Kenya, Open for Business
President Obama's trip to Kenya is a chance to jump start U.S. investment in the country — and across the continent. Otherwise, Africa may be China's for the taking.
When Air Force One touched down on Friday at Jomo Kenyatta International Airport in Nairobi, Kenya, for Barack Obama’s first visit as president to the country of his father, he found a place dramatically different from the one he last visited in 2006 as a senator from Illinois. It will be an emotional homecoming. There will be huge numbers of Kenyans lined up on the roads to his hotel cheering. He will hear the customary undulating sounds that women in that part of the world use to express joy and excitement. The excitement they will express is one I share.
In 1962, the year before the country’s independence, I worked in Kenya as a participant in Operation Crossroads Africa, a type of summer Peace Corps. It was known then as Kenya Colony, and our small group of American college students built roads and barns in an area called Kiambu not far from Nairobi. Jomo Kenyatta, the man who led the country’s independence movement, came from that area and welcomed us a few days after our arrival. Now, his son Uhuru (the Swahili word for freedom) Kenyatta is the country’s president. I returned regularly after that summer, first as a student and then as a government official, always stopping by to see if our fences and barns were still standing. Happily they are.
The first time I met with Obama — in 2008, when he was still a senator — I recounted my experience in Kenya. We started out with a few words of Swahili but, as he warned at the outset, his was not very good, and mine had become rusty with disuse. That part of the conversation did not last very long, but his warm feelings of affection for Kenya were quite apparent. The welcome he will receive wherever he goes will doubtless further strengthen those feelings.
But the visit, during which he will address the sixth Global Entrepreneurship Summit (the first to be held in sub-Saharan Africa), will do a great deal more. And even though the president will not be able to travel around the country, and therefor not down the road where our handiwork of 1962 is hopefully still standing, he will experience a country that has undergone remarkable change.
Kenya is brimming with aspiring entrepreneurs, fueling rapid economic growth. In February, Bloomberg Business ranked it the third fastest-growing economy in the world, behind China and the Philippines. In June, five young Kenyans were named to Forbes Magazine’s list of the 30 most promising entrepreneurs in Africa — a remarkable number for a relatively small country. In May, the president hosted a number of aspiring young Kenyan business leaders at a White House meeting for participants in the U.S.-sponsored Young African Leaders Initiative, which provides training and grants to budding entrepreneurs on the continent. Though the upcoming summit will include entrepreneurs from all over the world, it will feature the dramatic progress Kenya has made in this area.
But it is not just entrepreneurs who are driving modernization in this country. There has been an extraordinary telecommunications revolution. In a very short period of time, cell phones have proliferated, enabling Kenya to virtually skip over the landline phase of communications infrastructure development and go straight into the digital age. Thirteen years ago, about 9 percent of adults in Kenya owned a cell phone. By 2014, that figure had grown to 82 percent, according to the Pew Research Center (compared to 89 percent in the United States). And these phones are not just used for calls, texting, and taking pictures; 61 percent of owners use them for mobile banking, transferring money, or storing their funds in cell phone-based bank accounts. Farmers in remote areas also use their phones to obtain information of crop cycles and planting times. In some cases, villagers share ownership or rent out a single phone. And many Kenyans use them to obtain government services of health information.
There is something, however, that might concern the president. If he looks on store shelves or is briefed on which countries are selling Kenya the most equipment for infrastructure construction, he will find that the United States is not exporting very much to the country. It ranks number eight on the country’s list of import, well behind India, China, Japan, and Britain; such figures are representative of what is occurring throughout Africa. Trade between China and the African continent as a whole, for instance, was valued at over $220 billion last year — roughly three times the amount of trade with the United States, according to figures from the World Bank and the U.S. government. This imbalance is disappointing, especially because the president himself fought hard for the recent renewal of the African Growth and Opportunity Act that provides duty-free treatment in the United States for a wide range of products from sub-Saharan Africa. The small portion of Kenyan imports from America is especially disappointing considering that the United States is the fourth-largest importer of Kenyan products.
The president will also see enormous amounts of investment from China and numerous other countries — and little from the United States. The Chinese have built large numbers of roads, modern office buildings, schools, and ports, as well as other major infrastructure projects. From this, he is likely to conclude that Kenya — in a pattern that is true across the continent — is changing rapidly, and American commercial relations are not keeping up. Indeed, U.S. companies are losing ground and future opportunity.
Three steps would help to reduce these imbalances and increase America’s role in Africa’s development.
First, simply utilizing this trip and the visibility it will get in the United States to explain to Americans how much Africa has changed — and continues to change — should help to increase business interest in the continent. Unfortunately, many Americans see Africa through an outdated prism. Business opportunities have not been fully explored or capitalized on. The fact that many African countries are growing rapidly and building sizable middle classes that like American goods and want to send their kids to American schools, and that many Africans are grateful to the United States for such programs as the Peace Corps and the highly successful President’s Emergency Plan for AIDS Relief, launched by former President George W. Bush, should encourage greater focus on Kenya and other parts of the continent. Having the English language in common is also a major advantage in a significant number of African countries, easing the ability to do business.
The president and his entourage of experts on the region should work with the U.S. Chamber of Commerce and other influential business groups to convey this message and organize a broader set of commercial ties with U.S. embassies and local business groups in Africa to help facilitate contacts. Many African companies are relatively small; engaging small- and medium-sized U.S. enterprises could produce significant dividends and establish lasting partnerships with their African counterparts from which they also can benefit. Because of the rapid growth of digital literacy in Kenya, utilizing the Internet and digital business-to-business platforms could be an effective and inexpensive way to make contacts, and arrange sales for both Kenyan and American companies.
Second, the United States needs to launch a broad-based “entrepreneurial statecraft” initiative with a wide range of exchange programs sponsored by the government and the private sector to engage venture capitalists, associations of entrepreneurs, and highly visible innovators in visits and dialogues with Africans. Young Africans are already drawn to American entrepreneurs and innovators like Microsoft’s Bill Gates, Google’s Sergey Brin, and Facebook’s Mark Zuckerberg; they, and others, have risen to the level of popularity of rock stars on the continent. The president’s speech at the Global Entrepreneurship Summit this weekend will doubtless underscore American understanding of the important roles entrepreneurs and innovators play in developing new businesses — and driving 21st-century growth. But programs that institutionalize these relationships and engage a large number of entrepreneurs and venture capitalists who support them are important for long-run success, especially to strengthen bonds between younger generations of Americans and Africans and build a strong foundation for future relations. Success will also boost job creation for Africa’s growing numbers of kids who leave school but cannot find employment.
Finally, Washington — and U.S. companies — should play a greater role in meeting the region’s growing infrastructure needs. That would support more jobs in the United States and enable African nations to meet their enormous requirements for highways, electric grids, and ports, plus modern hospitals, data centers, and airports. China almost certainly will continue to be dominant in this broad sector due to its experience in the region and the large sums of money Beijing is spending. The United States has considerable expertise as well, but to play a greater role, Washington needs to resurrect and ensure the sustained role of the Export-Import Bank to compete with other nations’ suppliers of infrastructure equipment and construction services (nearly all of which receive huge amounts of support from their governments) and promote a well-organized series of trade missions for U.S. companies in this sector. This should not include only large companies; many American small and medium enterprises have considerable expertise in specialized parts for infrastructure development.
This is not a complicated agenda. But it is one that will leave a legacy to stronger relations with Kenya and other countries. I think back to 1962 and how different Kenya is now from when I first visited there, and I look forward to the next half century. I can only imagine what Kenya might look like if it harnesses the potential of new technology to spur development and economic opportunity. This visit can enable the United States to play a greater role in shaping a prosperous future for millions of Kenyans and, indirectly, countless other Africans. I am happy the president is going and would be happier still if he takes this opportunity to make a case for a greater U.S. role in Kenya’s development process. If not, Kenya will continue to develop, through its own hard work and the support of other nations. But America will be on the sidelines. And the opportunity to build relationships with the Kenyan people, and especially with young Kenyans (like the opportunity I had over 50 years as a student working in Kiambu), while helping to create jobs for Americans through increased trade with this fast-growing, economy will be lost.
Photo credit: SAUL LOEB/AFP/Getty Images