Financial Data
Updated 15 Oct 2019


Key challenges to consider when expanding your business into Kenya

Kenya offers opportunities to earn respectable revenues, but you’ll need to put systems and processes in place to avoid the challenges facing SME’s in Kenya. 


Nicole Crampton, 05 March 2017  Share  0 comments  Print


All the answers to your unique business lifestage questions

Kenya is a profitable market, reporting an overall GDP growth of 6.4% according to Deloitte’s Kenya Economic Outlook 2016: The Story Behind the Numbers report.

However, there are a few speedbumps that you will need to overcome in order for your new retail store to be successful in Kenya. If you don’t develop a strategy to combat these obstacles, your expansion aspirations won’t perform at its true potential, which could negatively impact your South African branches. You don’t want to be in a position where your SA operation is continually funding your Kenyan location. 

Related: 4 Key Kenya sectors to invest in


KEY LEARNING

Kenya’s economy is set to increase by an average of 6.1% between 2016 and 2020 according to Deloitte, making it an attractive destination for SA businesses looking to expand into East Africa. However, Kenya has its own drawbacks that will need to be addressed in your strategy before your business can thrive there.


Here are a few challenges your business will face when expanding into Kenya, according to Deloitte:

Its economy is still young

Inadequate capital, limited market access, poor infrastructure, inadequate knowledge and skills, as well as rapid changes in technology are all barriers and challenges your SME will need to face and overcome to succeed in Kenya.

You can, however, strategically plan for these barriers by pre-planning your capital contributions, training new employees to improve their skills and knowledge and by keeping up-to-date on technological advancement and availability in the country. Standard Bank’s in-country relationship managers are able to offer you unique insights on what’s happening on the Kenyan business front, so get in touch if you need tactical assistance.

Regulations are tough to deal with

Business -regulations -in -Kenya

Once you’ve handled the economic and social challenges in your expansion strategy, you’ll need to prepare for corruption and an arguably unfavourable regulatory environment.

Although the Kenyan government is attempting to address these obstacles by enforcing legislation to enhance local involvement in projects, establishing policies that support public procurement, research; development remains a challenge.

Even though the government’s involvement is positive for the Kenyan people, as a foreign party, you might need to work twice as hard to incorporate as many of the country’s social upliftment initiatives into your business model as possible. This could help you to obtain support from the government faster, should you need it.

Related: Kenya’s emerging cities offer untapped potential for SA retailers

Access to cash is an obstacle in Kenya

The finance world in Kenya is attempting to improve its options to SME’s, but you will still need to manage the relatively high cost of SME credit because of inefficient collateral registration processes and outdated local finance products.

Standard Bank operates in Kenya and can offer the convenience of setting up your financial products in South Africa to use in Kenya. This can enable you to keep your entire business in one bank, instead of having multiple organisations that you have to work with across borders.


TRY THIS

  • Pre-planning your capital contributions, training employees to improve their skills and knowledge, and keeping as up-to-date as possible with the technological advancement in Kenya is essential for business success.
  • Standard Bank operates in Kenya and can offer the convenience of working with a single bank across borders.
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About the author


Nicole Crampton


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