Kenya: A New African Voice in the BRIC(K)S Group?

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Written by Morgan McClain-McKinney, Guest Contributor

Africa, which has experienced a decade of strong economic growth—its trade with the rest of world has increased by more than 200 percent—deserves a greater voice in the BRICS countries. South Africa found its place in the group in 2010, but it represents only the tip of the African iceberg. The group should consider including a “K” in its acronym for Kenya.

Kenya is a major investment destination and a worthy potential addition to BRICS. According to Ernst & Young’s 2013 “Africa Attractiveness Survey,” Kenya’s foreign direct investment (FDI) in other African countries grew at an annual compounded rate of 77.8 percent between 2007 and 2012. That put it ahead of Nigeria (73.2 percent) and South Africa (66.2 percent).

When we look at the investment made by the BRICS countries in Africa, the questions that first come to mind are: What are the individual and collective motivations of the BRICS countries for investing in Africa, and which countries are the dominant voices? Discussion of these questions naturally focuses on interests in agriculture, natural resources, manufacturing and infrastructure. The political and social factors that inform these investment decisions are more complex and problematic, and commonalities are difficult to pin down.

The general consensus, however, is that Kenya has the potential to be the next African voice in BRICS, though the country’s political instability remains a major stumbling block.

Most experts in the field would agree that the original BRIC countries, before South Africa joined, were not well-equipped to meet the needs of their partners in sub-Saharan Africa. When South Africa entered the group in 2010, some said it was a major step forward, for it brought a much-needed African perspective to the equation.

At the time, Kenya was expected to be a major beneficiary of South Africa’s entry. Increased capital flows to South Africa would encourage firms to expand into the continent’s other frontier economies. South Africa came to be seen as the new gateway to Africa for firms in the U.S. and other countries wanting access markets across the continent. Today, however, these firms are now sidestepping South Africa and investing directly in Kenya.

Kenya has a long-standing history of engagement with the BRICS countries. India, for example, has long imported oil and other natural resources from the country, and it has an established economic and cultural presence in Kenya. Although minerals and oil still make up the vast majority of Brazil’s imports from Africa, the South American powerhouse has also demonstrated interest in investing in Kenya’s agricultural, auto manufacturing, construction, and healthcare sectors. Trade relations between Brazil and Kenya are growing rapidly, as the country is perceived as a hub for entrepreneurs and investors wanting access the broader East African Community (EAC).

It is no secret that China also has its large footprint in Kenya, mostly in infrastructure. It has recently announced a $13.8 billion railway project, which will connect Mombasa to Nairobi. The railway is expected to eventually extend to Uganda, Rwanda, and South Sudan. In August 2013 China and Kenya signed an agreement to deepen trade cooperation.

Although Russia has a less visible presence on the African continent, its investors have a clear interest in exploring for oil, natural gas, and minerals in Kenya, as well as in developing horticultural projects. Kenya and South Africa, meanwhile, continue to pave their own trade relationships. In January of this year they solidified an agreement that could eliminate administrative barriers and boost the exchange of goods and services between the two nations.

Considering Africa’s many distinct economies, it is difficult to envision South Africa forever remaining the only African voice in the BRICS group. Of all the possible African contenders for a new place in the group, Kenya seems the most logical choice and its possible inclusion should be discussed at future summits.

Morgan McClain-McKinney currently serves as Program Analyst for the Private Capital Group for Africa at the U.S. Agency for International Development (USAID), a unit committed to leveraging private investment in a range of sectors including agriculture, financial services, health and energy in support of development priorities that include both social impact and financial returns. She is passionate about supporting vulnerable populations by developing and implementing sustainable solutions for economic growth and entrepreneurship. Prior to her experience with USAID, she spent time on Capitol Hill and with the U.S. Department of State, engaging with International Organizations.

The views in this article reflect only those of the author and in no way represent the United States Government.

Photo: GCIS (cc).