President William Ruto has championed for governance changes at Bretton Woods institutions during his ongoing state visit to China, where he also addressed the ongoing global tariff war triggered by US President Donald Trump in early April.
- •On the second day, Ruto said that shareholders should elect directors who then appoint and supervise competent, professional management.
- •In a keynote address at Peking University, President Ruto pointed out that the current system has created an imbalance, and that implementing modern corporate governance best practices would transform the institutions into truly global apolitical entities.
- •He also waded into the ongoing tariff wars, saying that North American firms have typically enjoyed a larger commercial surplus and lower trade barriers.
“Both the World Bank and the IMF have evolved into development finance institutions, but the ownership and power remain with the wealthy countries that they no longer serve. The interests of the shareholders and stakeholders and beneficiaries are at great variance. This anomaly became apparently glaring during the IMF SDR issuance, where 64 per cent of the allocation ended up with wealthy countries that did not need liquidity support. The poorest countries, which needed it most, received only 2.4%,” President Ruto said.
“There are many reforms required in these institutions, but I believe that the most consequential is governance changes that will transform them into independent, apolitical global institutions, insulated from the national interest of their shareholders,” he added.
Ruto’s state visit to China coincides with an escalating tariff war between Washington and Beijing, and an uncomfortable pause in Washington’s worldwide tariffs that has upended global trade and spooked markets. Terming the current dysfunctional state of the post World War 2 system as ‘sobering truth’, he said that the current tariff war “may be its final death blow.”
He questioned the rationale of the tariffs as America’s global corporations generate between half and two-thirds of their business abroad. He noted that Apple Corporation reported $391b sales in 2024, of which the Americas contributed $167b and rest of the world $224b. Iconic footwear and apparel corporation Nike reported sales of $49b, $21b in North America and $28b from the rest of the world.
“Kenya’s response to these realities is rooted in economic diversification and regional integration. Through the African Continental Free Trade Area (AfCFTA), we aim to unlock value chains and markets across our 1.4 billion-strong continent”
“The question we have to ask is: how is this value distributed? When Levi’s or Calvin Klein jeans are stitched in Cambodia and Kenya, then sold in China or India, with the profits accruing to the Global North corporations, which share of the value is global trade and which is not? It stands to reason that when the entire value chain is factored into the trade equation, North America enjoys an even more significant “commercial surplus” from the global trade than is reflected in trade statistics,” he said in his address.
Indeed, this is the conclusion reached in , and I quote: “Lower trade barriers allowed North American firms to enter new markets and utilise their intangible assets to boost profitability. Foreign profitability of US firms increased by much more than domestic profitability,” he added, referring to the findings from a study by the European think tank, Centre for Economic Policy Research, published in 2024 titled “Globalisation and Profitability of US firms.”