If South Africa markets itself to the world as the business gateway to the rest of the continent, then Kenya likes to be known as Eastern and Central Africa’s economic, commercial and logistical hub.
Kenya’s capital, Nairobi, is the largest city in East Africa as well as the largest city between Cairo and Joburg. It is also home to the Nairobi Securities Exchange (NSE), one of Africa’s biggest and most lively stock exchanges.
For the South African entrepreneur there are a number of opportunities for doing business in Kenya and it is vital to know what and where these are as well as what challenges you might come up against.
First and foremost are the visa conditions required for doing business in Kenya. Africa has some of the toughest visa requirements in the world, and this can play havoc with the ambitious entrepreneur hoping to take advantage of any short-term economic opportunities that arise.
Experienced business travellers in Sub-Saharan Africa know that it is best to get all their visas before they leave home, but South African passport holders have a golden ticket to enter Kenya without a visa, as long as they intend staying for less than 30 days.
If a South African passport holder needs their visa to allow them to stay for more than a month, then one can be obtained from the Kenyan High Commission in Pretoria within 24 hours of application at a fee of R500 (single entry) or R1 200 (multiple entries). If you want the multiple entry option for extended stays this will take 4-6 weeks, as well as an additional application fee (R150) – pricing correct as at May 2014.
Safety and security has recently been of concern in Kenya, especially in major cities such as Nairobi. For updated safety and travel news on Kenya it is recommended that you contact your embassy in Nairobi prior to departure.
Credit cards are accepted in all major hotels as well as many establishments throughout Nairobi. The most recognised credit cards are MasterCard and Visa.
ATM machines are available 24 hours a day and are located at all major banks in Nairobi and other major cities and offer a safe and affordable way to get your hands on local currency using either your credit or your ATM card.
Etiquette and attire
As in most African countries, business attire in Kenya is conservative, with suits the expected business attire for business meetings (unless specifically stated as being casual).
As for matters of etiquette, a formal handshake with your right hand is the standard greeting. Additionally, Kenyans prefer being addressed using their title (Mr, Mrs, Dr and so on) as well as their surname.
It is also important to note that advance appointments are required for meetings and that if you’re likely to be late or have been delayed, then call ahead to inform them.
The primary language of commerce in Kenya is English and the country has a large number of English-speaking and multi-lingual professionals, in addition to a strong tradition of entrepreneurship.
Strengths and opportunities
Kenya’s strengths include its strategic location as well as their human resources and the country’s natural assets. Although the cost of skilled, educated labour in Kenya is high by developing world standards, it is also relatively abundant in comparison with neighbouring countries.
Kenya’s financial and manufacturing industries are the most sophisticated in Eastern Africa, albeit relatively modest in scale compared to South Africa. Business enterprises range from limited companies of various forms, to branch office registration and partnerships.
Some of the major opportunities locally and regionally are spread across five major sectors:
- Information and communications technology (ICT),
- Agribusiness, and
- Medical equipment.
Recent discoveries of oil, gas and titanium mean that the country and the region are emerging as a potentially important source of mineral commodities. Meanwhile, the agricultural sector is the largest employer in Kenya, contributing 23.4% of GDP.
The country’s major exports are tea (exported mainly to Pakistan, Egypt the UK and UAE), coffee (mainly to Europe), cut flowers (also mainly to Europe) and vegetables.
Kenya’s Vision 2030 development strategy emphasises value addition for coffee and tea exports, which should translate into an increased demand for processing and packing equipment. Here it is worth noting that the main export destinations for Kenyan products are the Common Market for Eastern and Southern Africa (COMESA).
After Africa, the European Union is Kenya’s second most important market and, within the EU, the United Kingdom has been Kenya’s leading export market, followed by the Netherlands and then Germany.
At the same time, industrial activities such as oil, coal and titanium mining are bound to increase the demand for material handling machinery and mining equipment.
The country’s tourism trade is the third largest industry in Kenya, and is one of the most successful in the world, making investments in this field a solid bet. Other investment opportunities in Kenya for South African businesses include the Chinese-funded Lamu Port project in the Coast Province.
This project involves the development of a new transport corridor from the new port through to Ethiopia and Southern Sudan.
According to Kenya’s Vision 2030, the entire project will include a new road network, a railway line, an oil refinery at the port and an oil pipeline, in addition to the construction of two brand-new resort cities (one at the coast and one inland). The project is expected to be a life-line to the otherwise remote Northern Kenya, which in turn is likely to open up a wide range of entrepreneurial opportunities across the board.
The demand for cellular telephones and associated products is also expected to continue growing at a high rate following the removal of all duties for these product categories. Mobile internet users are currently estimated at 13 million, far outpacing traditional internet access methods such as Cyber cafés.
Given these figures it is a no-brainer that the best sales prospects would include 3G/4G modems, computers, data terminals, modems, payphone terminals, routers, broadband equipment, and VSAT satellite equipment.
As a market entry strategy, potential investors should note that many foreign companies operating in Kenya do business under their own name in order to manage penetration into the larger, regional market. Meanwhile, firms with strong corporate social responsibility (CSR), education, and training programs are especially welcome.
What to watch out for
A word of caution, though: Corruption and insecurity continue to pose significant challenges to business and widespread violations of intellectual property rights (IPR) related to medicines, videos, music, software and a wide range of consumer goods can present major obstacles. Furthermore, legal recourse in Kenya is still slow and expensive, inefficient and sometimes even tainted by corruption.
As a result, many litigants (and especially foreign ones) resort to arbitration and other available alternative dispute resolution channels for resolving their differences.