Investing in Kenya’s People: Valuing the Benefits of the U.S.-Kenya Relationship Chapter 3 (Part 1 of 2)

Chapter 3 How do U.S. companies, organizations, and individuals contribute to Kenya’s shared prosperity?

There are many different faces to U.S. engagement in Kenya. In the previous chapter, we highlighted U.S. government assistance. In this chapter, we examine U.S. contributions from a whole-of-society perspective—from companies mobilizing private sector capital and private foundations funding program implementers, to non-governmental organizations supporting grassroots community development and individuals generating revenues that improve people’s livelihoods.

Taken together, we estimate that assistance from U.S. companies, organizations, and individuals contributes roughly USD 1.36 billion annually to the Kenyan economy. These annual contributions include approximately: USD 87.3 million from private foundations, USD 4.6 million in microloans and individual donations, USD 270 million in NGO operations, USD 294.2 million in foreign direct investment, USD 190.7 million in tourism related flows, and USD 517.6 million in remittances from overseas Kenyans working in the United States. In the remainder of this chapter, we examine each of these six channels in turn to understand how these generate value for the Kenyan people.

Section 3.1 U.S. private philanthropy and people-to-people assistance to Kenya

U.S. private foundations and individuals are increasingly important partners in Kenya’s efforts to spur development and entrepreneurship. Philanthropic institutions mobilize private sector dollars to directly finance grassroots development projects, as well as provide core support to international organizations and domestic civil society operating in Kenya. Meanwhile, the growth of information and communication technologies has dramatically increased connections and cooperation between the American people and their counterparts in Kenya. In this section, we examine how U.S. private philanthropic institutions and people-to-people assistance are helping Kenya achieve its growth and development goals in line with Vision 2030.

Finding 7: The seven largest U.S. private foundations funded development activities worth approximately USD 87.3 million annually, emphasizing health, food security, and good governance.

U.S. philanthropies include seven of the world’s largest private donors: the Arcus Foundation, the Bill & Melinda Gates Foundation, the Conrad N. Hilton Foundation, the David & Lucile Packard Foundation, the Ford Foundation, the John D. & Catherine T. MacArthur Foundation, and the William & Flora Hewlett Foundation. Collectively, these seven U.S.-based philanthropic foundations gave an average of approximately USD 87.3 million [22] per year from 2014 to 2018 to fund development activities in Kenya. [23] This includes USD 76.2 million in direct support to domestic and international organizations working in Kenya, as well as an estimated USD 11.1 million provided by the Bill & Melinda Gates Foundation via its core funding to GAVI, the Global Fund, and the World Health Organization (WHO).

In 2018, 57 percent of the total funding from these seven US philanthropies was directed towards promoting the health and wellbeing of Kenyan citizens, improving agricultural practices, and strengthening overall food security. Meanwhile, 11 percent of the funding went to projects supporting Kenya’s efforts to improve its governance practices and human rights.

Finding 8: Individual Americans mobilized an estimated USD 4.6 million annually in private donations and low- or no-interest loans for development projects in Kenya using three crowd-funding platforms.

Over the past decade, there has been unprecedented growth in online crowd-funding platforms that facilitate people-to-people assistance in two forms—donations and microloans.

GlobalGiving—a crowd-funding platform that vets and facilitates donations for local community organizations—reports that 77 percent of the over USD 5.6 million raised for Kenyan projects and individuals between 2004 and 2019 came from American donors. In the past five years, this averaged to USD 383,000 per year in total donations from Americans to Kenyans via GlobalGiving. [24] These donations funded hundreds of projects across a variety of sectors including education, economic growth and trade, and health (see Figure 9).

Microlending platforms such as Kiva and Zidisha, which connect individual lenders with borrowers in need of capital, have experienced a surge in new users in recent years. Borrowers typically reside in rural areas with limited financial infrastructure or are individuals that are unable to access traditional loans due to high barriers to entry. These microlending platforms play a vital brokering role in helping many Kenyan small businesses and individual entrepreneurs get access to capital through low-interest loans.

Kiva is one of the largest microlending platforms, with over 3.6 million borrowers in 76 countries, including Kenya. On Kiva, individual lenders that are identified as being U.S.-based accounted for nearly USD 3.6 million in microloans to Kenya per year from 2014 to 2018. This figure, however, is an underestimation of total contributions from American users, given that nearly half of Kiva users do not specify their home country when setting up their accounts. The vast majority of Kiva loans to Kenya went to support agricultural enterprises and local agricultural cooperatives such as Ann’s group, a cooperative of nine smallholder farmers.

Zidisha is an example of a smaller, more targeted microlending platform that operates in just five countries: Kenya, Ghana, Indonesia, Nigeria, and Zambia. American users have lent an average of USD 611,000 per year [25] in interest-free loans to Kenyan entrepreneurs via the Zidisha platform.

Between these two platforms, Kiva and Zidisha, American users directly lent an average of USD 4.2 million per year to Kenyans, [26] providing low- or no-interest loans to help start and expand small businesses across the country.

Section 3.2 U.S.-based non-governmental organizations active in Kenya

The United States is home to approximately 1.5 million non-governmental organizations (NGOs), many of which are actively engaged in supporting overseas development activities. U.S.-based NGOs add value for the Kenyan people in a variety of ways—from direct service delivery and education to advocacy and research. In this section, we examine how U.S. non-governmental organizations active in Kenya are improving livelihoods in line with Kenya’s Vision 2030.

Finding 9: Over 1,000 U.S.-based non-governmental organizations active in Kenya contributed approximately USD 270 million per year to the economy, excluding bilateral aid flows.

Beyond direct giving and microfinance, over 1,000 U.S.-based non-governmental organizations (as of 2017) were actively implementing community-based development projects in Kenya. These non-profit organizations range in scale from small community-based organizations with budgets in the thousands of dollars to organizations with multinational operations and budgets in the hundreds of millions, such as the International Rescue Committee (IRC).

Using tax-filing information for the 2017 tax year from a database of registered U.S. nonprofits, we estimate that over 1,000 U.S.-based NGOs contributed nearly USD 270 million in 2017 to the Kenyan economy through their activities. This amount excludes USD 42 million of U.S. government grants given to these NGOs to implement development projects, as these are already counted in the bilateral aid flows. [27]