Davos shows world is watching Africa for opportunities

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This article first appeared in my weekly column with Business Daily on February 1, 2015

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At the World Economic Forum, Africa featured more prominently in discussions than in the past. The continent’s politicians and leading businessmen seem to be singing the same tune stating the importance of emphasising global trade with the continent, investing in infrastructure and reminding the world of Africa’s growth figures.

But what did Davos say about Kenya (and Africa) and what does this mean for the country?

First, there is a great deal of interest in Africa but there is still significant anxiety and concern about the conditions and environment for business and for personal safety.

South African President Jacob Zuma had to reassure participants that Africa is “relatively stable”, with “reduced areas of conflict in the continent”. Of course Ebola in West Africa and terrorism in Kenya and Nigeria were mentioned.

The basic message is this: The world is interested in making money from countries like Kenya, but many are unclear on what a fully fledged investment on the continent entails.

One could argue that had China not made deep inroads into the continent, interest in Africa would be more muted.

It is up to Kenya to increase access to information and data about the country and market the positive aspects of what investment here means, while being candid about the risks present.

Delegatebrochure_final13(source: http://www.theismaili.org/ismaili/sites/ismaili/files/4515.jpg)

Secondly, Africa is the newest kid on the block but is still largely discussed as a monolith, a single market and single investment destination.

Luckily for Kenya, a few days after Davos, Fortune magazine listed the country as one of the seven emerging markets to watch (Kenya was the only African country on the list).

There is some indication that basic differentiation is beginning to emerge, with some foreign investors distinguishing between East and West Africa, or oil importing versus oil exporting economies.

This differentiation is bound to grow and is good news for Kenya because there is space on the global stage for the country to stand out as a key investment space.

afr2004regions(source: http://www.zum.de/whkmla/histatlas/africa/afr2004regions.gif)

At the moment, it looks like investments will be made in one or two “sure bet” countries and Kenya can leverage on all its strengths to be seen to be one of those sure bets.

Thirdly, Davos made it clear that people are paying attention to Africa and thus the continent is likely to be increasingly integrated into global financial markets.

Part of the reasons behind the interest is the resilience shown during the 2008-09 financial crisis. This and the high yields has given countries like Kenya access to global financial markets in an unprecedented manner.

Ironically in trying to diversify risk, investors are integrating the continent more closely to global financial markets, perhaps compromising the relative isolation on which Africa’s past resilience was based.

Kenya and Africa will open up further and the attention of the government should be on how to attract investment but more importantly, to develop the capacity to absorb the incoming investment in a manner that builds the economy equitably and sustainably.

Ms Were is a development economist.

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