Kenya’s robust economy, long known as one of the strongest and fastest growing in sub-Saharan Africa, has become an increasingly popular destination for British and European corporate investment. The recent relocation of Mugambi Nandi, a partner in Kenyan law firm KN Law LLP to London, is recognition of this trend and offers British corporates, with eyes on East Africa, a direct route to market with skilful local expertise.
Before a British business thinks about expanding to Kenya, Nandi who has sat on a number of public sector and private boards, suggests there are five things that every investor needs to consider first:
1)The importance of relationships. Business in Kenya is very dependent on personal relationships and requires networks to succeed. This extends across regulators, government and industry – in short, everywhere. “Cold calls,” says Nandi, “don’t work very well in Kenya. You have to be referred or recommended.” If investors spend time finding a partner who has these pre-existing relationships, or at least knows how to form them, they will be far more efficient and successful in finding their footing.
2)It’s more competitive than you think. Kenya can be seemingly paradoxical for foreign eyes – it is a developing country that, in many respects, is quite developed. This extends throughout many sectors of the economy – technology, communication, mobile money and beyond. Consumers are well informed and aware of their choices and product standards. Products and services cannot be pushed in the Kenyan market without an understanding of this. “People have their eyes open,” says Nandi.
3)The biggest profit potential is with everyday consumers. Some major foreign operators – banks, supermarkets and telecom operators – have made strategic errors by only targeting the top end of the Kenyan market, or those who have high incomes and big savings pots. There is true power in focussing on average Kenyan consumers who make up the majority of the market, as they are most likely to be reliable customers and spend their money locally. High income consumers are smaller in number and more likely to spend their wealth abroad. Investors need to be aware that the money is at the bottom of the pyramid.
4)A culture of respect is essential. “Kenyans are very proud and conscious of their place and themselves. They don’t like being looked down upon,” says Nandi. Kenyans are collaborative and like participating in mixed-nationality teams from senior management to support, so hiring locally is essential. Investors should avoid the practice of flying in a majority of staff from their home countries to run their business and instead look towards local resources. Kenyans are “highly educated, have an abundance of skills and come at a very competitive cost,” says Nandi.
5)Compliance can be confusing.Kenya has many regulations that investors have to deal with when setting up, although the path can be smoothed by using KenInvest (Kenya Investment Authority) instead of attempting to go it alone. Regardless, investors may have to deal with unresponsive authorities and different levels of complexity depending on the industry. An established and knowledgeable local partner can help them navigate the rules and ultimately aid them in hitting the ground running.
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