Dear Entrepreneur, Here Is Why It Is Impossible To Do Business In Kenya

By Getrude Mathayo / Published January 26, 2022 | 12:47 pm

KEY POINTS

From a business perspective, increased costs of fuel will likely translate to reduced investments and plateaued growth on the back of increased business costs.

KEY TAKEAWAYS

Corruption also impedes economic growth. With rampant corruption, foreign and domestic investment is discouraged because corruption destroys predictability and increases the cost of doing business.

Kenya is a business destination point for many people trying to start up one type of business or the other in Africa. This migration is due to the country’s abundant human, natural, and material resources.

It is one of the fastest-growing economies in Africa. Small business opportunities abound in the country, and start-ups are springing up on every corner.

Doing business in Kenya is not a walk in the park. This is because there are lots of problematic factors business leaders will need to overcome in order to successfully do business in the country.

When most people start up a business, they aren’t thinking of failure. However, starting and operating any business in Kenya comes with the chance of an unfavorable outcome, and probably more frequently than most people are aware

Unbearable tax codes

In Kenya’s budget, it is not reasonable to expect the government to lower taxes, but it could simplify tax laws, and eliminate areas of double taxation. The income tax act for example has some ambiguous areas that not only result in loss of revenue for the government but also expose businesses to future tax liability.

High cost of energy

From a business perspective, increased costs of fuel will likely translate to reduced investments and plateaued growth on the back of increased business costs. An increase in the cost of fuel will have a direct impact on the cost of electricity, thereby increasing the cost of running energy-dependent machinery and equipment.

A toxic political environment

Political factors can impact a business by making the market environment more or less friendly for that business. Typically, governments have a great deal of power over businesses, and many times, there is not much that businesses can do about it.

Runaway corruption

Corruption was considered the most problematic factor for doing business in Kenya. When corruption takes place in the workplace, it affects the perception of the business by the public and its employees. This is because it breaks public trust

Too many licenses

To start a hotel business in Nairobi, you need at least 5 licenses (City Council business license, hotel manager’s license, public health certification, liquor license, business registration, etc.), not to mention various approvals. Not only are these licenses expensive and exhausting to acquire, but corrupt county officials also use them as an avenue to receive bribes.

Make it easier to start a business

In Kenya, it takes at least 4 weeks to get an incorporation certificate and maybe another 4 weeks to be fully licensed to start a business. In contrast, it takes about 2 days to get a business registered in other countries.

A corrupt legal & judiciary sector

Corruption also impedes economic growth. With rampant corruption, foreign and domestic investment is discouraged because corruption destroys predictability and increases the cost of doing business. It increases the uncertainty and risk attached to investment and reduces incentives for entrepreneurs.

Lack of honest data

Honesty is a key characteristic of a business because it sets the tone for the kind of work culture that you want to create, provides consistency in workplace behavior, and builds loyalty and trust in customers and prospects.

A thriving counterfeit environment

There is also a business threat of counterfeit products, as it results in a loss of revenue for the brand that is being copied. Simply put, when counterfeiters sell a product that looks the same as the original but at a lower price, the authentic brand will lose sales

Lack Of Foresight

Many people who start up a business in Kenya aren’t really in it for the long run but just want to find a job. This is because of the country’s high unemployment rate. With such a mindset, many entrepreneurs don’t plan for the future.

Inability to find the right target audience

A solid sales strategy takes targeted marketing into account. If the right people cannot see your products or services, then your business will fail. An inability to connect with the correct demographic for your business means that you don’t know who your products/services are for.

Growth strategies & infrastructure

Most owners and managers lack clarity on where their businesses are at and more importantly where they are going. They don’t have clearly defined growth strategies, or clear business and revenue models.

Without the right infrastructure in place, such as the right systems, procedures, processes, controls, and overall quality in the business, it will standstill.