FT: Do not allow Kenya¹s tragedy to wreck

Do not allow Kenya¹s tragedy to wreck Africa¹s prospects
By William Wallis

Financial Times
Published: January 4 2008 19:14 | Last updated: January 4 2008 19:14

Kenya has occupied a treasured place in Africa in the minds of many
outsiders. It was not, until this week, a country that flashed red on the
map and certainly not one where women and children fled murderous mobs only
to be burnt alive in church.

Rather, in the western imagination it was where the azure waters of the
Indian Ocean meet breathtaking landscapes dotted with majestic fauna; where
the best hospitality in Africa can be found in hotels, and a robust private
sector has been built with the sweat of generations of Kenyans and Kenyan
Asians. At the centre of east Africa¹s trading and transport links, it was
also the most important ­ and it seemed most resilient ­ of the mere handful
of sub-Saharan countries to have survived the aftermath of colonial rule
without a major episode of bloodletting.

The shock waves emanating from its descent this week into chaos will
therefore be doubly strong, and the potential damage to the reputation of
Africa as a whole very real.

For the past year, international investors have joined a chorus of
development agencies highlighting unprecedented economic growth and shoots
of democracy to argue that the continent has turned the corner. It is the
next big thing in emerging markets.

Riding this wave of optimism, bankers from New York to London and
Johannesburg have launched a record number of funds to invest solely in
sub-Saharan Africa. More than $5bn was raised in 2007, drawing in US and
European pensions, some Arab petrodollars as well as more specialist
investors.

Unlike previous bouts of Africa euphoria, this one has been inspired neither
by the ephemeral promise of visionary autocrats, nor solely by a spike in
commodity prices.

Instead, fresh hope has been built on broader developments including a
turnround in the terms of trade brought about by China and India, as well as
Brazil and Russia¹s grasp of Africa¹s potential. These new relations have
begun to break the debilitating dependence of many African countries on
former colonial powers in Europe for aid and trade.

Glance across the map and you see more elections, fewer tyrants at the helm
and fewer conflicts than in the 1990s when the protagonists of the cold war
abandoned client dictators, leaving a legacy of failing states. If you turn
a blind eye to the conflict creeping across the Sahel and central Africa
from Darfur, and to chronic instability in Nigeria¹s oil-producing delta, it
is even possible today ­ for the first time in two decades ­ to argue that
west Africa is at peace.

Nor is it the continent¹s oil producers alone that have been growing. The
spread of mobile phones has added a percentage point to continental growth;
debt relief, in some cases better macroeconomic management and
liberalisation have all contributed to more dynamic economies. As one
London-based investment banker put it on Friday, there is also the
³willingness of a new generation of younger, often better-educated,
urbanised Africans to challenge the petrified strata of ageing leaders whose
corrupt hogging of the continent¹s limited wealth has held back economic
progress².

Kenya¹s place in this perceived renaissance seemed to many to be assured.
The same month as the country¹s immense inequities and latent tribal
divisions were exposed by a flawed election, France Telecom acquired a 51
per cent share in Telkom Kenya and Helios, the private equity group, took a
stake in Equity Bank. The Nairobi stock exchange, although down from a
January 2007 high, also seemed unperturbed at the prospect of polls.

Yet in Kenya, as in much of the continent, this resurgence of investor
confidence has lived alongside grimmer realities too easily ignored in the
rush to erase Africa¹s image as a repository of man-made disaster. It is as
if sleek new airports, homogenous hotel luxury, internet access and
BlackBerry networks that can now be found in so many African capitals have
blinded development consultants, investment bankers and politicians to the
despair found outside the bubble.

The headline statistics ­ Kenya¹s economy grew 7 per cent in 2007 ­ often
mask widening inequalities and an underclass with little to lose by hurling
stones and lighting flames when aspirations are frustrated.

Or take Angola. The champions of recent Africa optimism point out that it,
not China, is the world¹s fastest growing economy ­ yet its rapacious elite
makes Congo¹s look like mere pickpockets and its billionaires, like
Nigeria¹s, live amid unemployment and poverty so widespread there are no
reliable statistics to describe it.

For every cosmopolitan university graduate living in a comfortable suburb,
there are dozens in slums and villages with no access to electricity, clean
water or education.

There will be some who argue that the events in Kenya will prove a rite of
passage in the transition to greater prosperity and more accountable
government. There are still grounds to hope that permanent damage to the
social fabric can be avoided.

But there is a danger that these signs of fresh disaster will stoke belief
among investors that the billions being raised in western capital to meet
African demand for infrastructure and corporate growth are misplaced.
Rather, the crisis in Kenya should serve as a reminder that a continent so
huge, complex and beset with challenges will remain vulnerable to setbacks
whenever politicians have only their own interests at heart, and so long as
the majority live on barely a dollar a day.

The writer is the FT¹s Africa editor

http://www.ft.com/cms/s/0/1f73ffb6-baf5-11dc-9fbc-0000779fd2ac.html