Dean's Leadership Series - Hon. Margaret "Meg" Whitman '77, Fmr. U.S. Ambassador to Kenya

Well, thank you very much for being here. It's a privilege and thank you for interviewing. Thank you, Dean, for inviting me. I really appreciate it. So, I think I should start with a little story about how I ended up as the ambassador to Kenya. People say, 'How did you end up in that job?' Well, I am a lifelong Republican except for I endorsed Hillary Clinton and Joe Biden. And so I got a call from the White House in June of 2021 and it was Joe Biden who said, 'Meg, I want you to be an ambassador.' And before I could say anything, he said, 'I want you to go to Kenya.' And I said, 'Kenya?' I was thinking France. And he said, 'No, it's because Kenya is the tech capital of East Africa. Should be the tech capital of the continent. And I think your tech background would be an enormous help to the Kenyans. And frankly, Africa needs to be really important to the United States. And sending someone of your caliber will send a signal to the continent.' So I talked to my husband of 45 years this June, who is chairman of the department of neurosurgery at UC Davis, and I said, 'Hun, how do you feel about going to Kenya for three years?' And to his credit, he said, 'Let's do it.' And so he got a chance to train residents in Kenya. It was actually a wonderful experience. But sometimes in life it's better to be lucky than smart. I arrived after a year-long confirmation process which was really rough. I arrived on August 1st of 2022, nine days before the Kenyan national elections that occur every five years. And so I was new and the president of Kenya was new, and he was the first president born after independence. He was also the first non-elite president of Kenya. Most of the presidents of Kenya have been the founding fathers of the country or their sons. And he wanted to know what I knew, which was economic growth and development, because I think we both knew, and I figured out relatively early, that in many ways so many of the challenges on the continent relate to a population boom. The population of the continent is supposed to go from 1.5 billion to 2.5 billion by 2050. One in four working age, one in three working age people will live on the continent in 2050. And so if the continent doesn't create jobs at a much more rapid rate than has been done in the past, there's going to be some very big challenges. So I became convinced that the number one thing I could add value as a non-career diplomat is jobs, jobs, jobs, and attracting foreign direct investment and helping to shape the economic investment climate so Kenyan firms could grow and thrive. So we worked together on what changes from a legal and regulatory standpoint would help country companies, and then how do you change the narrative on Africa and Kenya? I know that when I was at HP and eBay, I thought about Africa 1% of the time. I got it. But I had things going on in Europe and Latin America and Asia, and Africa is a really long way away. And I think the narrative among most business people in America is 30 or 40 years old. They don't understand the economic situation. They don't understand the demographics, and they don't understand the potential of many of the countries in Africa. So the very first thing we had to do was to start off by changing the narrative, and then changing the regulatory environment to make foreign direct investment and frankly the Kenyan dynamic economy more able to succeed.

Well, you're right. The Kenyan economy, the GDP of Kenya, is the same size as the GDP of Nebraska, just for perspective. And so I think the first thing was we trialed this with the American Chamber of Commerce annual meeting in Kenya. By the way, the American Chamber of Commerce around the world does some pretty good things. Not every place is great, but actually the American Chamber in Kenya is the best I've encountered in 60 countries. And there was a fantastically talented Kenyan who ran it. And we created, because I knew we had a narrative problem, we created the story of why you should invest in Africa and why Kenya should be your destination. And the executive summary here is every company needs to diversify their supply chain. If the Russian invasion of Ukraine taught us anything, you have to have a diversified supply chain. You know, when Russia invaded Ukraine, we were all asked to get out of Russia. Okay, no problem. 4% of the sales, move out. If you asked us to get out of China today as head of HP or head of eBay, forget it. I mean, it would take years. And so, this diversification of supply chain even from places like Bangladesh, Sri Lanka, I mean, everyone has to have a more diversified supply chain. And then secondarily, if you're going to diversify your supply chain, why don't you go to a place with more than 93% green energy so you can hit your scope 2 and scope 3 emissions goals? And Kenya has 93% green energy. Again, better to be lucky than smart because it's all geothermal in the Rift Valley. Some wind, some solar, but geothermal in particular is fantastic because it doesn't rely on wind or sun and it's constant. And by the way, it's cheap, which is less than 5 cents a kilowatt hour. So that was sort of the pitch. And then we told the story of the workforce and all the things, a gateway to East Africa of 500 million people, and then the tech capital of East Africa. Frankly, they call it Silicon Savannah. And so we just told the story, and it was an enormous success because at the Chamber of Commerce we had mostly Kenyans. Interestingly, this is a very interesting fact about Kenya. Normally when you go to a country, the people that are running the American companies or the British companies or the Dutch companies are not native. So like IBM would not be run by a Kenyan. Mars Wrigley would not be run by a Kenyan. This is a testament to how good the Kenyans are. Virtually every American company in Kenya, the division is run by a Kenyan because they're so smart and so entrepreneurial and get it done. And so the Kenyans thought this presentation was amazing because they said, 'We didn't even know this about Kenya.' You know, we've told ourselves a less than optimal story, and now this has given us confidence to tell the story to the headquarters of our companies. And so then we decided to test market in New York. I usually don't test market things in New York, but we were going there, and so we decided it was a good idea, and really to quite great acclaim. And then I brought the president to Silicon Valley, and President Ruto had never been to Silicon Valley. And it's so interesting to go to a place like Silicon Valley with someone who's never been there and to basically explain to him that 60 years ago this was orchards, and now California is the fifth largest economy in the world, the same size as France. So that was very helpful. And then all of this culminated in the state visit where we really got to help Kenya tell their story. And just a couple of results: venture capital and foreign direct investment. Kenya is now the number one destination for venture capital on the continent, more than Nigeria, more than South Africa, which have economies much bigger. And then secondarily, foreign direct investment. We're now the largest foreign direct investment destination on the continent. I think because of the story we told. But I also need to underscore for those of you who are policy people, creating an investment climate that allows companies to thrive is crucial. And I'll give you two examples. So Kenya wanted to be the leading destination for venture capital, but they had a tax on unrealized gains of stock options. So let's say you went to work for a Kenyan tech company and you got $10,000 worth of stock options. The government wanted you to pay $3,000 upfront before there was any liquidity to the shares. So the Kenyans weren't able to do this. Americans wouldn't be able to do this. So they had to decline their stock options. But the whole point of going to work for a startup is that those stock options might be worth something. So I went to the president and explained this, and he said, 'We should change that.' So they did. The second thing was tech companies were required to have one-third domestic equity holders. So in other words, a tech company would have to have one-third Kenyan shareholders. And I said to the president, 'Okay, if you want Amazon to come to Kenya, there's no way Amazon is spinning off Amazon Kenya and selling one-third of it to Kenyans. It's not happening. So you need to decide if you want these big American tech companies, you have to get rid of this rule.' So he goes, 'That makes sense.' And then eight weeks later, Amazon opened with 300 people in a development center in Kenya, and they now have 900. And there were seven more. The tax code in Kenya is very inscrutable and also has been weaponized to some degree by the Kenyan Revenue Authority, which is the equivalent of the IRS, and that needed to get fixed, which is in part getting fixed. So we did nine of these initial recommendations about changes that you could make to the investment climate, and I think without that, had we just told the story without the substance, it wouldn't have worked. But if we hadn't told the story and done the substance, it also wouldn't have worked. So the lesson is the story and the narrative combined with real policy changes that enable success.

So first of all, I think the Biden administration really did understand it was time for an African head of state. And so really it was, and I might have had something to do with this, if you're going to pick a country in Africa, probably our most loyal ally on the continent is in fact Kenya. A 60-year partnership between Kenya and the United States fighting terrorism in Somalia, al-Shabaab. Lots of trust between these countries, and for all Kenya's challenges, it is probably the most stable democracy in Africa. Not perfect, but a very stable democracy. So the Biden administration decided to invite President Ruto. And then it fell to the two teams in Kenya and in the United States to lay out an agenda that helped to tell this story. And we wanted to lay it out. So then Jake Sullivan called me and said, 'Hey, he's supposed to come to DC on Wednesday, Thursday, Friday, but we'd like him to go to Atlanta on Monday and Tuesday.' I'm like, 'Atlanta? Why are we going to Atlanta?' And he said, 'We think politically it's important.' And so then we had to figure out what we were going to do in Atlanta. And what we did, every politician has challenges. Many of you probably know that President Ruto was brought up before the ICC along with President Kenyatta for the violence around the 2007-2008 elections where I think a thousand people were killed. And so that was a searing experience I think for Kenyatta and for Ruto. But I also said, you need to, I have a philosophy in life which is if you have a problem, run to the fire. Don't try to avoid, don't try to hide, address the issue. And so I recommended to the president that he make his very first speech landing in America at the Carter Center for Democracy. And I said, 'This is where you address the issues around the ICC, around democracy in Kenya, etc.' So we started off there. Then we went to Coca-Cola that was making a hundred million dollar investment in Kenya. Then we went to Tyler Perry Studios because Kenya is very interested in the creative economy. No one in Kenya has done anything to help the creative economy. It's already 5% of the GDP. Tourism is 10%. So think about that. If you've got momentum and no one's done anything, maybe if you did something, you'd have a bigger creative economy. And as you know, Nigeria and South Africa, probably Nigeria in particular, owns Nollywood and the music industry on the continent. So we went to Tyler Perry Studios and that was a fantastic experience for the president. And what Tyler Perry has done in Atlanta, do you know this? He bought a military base and turned it into 14 sound stages and has taken a huge chunk of Hollywood's business to these soundstages, and it's really a remarkable thing. So then a Kenyan entrepreneur was opening her first store in America in Atlanta, and so we visited the store to talk about Kenyan export. And we laid it out in such a way that it covered all the bases. And then obviously went on to the formal program which had a climate component. This president is a scientist. The good news about President Ruto, and there's some challenges here, is that he's a scientist. He has a PhD in biology and ecology from the University of Nairobi. So he actually is left-brained and he is a scientist, and this is very helpful. And he wants conservation and mitigation of climate change to be one of his legacies. And so we had him give a fantastic talk and a panel at Johns Hopkins climate auditorium there. So we just tailored it to speak to all the different things that we could do together.

We have a president who cares a lot about conservation. We also in Kenya have a CS of tourism, a CS of the interior, and a head of the treasury that is all about this as well. And that's important because you have to, and by the way, the communities in Kenya that own a lot of the land. There is more land outside the national parks that's owned by community conservancies than there is land inside the parks. There's more animals outside the national parks than inside the national parks. So part of the magic of what Kenya has done is enfranchise communities. There are 190 countries that have agreed to preserve 30% of their land by 2030. Kenya is at the head of the pack with 26.7%. And so they are all about trying to get to this next level. But what has really happened is many of the community conservancies have become somewhat degraded. So we decided to do two things. First is to put together with the Nature Conservancy an overarching program with the government of Kenya about how to get to 30% of their land conserved, but with financial sustainability. How does this maintenance of the land, how does this hiring of rangers, how does it fences and drones and all this, how does this get paid for in a country that is quite strapped? And so I said we need to do something that's quite innovative. So the Nature Conservancy has done three, no four or maybe five debt for nature swaps. What they do is they take high-cost Kenyan debt, which by the way is very high cost because when we raised interest rates in the United States, we get a head cold. A country like Kenya gets the flu because they have a risk premium on top of a risk premium on top of a risk premium. So they're rolling debt now at 15%. And so you swap high-cost debt for low-cost debt that is guaranteed by either Development Finance Corp or the World Bank. And then that savings the government agrees to put into conservation. That helps them because then they can use government funds for other things. And so we are working on doing a debt for nature swap. They've done it in Belize. They've done it in Gabon. And these things are quite durable. They've got a board of directors of a trust fund that has real penalties if they don't live up to this. And the Nature Conservancy did this in Gabon. Two weeks later there was a coup, and the Nature Conservancy was like, 'Oh man, this is how it gets.' But it survived the coup because of the penalties and why it was so good. So we're doing that. And then the first project is what we're calling the Kenya Rhino Range expansion. Black rhino have gone from 30,000 black rhino in 1980 to 300 black rhino. Now in the last 10 years up to a thousand, and it is all about black rhino, but actually what it is about is employment and benefit to communities. Black rhino is the capstone species that allows you to conserve land that allows you to put more game camps in community conservancies and in national parks that then create jobs, not only direct jobs like rangers, but indirect jobs. Think about what a game camp buys: meat, linens, toilet paper. And then of course employs the guides. And remember, this is very important because the GDP of Kenya, 10% is tourism. So if you could double that without cannibalizing something else, that's a real economic growth lever. So there's two landscapes we're working with. One is Tsavo down on the almost on the coast, which is, if anyone has seen a map of Tsavo, Tsavo is the size of Switzerland. You forget how giant this continent is. It's mostly national park. And what they need there is more room for the rhino. The rhino conservation efforts have worked so well, the rhinos are out of room. So we just need to drop the fences in Tsavo National Park and then put some more game camps there. The one in Laikipia is more complicated because it is government land, it is private conservancies, and it's community conservancies. But they have all agreed this would create 20 new rhino conservancies. They've agreed to drop the fences and let the rhino roam. Now the lynchpin to this whole thing is Impala. And I think you guys know the story of Impala. I think what happened was there were these two brothers who owned Impala. And like one day you all got a letter that said something like, 'Hey, it's your lucky day. You own 55,000 acres in Kenya.' And so what I've really asked Princeton to do is to agree to put at least some of Impala into this rhino range expansion so the rhinos can go north to south. And the first question I got was, 'Well, aren't rhinos dangerous?' Well, yeah, they are, but there's rhino fencing. They're not going to be marauding through the Impala research facility. And they said, 'Well, what about our research?' I said, 'You keep on doing the research, and by the way, you invite students to go do research on rhinos and lions and giraffes and zebra.' I said, 'This is the greatest thing that could ever happen.' And by the way, because we're raising money through TNC, not only through the debt swap, but also philanthropically, you don't have to pay for it. So I think it's a really excellent opportunity. I did say to you earlier that watching Princeton make a decision on this is a little bit like watching ice melt. And then someone said to me, 'Yes, but Princeton's the fastest moving university of all the Ivies.' I'm like, 'Great. That's great. Meanwhile, we need Rhino Range Expansion Land.' So anyway, I think we're getting there, and it's really going to be important, and I think it'd be great for the researchers, great for the students, great for faculty. It's 55,000 acres is huge. We just forget, envision the continent of Africa and then near the tip of Somalia to the Kenyan Somalia border. The tip of Somalia to the Kenyan Somalia border is Maine to Miami. The trip from Nairobi to Dakar on the other side of the continent is like going from New York to Hawaii. I mean it's absolutely huge. And so these are some of the great landscapes left in the world with some of the most important biodiversity, and it is a key to employment and community empowerment.

Well, so everyone in this room knows there is a great power competition between China and America for influence on the continent. Why is that? Because of the natural resources, rare earth minerals, and the demographics. Remember, one in three working age people are going to live on the continent in 2050. And the Chinese have been in Africa for two decades. The Belt and Road Initiative has built most of the bridges, the hospitals, the roads that exist in many of these African countries. And they are very interested in influence. I think under the Biden administration, and maybe a bit before, we have begun to wake up to the fact that half the battle in life, this is a great lesson for you all, half the battle in life is showing up. If you don't show up, you have no chance. And we hadn't shown up, but we started to show up, and I think in a really good way. And I can speak for Kenya. We really did show up. And then under our current administration, I believe we have actually stopped showing up. I don't think this administration understands what happens when you eliminate USAID in a country like Kenya. I mean, it is if you said to Kenya, 'We need to have less dependence on us over a 5-year period, and here's what we're going to continue. We're going to continue PEPFAR, and we're going to continue humanitarian aid, and we're going to continue this,' as opposed to wake up on a Monday and say it's gone. They cannot cope with this because this is a very indebted country. When I came to Kenya, 29% of the budget went to debt, interest and principal payment. When I left, it was 59% of the budget because as I said, when we raise interest rates, they get the flu. And so they're in a very constrained financial situation. So we eliminate that, and then basically I think communicate to the African continent that the continent is no longer important to the United States. And you will recall what President Trump called African countries in his first term.

Term and now the rumor of eliminating the Bureau of African Affairs, etc. So what we are doing inadvertently or on purpose is we are seeding ground to the Chinese. And I know that what happened here is that when we eliminated USAID, within a week she was on the phone inviting the president to a state visit in China. And if you're the president, what do you do? You obviously have to go because you can no longer count on what we will do as the United States of America and you have to hedge your bets. 15% of their debt is Chinese debt. They've got to have help on a number of different issues. So you go and by the way, I think almost all the African countries now, well certainly more than half, have joined BRICS and Kenya has joined BRICS. So I think it's really, I mean my personal opinion is this is unfortunate.

Yeah. So part of the pitch of why Africa, why Kenya, was that Kenya is the most stable democracy and had the freest, fairest elections in Kenyan history. I didn't say that. That's what observers said. By the way, there were 11 different election observers in Kenya who basically said this was the freest election in Kenyan history. I incorporated that into why Africa, why Kenya and gave a presentation at the Homa Bay investment conference where I gave the why Africa, why Kenya presentation. And one of the first things I said was, here's the things that would recommend Kenya to an investor: most stable democracy with the freest and fairest elections. The only problem, not unlike America, is half the country was on the other side. And the other side went nuts. Just nuts. Because they thought I was declaring that this was the freest and fairest elections. I didn't say I thought it. I said observers thought it. Doesn't matter. In politics, when you're explaining, you're losing. And so they took that to mean that I was an unfettered supporter of the president and that what happened in the Kenyan elections was when the election took place, Odinga did not actually contest the election. Six months later, he was an election denier and then his party rallied around that. And I walked right into that. And that was, by the way, when you make a speech as the United States ambassador, the whole embassy reads your speech before it goes. I mean, there's like a zillion fact checkers there. They send it to Washington. I mean, it's like, you know, and no one caught it. No one said, Meg, you're walking into a problem if you say this. And it would have been easy to just say it's the most stable democracy in America. Next. But I didn't. So that was the sort of the thing that actually made a lot of Kenyans who were mad at Ruto because he hadn't tackled corruption. He hadn't tackled a lot of things that the youth in particular were bummed out about. And I took a lot of heat for that. And you know, guess what? I ran for public office. I get it. But it was a mistake. I mean, in the perfect world, I would not have said that. And then there wouldn't have been a hook to hang me on. And what of course people in Kenya don't know is behind the scenes what I was doing to sort of help get him on a little bit more of a right path.