Investing in Kisumu, and Kenya?

Since Egypt, a lot of my time has been spent preparing the Investment Guide to Kisumu, as well as coordinating other investment work by KPMG and UNIDO, all in an attempt to finalize reports for launch at a large Business Roundtable with the Government of Kenya, held by the Economist Conferences (related to the magazine) and co-sponsored by Millennium Cities Initiative, to be held 17-18 July. Our goal was to have President Kibaki launch the Guide – which is the first for a Millennium City, and we also think the first real investor’s guide to an African city. Then, we will use it to promote Kisumu and lead a trip of foreign investors to Kisumu immediately after the Roundtable and in October…well, as you’ll see below, things don’t always go as planned...

I worked in Kisumu with a consultant, an expert in putting together African country investment guides from Canada, during most of the month of June. Together, we worked to pull together investor stories and quotes, information on promising sectors for investment and reports on infrastructure and other challenges to investment in Kisumu, and Kenya. For promises, we are highlighting agro-processing, aquaculture, rice, cotton, peanut butter / peanut oil, ethanol, regional tourism and water transport.

During this time, my relationship with many individuals in the Kisumu private sector became strong – they have been an incredibly supportive group, a group of thriving business people who are very welcome to the idea of competition. I have toured their factories and farms – fish processing or confectionary or ethanol factories, bakeries and hotels, rice and sugar mills. They have invited me to their homes for dinner and sat with me dozen of times in the hotel, telling me stories – mostly horror stories of trying to do business here, of corruption from all levels of government, of overwhelming infrastructure problems, of constant truck hijackings, you name it – over tea or Tuskers. Many of them have become friends and enriched my time here greatly.

A few stories in particular stand out: One of my investor friends is a local Kisumu man who took over thousands of hectares of rice farms from the Government a few years ago. He took me on a tour of the farm and mill. Prior to his taking it over and reviving the rice-growing scheme, the Government had mismanaged the farm to death, pushing hundreds upon hundreds of farmers and their dependents to the brink of starvation. This investor has now become so popular in the area as a result of his work with the farmers, that he has decided to run for Member of Parliament. As we drove through the fields, I felt like I was with a rock star. Farmers and their families saw his car and came from everywhere. Our truck soon became surrounded by hundreds of rice farmers, all shouting and cheering at this businessman. We stopped and he gave an impromptu speech – the people cheered and clapped. Then he had me get out of the car and he introduced me and the work I have been doing, and I gave a speech which he had to translate into Luo. It was one of those moments that made me thrilled for politics.

As did one Saturday morning in Kisumu. I have become friends with the family of one of the leading opposition candidates, Raila Odinga, who is trying to unseat the President Kibaki in this year’s elections. Odinga is the leading contender to be the party candidate for the ODM-Kenya party, officially to oppose Kibaki. One Saturday morning in Kisumu, as I sat and had breakfast at the Imperial Hotel, the entire room cleared out except for me and our consultants. Every opposition candidate came into the room to have breakfast before attending a large state funeral for Ramogi Oneko the last remaining Kenyan freedom fighter (part of the Kapenguria Six, including Jomo Kenyatta (Kenya’s founding president) who were arrested and spent 7 years in prison during the Mau Mau rebellion for trying to overthrow the colonial government). Our friends introduced us to the politicians, while huge crowds formed outside the hotel to cheer them on – it was like having breakfast with Obama, Hillary and McCain.

And throughout this, I have become a strong believer in the ability of the private sector to invest in Africa, make good returns on their investments and do a lot more to improve the lives of hundreds of people than can development aid or the government. One of my favorite companies is Dominion Farms, started by a very successful American businessman from Oklahoma named Calvin Burgess who has the Dominion Group of Companies in the US. Near the “end” of his career, he decided to turn his attention to Africa. He’s a businessman so always thinks about his return, but also believes he can make a difference, and he is. I have spent time with various people at Dominion and I am a true believer. They have turned a swamp into a state-of-the-art rice farm, employing 600 people directly, with top rate equipment and processes which have not been seen in Kenya. THEY are teaching agriculture students about best practices. They use the rice bran to feed the tilapia and catfish that they are growing on their aquaculture farms –and are looking at how they can use the bran for baby food. They have set up communal farms and are in the process of building a community youth camp. They have built roads and provided electricity and housing. They have employed women in small economic enterprises to make honey or paper. They have gone through a great deal with the Government of Kenya and have invested a lot of money. But, will they make money? Yes, I believe so. Will they change lives? Yes, they already have.

So then, at the culmination of our work for the Investment Guide I held a two-day workshop with government and the private sector in Kisumu. The first day included closed sessions, with the private sector in the morning and the Government of Kenya in the afternoon. We had given them a draft of the Guide and wanted to hear their honest feedback on doing business in Kisumu, and Kenya. On the second day, which was a combined session of Government, business and civil society, I had hoped for 50 people to attend – but instead 80 showed up, including 3 newspapers and 4 radio stations! I gave the opening and closing speeches and served as sort of the master of ceremonies, and, most fun, was quoted in the Kenyan papers and on the radio. You can use the link to this story in Kenya’s main paper, the Daily Nation: http://allafrica.com/stories/200706251549.html

From the time of the workshop in mid-June, we worked and worked to help organize the Kisumu portion of the Kenya Business Roundtable in Nairobi with the Economist, finalize the Investment Guide and prepare for the first foreign investor mission to Kisumu. Then…last Friday, we learned that a mere 10 days beforehand, the Government of Kenya decided to pull the plug, on the Economist Business Roundtable, which would have been next week. Jeff Sachs and the American Ambassador here both tried to intervene, to no avail. (Technically, they say they have merely postponed until September, but with looming elections, we’ll see…) The Government was unhappy with an article on Kenya published in the June 6th issue of the Economist magazine. Understandably, it was an offensive article to the Government, calling the current leaders “hippos” and the State a “fragile and rotten thing.”

However, wouldn’t you like to think that, if the Government disagreed, it would have used this Roundtable – with Kibaki and all the Ministers in attendance – as a forum to explain why the article is incorrect and what they are doing good for Kenya? Wouldn’t you hope that, if the Government was serious about improving the business environment and encouraging investment, it would not have cancelled the plans of approximately 200 major corporate executives, who had signed-up to spend 2 working days in Nairobi to discuss doing business in Kenya? I would. Jeffrey Sachs is now in Kenya and will hopefully meet with the President to insure the Roundtable goes forward in September. Otherwise I'm afraid it is not a good sign for the Government's willingness to improve the investment conditions in Kenya.

(Pictured: (1) Kisumu Chamber of Commerce office, desperately needing a new one; (2) an old ship sitting abandoned and surrounded by water hyacinth at the almost desolate Kisumu port, which badly needs to be revitalized as an important means to transport goods to and from Uganda and Tanzania; (3) a successful business in Kisumu, 44% Canadian owned, that produces alcohol from sugarcane molasses)