Bending the Linear toward the Circular
The Challenge of Developing East Africa – Part 2
2 min read

The Challenge of Developing East Africa – Part 2

It's not desirable, or possible, to sugarcoat the enormity of the challenges facing investors and the people in East Africa.

The question is, how do the developed nations of the West effectively and honorably interact with the developing world today, in East Africa and elsewhere?

Investment and private-public partnerships (another use of the term “PPP”) are ideally more appealing to people I know in the tech business, particularly when it comes to major traditional and digital infrastructure.

Yet foreign direct investment (FDI) in the region remains sparse. A few billion USD per year are traditionally invested throughout the region, with Kenya, Tanzania, Ethiopia, and the DRC the primary recipients. Small Burundi receives as little as $1 million of this. The investments amount to about 1% per capita of the FDI invested in the United States or EU states, for example.

A Look at China and Its Influence
The Chinese government has committed $60 billion for Africa in general as part of its Asia- and Africa-focused Belt and Road Initiative (BRI), with specific projects mentioned in Kenya and Tanzania. How much of this will ultimately go to East Africa is a topic for the future.

Although the government and investors in the United States are well aware of the BRI, I have not seen a policy declaration about what, if anything, to do about it.

This does not mean that nothing will be done about it. China's economy is now comparable to the that of the EU, and two-thirds that of the US. Present growth trends show that it could catch the US sometime in the next decade. So continued, serious economic competition between the US and China seems guaranteed for a long time.

History Must Teach Us Something
There is already $400 billion in mutual investment between the US and China, more than a half-trillion in mutual trade, and notorious efforts from both countries to keep the upper hand. Just as Europeans played The Great Game for Africa in the 19th century, and the US and USSR worked to create two, separate economic and political spheres while conducting real war-by-proxy during the Cold War, future decades look to be a long wrestling match between the US and China, one that threatens to manifest violence at any time. East Africa is drastically underserved economically today, but may be a pawn, for better and worse, in the latest era of battle among global superpowers.

So it's not desirable, or possible, to sugarcoat the enormity of the challenges facing investors and the people in East Africa. Regardless of how China pursues its interests in the region – and I do mean regardless – the challenge to Western investors is how to deliver benefits to the region.

An exploitative neocolonialism is not the answer, but this will be a difficult thing to avoid. Even well-meaning people from the developed world are often seen as obtuse, condescending, and worse by native populations who know their history well enough to know the appearance of a foreign flag on the horizon might be a terrible thing.

Even mere advice given about a region's prospects, particularly when delivered by glib, cocksure Americans is also not wanted. In a way, Western interlopers today must be more cold-blooded about what they are doing, sizing up projects in East Africa as they would in say, Massachusetts, Alberta, or Brabant.

Risk is assumed at a price, mitigating and aggravating factors are carefully weighed, and decisions are made that, yes, benefit said people in said developing nations, but are not exclusively idealistic or cathartic.

(The final post in this series will show the numbers I've developed to measure the relative progress and potential of this region, and the scale of investment and development required to achieve significant progress.)