Africa Business Communities

[Column] Njeri Rionge: Kenya, your time is now

 As a proud Kenyan and champion of business opportunities in Africa, the optimistic chat on Twitter from last week’s US Africa Business Forum in New York popped up on my radar.

There was US business magnate and former mayor of New York City, Mike Bloomberg, highlighting “Africa’s untapped economic potential”, a State senator saying, “We should be doing everything we can to strengthen US-Africa ties”. While after the recent UK Kenya Trade and Investment Forum in London we heard, “Great to welcome ‪@AMB_A_Mohammed‬‬‬‬‬‬‬‬‬‬‬‬ to UK & encourage UK companies to help build trade ties,” from Tobias Ellwood, UK MP and minister for Middle East and Africa. “GDP growth in Kenya on a steady course,” tweeted African Business magazine; while this from Kenya London News, “Think Investment - Make it ‪#Kenya‬‬‬‬‬‬‬‬‬‬‬‬ ‪@AMB_A_Mohammed‬‬‬‬‬‬‬‬‬‬‬‬ rallying call to UK's Private Sector”.

While the UK and US are the largest investors in Kenya, East Africa’s largest economy continues to attract high levels of foreign investment from around the world; Bloomberg in 2015 ranked Kenya the third fastest growing economy after China and the Philippines in a global survey of 57 economies, and according to the 2016 African Economic Outlook, foreign direct investment (FDI) inflows to Kenya rose a staggering 760% between 2009 and 2014.

In fact, with a 12.5% share of all Africa bound FDI in 2015, Kenya was second only to South Africa on the continent in attracting foreign investment. Its strategic location, developed private sector, wealth of natural resources, and an emerging middle class all serve to make Kenya a very attractive business hub indeed. And with GDP projected to rise to 6.4% in 2017 (AfDB), the signs going forward remain encouraging.

And it’s against this developing economic landscape that I’ll be bringing a major delegation of US and Canadian investors to Kenya (and Zambia) in April next year with the Africa Expert Forum. With the focus on sectors such as agriculture, energy, and financial services, we will be offering financiers a first class insight to the opportunities, potential rewards and yes, the challenges too, of doing business in Africa.

Over 90 major new projects were announced for Kenya last year but too often over the years many projects, which show such promise, fail to reach their potential, conclusion or even start because of unforeseen factors.

In the words of the EY’s CEO for sub-Saharan Africa Ajen Sita, “Yes, the environment for investing and doing business in Africa is uncertain and volatile, but this is nothing new.” Political instability, corruption, poor security, lack of infrastructure and a weak labour market are frequently cited as barriers to investment opportunities in Africa.

Much has been done to ease these concerns and, interestingly, those already invested in Africa are less likely to see those factors as barriers as new investors are. It’s very encouraging to see Kenya move up 21 places in the World Bank’s 2016 Ease of Doing Business Index from 129th in 2015 to 108th spot.

I do see Africa as the next economic frontier; with a conducive operating environment the opportunities are varied and plentiful, particularly so in Kenya. Yet I understand too the fear citizens may have when they see foreign investors emerging from their smart hotels to their air-conditioned land cruisers and there is concern what their future may hold and what may be taken away.

But let me give you an example. When I co-founded Wananchi Online in 2000, it was a fairly typical cash strapped start up that then grew into the largest ISP in Africa and has now been transformed further into Wananchi Group Holdings which is revolutionizing entertainment and connectivity in East Africa, employing over 500. This growth would have been impossible without overseas capital. It took an initial investment of US$238 million to enable the first phase of growth, funds that just weren’t available locally then.

Capital raising still forms part of the work I do with NRBC Inc, and of course will be part of the Africa Investment Forum next year. But I feel we need to rid ourselves of this image of the foreign corporate invader because, for now, they are an essential element for growth and investors are looking all over the world, not just the developing world, not just Kenya, for growth opportunities.

Look at Hinkley Point. A nuclear power plant in the UK financed by the French and Chinese which has just been given the go-ahead by the British government. It’s just simply part of this global economy in which we live today.

Energy continues to be a priority in Kenya. And rightly so. No less than six new power projects have just been announced for Kenya under US President Barack Obama’s Power Africa Initiative. It’ll be one of the focus sectors for our investor roadshow next year.

A good reliable energy supply is vital to business growth and thus to Kenya’s goal to achieve middle income country status by 2030, and the country still needs to increase its power production quite dramatically to achieve this. This means inviting in independent power producers, who may be international players, and reassuring them that the vast sums needed to create and deliver energy through public private partnerships are secure.

Also, crucially, given the need for large up-front capital expenditure and returns which are realised over the project life of 20-30 years, that stability will continue into perpetuity. It means too, ensuring that the long-term benefits of local communities are not sacrificed for short-term local political agendas.

When I talk to potential investors and indeed Kenyan entrepreneurs looking to expand, the long term political and economic outlook and access to reliable and affordable power are right up there on the list of concerns.

Kenya needs to work to maintain its attractiveness as a destination for investment; this also means commitments being honoured, and having clarity and surety when it comes to issues such as tax, regulation, politics and land rights because if there’s one thing financial markets and investors really dislike, it’s uncertainty. Inviting investors in is relatively easy, but that interest then needs to be enabled or it’s just rhetoric.

While I fully comprehend the sensitivity of land issues and we must ensure our communities and citizens at all levels are taken care of, so too must we respect the hard working Kenyans who pay tax. Measures must be put in place to ensure firstly that people are educated on the value of paying tax and introduce mechanisms to ensure more people do so.

As well as protecting and managing natural resources, I do see some responsibility of the extraction sector and mining and environmental ministries to play their part in civic education on how natural resources are being managed and that these resources are needed to develop the continent for the benefit of individual economies, stakeholders and shareholders.

The strength of the Canadian economy doesn’t come from self interest and feathering personal nests. It comes from acknowledging and learning from past mistakes, implementing policy changes, combined with focused hard work.

I’ve said it before, but I’ll say it again: I believe that success is defined by increased value – not simply financial rewards. The wind power project that will light 150 thousand homes, does not only, if correctly managed, bring financial benefit to shareholders, it will also bring fresh infrastructure to communities, new jobs, and will also enable children to study and improve themselves once darkness has fallen. That’s what I mean by increased value.

No one place is perfect; but let us work tirelessly to make sure we leave a better place for all of us.

 

Njeri Rionge, described by Forbes as one of East Africa’s ‘most successful and revered serial entrepreneurs’, is credited with making the internet affordable for most Kenyan households when she set up Wananchi Online in 2000. A central role in the restructuring of Telkom Kenya followed in 2008. Currently based in Canada, she’s an entrepreneur, corporate director, business strategist, and founder, president and CEO of NRBC Inc (Networks, Research and Business Capital).

 

 

Africa Business Communities Networking Event

Monday 21 November 2016

6:00 - 9:00 PM
InterContinental Park Lane | Mayfair | London | UK

parklane.intercontinental.com


Following successful networking events in Accra, Lagos, Hamburg, Kigali and most recently in Amsterdam, Addis Ababa and Nairobi, Africa Business Communities will be coming to London on the 21st of November 2016.

Read all about this event here

Share this article