By Kate Schecter
In July, Barack Obama attended the first sub-Saharan African Global Entrepreneurship Summit in Nairobi, Kenya. It was an historic event for a number of reasons. Obama visited his father’s ancestral homeland. His trip emphasized how Kenyans and others are helping themselves through market-based approaches that have raised other nations from poverty. Obama emphasized the opportunities in Africa, rather than insuperable challenges. He focused on trade rather than aid.
This was refreshing, but it also painted an incomplete picture of the region’s needs.
When we think of entrepreneurs, we tend to think about those running tech startups, coffee shops, or other businesses that cater to educated urban dwellers. There is no doubt such entrepreneurship is to be encouraged. It results in useful goods and services and helps move an entire country up the skills and income ladder.
But not many of Kenya’s citizens possess the resources to engage in this kind of entrepreneurship. Kenya ranks 145th among 187 countries in the United Nations Development Programme’s Human Development Index. When you move outside Nairobi and other cities, the world and its opportunities look very different. Educational levels are low (particularly among women and girls), access to credit is difficult, and transportation is often unreliable and expensive.
More than 70 percent of Kenya’s population lives in these rural areas. The economy is highly dependent on agriculture and the rural communities engaged in it. Agriculture accounts for a relatively large share of Kenya’s GDP (32 percent on average) and 65 percent of its export earnings. Small farms account for 75 percent of total agricultural output and 70 percent of agricultural production sold on the market. As in most countries, small farms in Kenya have low productivity. This is largely due to lack of access to basic inputs like fertilizer and farm equipment.
Low productivity means low output. This means incomes too low to save and invest in the fertilizer and other inputs that increase output and income. In other words, most Kenyan agriculture operates outside the development dynamic of surplus, investment, and more surplus. It is this dynamic that creates wealth that can then be invested in education, training and other social capital, enabling even higher incomes and more wealth creation.
Poverty in Kenya is largely a rural phenomenon. Over the last two decades, rural poverty has deepened, as agricultural production stagnated and the rural population increased by more than 2 percent per year.
A number of global development organizations have been working with local communities to reverse this trend. For instance, I visited an innovative project to catch and use rainwater to form fishponds. Each fishpond can hold as many as 1,000 catfish and tilapia. A solar powered device pumps the water into nearby vegetable fields through a very efficient drip irrigation system. The fish waste fertilizes the vegetables, leading to more and healthier—and thus more valuable—vegetables.
The result is a new source of protein and surplus to sell at higher prices at market all year. The farmers combine their profits in a village-level savings and credit program. Farmers borrow relatively small sums of money to purchase additional fishponds, greenhouses, and irrigation systems. This leads to more income and more investment—the classic development cycle.
What’s especially impressive about this project is that farmers initiated it. NGOs provide training on how to buy and use equipment, crop management techniques to increase yield, and basic business skills. They also provide minimal financial assistance. But the entrepreneurial innovation comes from rural residents.
It is this type of entrepreneurship that promises widespread and sustainable gains in Kenyans’ income and wealth. While governments and corporations can and should encourage urban technology entrepreneurship in Kenya and other African countries, basic business skills and innovations need to be brought to the majority of citizens engaged in the agricultural sector. When communities gain these business skills, the entrepreneurs within them communities waste no time in applying them to their own ideas and activities.
Development NGOs are the organizations working with rural communities to apply basic business techniques to agricultural production. Foreign aid still has a significant role to play in Kenya’s economic and social development.
Kate Schecter is the President and CEO of World Neighbors, a non-profit international development organization.