In this guest post, Robert Rayford of Dealmarket.com argues that Kenya merits a long look from global investors.
Throughout Africa there are a number of potential economic giants waiting to awaken from their collective slumbers and lay down a marker both on the continental and global stages. Due to the well-documented troubles encountered by the continent, be it famine, corruption, or something else, the potential for growth there is among the highest and most attractive in the entire world.
Kenya is one such country where all the stars appear to be aligning at the same time, so to speak, and the East African nation could be set to be the big African economic success story of the next decade.
What is happening, or has happened, in Kenya to leave it on the cusp of an economic boom period?
1. 2013 Elections
The prospect of peaceful democratic elections taking place in early 2013 is an important indicator of the potential of Kenya. While the country was wracked by violence following its 2007 election, a raft of reforms designed to safeguard citizen rights and check the power of elected officials has increased the likelihood of a peaceful vote. Thus, while the eyes of the world may be casting negative, nervous glances at the country come election time in March, the perception of risk appears to be greater than the actual risk.
2. Diversifying Exports
Kenya has done much work to move away from their reliance on tourism and tea exports. Although these are still huge revenue generators for the Kenyan government, natural resources and textiles are now being seen as having the potential to be just as lucrative, with the exploitation of these opportunities crucial to creating a stable and sustainable economy for the long-term.
3. Attractive Investments
Kenya as a whole is an attractive investment proposition for private equity firms. Generally speaking, this is down to the ability to acquire a quality product, and more of it, in the country, and at a cheaper price.
While there are concerns that many private equity investors are taking advantage of the country, for example buying fertile land from farmers at a reasonably cheap price, only to build property with a view to making a huge profit, many accept that this is an inevitable consequence in a country that aims to be fully industrialised by 2020. At the same time, the land being brought is generally that which has been historically used for growing coffee, a crop that has been in terminal decline in Kenya for most of the last century anyway.
The Tatu City development, being built outside of the Kenyan capital Nairobi, is the perfect example of where the country sees itself in the future, and shows why an economic boom here is inevitable. The development aims to create over 110,000 permanent jobs and permanently house 70,000 residents. With prospects that promising in contrast to a globally bleak backdrop, it is no wonder that so many investors are looking to Kenya, and Africa in general, for the future.