Monday, June 21, 2004

A Lesson Worth Learning

The year 2003 marked the 30th anniversary or the Arab oil embargo. On October 17 1973 Arab countries decided to limit oil production and prohibit the sale of oil to the U.S. and the Netherlands. This was aimed at getting concessions and pressuring the two countries from supporting Israel in a war that was going on (Yum Kippur war). The embargo had an immediate and quite debilitating effect on the U.S. economy, oil prices rose 300%, long fuel lines became the norm, electricity rationing became prevalent and a ban on fuel sale on Sunday was instituted. The American economy – that is very dependent on oil – was adversely affected. However, though the embargo was crushing in the short-term, the US learnt from the experience and instituted measures to ensure that it could survive a similar shock in the future. This lead to the creation of the Strategic Petroleum Reserves (SPR), 700 million barrels of petroleum used as the first line of defense against future oil shocks. The U.S. also expanded its purchasing base, and now depends less on Arabian oil. There was also a movie to limit oil usage and today a great deal of effort is put into producing fuel efficient vehicles and other machinery. Most important – I believe – is the transfer of wealth that occurred after the embargo. A lot of money was pumped into the Middle East and the economic ties between Arabia and America grew, to the point that the interdependence between the two parties precludes a repeat of the embargo (as it would spell economic doom for the Arabs and Americans).
I believe that Kenya can learn from the 1973 oil embargo in dealing with the recent and debilitating travel advisories instituted by the U.K. and U.S. Kenya’s economy has been suffering tremendously, by all accounts the country is losing Ksh.1 billion per week, 90% of its regular market is inaccessible, the tourism industry is on the verge of recollapse, other industries such as horticulture are also feeling the pinch and the government has to spend more of its already merger resources to satisfy the demands of the U.S. and U.K. I believe that this should be our oil shock, a shock that forces Kenya to institute safety net policies to ensure that in the case of future shocks, the country is able to survive.
I believe that Kenya needs to expand access to the country, it is unfortunate that 90% of our markets can be inaccessible due to the British banning flights to Kenya (the return of Alitalia is a positive, Air France and other airlines should be lured back as well). We also need to expand our market base, exploit the near and far east (positive moves in that direction commendable), exploit the rest of Africa – especially the West and North. And dare I say exploit the U.S. we could take advantage of the disenchantment that exists toward European countries after the Iraq war. All this would call for an uptempo advertising campaign targeted at these markets – I fail to see why Egypt and Malaysia can advertise on CNN and Kenya doesn’t. We can also borrow a leaf from the Saudi Arabians, they are the masters of spin here in America, and they broadcast advertisements here in the U.S. to ward of any negative press. I believe Kenyan embassies should use the same tactics to assuage fears that the populace may have (have a rapport with the populace and the government seems to become irrelevant). On the issue of marketing Kenya I would also call for an upgrade of the product, let us movie away from the old cliché of safaris and develop new areas of interests (cruises, business holidays, ecotourism and the like would be ideal candidates for further exploitation. With the power that business and industry hold in the U.S. and U.K., Kenya should entice businessmen into Kenya who can invest in our resorts and industries and become more active in our economy. With closer ties between us, the governments are likely to think twice about issuing travel advisories – wonder why the U.K. hasn’t issued an advisory against the U.S. and vice versa? They have a lot to lose by banning flights etc.
These efforts will take a longtime to effect and that is why I would characterize them as long-term strategies. For now, we need to comply with the demands of the Brits and Yanks, this should ensure that the no longer have an excuse to keep their egregious bans in place; and we would live to fight another day.


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