the fact that we export these in primary form, and thus leave much of the value to be scooped up by those who blend and brand the commodities for the end-consumer.

Thus our answer to this has been the sometimes-amateurish attempt to brand our own commodities— to ensure that consumers actually know that they’re drinking Kenyan coffee or tea.

These efforts haven’t gone too far, partly because they are not rigorous enough; but they’re also misplaced, because if we want to actually capture value, we need to create more Ivan Glasenbergs.

One of the few to dip their toes successfully is a Tanzanian company called Export Trading Group(ETG), which buys agricultural commodities from small farmers and trades them to buyers in such markets as China and India.