Kenya setting the scene for business in East Africa, says analyst
My conversations with business leaders, consultants and journalists have revealed that Kenya is a regional trendsetter for many reasons. The country’s private sector is arguably the most dynamic in the region, benefiting from a free market economy since independence. Kenya is therefore much more open to international business, unlike neighbours such as Tanzania that for a long time followed a state-led and socialist approach to business.
Kenya is oftentimes the first point of entry for goods traded in the region through its port of Mombasa. Upon clearance from the Mombasa port, goods are then transported via the Northern Corridor to Uganda, Burundi and Rwanda; and from those countries to South Sudan, and the eastern Democratic Republic of Congo. The majority of goods sold across East Africa and not imported from outside the continent are produced in Kenya. Its manufacturing sector is underdeveloped but remains bigger than that of other markets. As a result, Kenyan consumer trends, particularly in fashion and technology, are carried throughout the region.
Historical legacy and better infrastructure are not the only reasons for Kenya’s role as regional trendsetter. Kenya’s financial landscape is more sophisticated and mature than its neighbours and Kenyan banks are expanding across the region. Local retailers, such as Nakumatt, are among the most successful in the region and are on an expansion drive. The country’s talent pool and human capital are strong, as multinationals face minimal problems in staffing their local operations.
However, not all East African consumers are receptive to these trends. Tanzania’s relationship with Kenya is strained. Tanzanians perceive Kenyans as aggressive and are afraid that they might take over Tanzanian businesses if the country opens up more under the East African Community. As a result, Tanzania is hindering faster progress of regional economic integration.
To put it in the words of two executives I spoke to, “Kenyans are trendsetters in East Africa” but “they are not well liked in the region”.
Anna Rosenberg, head of sub-Saharan Africa at Frontier Strategy Group, is currently on a research trip to Kenya, Uganda and Ethiopia.