Michael Power on Kenya

With cyclical and Covid-related variations, of course, Kenya has been running a 5%+ GDP average annual growth rate for two decades. Since 1994, South Africa’s has, with an average of 2.4% per annum, not achieved half that. The contrast in performance is even more stark since 2011: in that year, South Africa’s GDP was 10.2 times Kenya’s; a decade later, in 2021, this ratio had fallen to 3.8. Meanwhile, according to Trading Economics, as South Africa’s current unemployment rate is 33%, Kenya’s is 5%…

And:

The first item to note in Kenya’s favour is the extraordinary “can do” commercial attitude that prevails no matter which political party is in power. Of course, there have been, are and will be differences in emphasis, but whether it is Team Uhuru Kenyatta or Team William Ruto that is calling the shots, both sides are unashamedly pro-business.

And before assuming that this means they are therefore anti-labour, that is simply not the case: more than halving unemployment to under 5% during the last decade is evidence of that. It helps that 86% of Kenya’s workforce now has some post-secondary education.

Kenya’s informal economy is vibrant, solutions-oriented and celebrated — far more than pooh-poohed — by politicians of every persuasion. Called in Swahili “jua kali” — “hot sun”, or, literally, “sun hot” — it operates outdoors and amounts to a training ground for industrial labourers, many of whom have gone on to “graduate” into more formal manufacturing activities, a form of tropical apprenticeship that even the Germans would applaud.

On a drive into the City Centre from Nairobi Airport — now much faster thanks to a Chinese-built highway — you can see roadside manufacture of beds, buckets, furniture, tin trunks, lamps, kitchen pots, jikos (ovens), coffins… you name it. And this is all happening at 8pm, well after the jua has gone down!

And:

GDP-adjusted, Kenya now receives more venture capital investment than anywhere else in Africa; its ratio of VC-to-GDP is more than triple “rivals” Nigeria, Egypt and South Africa. Unsurprisingly, these money inflows have helped reinforce Nairobi’s long-held status as East Africa’s financial capital.

And:

Remoteness in Kenya is no longer a barrier to generating power: a flight over arid northern Kenya on a sunny day gives the impression of a country littered with “glittering diamonds”. On-grid electricity has benefitted from solar too, as well as wind and thermal with over 90% of power generated now coming from these sources.

The 2030 target — which is well within reach as the country is ahead of its interim targets — is to generate 100% of power from renewable sources.

As noted above, for renewable energy projects, private sector financing is everywhere to be seen, from the single solar panel on a house to the giant wind farms of Kipeto and Lake Turkana: Blackrock is an investor in the latter with the US government helping fund the former.

And Kenya’s thermal endowment — born of the country’s geological position astride the hot steam vents of the Great Rift Valley — is the original underpinning of its renewable energy story: here it has benefitted hugely from best-in-class Icelandic technical support and finance.

Kenya still has major problems with foreign investment, as I have noted, but the Power piece is interesting on numerous fronts.