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.
Nigeria’s Strides Towards African Energy Efficiency
The role that both government and private investors play in increasing accessibility to electricity needs to greatly adapt.
The last decade has seen African and world leaders emphasizing the importance of effective and affordable energy solutions for the mighty continent. In 2013 President Barack Obama traveled to Tanzania as part of his Africa tour and launched a five-year endeavor aimed to increase energy development and economic growth in the continent.
Called the Power Africa Initiative, the governments of Tanzania, Ethiopia, Kenya, Libera, Nigeria, and the United States, along with the African private sector and the African Development Bank Group (AfDB) have been working together to design its strategy and implementation. As part of this collective initiative, the Beyond the Grid programme is responsible for building successful partnerships with investors and turning the more than $1 billion invested into smaller off-grid projects throughout the market.
Nigeria in particular has experienced many problems in generating and distributing power throughout its modern history to a staggering population of over 185 million people. Though Nigeria is Africa’s largest economy it falls far below the continent’s average grid capacity per capita. The average Nigerian uses only three percent of the electricity the average South African uses. Only one in four Nigerians have access to the grid and when they do, it’s not for more than a few hours a day.
The role that both government and private investors play in increasing accessibility to electricity needs to greatly adapt.
The Role of the Private Sector
Nigerian entrepreneur Benedict Peters is the founder and CEO of Aiteo Group, one of the leading energy groups in Africa. Peters believes in the importance of collaborating with local communities to form joint energy strategies and projects that can translate into strong lasting relationships in the international arena. He states that the current energy crisis in Africa can be hugely minimised by microgeneration. This initiative, which consists of setting up small scale electricity-generating systems as opposed to larger projects like the Democratic Republic of Congo’s controversial hydroelectric dam, would allow electricity to be brought onto the grid at a faster pace and would benefit more remote, rural communities who are so in need.
Countries like Nigeria and the DRC have the empty land and the sunlight needed to set up a system of solar panels that can begin powering small communities. But the obstacle in obtaining and implementing these projects is not accessibility, but funding. The well-known and internationally funded initiatives tend to be larger scale, which take longer to implement and benefit the larger energy companies and population centers. Nigeria is beginning to stress the importance of microgeneration projects which benefit remote communities and are much faster to see results. It is believed that this kind of initiative can be implemented throughout many African countries and can in just a few years begin to reshape the way the continent manages their energy production.
In August of this year Alternatio Navitas company, based in Lagos, unveiled its ambitious plans for an off-grid solar home system to make use of the abundant sunlight in Nigeria and meet the needs of households across the country that lack sufficient energy from the national grid. Alternatio Navitas CEO Tayo Ogidan says his company is on track to completely redefine the country’s use of renewable energy and efficiency. The technology needed to create solar panels improves drastically each year, and similarly, the cost of these solar panels decreases each year.
This happy occurrence, paired with such an abundance of sunlight in the country creates quite the advantageous circumstance for attempting to execute lasting energy efficiency. The company’s director notes that new solar panels can last up to twelve years when used consistently for eight hours a day. The panels themselves are durable, needing only a relatively inexpensive battery replacement every few years.
Bringing Energy to Africa
Initiatives like these may seem simple to the west, where very few have to worry about being able to access power and electricity. But for the world’s most underdeveloped and least urbanised continent, collaborative efforts to bring energy efficient, environmentally beneficial, and accessible power and electricity to small communities is a major leap towards advancement.
If several such microgeneration projects are successfully executed and normalised, it can mean remote communities across Nigeria and greater Africa will experience an affordable way to receive sustained access to electricity. Additionally, the implementation of these projects can create more jobs and mobility in small towns, working to connect rural areas both physically and technologically, to larger ones.
The Evolution Of Retail: From Corner Store To Artificial Intelligence
Shopping! It is one of the oldest and most pleasurable pass-times. No one can deny it.
Let’s face it: we all like acquiring new things. Things that make us feel good or look good or make our lives easier somehow. We like the thrill of browsing through our choices and finding that perfect item that no one else has or everyone else wants. Shopping! It is one of the oldest and most pleasurable pass-times. No one can deny it.
When I was little, my parents took us to the opening of the first shopping mall in Bloemfontein. It was a momentous occasion and we all dressed up in our Sunday-best to welcome the new addition to our little town, an addition that would soon consume most of our free time as my mother, sister and I lazily perused shop window after shop window mesmerised by all the shiny new things.
For the first time we were also able to find everything we needed under one roof – from clothing to hardware to groceries – even making it bearable for my father to tag along as he could now buy that new drill or braai he desired while we tried dress after dress in fitting rooms.
A few years later, we moved to Jozi and I was stunned by the fact that there was more than one big shopping center. Not only that, but shops stayed open past 5 pm and were even open on Sundays! Oh the opportunities were endless! Oh, so we thought.
Fast-forward to the present and I now buy stuff all the time from my laptop, my phone, big shopping malls or bespoke pop-up shops. Anything I could ever want or need is either a few minutes drive or a simple click away.
How we live and behave is changing drastically. It is changing because technology has enabled an increasingly connected lifestyle where instant gratification is the name of the game. And so technology is, to an extent, shaping our behavior as well as our expectations of the world and the proliferation of brands that form our reality.
One such expectation is the ability to shop anywhere, anytime for anything and therefore we are developing an instant, constant and unrelenting expectation of retailers to shine. Because when you’re fast-paced life is divided into timeslots of deadlines and meals and carting children to various activities and meetings and conference calls, the last thing you need is a tedious shopping expedition.
Our, I-want-it-now attitude has created a compliant market place that constantly strives to meet our needs and demands. This allows us to carry on with the things that really matter most to us. Why do I want to spend my Saturday morning in a shopping mall when I can take the dogs for a walk on the beach?
Retail giant Amazon is one of the biggest drivers of this essential shift in commerce. They constantly innovate and understand the need to perpetually satisfy customer expectations. They do this by connecting and integrating their products seamlessly into consumers’ lives.
The Amazon Dash Wand makes ordering groceries a piece of cake. You only have to hold down the voice button and call out items that are running low in your fridge and Amazon Dash’s easy interface will order it automatically. They’ve even produced our first serious glimpse into the future of an intelligent home. She is called Alexa and can order your pizza, create shopping lists and control various smart devices in your home. Some might call this a dream come true! But if you prefer a more traditional shopping experience without the fuss, this mega-brand is also experimenting with Amazon Go – where Prime members scan their phones, skip the check-out at their favourite store and walk straight out.
Amazon is not the only brand who understands the importance of instant and on-demand purchasing. Other brands are adopting this approach, fast. Domino’s Anyware™ allows you to order pizza from your smart watch, smart TV, Twitter or texting via emoticons – seamlessly integrating their brand into their consumers’ lives, without even having to use words (smiley face)!
Tech start-ups are also radically disrupting the commerce industry and altering a wide variety of consumer product categories, so much so that they’ve acquired a new term:
the digitally native vertical brand.
Their primary means of interacting, transacting and story-telling takes place on the web. And if they want to extend offline, it is normally through experiential retail or highly selective partnerships. Their core focus is on customer experience and customer intimacy and the only reason they can do this is because of new technology and this consumer behavior that has immerged in the past 10 years.
Related: Latest Trends Driving Retail Today
In 2016, Unilever acquired Dollar Shave Club for $1 billion. Sharing hilarious online videos on social networks created instant customer recognition. They were able to create a brand far more quickly and for less money than a company could have managed a few years ago. Back then you needed big TV and radio budgets and lots of airtime, to even scratch the surface of this kind of scope.
They also shaved off the price of their product by cutting out a costly retail presence and delivering straight to people’s homes on a subscription basis. They’ve made it more convenient for consumers to buy shaving products online than going to a store. And isn’t this what we all want? Lower prices, less time wasted and complete and utter convenience?
Although these kinds of online brands aren’t new (Warby Parker began selling glasses over the web in 2010), there has been a rapid increase and success of such companies in the last few years and the Dollar Shave Club deal suggests their growing importance. Technological change has therefore created creative disruption – and no company or brand is immune to this. Nor should they be.
But technology alone is not enough. Even Amazon has been opening physical bookstores, most recently in New York City’s Columbus Circle, and the acquisition of Whole Foods could signal Amazon’s vision of including physical retailers into their offering. Previously exclusive online stores, such as Warby Parker that allows you to try on frames at home for free, have also opened physical stores. Does this mean we don’t know what we want? We strive for online convenience yet demand the physical entity of a shop front? No – it means we want it all.
Oak Labs believe that physical stores have not changed much in the past 100 years, however, customers have. They are trying to bridge this gap between technology and retail by creating intuitive customer experiences, which will transform the shopping landscape. One such experience is The Oak Mirror. It is an interactive, touch screen mirror that empowers shoppers to customize their fitting room experience. Customers can explore product recommendations, digitally seek assistance from store assistance and even adjust the room’s ambience (no more neon lighting and terrible shadows in fitting rooms!).
It uses RFID technology to recognize products as they enter the room. It syncs with the retailer’s inventory system to provide intelligent product recommendations and seamlessly connect shoppers with sales assistance via mobile or wearable devices. So you no longer have to dress and redress to go and look for smaller or bigger sizes, and then run back to your cubicle before someone else steals it. But why does this matter? Well, shoppers who make use of a fitting room is seven times more likely to make a purchase (according to research by Alert Tech) and Ralph Lauren has had a basket lift of 59% since the launch. So there we go. We’re demanding it all and retailers need to start delivering.
We are constantly redefining what stores are or what they mean to us. Take Bonobos Guide Shops for example – they don’t sell anything in-store. A Guide will walk you through the Bonobos assortment and help you find the perfect fit. You then walk out shopping-bag-free as your Guide will purchase your goodies for you online and deliver to you for free.
Howard Schultz, based in Seattle, has been instrumental in changing the retail landscape. In 1992 there were a mere 165 Starbucks coffee shops in North America but today there are 27,000 worldwide. He created the notion of the ‘third place’ – the place between home and work. And yes, he’s created Starbucks Reserve, a bespoke, experiential roastery immersion where you can experience their rarest, small-batch coffees and buy artisanal coffee paraphernalia.
What really made them a ground-breaking retail brand, was the launch of the Starbucks app in 2010 – pay using the app, skip the queue and get rewarded. It is the digital thread through their entire business and one of the most successful mobile payment apps in North America – clearing $1.7 Billion every year.
In a world where people embrace increasingly connected lives, and as the market became more saturated, he ensured that his brand remained relevant by giving customers what they want, when they want it in the most convenient way, and still providing an authentic coffee experience for those who wanted it. Not only can you have your cake (and coffee) but you can eat it too!
Retailers that want to survive this highly dynamic and exciting commercial future need to compete ferociously on various platforms – mobile, desktop, tablet and physical storefront. Neglecting any one of these is not an option and will quickly ensure being left behind. And consumers do not look back.
Instead, gazing into the future gives us a glimpse of an Artificial Intelligence (AI) dotted the commercial landscape where absolutely anything is possible. Eric Oliver, director of digital marketing of The North Face, believes that “Every brand wants to forge an emotional connection with its customers”.
Those connections aren’t made on digital channels but through human experiences. Perhaps with AI even our deepest desires and all our emotional needs will be met too.
The future of retail, in my opinion, is one that is governed not by the brand, but by what customers want, and their wants are based on their intrinsic human experiences. Only the retailers that can rapidly adapt to the ever-changing expectations of consumers – expectations created by and through technology – will survive. Because as Peter Drucker once said, “The greatest danger in times of turbulence, is to act with yesterday’s logic.”
Building a Brand in Nigeria: A South African Marketers’ Guide
As one of Africa’s fastest growing economies, Nigeria can be an excellent growth strategy for your brand. Here’s what you need to know about marketing your business in Nigeria.
For many ambitious South African businesses looking to expand their footprint across Africa, Nigeria is an obvious choice. With a population of 175 million, it is Africa’s largest market and has more consumers than anywhere else.
The Nigerian economy is growing at an average of 6,8% per annum, dwarfing South Africa’s modest GDP growth rate. And the country has a rising consumer class that is ambitious and aspirational, with smaller families, higher incomes, better education than previous generations and increasing connectivity to digital and mobile channels.
Nigerians are highly receptive to Western brands and very brand conscious. It sounds like a marketer’s dream.
But building a brand in Nigeria is also hugely challenging. Corruption and bureaucracy are still big problems, and there are security risks.
Cracking the Nigerian market requires guts and perseverance on the part of the marketer, deep insight into the market, smart marketing and an adaptable approach. Very few brands are getting it right.
Overcoming the challenges in Nigeria
Nigeria’s market attractiveness has not gone unnoticed. Despite the slow diversification of the economy, global consumer brands are rushing in and competition is heating up across all sectors. The low-hanging fruit is largely gone, and marketers now need to work hard to stand out in the noise. As ever, there is no substitute for insight into your customers.
Unlike many other African markets, Nigeria is relatively urbanised. 50% of the population live in cities and more than ten million people live in Lagos alone. Transport and distribution are therefore not as difficult as they are in other African countries, but they remain a huge challenge between cities and marketers either need to focus on one or two urban areas or partner with local suppliers and the informal sector to find innovative ways to distribute.
Nigeria is an incredibly complex market. It has diverse languages, religions and cultures. It has sharp regional differences, with a poorer, largely Muslim and relatively unstable North. Consumers here are more conservative and traditional, while those in the south are optimistic and more Western in their outlook. Marketers need to understand drivers of consumer behaviour in the different regions, segment their customers and develop relevant value propositions for each segment.
Brand-Building Tips: What Not to Do
- Don’t copy-paste your strategy from other African markets
- Don’t rely on being South African to win over Nigerian consumers
- Don’t import trends or assume you know what’s cool with the youth
Brand-Building Tips: What to Do
- Tap into the optimistic national mood with your communications
- Understand local drivers of status across regions
- Partner with the informal sector and other brands to develop affinity.
- Do your homework and build a good network of trusted local suppliers
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