Having spent my youth in Nairobi ? the ?East African capital? as it has frequently been referred to – I have made it a point to visit the motherland at least once a year. This year was no different, and I was particularly looking forward to seeing the astronomical developments and the Boom that has been widely reported in the press. Had I missed the golden era or could I still play a role in the upcoming success was the burning question in my mind.

Landing in the country just before 20th?October, formerly called Kenyatta day, named after Kenya?s first president Mzee Jomo Kenyatta, gave me a chance to reflect on the vision the founding father had for the country when he became the first president in 1964. This was a vision that is universally shared with all emerging economies ? to have a knowledge-based economy supported by ultra modern transport and ICT infrastructure that generates wealth and prosperity for its citizens.

First sights indicated that achieving this vision was not far off. Out was the creaking potholed single lane roads of yester-years replaced by brand new four-lane superhighways usually associated with the developed mega cities like New York, Shanghai and London. Lining up these highways from the airport to the city centre were not the vast plains of the savannah, but glossy new high rise buildings filled with clusters of cutting edge technology start-ups giving the city its alter-name of Silicon Savannah.

Since the last time I visited the capital – over a year ago, the construction industry has significantly increased pace, fuelled by an influx of foreign money looking to cash-in on the African growth story. Huge cranes, high rise office blocks, shopping malls and residential developments are now ever present across the previously lush green suburbs.

Moving out of the capital towards the highlands surrounding Africa?s second highest mountain Mt. Kenya, the serene environment seemed relatively untouched. However, some regions are now beginning to receive attention from wealthy expats familiar with the area. The agriculture and tea growing region of Eldoret in Central Kenya, better known for producing some of the most successful Kenyan runners, has seen significant investment in Agriculture, Education and Healthcare, with land prices in some parts now as high as the prime Agricultural region of Mato grosso in Brazil. The government clearly sees this as a new hub for growth with a brand new airport recently opened.

However, despite the positive developments there is an air of anxiety and caution. With mortgage borrowing rates at circa 14% p.a. and almost 80% of new developments funded by debt, an impending election in 5 months and a relative high inflation rate, the local ?wananchi? (people) continually express concern of being squeezed out of the capital by rising costs of living and being left behind by the boom. They are not wrong. While official minimum wages have stagnated at around ?1.50 a day over the last few years, the cost of basic food has increased by over 25%, while the housing market has almost doubled in the past 3 years. In addition, the government budget deficit continues to grow due to the huge infrastructure spending and limited tax collection (only an estimated 30% of the population pays taxes), and with the country having an (unofficial) unemployment rate of circa 40% (with youth unemployment even higher) there are significant headwinds facing the economy in the next 12 months.

However despite these headwinds, I remain optimistic on the long term prospects for the country as a whole. The port of Mombasa, the largest in the region, is still the main gateway into the oil rich Uganda and South Sudan ensuring Kenya will remain a key logistical hub for at least a few more years. The superfast fibre optic broadband also makes Kenya a key destination for companies looking to have a regional headquarters, while the ongoing construction of the railways connecting the East African countries should add support for the manufacturing and agricultural industry.

However, I think the biggest advantages that Kenya possesses is its geographic location ? a few hours from the food and energy hungry Asia; its varied and moderate climate ? perfect for growing almost all kinds of food and cash crops; its fertile land ? the water-rich rain-fed Rift Valley which runs through Kenya is suitable for all kinds of crops; and its people ? educated, technologically connected and very entrepreneurial by nature. Hence, while short term concerns about the growing real estate bubble exist, as a local wananchi I can safely and happily say that there are still some good long term investment opportunities available in Kenya.

Vishaal Shah, Head of Private Equity Research