Otiato GuguyuI got a feel of the half a trillion booming tourism sector when I attended the African Development Bank global conference at the capital Nairobi.
Kenya’s tourism grew 33.3 percent last year to Kes527 billion according to the Kenya National Bureau of Statistics’ Economic Survey, a growth better than the pre-pandemic performance for the first time driven by a flurry of international visitors and conferences held in the country.
Nairobi is strategic both geopolitically in the race of the West against China and Russia but is also attractive to capital with one of the most advanced capital markets in the region. Recent investment in infrastructure has unlocked the City’s crowded traffic offering conference meetings logistical capabilities, powerful regional networks and a chance to see lions carry off dogs sleeping outside peoples’ lawns.
Read also: Part I Hot Forex, my kind of gamble
And as global conferencing becomes a major source of economic growth, there is no better place to see Kenya’s procurement bureaucracy positioned for extraction from food and hospitality to branding and organization, to meals.
This procurement machine has elevated the quality of service that has made Nairobi attractive to conference tourism behind the multibillion rebound in tourism income that has helped the country recover from dollar shortages.
The first impression I got on Monday morning when I went to the Africa Development Bank (AfDB) Annual meeting at the KICC was that they had hired the right events manager. I would later meet her Mrs Jane Muriithi of Sleek sourcing and she was charmed by her performance, says, client was pleased.
The branding had this impressionable photography, that really got at you, a little girl with village hands wrapped around the trunk of a young tree grinned to you on your way to registration and collection of badges. Beautiful photography of morans looking down on you like you are in a hole in the ground and a young female innovator holding a drone a little too close for comfort were some of the remarkable photography I saw.
Procurement capitalism
But while AfDB had hired a good events manger with a good photographer, they had not hired an efficient registration desk. As usual there was too much confusion, too few booths an overwhelmed personnel which meant hours on our feet.
The lines stretched in the hot sun running streaks of sweat down our backs as we waited hours. Aides embarrassedly made appeals to get their ‘important’ men to skip the line, as we provided angry audiences antennas prickled for any racial undertones.
The ushers a mix of police and boy scouts from the National Youth Service were however unrelenting, and the only ones let through were journalist and non-nationals who held a separate queue.
Time Travelling Economist
In my resume, I claim to be a sort of resident conference journalist. I have covered a couple over the decade including the 2018 Blue Economy Conference and the African Development Bank Group annual meeting in Busan. The 2017 United Nations Conference on Trade and Development (UNCTAD); the 2016 Tokyo International Conference of Africa's Development (TICAD) VI, and the 2015 World Trade Organisation ministerial conference. In 2016 I was at the Africa Ceo Forum in Abidjan where I would later return for the 34th AGM of Ecobank Transnational in 2022.
In all those meetings, Kenya’s registration process has always been chaos compared to the other countries hosting these global events.
The promise for a top security check through tracked by barcodes turns out to be a colour coded tag printing system always domiciled at Charterhouse, City Hall that will always appear ill prepared for pre-registered delegates; struggling with internet connection and electricity outages.
After hours on the long queue we finally entered Charter Hall where at least they provided too few plastic chairs and made us move round and round like a game of dancing chairs as we approached the counters with good photography and terrible service.
As we waited, I finished the last bits of Charlie Robertson’s Time Travelling Economist that does an amazing job explaining why credit is expensive in Africa.
He says countries start borrowing cheaply when family units within them can generate more savings.
Families only generate more savings if they have three children or less which allows them to offer education and build up some savings.
In a generation, an educated youthful population emerges, who number two for every child / pensioner. They deliver an economic boom since more people are economically active than there are dependents. This is the way to build up enough savings to reduce the cost of credit.
While the youth are growing, invest in electricity.
“Africa’s Transformation, the African Development Bank Group, and the Reform of the Global Financial Architecture”
The opening of the AfDB conference happened at the tail end due to the busy schedule of the top panelists, the presidents of Kenya, Congo, Rwanda, Somalia, Zimbabwe, Libya and the African Union plus top leadership and prime ministers from Namibia, Burundi, Niger, Gabon and ex Mozambique president.
President Paul Kagame’s address caught the predicament of present day African states who need to develop their continent but find themselves with little savings for local capital. He said that Africa finds itself in a world where there are enormous resources which are inequitably distributed.
His realist view posit that Africa has to look at itself and look at the whole world and how it is set up, and we know in this world, people countries world for their interests.
He said the interests of the countries on the Africa content must be taken care of beginning with ourselves. We should push for representation and not just in numbers but it has to be about representing ourselves rather than letting other people represent us
“We are talking about the international financial architecture, therefore in the mind we have the architects. So what did they have in mind when they provided us with the architecture we have to deal with. They must have had their own interests and framed things the way they wanted to benefit themselves or maybe we can assume they wanted to benefit the whole world,” he said.
But this was easier said than done when Africa has to rely on cheap deposits from an ageing Western population and their peculiar cyclic vulnerabilities.
Over the past few decades, Africa has been financing development goals through investments in infrastructure, trade and manufacturing with loans from China and cheap Eurobonds on ultra-low interest rates in the West.
When the developed markets of the US, the UK, and the EU began raising rates to tackle high inflation from mid-2022, this forced Central Banks to tighten their monetary policy to control the flow of money. As a result, Africa suffered disproportionately from capital outflows at a time when China also slowed down lending.
Many African markets have witnessed a decline in liquidity over the past years as investment shifts towards the United States, Asia, and the Middle East on global financial cycles.
Green, the colour of money
As African governments challenge the current financial architecture even with the philosophical posing, the proposal was not to center it on gradual domestic mobilization but instead to disrupt the current structure to accommodate Africans in providing conditional support linked to Green financing.
Absa Bank which held a side conference on Harnessing Africa's Resources to Support Climate Finance and Transform our Tomorrow, said that while the shifts in global trends have treated Africa as generally risk-averse, they are ignoring exceptional stories of growth on the continent and untapped potential, especially in spearheading the shift to clean energy, where Africa could potentially lead the world in energy transition.
“According to a study by UNEP in 2023, Africa’s green business opportunities are abundant. Africa can become a trailblazer in renewable energy solutions, with abundant solar, wind, hydro, biomass, and geothermal resources that may contribute to a 6.4 per cent increase in GDP from 2021 to 2050. With an annual funding gap in climate financing of $213.4 billion in Africa, this offers innovative investors and players within the finance sector a chance to make an impact by building Africa’s climate resilience,” ABSA Bank Chief Finance Officer Yusuf Omari said.
“As Absa, we recognise our role in contributing to the conversation on reforming the financial architecture to harness Africa’s resources to support climate finance and transform our tomorrow,” he said.
Speech act
The first time I heard of speech act was at an International Relations class describing how words are used in the international stage to form collective understanding and marshal action. I was impressed at how little I knew about the buzz words that unknowingly pushed and pulled at my individual and society.
I found myself using speech act as a concept when talking to this gentleman next to me at the Absa Bank side conference on Harnessing Africa's Resources to Support Climate Finance and Transform our Tomorrow.
The gentleman was convinced that in as much as climate change is a big issue right now, we should not forget the basics, the health, the poverty and education which need even more urgent attention especially for Africa.
I agreed with him that money labeled colour green has become Africa’s main channel of accessing cheaper capital from the West. Africa has been following the speech act of western liberal ideas that direct funds, from population control, rural electrification, immigration, terrorism finance, Covid 19 response, and now the green energy transition.
By all means some these liberal policies have good intentions and desirable outcomes but by the convoluted nature of the west’s bipolar politics some of these policies have been contradictory and short term while real local problems are sometimes overlooked.
No one knows what a Donald Trump US presidency will mean for all the green commitments which means the best policy should be internal.
Kenya and Africa’s only realistic route to cheaper credit is to keep money in people’s pockets.
Having less children so you can educate them and set aside a personal saving. In a generation when there will be more educated working youth than pensioners and children then savings will triple and the law of demand and supply will bring down the cost of credit automatically.
But the cycles of politics and challenges of the present day have forced Africa to short termism in the name of pragmatism to feed into global financial cycles for cheaper capital.
Worse still foreign capital always comes with consequences, including serving the geopolitical interest of other peoples and nations, and imposing policies that may not align with local needs like the structural adjustment programs that are imposing austerity measures on vulnerable economies like ours.
Taking money from people’s pockets through tax and in inflation is shrinking savings making Kenya’s credit expensive, it will kill your goose before it lays the golden eggs and no amount of credit rating can fix that.
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