In the last two Finance Friday posts, we discussed debt and equity, the two most common types of financing available to start-ups. Last Friday, we did not post anything (sorry!), as we were very busy running the first of six workshops in the Village Capital Nairobi Programme at the GrowthHub! But now we are back to continue our discussion about specific types of financing, today talking about grants and hybrid securities. Next time, we will move on to discuss even less common, but more creative, alternatives for financing.

Grants

It may have occurred to some entrepreneurs that we have not yet addressed what might at first seem to be the most appealing source of funding available: grants (money that never has to be paid back). Grants are sometimes available from governments and foundations if your business is providing a service that helps achieve certain goals. Most businesses, however, should probably not hold out too much hope for such funding. First, compared to the amount of money available as debt or equity, grants are relatively rare, and they are seldom suitable for the large-scale funding that will become needed if your start-up grows quickly. Second, grants are generally not a sustainable funding source, as priorities of grant-makers shift, and grant funds may even dry up entirely during difficult economic times. Finally, grants often do not provide the right incentive for a business to really be competitive and get to scale. While this is beginning to change, many grantmakers require little accountability – as long as you spend your money along certain guidelines, there are often few checks to ensure you are making effective and efficient decisions. (There are exceptions, such as the Tandaa grant in Kenya, which over the years has been increasing its accountability requirements.) Other forms of funding encourage you to make good decisions by requiring a return on the investment, with significant repercussions if you fail to deliver. To top it off, investors who see businesses consistently applying for grants may hesitate to become involved, as this practice may signal a lack of seriousness and focus in building your business. Thus, you should consider the downsides carefully before making a habit of relying on grants to finance your business in the long-term.

Hybrid Securities

There are a number of vehicles that combine debt and equity, such as convertible notes/bonds, which begin as debt and convert to equity after a certain time period or based on pre-specified criteria. (Bonds are essentially a type of loan, but whereas loans are not easily traded, bonds are highly tradable.) Such vehicles are normally used for start-ups whose value is not easily calculated. For instance, in GrowthAfrica’s case, investment in companies in the Village Capital programme uses a convertible note, beginning as a loan, which, if not paid off after a certain period, automatically converts into equity. However, in this case, as in most, the automatic conversion is a last resort. The two better outcomes, from the investor’s point of view, are that 1) the entrepreneur simply pays back the loan or 2) the outstanding balance of the loan is converted into equity when another investor offers financing. To understand this second case, an example is useful (explanation below):

In this example, the 1^st round investor has invested $100,000 in Company X using a convertible note. The interest rate is 18% per year and the note is convertible to a 15% equity stake after 24 months if the loan is not repaid and no other investors materialize. If another investor comes along, though, the first investor’s remaining investment converts into equity at a 25% discount to whatever price the new investor is paying.

Fortunately for Company X, 16 months later, another investor provides a second round of financing. This investor ends up infusing $500,000 in capital for a 10% stake. Because the company has 100,000 shares in total, that means the investor is paying $50/share for 10,000 shares. Company X has only been paying the interest on the convertible note, so the principal for the first investor is still $100,000. Thus, due to the arrangements of the note, the 1^st investor now converts the remaining $100,000 principal into equity at a 25% discount to the price paid by the 2^nd round investor. That is, instead of paying $50/share, the 1^st round investor only pays $37.50/share, purchasing 2,667 shares and now owning roughly 3% of Company X.

This is just one example, but the specifics of convertible notes are completely up to the investor and, to some extent, the entrepreneur, and vary widely. So as an entrepreneur, the parameters you need to consider if you use a convertible note are primarily: the interest rate on the loan, the repayment period, the discount given to the investor when converting to equity (assuming a 2^nd round of financing), and the conversion rate to equity if you do not repay the loan or cannot secure more financing. There are also other types of hybrid securities, but they generally share the feature that they initially pay a dividend or a set interest rate and then provide the option to convert into equity at a later date.

What other hybrid securities have you come across in your journey to find financing? Have you encountered convertible notes with very different terms than the ones in this example?

Check back next Friday for our final post on types of financing, covering topics like revenue and profit sharing, supplier credits, and more!

Building on the post on debt from last week’s Finance Friday series, today we will consider another common means for financing a start-up – equity. At the end of this post there is a table showing the pros and cons of debt and equity. Next Friday, we will discuss some of the less common, more creative avenues for financing a business.

Equity

For equity financing, a business cedes partial ownership in exchange for capital. The benefits of this type of capital are several. First, you don’t necessarily need collateral or cash flow to obtain this kind of financing. The risks are also much lower for the entrepreneur – if the company fails, the investor is out of the money, not you personally. Equity financing often comes from venture capitalists or angel investors, and these types of investors usually bring relevant expertise and advice to your company as well. In fact, this expertise and partnership is one of the biggest advantages of equity financing. Since investors are betting on a bigger payoff from your company down the road, they have a significant interest in investing in you as an individual, making sure you have the knowledge needed to make your business work. The investors often will be able to leverage their skills and networks and funnel them toward your business, strengthening areas where you are weak and providing very valuable insights you may not have considered.

The main disadvantage of equity funding is that you are relinquishing some control in your company. You are no longer just accountable to yourself, and equity investors often want more reporting and monitoring to ensure you are staying on track. While this is a downside, it can also have the benefit of keeping you focused, forcing you to make sure you are taking prudent steps forward. Some entrepreneurs may find the idea of giving up a share of their company very unpalatable, but if you find a strong investor you can work well with, the payoff for your company can be huge, especially at an early stage.

Equity Exits

Investors want to know how their money will be returned; that is, they want to eventually “exit” the investment, hopefully with a sizable return. For debt, the investor’s exit is built into the instrument – there are defined terms for repayment with interest, which, if broken, lead to specific mechanisms for recovering as much of the investment as possible. The equity exit is not as clearly defined, and many entrepreneurs neglect to consider it at first. Entrepreneurs are often understandably attached to their businesses, and may want to continue managing them indefinitely. But it is important to realize that equity investors do want their capital returned at some point.

Thus, it is important to consider possible exit strategies for your equity investors, and there are two main routes to follow. The Initial Public Offering (IPO) is easily the most glamorous, and in the West an IPO is the dream of many start-ups. In an IPO, a company offers a portion of its shares to the public, to be traded on a recognized exchange. But IPOs are relatively rare, even in the West, as companies must be quite large before an IPO is possible. In Africa, they are even less common.

The more common exit is through either a merger or an acquisition. Perhaps your company builds mobile applications to help businesses manage their affairs. After developing your products and proving demand and profitability, a larger firm, such as Google or Safaricom might find your business attractive as an easy way to expand its services. Global companies who want to enter African markets may also be interested in acquiring a local company that is already established in Africa.

A new African exit strategy?

Exit strategies are largely defined by what has already been done in the US and Europe. But might there be more appropriate strategies for the African context? For instance, in the US, an investor providing a second round of funding is often unwilling to buy out the seed-stage investor’s share of equity, instead plowing all of its capital into the company in hopes of a large return down the road in an IPO or acquisition. But waiting for an IPO or acquisition in Africa might take many years, discouraging initial seed-stage investment.

At GrowthAfrica, we have been thinking about alternatives. What if we were able to set up an ecosystem of investors at different levels who were willing to return the initial capital of the previous investors?

For instance, a seed-stage investor puts $50,000 into a company, and a year later, the company is ready for larger financing. Then a venture capital firm puts $250,000 into the company, paying back the $50,000 to the seed-stage investor (though the first investor will still retain equity in the company, as the investment will have grown in value). That way, the seed-stage investor is more willing to invest in the first place, knowing that if the company is growing, the investor will not have to wait 8 or 10 years before seeing any returning capital. The same process could be repeated at each level of financing all the way to an acquisition or the rare IPO, improving financing for enterprises at all levels and reducing risk for investors.

What other solutions have you thought of to deal with the limited number of exit opportunities?

In summary, depending on the financial status of your business and your needs, equity may be more appropriate than debt. The table below summarizes the key differences between debt and equity. Having a firm understanding of their pros and cons will help you make better decisions as you seek funding. Check in next week for more creative (or less common) ideas for financing!

Every entrepreneur needs money to get an idea off the ground, but securing funding can be time-consuming and stressful. Adding to the stress of finding a willing investor is the fact that many entrepreneurs are not very familiar with finance. The jargon can be confusing and the pros and cons of various types of financing may not be clear. To help you make sense of the options, we are starting a series of weekly “Finance Friday” blog posts to address important aspects of finance for entrepreneurs. In this first post, we will discuss the most common type of financing—debt—and the pros and cons associated with it. Next time we will take a look at equity.

In all of these posts, we would love to hear your thoughts and questions, so please contribute to the discussion!

Source: http://www.oncalc.com/wp-content/uploads/2010/08/loan-calculator.jpg

Informal and Small-scale Debt

For many entrepreneurs, the first sources of funding that come to mind may be family and friends. This close network can be very supportive of early-stage business ideas – they all want you to succeed, and you may be able to secure some small loans from them. The advantages of this are obvious – approaching them is comfortable, they will probably not be overly demanding, and they already know you, so the process for securing the money is minimal.

But such informal sources of debt also have their problems. Expectations for repayment are often not made clear, the amount of money available is normally minimal, and if the business does not work out, failure to repay can have serious consequences for important relationships.

Even if such informal debt works at an early stage, it is often not enough to get a business very far. Scaling a business only using such financing is out of the question. The same is true of microfinance. While microfinance can be an excellent source of funding at the very start of a business, microfinance institutions seldom provide enough capital to expand and grow your business significantly, and the group-lending model (essentially a form of social collateral) that dominates microfinance is not as appropriate for larger-scale investment.

Institutional Lending

Once family, friends, and microfinance have been exhausted as sources of capital, banks are generally the next common source for larger loans, but loans can also be provided by private investors, governments, or other corporations. At this level of financing, the main benefit of debt is that you don’t have to give up an ownership stake in your company to receive funding (as we will cover next time with equity). Just pay back the loan with interest and you are done. Depending on the cash flow you will be generating, you may be able to obtain a loan with an initial grace period, which would allow you to delay payments until you are generating more revenue (but grace period longer than 12 months are rare).

The main disadvantage of debt financing is that collateral is often required. Lenders want to know that if you can’t pay back your loan, you have some assets they can possess and sell to reduce their loss. This fact means that debt is often not an appropriate way for some young companies to fund themselves. Especially for companies in IT or mobile/web application development, which may not have any significant physical assets to speak of, loans will be harder to secure (unless you take the risk of using your home or vehicle as collateral). After all, a bank cannot take your coding and sell it like they could take a car, a piece of land, or a building. Debt will also be harder to secure if you are not generating revenue already. Lenders want to know that your product will actually sell so that you have money to pay back the loan.

So if your company is too big for loans from family and friends and too small to secure a larger loan from a bank, the next source of funding, equity, may be more appropriate for you. We will discuss that topic next week.

Until then, hopefully we can discuss debt a bit more. What challenges have you faced in trying to secure loans from family, friends, banks, or other sources? Have you come across any solutions that have made the process easier or more effective?

What is your experience – and thoughts on how you have or wish to finance your start-up?

Nairobi is heralded as having some of the worst traffic in the world. But I lived most of my life in Atlanta, last year ranked 13^th worst commute in the US by CBS News, and now I call the Washington, DC area my home, ranked the absolute worst US commute by the same report. So I was a bit skeptical that Nairobi could really be so bad. But I think IBM got it right in their Commuter Pain Index. Measuring the merits (or demerits) of a commute involves more than just the length of time it takes to get to your location. This survey measures commuting time, time stuck in traffic, how often driving causes anger, and seven other metrics to assess the pain of commuting, and Nairobi ranks as the 4^th most painful on the survey of 20 major world cities.

Source: http://www-03.ibm.com/press/us/en/pressrelease/35359.wss

I live and work a few kilometers west of downtown Nairobi, so I don’t deal with the traffic of the biggest roads daily (though I have experienced the larger roads at rush hour – not fun). But that is perhaps part of the problem. My route, which follows roads color-coded by Google Maps as “major,” takes place entirely on two-lane roads. They simply cannot handle the volume of cars that want to use them every day.

So what about walking? It’s about a 30-40 minute walk to work, and with the wait for a matatu and the stop-and-go traffic, the commute time via bus is similar. All in all, walking is probably more pleasant, but there are different problems when walking. Sidewalks only exist in a few places, so you are inevitably very close to traffic, though it is often slow-moving. The bigger issue is the air. Right now, during the dry season, the air near the road is thick with dust and smoke. Matatus are mostly ancient, and the exhaust they pour forth is dark and noxious. The volume of cars also stirs up quite a lot of dust. Together they create an airborne concoction that the lungs simply adore.

My experience with traffic in Nairobi highlights an important issue. Looking at the IBM index, it is clear that developing countries have much more painful commutes than developed countries. Before coming to Nairobi, I didn’t adequately appreciate the quality of the commute in the US, even when the commute is lengthy. I could sit in a climate-controlled car, listen to the news, not have to deal with excessive uncertainty about what other cars would do (like suddenly switch which side of the road they were using), and be fairly sure I wouldn’t suddenly find myself in a cloud of dust and smoke, largely prevented by environmental regulations and high quality roads. This last point I think is significant. In the US, it is easy to ignore the impact that environmental regulations (e.g., emissions standards) can have on everyday life. But once you find yourself tromping along a road packed with old vehicles, pollution clearly swirling around you, it is easier to recognize the importance of such regulations.

The debate about the environment between developed and developing nations often revolves around what is just – the developed world had their chance to pollute extensively while they developed; thus, developing countries should also have their chance to pollute and develop. But environmental damage has significant direct costs, depleting capacity for future or even current growth, and many of the same factors that harm the environment also have deleterious health effects. For instance, the World Health Organization estimates that indoor air pollution from wood-burning stoves in poor countries contributes to the premature deaths of 2 million people per year. The WHO also estimates that outdoor air pollution causes about 1.3 million deaths per year, predominantly in middle-income nations.

While some of the largest developing countries (like China) have been loath to sacrifice GDP growth for environmental protection, some of the most ardent advocates for prudent environmental policy are also developing nations. The developing world will be affected by rising sea levels much more than the developed world, both because so much of their population lives in vulnerable, coastal or island areas, and because developing nations have fewer resources with which to stave off the effects of climate change. Thus, in some cases, the developing world is racing ahead of developed countries in attempts to adequately address the very real costs of environmental damage.

Even here in Nairobi we can see that change is coming. Nairobi recently announced it was planning to make itself a “smart city” through heavy investment in technology to improve the efficiency of everything from traffic flows to water pipes to electricity. While these changes are focused on promoting business competitiveness, they will also likely reduce congestion and the smog that accompanies it, along with other environmental costs from inefficient electricity production. I may not be here to witness the transformation, but I’m very glad that change is on the way.

Economists have always said that nothing is free; our use of the environment is no exception. In the US, many have ignored this reality because the most apparent ills caused by environmental degradation have been banished to memory. Environmental problems are somewhere else, far away and out of mind. But in the developing world, the costs are very obvious and directly affect the daily lives of millions. The US needs to finally realize this and get on board. It may take some time, due to fortuitous geography, but eventually, the costs that are clear to see elsewhere will also catch up with the US as well.

A matatu pulls up to the stop. A man dangling from the open door peers into the faces of the waiting travelers, looking for customers.

“Yaya?” I enquire, the minibus still moving.

“Yaya.” The dangling man steps off the bus as two or three passengers disembark. I climb in, squeezing my way among the 15 people packed into the bus originally meant for probably 6-8. Before I have the chance to sit, the dangling man raps on the roof of the bus, still hanging out the door and the driver abruptly reels us into traffic. Eventually I manage to sit down, after having bashed three or four people with my backpack.

A typical matatu – Source: http://en.wikipedia.org/wiki/File:Nairobi_matatu.jpg

From my new position in the back of the bus, I survey the scene. I’m glad I got in first, because the person right after me sat on the seat in the doorway. As soon as we lurch into traffic, the dangling man slams the door shut and basically pushes the last passenger off her seat in the door, leaving half of her to hover in the narrow aisle.

The bus itself might be crumbling, but the sound system looks brand new – Pioneer surround sound – and music blasts, rattling some of the loose bits of the vehicle. I have to keep my head down to prevent it slamming into the ceiling when we hit bumps. And whenever the traffic is moving too slowly for the taste of the driver, he will suddenly pull into the lane with oncoming traffic, trying to skip ahead of as many cars as he can. Often this leads to oncoming traffic simply stopping, as they are completely blocked. Other times, the road manages to fit three lanes, flexing itself for the needs of our driver.

This picture is terrible but illustrative. In Kenya, you drive on the left, so the matatu on the right is driving completely across the road from where it should be. Two of the matatus wheels are not even on the road. When I encountered this one, it was chugging along the wrong shoulder like it was nothing. You can also barely make out that there is another matatu on the same shoulder going the opposite direction just beyond our foreground friend.

By the time we reach my destination – the Yaya Centre, a shopping center across the street from where I work – I am getting used to the setting. But getting in and out is the worst part of the journey. I undoubtedly break all sorts of cultural rules on both occasions, and I am glad if I can complete the journey without ripping my clothes. But I do manage to get out, and I wonder how the next journey will be.

***

Having now been in Nairobi for a few weeks, I am getting more used to matatu travel. But it is certainly always an adventure. Just the other day I failed to meet my primary objective – a journey without ripping clothes. It had been a fairly good journey at first – I’m fairly certain I only roughed up one person when entering the bus. But as I exited, I felt my shirt suddenly catch on something. The subsequent ripping sound confirmed my fear. It was one of my favorite shirts (alas!), but the tear was fortuitously small and discretely placed, so I think it can be salvaged.

Aside from the experience getting in and out of a matatu, this mode of transportation offers two other exciting components. While a few matatus are clean and unadorned, the vast majority bear some sort of banner written across the windshield or back window (see first picture above for example – “Glory to God”). Many are of a religious nature – “Jehovah,” “Jesus is my hero,” “Annoited [sic]”, and my personal favorite, “Biblical Avisory [sic] – Jesus saves.” Suffice it to say that public religious expression seems to be common here, much more so than in the US.

But many other banners are decidedly not religious, “Limousine Exotica” and “Bend Over” being two I have seen. Others do not seem to have a particular message, other than perhaps the preference of the driver – “Infinity,” “Las Vegas,” and “Weezy F,” for example.

The final excitement comes from payment. Native Kenyans have no problem with this, but as a mzungu (white person, or literally “aimless wanderer”), I stick out as an obvious target for exploitation, understandably. Within the first day, thanks to my friend here, I learned what I ought to pay for a ride to work – 30 Kenyan shillings, about $0.35. There are a few exceptions: the larger (and nicer) buses charge about double, weekends are normally cheaper, and so on.

Normally there is no problem. The operator taps you on the shoulder after you’ve been in the bus for a minute, and you hand him 30 KSH. But the other day I did not have exact change, so I gave a 50 KSH note instead. Usually the man will hand back the change promptly. But this time, he didn’t. So after both of the people sitting next to me had paid their 30 KSH, I started bugging the man to give me my change. But he was having none of it:

“It’s 50 shillings.”

“No it’s not – I know it’s 30, and both of these guys just paid 30.”

He laughs a winning laugh and flashes a smile. “Ha ha ha – no my friend, the charge is 50.”

“Dude, I saw them pay 30!”

“My friend, these are our people.”

Frankly, I was shocked that he had admitted he was overcharging me because I was a foreigner. Usually if you know the price, no one will give you any trouble, though of course they will try at first to overcharge (as they do for locals as well). I hassled the man some more but he simply wouldn’t budge. Eventually I got off and warned him I’d never take his matatu again, not that I even remember what he looked like now (as I’m sure he knew would happen).

Bargaining is part of life here, and I clearly lost that round, though that is the only time I know I was overcharged. I guess the story is worth the quarter it cost me anyway.

Needless to say, matatus are an adventure every time. I’m sure I’ll have more matatu stories for later posts.

I approach, nervously smiling, and offer my hand. “Hi, I’m Jonathan.”

“I’m Lamar.” He shakes my hand.

Awkward pause.

“So, Lamar, what do you do?”

“I’m a property developer. You?”

“I’m a student – international affairs, development especially.”

“That’s nice.” I sense an utter lack of interest. Or maybe I am the uninterested one.

“Yeah.”

Another awkward pause.

“Well it was nice meeting you Lamar.” He nods; we part ways.

This meeting never actually occurred, which is too bad, because I’ve always wanted to meet someone named Lamar. But the scene is a familiar one for me. I can be a distinctly crazy person – those of you who knew me in high school or outside of class in college can testify – but when I am presented with a room full of people I don’t know, I generally recede into myself or, preferably, man the table with the crackers and fruit punch, intermittently making trips to the bathroom to make it look like I’m actually doing something.

It doesn’t help that I’m not terribly into sports (beyond UGA football); among men at least, sports commonly prepare the discussion for more serious topics. And many of my other significant interests are also becoming decreasingly common – classical music, literature, cooking – worsening the situation.

But these practical issues are not the biggest reason I have tended to dislike networking. More than anything else, I don’t like networking because it makes me feel like I’m using other people, and that I am being used in turn. Building a friendship is about enjoying another person, about sharing some sort of common ground that binds you together, genuinely caring about the other person. But networking is generally about self-benefit, getting in touch with people who can offer you something, in terms of connections or opportunities.

This perception of networking especially bothered me when I was in the business world. Networking in that context is, obviously, always tied to money. You needed to meet the right people to expand your client list or to improve your career options – both of which will lead to more money for yourself. So networking was tied in my mind to greed. Of course I wanted to make more money – who doesn’t want to? – but specifically using other people to pursue that goal didn’t seem right to me.

Through the years I have had discussions about this with many people, and generally I am told that, when networking, everyone is in the same boat. Everyone knows that the other people are looking for opportunities, just like you, so it isn’t bad – you are all creating a space for mutual benefit. I understand this argument, and I don’t have a particular response to it, but it never changed the way I felt.

Some of the new members of my local network!

But this summer it all changed.

I am new to the world of social enterprise, but I am very excited about its potential. And along with all of its potential, it has also solved my networking dilemma. I arrived in Nairobi just as the recruiting of entrepreneurs for our program was reaching a fever pitch. (For a description of the program, see my last post.) Recruiting involved a lot of cold-calling people I didn’t know and reaching out to people in alumni networks, random contacts I had through friends, and the like. And in all of these cases, I was asking people to do me a favor – namely, to let me know of any entrepreneurs who might be interested in our program. Even though this was in some ways even more blatant “using” of other people compared to networking at an event, I had no guilt.

Why?

Because this time I was networking for a cause.

I was no longer networking just to improve my own career, although that might be a pleasant side benefit, or even to help the business I was working for, although that would be a direct result. I was networking to improve the lives of the poor, a cause I think is well worth fighting for. Our program aims to kick-start social enterprises that address issues of poverty, health, education, environmental sustainability, and other important causes. But to find such enterprises, we have to take advantage of our networks and build onto them. Networking is tied up with the job and its goals.

My experience with networking is actually very similar to my experience with careers in general. I left my previous career, despite its potential for provision and comfort, because I was passionate about improving the world more directly, especially the lives of the poor. Once I became involved in something I was more passionate about, networking wasn’t an issue, because it contributed to my larger aspiration of helping the poor.

This discussion is clearly not a philosophically rigorous view of the morality of networking, but it makes sense to me. In many careers, networking is simply part of the job, so finding a job that you are passionate about may be the most important catalyst to making networking more comfortable.

I got up at the usual time. I showered. I dressed. I went to catch the matatu. I worked. I walked home, stopping to get some groceries on the way. I rested, too tired to go back out tonight for a celebration.

There is nothing like a holiday abroad to remind you of your foreignness. Today is Independence Day in the US, and I am in Kenya. I had no work-appropriate red shirts with me, and white signifies nothing whatsoever, so my homage to my country today consisted of a blue shirt and a post on Facebook. I am still settling into life in Nairobi, and while I am certainly enjoying my time here, I am especially aware today of the blessing that it is to be an American.

If you know me, you know I can be a bit of a cynic. This is especially true when speaking of matters of politics. I love to discuss politics, but politicians always seem to provide the world’s best examples of idiocy. Politics is situated at the confluence of money and power, both of which are often potent enemies of character, so it is no surprise that politicians can be so rotten. This tendency is just as common in the US as elsewhere in the world.

At the international level of politics, the situation is very similar. Power and money distort the character of entire nations, and in many ways the US has abused its primacy of power and money tremendously. The sad truth is perhaps most ironically evident in US foreign aid, which so commonly does harm to those it professes to help, while propping up US industry and interests (see Easterly, Moyo, Hancock, or basically anyone else who does not subscribe to Jeffrey Sachs’ view of the world for details). And though I think improvements can be made, I am basically a pessimist about global power structures – I expect that great powers will act in the same way for many years to come, if not forever.

As a result, the US is any easy target for anyone who wants to be a critic. There are many aspects of current US policy and society that I myself don’t like: the marginalization of immigrants (even those who had no voice in deciding to come to the US), the general lack of acceptance of science (evolution, climate change), the hyper-partisanship and refusal to compromise, the persistent distortion of truth by both sides of the aisle. But at the same time, I acknowledge that for me personally, the US has been a setting of abundant blessings: a strong education, a safe and enjoyable lifestyle, individual freedom to do as I please, checks and balances on the powers of government, beautiful landscapes, mostly sound infrastructure, and a multitude of affordable goods and services, to name a few. Not all people have the experience I have had, and I recognize that, but the same is true in all countries. And compared to many countries, the US seems to have done a fairly good job at providing a positive setting for a majority of its citizens, founded on an emphasis on personal freedom and checks and balances on power.

I know some Americans who never have anything good to say about the US – never – despite the fact that the US is clearly not the source of their problems. To me, this is unacceptable. There are some who can legitimately complain about problems in the US because they have been directly affected by miscarriages of justice, but for others, the US has become a scapegoat for self-induced problems. No country is perfect, and it is always valuable to point out problems in the US and work on them. But the vast majority of Americans enjoy standards of living that are unheard of in most of the world, and we ought to be thankful for that. Every day in Nairobi I am reminded of the small (and big) things that make life in the US so pleasant. We must be vigilant and care more about when improvements in our own standards of living mean harm to the lives of others, but much of what America enjoys has few downsides.

Furthermore, the most important changes in any country can only come from within, which means that denying one’s homeland removes one of the most fertile settings for change. Outsiders can only do so much, even if they intend to be helpful. For this reason, we all have a duty to change our own country, our own home, for the better. I yearn to have an impact on the poor abroad, but I know that natives will always have more potential to effect change than I will, and I must not become so cynical as to forget opportunities to do good in the US.

Thus, I wish you all a happy 4^th of July, and I celebrate my homeland, imperfections and all. It will always be my home wherever I roam, and I hope we all can contribute to its improvement in years to come.