Updated Aug 24, 2018 - Politics & Policy
Expert Voices

Trump–Kenyatta meeting an opportunity for Kenya to court investment

US President Donald Trump standing with Uhuru Kenyatt, Mahamadou Issoufou, Muhammadu Buhari and President of the African Development Bank.

President Trump with Kenya President Uhuru Kenyatta and the presidents of Niger and Nigeria, at the G7 meeting on Sicily island, Italy, on May 27, 2017. Photo: Michael Kappeler/via Getty Images

On Monday, President Trump will meet with Kenyan President Uhuru Kenyatta to discuss security collaboration and ways to bolster trade and investment between the two countries. Kenya is a pioneer in mobile payment systems and in attracting venture capital (VC) within Africa for its tech startups, but, compared to other emerging markets like China and India, attracts a minuscule portion of global VC.

Why it matters: Leading Kenyan companies have yet to make significant domestic venture investments. In order for Kenya to maintain the rate of acceleration and reap the benefits of Africa’s most successful startups, President Kenyatta needs name-brand investors from the U.S. — figures like Peter Thiel and Ben Horowitz — to claim a stake in the Kenyan entrepreneurial ecosystem.

In 2017, VC investment in Africa reached $560 million, up 53% from 2016. Gone are the days when leading African startups rarely saw investments over $50,000. The strength of Africa’s startups lies in the developmental problems they're trying to solve, namely by building platforms in the financial, healthcare, transport and education sectors, which presents attractive opportunities for investors. Thiel, for example, who has been a long-time advisor to Trump, has called for Silicon Valley investors to look to new markets.

In Kenya, there is a huge latent potential in retail e-commerce given that one in four Kenyans now goes online in search of products and services. Increased mobile and internet penetration rates coupled with a growing middle class and improved infrastructure are fostering a successful environment for young companies such as Sky.Garden, which provides a software-as-a-service platform to connect informal traders and established businesses to customers.

Like so many countries in the region, Kenya also faces a significant job-creation challenge: Official youth unemployment is over 20%, and by 2020 another 28.5 million Kenyans will reach working age. In this environment, entrepreneurship is not a luxury, but a much-needed path toward prosperity. With Kenya’s economy predicted to expand by 6% in 2019, startups have natural growth at their fingertips.

The bottom line: For Trump and Kenyatta, focusing on mobilizing U.S. VC is a win-win. Kenya’s startups would receive much-needed investments, in turn growing the local economy and solving development challenges, while U.S. VC firms could diversify their portfolios and take advantage of a fast-growing market in search of Africa’s next unicorn.

Aubrey Hruby is a senior fellow in the Atlantic Council's Africa Center.

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