Magazine article New African

Obama Visits Africa's Hotbeds of Investment and Opportunity

Magazine article New African

Obama Visits Africa's Hotbeds of Investment and Opportunity

Article excerpt

Ethiopia and Kenya are among the fastest growing economies in Africa, according to the World Bank. And Chinese ties in these countries are at unprecedented growth. Is it just a coincidence that Barack Obama--on what may be his last tour of the region as US president--chose to visit both countries? Mark Kapchanga does not think so.

Massive investments in infrastructure, mainly in energy and the construction of railways are expected to further bolster the growth of both Kenya and Ethiopia, besides the turnaround of their investment landscapes. There is little doubt that these two countries have been one of the biggest beneficiaries of their economic and political ties with Western countries, particularly the US.

Perhaps this explains why US President Barack Obama opted to visit the two in July. Ethiopia and Kenya are strategic partners of the United States in the war against terrorism. Indeed, in a press conference in Addis Ababa, President Obama praised Ethiopia for its outstanding partnership in the fight against al-Shabaab, the Islamic militant group.

"Your troops have played a key role in weakening the al Qaeda-linked al-Shabaab group in Somalia," Mr Obama said. In return for pushing forward America's agenda on the global fight against terrorism, Ethiopia has emerged as one of the US's main recipients of aid. In 2008, US aid to Ethiopia amounted to $969 million and stood at $916 million in 2009. Although US aid dropped to $513 million in 2010, it peaked again in 2011 to $586 million.

Despite the long-standing friendship between Ethiopia and Kenya and the US, in the recent past, particularly with Kenya, the relationship has been bumpy, with the Kenyan government threatening to turn to the East following allegations that the US was behind President Uhuru Kenyatta and Deputy President William Ruto's woes at the International Criminal Court in The Hague.

At the time of the 2013 general elections, Mr Kenyatta also accused the UK of a "shadowy, suspicious" role. "The British High Commissioner has been canvassing to have rejected votes tallied in an attempt to deny the Jubilee Coalition outright victory," he said.

The Chinese revolution

With the corroding relations with the West, at the back of his mind, argues Dr Emmanuel Manyasa of Kenyatta University, Mr Kenyatta knew there would be a lot of support coming from the East, particularly from China. Dr Manyasa bases his argument on the fact that today, the increase in China's economic and political involvement in Africa is arguably the most momentous development on the continent. The Asian country is revolutionising Africa's roads, ports, railways, investing in the education and healthcare sectors, and erecting new energy plants.

As at 2009, Chinese direct investment in Ethiopia had reached $900 million while bilateral trade figures were at $1.3 billion. The Chinese, who recently built an ultra-modern, 20-storey African Union Headquarters in Addis Ababa, expect to source materials such as oil and food from Ethiopia and create a market for Chinese exports. Certainly, the Chinese involvement in Ethiopia is stimulating economic growth and helping promote exports to other countries.

According to Berhe Mulatu, an economist from Ethiopia working in Nairobi, the undisputed engagement with China has also seen her country access large concessional loans, which Kave been tied to huge development projects. …

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