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In Kenya, Obama stresses corruption's stifling effect on business

In Kenya, Obama stresses corruption's stifling effect on business
President Obama and Kenyan President Uhuru Kenyatta answer reporters' questions after a meeting Saturday at the State House in Nairobi. (Ben Curtis / AP)

When President Obama called young Kenyans with great ideas "the spark of prosperity," Kenyan small-businessman Delbert Mageto was inspired — and frustrated.

As the Kenyan government pushes the hashtag #MagicalKenya during Obama's Kenya tour, Mageto feels that his good ideas are being choked by hefty government fees and taxes, and his opportunities thwarted by corruption.

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"You can get a start-up moving at the speed of how fast you can text," Obama said Saturday, launching the Global Entrepreneurship Summit in Nairobi. He said young African entrepreneurs are the continent's future, but cautioned that governments cannot allow small would-be businesspeople to be stymied by corruption and big investors to be discouraged by the costs that corruption adds to business dealings.

"Africa is on the move," Obama said, citing the growth of the middle class. "Young people ready to start something on their own: That's entrepreneurship. It's the spark of prosperity. It helps citizens stand up for their rights and push back against corruption.

"You don't have to look a certain way or have a certain last name to have an idea."

Along with thousands of other Kenyans, Mageto, 39, waited in central Nairobi to try to catch a glimpse of Obama's limousine, but he was disappointed when it took another route.

His small business, a tiny courier and errand service in Nairobi, has five clients, and he can't afford the $500 fee for a license, which means no website, no advertising and registration, or "they'll catch me."

In Kenya, he said, there are situations when your last name and who you know count more than they should.

"There's also corruption. The corruption problem is so bad. When you are looking for business, it's who you know," he said. "Or maybe you will use money. The person in authority who can give you some business, you have to give them money so that they can give you business.

"Even the president is fighting corruption," he said, referring to Kenyan President Uhuru Kenyatta. "But in my view, he's not been able to do it because even the senior people in the government, those friends of the president, are involved in corruption."

In a joint news conference with Kenyatta, Obama said high-profile prosecutions of those involved in such illegalities would be necessary to change an entrenched culture of corruption.

Kebaso Onchana, 34, dressed in a gray pinstriped suit, gray pinstriped tie and gray pinstriped shirt, jostled with other Kenyans in the hope of a glimpse of Obama. Onchana, who makes a living selling diet foods, dreams of creating a business to build drones and electric cars in Kenya. He wrote to Kenyatta a year ago, pitching his idea and begging for the government to back the project, but he got no reply.

"The problem is capital, capital. I want to build an empire, but I don't have capital. I just have a little capital that my parents gave me. It's difficult to get capital because you need collateral, which we don't have."

Onchana said it was hard for many Kenyans to get good jobs that pay a decent wage.

"One problem is corruption. It affects you because you have to bribe in order to get a job," he said. "President Obama understands about corruption in Kenya, but he doesn't understand the depth of corruption and the magnitude of corruption. He understands it's very hard, but he doesn't understand how difficult it is. He knows it's hard in Africa to excel. He knows it. But it's very hard.

"Look at me. We are university students. We have the knowledge. We are tech-savvy. But it's difficult to get capital."

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In his speech at the summit, Obama acknowledged the struggle young African would-be entrepreneurs face in making pitches and getting access to money for start-ups.

In a news conference later, he pressed hard on the issue of corruption, seen as one of the greatest barriers to Kenya attracting more investment. The issue not only cuts into business profits, as corrupt officials seek to skim a share, but leaves the country more vulnerable to terrorist attacks, with police and border guards prone to taking bribes.

"At a grass-roots level, if you have got some small businessperson trying to open up a store and they have to pay bribes here there and everywhere, that's inhibiting the kind of entrepreneurship that we talked about earlier this morning," Obama said.

He said that only when high-level officials move to curb corruption and are held accountable can a culture of corruption be overcome.

Part of the fight, he said, was people "just breaking these habits and saying, 'No.'

"It's going to require the support of the Kenyan people and it's going to require some visible prosecutions," he said. If people saw a lowly paid official driving a fancy car and building a big house, "they don't have to be a forensic accountant to know what happened."

Moses Nderitu, 32, a small businessman selling handbags on the street in downtown Nairobi was so inspired by Obama that he went from one location to another Saturday to stand by the road to watch Obama pass.

Nderitu said he confronts corruption daily: When police sweep through the streets, he says, they demand bribes from sidewalk traders to allow them to stay.

"The city council harasses us. You have to pay the city council's police who come to arrest you. They want you to pay something every day, so you must bribe them, for them not to take you to court.

"You have to bribe them 300 shillings, 400 shillings, sometimes 500 shillings a day," he said, the equivalent of $3 to $5 a day, or up to a quarter of his income.

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