"Regional co-operation key to East African success "
Kenya has updated its laws to make it easier to do business leading to a surge in interest from international investors. This was expected to stimulate the economy through job creation and raise the overall standard of living. Mugambi Nandi, senior partner at KN Law LLP, made this observation in an interview with Africa Legal from Nairobi, adding that the East African region was increasingly playing a bigger role in the global economy.
"Kenyans are a very welcoming and friendly people. This, with changes and updates to legislation, has made the country a gateway for businesses coming into Africa, many of them for the first time.”
He said it was now an acknowledged fact that, for global businesses, Africa was “the place to be” with its infinite opportunity, emerging middle class and hunger for consumables.
“In the African Union 44 (out of 55) countries signed the African Continental Free Trade Area (AfCFTA) Treaty on March 21, 2018 and 27 signed the Protocol on Free Movement of Persons, Right to Residence and Right to Establishment, thus opening an immense opportunity for investments, trade and economic integration. This is probably the single biggest achievement of the African Union in over five decades,” he said.
In this context stepping onto the continent via Kenya made sense. “Our sizeable population of between 45 and 50 million (there will be a census next year) is well educated and speaks English, the international language of business. Also Nairobi’s airport has been upgraded and is a transit point for the region.”
On changes to the law he explained that Kenya’s Companies Act of 2015 had simplified the processes involved in setting up a company (like doing away with stamp duty for registration thereby eliminating a layer of bureaucracy), while its Insolvency Act of 2015 (gazetted in tandem with the Companies Act) had consolidated and clarified bankruptcy laws along the lines of the famous Chapter 11 of the United States.
Registering a company was now easy and unencumbered by policies like affirmative action, he said. Firms were not legally obliged to have local shareholding except in certain sectors like telecommunications, mining and insurance. Kenya also did not have exchange controls making it straightforward for investors to move money. The tax laws have also been undergoing changes, starting with the VAT Act a few years back, and the simplification of tax procedures. The Income Tax Act, an ancient and cumbersome piece of legislation, was also being updated.
“Technological advances have made so many aspects of doing business here much easier. Tax returns, for instances, are now done online making that whole process more efficient,” he said.
But Kenya’s strongest feature lay in regional cooperation and the shared legal tradition with its neighbouring countries.
“We are lucky in that these neighbours – Uganda, Tanzania, Rwanda - are all on the English Common Law system, although Rwanda’s move from the French Civil Law tradition is recent. The respective regional bars have been working towards permitting cross-border practice by advocates admitted in any of the East African countries. This co-operation must be encouraged. With advances in technology, there are good opportunities to work together. There should be no reason why a lawyer should not be able to practice in both Nairobi and Kampala for example.”
Cross-border networks of lawyers were growing fast especially in the area of mergers and acquisitions, the extractive sector, technology and investment funding. For the region’s lawyers, their local knowledge, especially of cultural nuances, was what was most sought after by international clients.
Currently the biggest global business interest in the region was from China, already heavily involved in infrastructure development and construction. India was investing mostly in manufacturing and the medical sector while interest from the United States tended towards technology and finance.
“While the opportunities are endless, to do well here you have to be an adaptive person. Kenyans are very proud. If they feel you are condescending towards them, you are in for a rough time.”
This was one of the reasons why many South African companies struggled when they arrived in East Africa after the trade restrictions of the apartheid state were lifted.
“Many of them came with South African knowledge and were arrogant, wanting to impose their way of doing things here. Some had to eventually pack up and go home. The successful re-entry by South African investors, especially in the retail sector, suggests that the necessary lessons have been learnt.”
Nevertheless, Nandi said, Kenyans held no grudge towards their southern counterparts and watched the unfolding political crisis and corruption scandal surrounding ex-president Jacob Zuma and the Indian Gupta brothers with concerned interest. “We all want South Africa to do well,” he said.
On a personal note, Nandi studied law at the University of Nairobi and later returned to complete an MBA. Before founding KN Law LLP, he was company secretary and legal adviser to Stanbic Holdings Group in Nairobi. He also spent time with the East Africa Development Bank in Uganda and before that at one of the top law firms in Nairobi.
He loves travelling abroad, especially to London for the theatre and music and to “enjoy things that work”, he chuckled.
If he travels locally it might be to a good hotel in Mombasa where he can read and spend time walking.
He said he had been to Kenya’s famed Maasai Mara National Reserve only once and, while he loved it, the flight into the reserve in a small plane put him off going back.
“What I love about travelling in Africa is the hospitality of the people. You don’t get that feeling in Europe. In London they are happy to give you directions but they are not going to say ‘hi’. In Africa, no matter