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OPIC Delegation Looks to Kenya to Boost Economic Development - 2002-04-18

A trade delegation from the Overseas Private Investment Corporation (OPIC) of the United States Government has concluded a three-day visit to Kenya. The visit, which was preceded by stops in Ghana and South Africa, was intended to stimulate regional investment and economic development across the African continent.

OPIC President and Chief Executive Officer Robert Watson says his corporation views its stop in Kenya as an important step toward stimulating investment in the East Africa region. He says, "The reason we came on this three-capital tour, which was in turn designed to attract people from neighboring countries, is to give exposure to a wide range of would-be investors and indeed to communicate the strong investment possibilities in this region. At a time that some focus has been obviously on September 11 activities, this trip is designed to re-enforce the United States commitment to the region and also to give it some prominence and profile."

Mr Watson says plans for making the trip were placed briefly on hold last year when President Bush and Secretary of State Colin Powell brought together finance and trade ministers from African countries in Washington for trade talks.

Before stopping in Kenya, he says, OPIC took American investors to South Africa, where entrepreneurs from a couple of Southern African countries were able to explore joint business ventures. The team also travelled to Ghana, where entrepreneurs from six West African countries explored possibilities of forming joint business ventures with OPIC partners.

The Overseas Private Investment Corporation was set up by the U.S. Government more than 30 years ago to stimulate economic development in emerging and transitional economies. It does this by furnishing political risk insurance, providing debt support, and providing equity funds to joint business ventures between American and African investors. It has projects in 140 countries, with investment in Kenya totalling 75 million dollars.

One of the Kenyan companies that has benefited from OPIC funding is the flower company Homegrown. Mr Watson says the company has used the funds to reorganize its operations in Kenya and is now making good profits exporting flowers to Europe. But Mr Watson says for countries to attract investments some conditions must be in place.

Steven Cashin is Managing Director of the Washington-based Modern Africa Fund Managers and was part of the OPIC team visiting Kenya. He says lack of knowledge about Africa among American investors is a major hindrance to investment flows into Africa. "For the most part," he says, "it is lack of knowledge. Africa is a long way away from the United States. African economies have for a long time been driven by donors for your and my whole lifetime and the private sector has not been at the table as it relates to the evolution of the markets in Africa in the same way that the private sector has been on the table in almost any other continent in the world. I believe strongly that there needs to be a transition from donor driven economies to market driven economies."

Mr Cashin says most of the economic programs of the Bretton Woods institutions such as the World Bank and the International Monetary Fund lack the components that would drive African economies from donor driven economies to market driven economies. He says structural adjustment programs should have incorporated components that could have introduced African countries and companies to the international capital markets. He says OPIC is the only development finance agency that incorporates the private sector into development financing. And this in his view is the way forward.