The Economic Case for LGBT+ Inclusion in Kenya

Open, inclusive and diverse societies are better for business and better for economic growth. This is true for companies and economies all around the world, including Kenya. This report presents the evidence base that supports this: it demonstrates discrimination costs Kenya’s economy and that openness and inclusion can aid Kenya in reaching its economic goals laid out in Vision 2030 and that businesses thrive in tolerant societies.

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The Evidence Base

The business and economic case for LGBT+ inclusion is based on a global evidence base and applies globally. Nine propositions have been identified which apply especially strongly to Kenya, and these are in the areas of improved economic performance and improved business performance.

Economic Performance

The evidence shows that an open, inclusive and diverse Kenya improves prospects for economic growth, and that discrimination based on sexual orientation or gender identity can damage long-term economic prospects.

(i) Foreign Direct Investment

Open and inclusive societies are more likely to attract higher levels of Foreign Direct Investment (FDI), which is necessary in order to achieve many of Vision 2030’s goals.

(ii) Public Health

Poor health outcomes from LGBT+ discrimination cost Kenya Sh105 billion ($1.0 billion), or 1.4% of GDP, per year. A more inclusive society will lead to a healthier, more productive economy for everyone.

(iii) Urban Economic Development

As Kenya continues to rapidly urbanise, a transition to high-value service industries is needed to create jobs for this shifting population. Openness and inclusion will help create the environment for urban economic growth

(iv) National Productivity

Open and inclusive environments have higher levels of national productivity and more efficient allocations of human capital.

(v) National Reputation

National reputation underpins Kenya’s ability to attract talent and investment, to drive tourism, and to grow exports. Discrimination can undermine national reputation.

Business Performance

Stronger financial performance flows from the increased ability of LGBT+ inclusive companies to attract and retain talent, to innovate, and to build customer loyalty and brand strength.

(vi) Brand Strength & Customer Orientation

Diverse and inclusive brands position themselves as progressive, global brands, which builds their brand strength. Inclusive companies are also better able to serve a diverse customer base.

(vii) Attracting & Retaining Talent

Companies that are truly inclusive are more successful in attracting and retaining talented employees.

(viii) Corporate Governance

Companies that have higher levels of diversity at board level have stronger corporate governance.

(ix) Financial Performance

Companies that are diverse and LGBT+ inclusive have better share price performance.

The Cost of LGBT+ Discrimination in Kenya

The report finds that LGBT+ discrimination in Kenya costs the economy as much as KSh130 billion every year. This cost comes from poor health outcomes (proposition ii), reduced tourism (proposition v) and lower productivity (proposition iv). Due to the available data, we provided a range of potential costs. However, these findings are in line with similar studies carried out in India and Indonesia.

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How inclusion can fuel Kenya’s tech and start-up communities

Kenya has one of the continent’s largest high-tech start-up scenes: in 2017, it received 26% of all start-up funding in Africa. However, in recent years, Nairobi’s dominance has been waning, as early start-ups fail and more cities in Africa attract start-up funding. For example, Konza Technology City, a cornerstone of Vision 2030, has failed to take off, as international interest has moved on to Rwanda’s Kigali Innovation City.

Over the recent years, initiatives have been launched to foster tech hubs in a number of Kenyan cities, including Mombasa (SwahiliBox), Kisumu (LakeHub), Eldoret (Dlab Hub) and Voi (Sote Hub). For these to be successful, they need to be part of an overall “innovation ecosystem”: globally integrated, with a culture of openness and inclusion – allowing for a free flow of ideas and human capital to take those ideas to market. Evidence shows that innovation is greater when people with diverse backgrounds are able to freely contribute their ideas and perspectives.

While there are many policies and regulations that are necessary to bolster performance, research shows that openness and inclusion, particularly LGBT+ inclusion, creates a favourable environment for startup ecosystems to flourish. For example:

  • LGBT+ inclusive cities have higher levels of entrepreneurialism, research has shown. These entrepreneurs tend to start companies in higher value service sectors.

  • More than half of graduates from cities in a number of countries are likely to emigrate, according to an OECD study. These cities tend to have laws that discriminate against their LGBT+ citizens. A study of Kenyan youth found that 65% would like to leave Kenya in search of better job opportunities. Being more LGBT+ inclusive could create a more progressive culture that retains more young people.

  • Inclusion attracts the highly skilled “Creative Class” to a city, according to studies. Diversity feeds a “clustering effect” for young talent, and LGBT+ inclusion is a signal of openness, diversity and culture.

  • A city like Bangalore in India, which is the world’s fourth largest tech cluster, has used its diversity as an advantage to be a leader on the global stage. It is a diverse city that has projected an image of openness to immigrants and the LGBT+ community. This has created a strong innovation ecosystem that continues to build on itself by attracting more and more skilled workers to the city.

Kenya has some world-famous innovation stories, including the popular money-transfer app MPESA (2007), and the crowdsourcing platform Ushahidi (2008). “Kenya is unique in that her people possess a natural entrepreneurial spirit,” says Daniel Maison, co-founder and CEO of Sky.Garden. In order to unleash that natural entrepreneurialism, Kenya’s policymakers should consider how to create a progressive culture that prohibits discrimination and embraces diversity.