Kenya stands out as the most promising country in sub-Saharan Africa, thanks to a convergence of economic and political forces that position it favorably among the continent’s nations. As Africa experiences rapid growth and is projected to account for a quarter of the world’s population by 2050, multinational corporations are increasingly looking to establish a direct presence in sub-Saharan Africa, just as they have done in Asia, with Singapore emerging as a popular hub due to Hong Kong’s integration with communist China.
However, some of Africa’s leading nations have faced significant challenges recently. Nigeria, the most populous nation in Africa, has seen economic growth slow and is only beginning much-needed reforms. Ethiopia, the second-most populous country, recently endured a civil war, while South Africa grapples with ongoing political issues and power shortages. These factors make these countries less attractive for expatriates and less likely to become dominant economic hubs in sub-Saharan Africa.
In contrast, Kenya presents a compelling option due to its reasonable level of English fluency and attractive year-round climate. The country achieved a growth rate of approximately 5.5% last year, despite adverse shocks in the prices of imported food and energy. Kenya has consistently maintained growth rates in the range of 4% to 5% since 2004.
Kenya also boasts geographic advantages, with an extensive coastline along the Indian Ocean. Research suggests that landlocked countries tend to have weaker economic performance, while coastal nations have better access to the global market. Kenya’s proximity to China and India, both large markets and sources of capital, is especially advantageous in the current geopolitical climate, which is showing increasing interest in East Africa over West Africa.
Although Kenya’s population of approximately 57 million is smaller than Nigeria’s 222 million, the broader East Africa region, with nearly 500 million people, surpasses West Africa in terms of population. Additionally, Kenya surpasses neighboring Tanzania in wealth and infrastructure, including a robust digital infrastructure, with reliable internet access ranking among the best in Africa.
Kenya’s commitment to renewable energy, with over 80% of its energy coming from renewable sources, aligns with the global shift towards green energy. The country’s climate is ideal for expanding solar power, making it an attractive destination for foreign companies seeking to enhance their green reputations. However, high energy costs, partly due to taxes and inadequate regulation, have been a growth impediment.
Despite these advantages, Kenya faces challenges such as difficulty attracting foreign direct investment, corruption, regulatory barriers, and political instability. However, the recent stability in Kenyan governance and the relatively smooth 2022 election suggest progress in addressing these concerns. Additionally, as Kenya’s wealth continues to grow, the government’s ability to combat major terror threats from Somalia is likely to improve further.
It is also possible that sub-Saharan Africa may not develop a single dominant corporate hub. The United Arab Emirates may continue evolving as Africa’s financial center, Lagos could thrive as the center of startup activity, South Africa may retain its dominance in the South, while London, Beijing, and India may play significant roles in Africa’s economic future.
Nonetheless, Africa’s vast distances and growing population make a strong case for Kenya’s continued growth. The idea of establishing manufacturing plants or service centers near Nairobi or Mombasa makes sense, even if they serve only East Africa. Kenya’s immediate neighbors, Tanzania and Uganda, also have English-language backgrounds, and Tanzania, in particular, may become one of the world’s most populous countries.
In conclusion, Africa is on the rise, and East Africa is no exception. Kenya’s stability and advantageous characteristics make it a compelling choice for those looking to invest in the region. Whether or not it becomes the dominant hub, Kenya is likely to play a pivotal and predictable role in East Africa’s promising future.