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Obama’s hangover: Capitalising on the hype
  • Obama’s hangover: Capitalising on the hype

Copyright: U.S. Embassy Nairobi

Speed read

  • Obama’s Kenyan visit ‘set an ecstatic and entrepreneurial mood’

  • Newly-pledged business loans and investments are worth more than US$900m

  • But a skills gap and digital divide still impede Kenya’s progress

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Even the most hardened critic of Barack Obama’s US presidency couldn’t help but be caught up in the passion of his visit to East Africa last month. 

Nairobi was on full alert for the visit, having spent millions of dollars to clean up and secure roads and locations. Mobile ringtones of Obama’s voice were on sale everywhere and giant billboards emblazoned with his face appeared across the city.

The self-styled first Kenyan American US president, the country’s “son of the soil”, certainly didn’t disappoint the crowds, who put their lives on hold to welcome him home. Calvin Otieno, digital producer on SciDev.Net’s Sub-Saharan Africa desk, described Obama’s visit as having put the country in an “ecstatic and entrepreneurial mood”.

Rousing rhetoric

High on the president’s agenda was the desire to build stronger economic links between the US and fast-growing African economies, with an emphasis firmly on entrepreneurs and small businesses. The crux of this message was aimed at Africa’s largest, and rapidly growing, age-group — its young people.

“When it comes to the people of Kenya, especially the youth, I believe there is no limit to what you can achieve,” Obama said. “You can build your future right here, right now.” 
Otieno explains how “Obama urged the youth not to look forward to employment as the only alternative but to start something of their own that will lift their lives and shape their destiny”.

Incoming investment

Sentiments from the podium have already translated into promises of hard cash. According to The Economist, newly-pledged agreements include a US$600 million loan from Chase Bank over three years to small and micro-enterprises, US$100 million from the Global Entrepreneurship Network for business start-ups, US$13 million from Village Capital for small firms, and US$4.5 million from the Coca-Cola Foundation to assist youth entrepreneurs. And the US will provide an additional US$200 million to an enterprise fund for small and medium-sized businesses jointly run by the US government's Overseas Private Investment Corporation (OPIC) and Kenya's Equity Bank.  
“More than half of the money pledged is focused on women and the youth,” Otieno says, adding that “Obama’s visit not only tried to solve some of the challenges investors face but also demystified some of the beliefs that are holding back investors.”

Ambitious but under-skilled

As the post-visit tidy-up of the city continues, news of a flood of overseas investment will inspire many into putting their business ideas into action.

But according to a report by the GSMA, the global mobile phone operator association, there are hundreds of entrepreneurs already running start-up and small businesses in Nairobi, many of them inspired by the mobile explosion that Kenya, and Africa more broadly, has seen over the past decade. [1] 

There are now 74 mobile phones for every 100 Kenyans and, of those who access the internet, 99 per cent do it via a mobile device. The city has a reputation as a growing tech hub — built on the success of the online transfer system M-Pesa, high-profile initiatives such as the iHub, the open-source mapping platform Ushahidi, and the ‘Silicon Savannah’ tag attached to the Konza Techno City, 60 kilometres from Nairobi, which supporters claim will turn the scrubland into a futuristic business district by 2030.

The report found, however, that many of these businesses are failing due to lack of business know-how.  At least 70 per cent of start-ups are not earning enough to maintain business and living expenses for a small team, and only 38 per cent of founding teams believe they have the necessary skillset to run the company properly.

The GSMA also suggests that this skills gap discourages investors from fully believing in Africa and that this gap can only be filled by a coherent system of mentoring.

Connectivity is crucial

Another challenge facing small businesses is connectivity. The past few years have seen large-scale government investment in bringing broadband from the United Arab Emirates to Kenya via undersea cable. And internet provider Liquid Telecom recently said that Kenya leads in African connectivity, with the highest bandwidth per person and fastest speeds on the continent.

  • Percentage of people with internet access 

  • 39% of people in Kenya have internet access
  • 20% of people in Africa have internet access (average for continent)
  • 35% of people in developing countries have internet access (average) 
  • 82% of people in developed countries have internet access (average)

    Source: World Bank; ITU

But, in reality, ongoing unreliable connectivity holds back young businesses from competing in the global digital economy, not least in harnessing the huge benefits of social platforms. In Kenya, just 39 per cent of people have access to the internet — much higher than the African figure of 20 per cent, and a little more than the 34 per cent average for developing countries, but far lower than the 82 per cent average for developed countries

At SciDev.Net, we have seen first-hand how poor connectivity affects organisations and information access. Shannon Marie Harmon, digital producer on SciDev.Net’s global edition, visited Nairobi to research connectivity speeds across different locations — from offices and cafes to Nairobi’s iHub. She tested the speed of various websites including our own, and found that, even though most people depend on wifi for connectivity, good connections were patchy.

“I was told several times that on Friday afternoons after about 4pm, phone signals and internet slow down due to everyone making their weekend plans,” Harmon says. “In my experience, around 10am was really slow as well. There were several ‘brown outs’ (drop in power) and ‘black outs’ each day in the office, which obviously affected our work, as the internet would go down two or three times a day.”

Obama’s visit has been hailed globally not only as inspirational for East Africa’s progress, but also as a welcome boost for the President’s personal popularity in the United States. As Kenya comes down from the jubilation, many will be left asking, ‘What next?’ and wondering in reality how to translate the hype into personal success. Investment will have a huge impact, but only in combination with the right skills mentoring and a political commitment to expand connectivity across the country.

Nicola Pearson is acting editor at SciDev.Net while Kaz Janowski is on sabbatical. 

References

[1] GSMA Digital entrepreneurship in Kenya 2014
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