Kenya – East Africa’s Investment Anchor
Portfolio Manager, Sub-Saharan Africa
Africa has an abundance of natural resources, from mineral wealth to arable land, as well as a young vibrant population to boot. Thus far, however, these resources have not been leveraged for the economic benefit of its citizens.
Fortunately, change is in the air.
African countries are starting to benefit from growing political democracy, progressive structural changes, economic reform, and infrastructure investment.
Kenya has followed a capitalistic course since gaining independence, with a greater focus on national development. As a consequence, Kenya has operated far more efficiently than many African countries, with foreign investment and tourists pouring into the country providing volumes of economic stimulus.
The capital, Nairobi, is an established business center, with numerous multinationals choosing to base their regional operations here such as multilateral agencies like the United Nations.
Kenya has also undergone significant political and governance transformation over the past six years. Since Kenya promulgated a new constitution in 2010, the country has moved to a more decentralized form of governance, creating 47 new counties each with its own budget and funds, ensuring that development takes place equally across the country. The government also enacted key reforms that have improved accountability in the management of public resources, allowing the country to upgrade its energy and transport infrastructure.
Now, Kenya has ambitious plans to spend around $56 billion on infrastructure projects; funds have been mobilized with several projects complete and many others underway. The standard gauge railway, consisting of 600 kilometers of the raised track at a cost of $4 billion is the most ambitious project in Kenya’s post-independence history – target opening date is set at 2017. The Nairobi Southern bypass commissioned in 2012 is now almost complete.
The outlook for Kenya is promising; good macroeconomic policies having boosted private investment – also attracted by the benign inflationary environment – a flexible exchange rate and a lack of capital controls. Massive strides in infrastructure investment coupled with strong economic fundamentals are premised on its maturing political democracy and progressive structural reforms – this East African beacon of stability will only continue to strengthen.