Kenya Just Changed the Rules for the Rich

[00:00:02]You're probably the right person Kenya is looking for to [music] help it figure out how to grow its economy and find employment for its young population.

[00:00:14]Many African countries for long have failed to match their economic growth and population growth.

[00:00:20]Look, with that failure and rising public debt and less industrialization, now you can visualize how big the problem is. This young population is restless and is demanding only one thing, access. But access to what?

[00:00:37]Obviously, access to economic opportunities.

[00:00:44]So, Kenya has an offer.

[00:00:46]Kenya's young population, as I mentioned, wants an access to economic opportunities that guarantees them two things, gainful employment and wealth creation opportunities for upward mobility. So, on top of home-grown solutions, Kenya is working on a special visa for you, [music] the golden visa.

[00:01:07]This proposed golden visa aims to attract wealthy foreign investors, and it will grant them permanent residency as long as they do three things. I mentioned them. First, make significant investments. Second, create jobs >> [music] >> and boost exports. Definitely, when you invest significantly, you'll be able to do these two, create jobs and boost exports.

[00:01:38]>> [music] >> Now, this brings us to Kenya's economic situation.

[00:01:44]Before this golden visa becomes a reality, as an investor, you just have to understand Kenya's current economic progress or situation, for that matter. Come to infrastructure. Does Kenya have enough infrastructure? I can say yes to some extent and also look at it this way.

[00:02:04]Kenya is registering significant infrastructure development. Look, there is 5 billion US dollars being injected into SGR extension to Kenya-Uganda border. Also, international airport, that is JKIA, is being expanded [music] and modernized at 1.2 billion US dollars.

[00:02:24]Motor roads and markets are under construction. In addition, affordable housing program is ongoing. Honestly, we can say there's much that is going on in terms of improving Kenya's infrastructure. And I've always argued that infrastructure is an input. So, when an investor comes in and sees this progress in infrastructure, definitely Kenya becomes attractive. Now, let's come to formalization of economy. For long, Kenya has sought to formalize its economy. This is what I can say. Kenya wants to formalize or structure its economy through industrialization and believes this is the way to rapidly grow its economy.

[00:03:09]>> If we have to engage in manufacturing, we need minimum 10,000 megawatts of energy.

[00:03:21]And we need it like yesterday.

[00:03:24]>> By directing efforts to industrializing the economy, Kenya will be in a position to grow its economy at 7%, [music] 8%. Look, today Kenya's economy, according to World Bank, is growing at 4.3%.

[00:03:40]Imagine, that is so low. That is not [music] impressive at all. So, for Kenya to be in a position to grow its economy at 7% and above, But calls for more investments in strategic sectors. And that is why having wealthy investors come in changes Kenya's economic playbook. Also, by industrializing, Kenya will be in a position to stop heavy reliance on high taxes to grow.

[00:04:07]Now, it wants to boost production instead of over taxing the overburdened formal sector employees. Listen, we jokingly say you can't nice guy a woman into genuine feelings and reciprocal love.

[00:04:23]Similarly, you can't overtax your way into prosperity. I hope I make sense to you because for the longest we've seen African countries, including Kenya, thinking that by overtaxing the already overburdened taxpayers, it will get into prosperity.

[00:04:40]No way. You can't overtax to become wealthy. Also, by industrializing, Kenya will be in a position to reduce public debt.

[00:04:49]>> [music] >> Kenya's debt stock is worrying. Public debt has risen to over 100 billion US dollars in an economy with a GDP of about 150 billion US dollars.

[00:05:01]So, this economy is not growing as fast as one would expect. Also, the public debt has risen to a level that honestly is alarming.

[00:05:12]So, having investors come in changes the economic playbook. Let's move forward.

[00:05:17]By industrializing, Kenya seeks to pull through shrinking physical space. In addition to industrialization efforts, Kenya has adopted innovative financing [music] to survive through a shrinking physical space. This financing will expand infrastructure with the hope of opening up the country for industrialization.

[00:05:39]Look, there's a national infrastructure fund whose main objective is to de-risk investments from the private sector.

[00:05:47]National Infrastructure Fund mobilizes resources and provides seed capital to catalyze direct investment and public-private partnerships. That's a good move. In addition to National Infrastructure Fund, there's Sovereign Wealth Fund with a strategic [music] investment component, which allows government to invest some money in high-return investments, including commercially viable infrastructure. In essence, Kenya wants the world's wealthy to unlock its production [music] or manufacturing potential. This is an area Kenya hasn't moved an inch for the last 4 years since President Ruto assumed office.

[00:06:29]>> Kenya has everything. Kenya has everything. It is the hub of East Africa for >> Today, manufacturing still sits at 7 to 8%. So, its contribution to GDP is just 7 to 8%.

[00:06:42]That is why there's no transformational growth in the economy.

[00:06:46]Yes, people talk about we are transforming, we are growing, but with this low percentage in terms of manufacturing or production, honestly, you can't see transformational growth.

[00:06:59]As a result, people will continue to disagree to any efforts to convince them that the economy is going to improve their lives because they live daily struggles in this economy. However, [music] in this effort to attract wealthy investors through golden visa program, recent reports have cited high energy costs as a reason why investors are paying attention to other countries such as Ethiopia, Tanzania, Egypt, Rwanda.

[00:07:32]Again, unnecessary bureaucracy and kickbacks kind of dampen Kenya's efforts to win the hearts of wealthy foreign investors. This has to be fixed though. Now, let's pay attention to this >> [music] >> chapter, wealth concentration. In case you are wondering, where are these wealthy investors going to come from?

[00:07:52]Nearly half of the world's wealth is concentrated in just a handful of regions, North America, Europe, the Far East, the Middle East, and Australia, and also New Zealand. These regions are homes to millions of dollar millionaires and thousands of dollar billionaires who control tens of trillions of dollars in investable assets. In fact, one in 10 Americans is a dollar millionaire. But, you see, in Kenya, out of 55 million people, you only get about 7,200 dollar millionaires and 16 centimillionaires. No dollar billionaire here. So, in Kenya, one in 7,700 people, you are likely to meet one dollar millionaire. This now tells you the [music] urgency to grow this economy, grow wealth, create jobs, and fight poverty.

[00:08:48]Yes, you can see the gap. We don't have many wealthy people in this country because the economy hasn't created many economic opportunities for that.

[00:08:58]These regions that I just mentioned are experiencing market saturation. So, wealth has to move to the developing world. And Africa is at the center of this wealth migration. A lot of economic potential is untapped here.

[00:09:14]Essentially, global institutional capital is entering Africa for long duration, asset-backed yield, and Kenya wants to leverage that.

[00:09:25]This now brings me again to Kenya's private sector.

[00:09:29]So, can we talk about Kenya's private sector?

[00:09:33]Yes, in case you do not know, Kenya has one of the most vibrant private sectors in Africa. It is a free market economy. Many multinational companies looking for expansion into Africa are setting their regional bases here, even though they have a problem with Kenya's high energy costs, bureaucracy, and kickbacks. Also, understandably, Kenya is Africa's Silicon Savannah. So, if you're into tech, Kenya's the right place.

[00:10:05]>> [music] >> The middle class is also growing rapidly. So, there's a market here.

[00:10:11]In addition, you'll get [music] UN headquarters here, and UN is building more here.

[00:10:18]Understandably, Kenya's private sector is the venture capital destination in Africa.

[00:10:23]So, as much as Kenya is looking for these wealthy foreign investors, already there's a base. We have foreign investors here.

[00:10:35]So, Kenya wants more of them, perhaps in sectors like agriculture, energy, tech.

[00:10:42]All these combined will industrialize Kenya and make it possible for young people to access economic opportunities they're yearning for. What do you think about Kenya's proposed golden [music] visa program?