{"id":606,"date":"2014-07-20T02:10:50","date_gmt":"2014-07-19T18:10:50","guid":{"rendered":"http:\/\/www.www.innovationiseverywhere.com\/?p=606"},"modified":"2014-07-20T02:10:50","modified_gmt":"2014-07-19T18:10:50","slug":"starting-business-kenya-market-analysis","status":"publish","type":"post","link":"https:\/\/innovationiseverywhere.com\/fr\/starting-business-kenya-market-analysis\/","title":{"rendered":"Starting a Business in Kenya: Market Analysis"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><strong>Facts (as of 2012):<\/strong><\/h2>\n<p style=\"text-align: justify;\">GDP &#8211; USD$40\u00a0billion<\/p>\n<p style=\"text-align: justify;\">GDP growth \u2013 4.6%<\/p>\n<p style=\"text-align: justify;\"><a href=\"http:\/\/www.indexmundi.com\/kenya\/gdp_composition_by_sector.html\" target=\"_blank\" rel=\"noopener\">GDP breakdown<\/a> \u2013 Services: 61% \/ Industry: 14.8%\/ Agriculture: 24.2%<\/p>\n<p style=\"text-align: justify;\">Inflation rate \u2013 7.4% (2014)<\/p>\n<p style=\"text-align: justify;\"><strong>Pros: <\/strong>Highly beneficial geographical position\/ Regional financial centre\/ Forthcoming monetary union\/ Well-educated labor\/ Growing government support\/ Strong mobile market\/ Diversified economy\/ Highly social community\/ Strong diaspora<\/p>\n<p style=\"text-align: justify;\"><strong>Cons:\u00a0<\/strong>Security issues\/ High unemployment\/Large population remains unskilled\/ High levels of corruption\/ Lack of legal redress\/ Highly culturally diversified\/ Significant poverty<\/p>\n<p style=\"text-align: justify;\"><img fetchpriority=\"high\" fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter size-full wp-image-610\" src=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/07\/Screen-shot-2014-07-15-at-PM-05.49.59-3.png\" alt=\"innovation is everywhere emerging markets startup kenya business startups mobile connectivity martin pasquier mobile kenya connectivity kenya startups kenyan startups mobile market market analysis pros cons\" width=\"623\" height=\"249\" \/><\/p>\n<h2 style=\"text-align: justify;\">The Kenyan Market<\/h2>\n<p style=\"text-align: justify;\">Thinking of<strong> expanding into untapped markets<\/strong>? Be sure to have a good analysis of\u00a0what exactly are the different <strong>advantages and disadvantages<\/strong> of the Kenyan market before diving into Iran. Here, we look into\u00a0some of the pros and cons:<strong>\u00a0<\/strong><\/p>\n<h2 style=\"text-align: justify;\"><strong>Market Analysis &#8211; Pros:<\/strong><\/h2>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">Due to its <\/span>geographical position<span style=\"text-align: justify;\">, Kenya is one of the most <\/span><strong style=\"text-align: justify;\">crucial and reliable logistical conduits into East Africa<\/strong><span style=\"text-align: justify;\">, positioned on the Indian Ocean and with <\/span><strong style=\"text-align: justify;\">access to key shipping lanes coming from both Europe and Asia<\/strong><span style=\"text-align: justify;\">. It also serves as the <\/span><strong style=\"text-align: justify;\">regional financial hub<\/strong><span style=\"text-align: justify;\">, allowing more than <\/span>70% of all Kenyans to have access to financial services<span style=\"text-align: justify;\">, <\/span><a style=\"text-align: justify;\" href=\"http:\/\/www.ibtimes.com\/imfs-lagarde-warns-kenyan-officials-emerging-market-slowdown-will-challenge-african-growth-1528784\" target=\"_blank\" rel=\"noopener\">the highest of all countries in the region<\/a><span style=\"text-align: justify;\">.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">Kenya is an excellent market in the East Africa Community, which is a <\/span><strong style=\"text-align: justify;\">hub of a 150 million people<\/strong><span style=\"text-align: justify;\"> region (Tanzania, Uganda, Rwanda, Burundi, and Kenya) with a <\/span><a style=\"text-align: justify;\" href=\"http:\/\/www.aljazeera.com\/news\/africa\/2013\/11\/east-african-nations-agree-monetary-union-20131130175336476127.html\" target=\"_blank\" rel=\"noopener\">forthcoming monetary union that is expected to attract a surge in foreign investments<\/a><span style=\"text-align: justify;\">. This monetary union is expected to unfold over the next 10 years, allowing for a steady expansion in its economy.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">As an ex-British colony, Kenya has <\/span>inherited their proficiency in English<span style=\"text-align: justify;\"> and it is widely spoken in business, schools and government. This has allowed for <\/span><strong style=\"text-align: justify;\">ease in communication with foreign firms<\/strong><span style=\"text-align: justify;\"> and entrepreneurs. With a <\/span><strong style=\"text-align: justify;\">relatively high literacy rate of 88%<\/strong><span style=\"text-align: justify;\">, Kenya has the region\u2019s strongest pool of available human resources to tap into. The <\/span><a style=\"text-align: justify;\" href=\"http:\/\/www.brookings.edu\/research\/opinions\/2013\/12\/30-kenya-economy-kimenyi\" target=\"_blank\" rel=\"noopener\">most recent Global Competitiveness Index of 2013-2014<\/a><span style=\"text-align: justify;\"> ranked<\/span><strong style=\"text-align: justify;\"> Kenya as 44<sup>th<\/sup> in its quality of education<\/strong><span style=\"text-align: justify;\">. \u00a0Interestingly, <\/span><a style=\"text-align: justify;\" href=\"http:\/\/www.theeastafrican.co.ke\/news\/If-you-must-go-to-school-in-East-Africa--do-it-in-Kenya\/-\/2558\/1193498\/-\/item\/0\/-\/pb7497z\/-\/index.html\" target=\"_blank\" rel=\"noopener\">this study shows that<\/a><span style=\"text-align: justify;\">, as a result of a strong public education, a poor child from Kenya would be more likely to succeed than a wealthy child from Tanzania or Uganda.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">Although Kenya does not have a long history of the government supporting startups, the <\/span>government has recently started developing initiatives<span style=\"text-align: justify;\"> to help establish a conducive infrastructure. Recent projects include a <\/span><strong style=\"text-align: justify;\">giant tech city \u201cKonza city\u201d<\/strong><span style=\"text-align: justify;\"> dubbed the \u201cSavannah Sillicon\u201d as well as legislative overhauls, such as the presidential directive that\u00a0<\/span>30% of public tenders be reserved for companies\u00a0started by\u00a0youth (below 25)<span style=\"text-align: justify;\">, women entrepreneurs or people with disabilities. Such a definition is <\/span><strong style=\"text-align: justify;\">naturally favorable for young startups<\/strong><span style=\"text-align: justify;\"> and will\u00a0open up opportunities for government contracts. The <\/span><a style=\"text-align: justify;\" href=\"https:\/\/www.imf.org\/external\/np\/speeches\/2014\/010614.htm\" target=\"_blank\" rel=\"noopener\">IMF has recently praised the Kenyan government<\/a><span style=\"text-align: justify;\"> for its<\/span><strong style=\"text-align: justify;\"> strong fiscal discipline that has kept inflation in check<\/strong><span style=\"text-align: justify;\">, allowing it greater access to\u00a0international financial markets.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">The <\/span><a style=\"text-align: justify;\" href=\"http:\/\/nairobi.usembassy.gov\/doing-business-local.html\" target=\"_blank\" rel=\"noopener\">mobile market has also grown significantly<\/a><span style=\"text-align: justify;\">, with <\/span>mobile subscriptions rising from 10 thousand to 3 million since 1998<span style=\"text-align: justify;\">. \u00a0The growth of mobile money has also resulted in Kenya being the <\/span><strong style=\"text-align: justify;\">foremost country in the world in terms of mobile money technology<\/strong><span style=\"text-align: justify;\">. This is definitely an interesting area to look at for any startups looking at the growing market of mobile payments or e-commerce.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">The <\/span><strong style=\"text-align: justify;\">Kenyan economy is also very diversified<\/strong><span style=\"text-align: justify;\">, with strong growth in its horticulture, financial, ICT, transportation and tourist industries. With its strong diversified economy, it has become the main centre and headquarters for many industries in the area.\u00a0At the same time, this <\/span><strong style=\"text-align: justify;\">opens up\u00a0many innovation possibilities in the various different industries<\/strong><span style=\"text-align: justify;\">. In the <\/span><a style=\"text-align: justify;\" href=\"http:\/\/www.investmentkenya.com\/opportunities\/ict\" target=\"_blank\" rel=\"noopener\">ICT (Information\/Communication Technology) industry alone<\/a><span style=\"text-align: justify;\">, the Kenyan market has grown to 500 million USD.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">For any startups leveraging on the power of social media, <\/span><strong style=\"text-align: justify;\">Kenya is an excellent market to leverage on the\u00a0existing social community<\/strong><span style=\"text-align: justify;\">. A\u00a0unique feature of Kenya&rsquo;s economy being the <\/span>large cooperative &amp; sharing economy that accounts for 42% of GDP<span style=\"text-align: justify;\">. This sharing economy takes place in the form of chamas, something we covered <\/span><a style=\"text-align: justify;\" href=\"http:\/\/www.www.innovationiseverywhere.com\/?p=581\">here<\/a><span style=\"text-align: justify;\">. It is in fact this phenomenon of chamas that have contributed to the success of mobile money in Kenya. As a result, there already exists a\u00a0<\/span><strong style=\"text-align: justify;\">highly social base that is susceptible to technology and monetization<\/strong><span style=\"text-align: justify;\">. Startups would do well to pay a close attention to this social\u00a0market when in Kenya.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"text-align: justify;\">With <\/span><a style=\"text-align: justify;\" href=\"http:\/\/www.iom.int\/cms\/en\/sites\/iom\/home\/what-we-do\/migration-policy-and-research\/migration-policy-1\/migration-policy-practice\/issues\/aprilmay-2012\/diaspora-and-development-in-kenya-what.html\" target=\"_blank\" rel=\"noopener\">roughly 8% <\/a><span style=\"text-align: justify;\">or nearly <\/span><strong style=\"text-align: justify;\">4 million Kenyans currently in diaspora<\/strong><span style=\"text-align: justify;\">, their potential to the economy is not insignificant. In 2013, roughly <\/span>$1 billion USD was remitted back to Kenya<span style=\"text-align: justify;\">, <\/span><a style=\"text-align: justify;\" href=\"https:\/\/www.centralbank.go.ke\/index.php\/diaspora-remittances?yr=2014\" target=\"_blank\" rel=\"noopener\">growing at roughly 11% every year<\/a><span style=\"text-align: justify;\">. This has provided\u00a0a <\/span>steady source of income<span style=\"text-align: justify;\"> for the domestic population, <\/span><strong style=\"text-align: justify;\">increasing their disposable income and ability\u00a0and willingness to engage in social connectivity<\/strong><span style=\"text-align: justify;\">.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: justify;\">[divider]<\/p>\n<h2 style=\"text-align: justify;\"><strong>Market Analysis &#8211; Cons:<\/strong><\/h2>\n<h2 style=\"text-align: justify;\"><strong><a href=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/07\/Screen-shot-2014-07-15-at-PM-05.50.12-3.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-611\" src=\"http:\/\/innovao.cluster030.hosting.ovh.net\/wp-content\/uploads\/2014\/07\/Screen-shot-2014-07-15-at-PM-05.50.12-3.png\" alt=\"innovation is everywhere emerging markets startup kenya business startups mobile connectivity martin pasquier mobile kenya connectivity kenya startups kenyan startups mobile market market analysis pros cons\" width=\"623\" height=\"263\" \/><\/a><br \/>\n<\/strong><\/h2>\n<ul>\n<li style=\"text-align: justify;\"><strong>With security issues<\/strong> (Somali &amp; South Sudan nearby) and the recent Westgate terrorist attack, security remains a tangible concern for residents of Kenya.\u00a0<span style=\"color: #000000;\">Property crime and violence are major concerns and have become another <strong>unavoidable cost of doing business for companies in Kenya<\/strong>. Most expatriates opt to <a href=\"http:\/\/www.internations.org\/nairobi-expats\/guide\/working-in-nairobi-15858\/nairobi-expats-cost-of-living-and-taxes-3\" target=\"_blank\" rel=\"noopener\">live in gated communities<\/a> or shared accommodations, which are either expensive or have very basic facilities.<\/span><\/li>\n<li style=\"text-align: justify;\">Although the<strong> cost of skilled, educated labor in Kenya is high<\/strong> by developing world standards, it is relatively abundant in comparison with neighboring countries. Roughly <a href=\"http:\/\/www.moraafoundation.org\/challenges-facing-kenyan-youths\" target=\"_blank\" rel=\"noopener\">500,000 youths graduate from various tertiary institutions every year<\/a>. However, due to a mix of inexperience, corruption, and nepotism, roughly <strong>75% of these youths remain unemployed<\/strong>. Furthermore, a large portion of the young population (35 and under) still remain \u00a0relatively unskilled, and subside in an employment environment that offers few opportunities.<\/li>\n<li style=\"text-align: justify;\">As mentioned above, <strong>corruption remains a big problem in Kenya<\/strong>. A <a href=\"http:\/\/cpi.transparency.org\/cpi2013\/results\/\" target=\"_blank\" rel=\"noopener\">recent review by Transparency.org<\/a>\u00a0ranked <strong>Kenya as 136th out of 177 countries in terms of its Corruption Index<\/strong>. This is especially so in the government sector, which would pose a problem for companies seeking public tenders. However, the latest legislation is a step in the right direction and Kenya has made great strides, coming from the 154th position in 2011.<\/li>\n<li style=\"text-align: justify;\">There is also the high probability of a <strong>lack of legal redress<\/strong> in the case of any disputes. Besides the aforementioned scope of corruption, there is also the<a href=\"http:\/\/nairobi.usembassy.gov\/doing-business-local.html\" target=\"_blank\" rel=\"noopener\"> tricky issue of judiciaries that may view<\/a> that foreigners who carry less legal weight than a local party.<\/li>\n<li style=\"text-align: justify;\">Although Kenya\u00a0has the 7th largest population\u00a0in Africa, the <strong>opportunities for market expansion may not be as wide as expected<\/strong>\u00a0given that Kenya is a widely\u00a0culturally\u00a0diversified country. The<a href=\"http:\/\/www.africa.upenn.edu\/NEH\/kethnic.htm\" target=\"_blank\" rel=\"noopener\"> largest ethnic group<\/a>, the Kikuyu,\u00a0consists of merely 20% of the population. Furthermore, achieving a successful strategy in Kenya and\/or East Africa does not necessarily mean success in other parts of Africa\u00a0due to the <strong>wide range of cultural and political differences<\/strong>. Any companies eyeing market expansion in Kenya should thus be aware of these cultural differences and <strong>aim for less cultural-centric marketing strategies<\/strong>.<\/li>\n<li style=\"text-align: justify;\">One challenge companies should have in mind when approaching the Kenyan market is that a big proportion of the <strong>country remains severely poverty stricken<\/strong>.\u00a0In 2011, <a href=\"http:\/\/www.export.gov\/kenya\/doingbusinessinkenya\/index.asp\" target=\"_blank\" rel=\"noopener\">3.75 million Kenyans required emergency food aid<\/a> and another 5 million were food insecure.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Facts (as of 2012): GDP &#8211; USD$40\u00a0billion GDP growth \u2013 4.6% GDP breakdown \u2013 Services: 61% \/ Industry: 14.8%\/ Agriculture: 24.2% Inflation rate \u2013 7.4% (2014) Pros: Highly beneficial geographical position\/ Regional financial centre\/ Forthcoming monetary union\/ Well-educated labor\/ Growing government support\/ Strong mobile market\/ Diversified economy\/ Highly social community\/ Strong diaspora Cons:\u00a0Security issues\/ High [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":1506,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[54,47,52,49,51],"tags":[189,181,215,190,192,78,194,195,196,103],"class_list":["post-606","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-community","category-countries","category-events-innovators","category-innovators-category","category-markets-category","tag-analysis","tag-business","tag-companies","tag-cons","tag-emerging-markets","tag-kenya","tag-market","tag-market-analysis","tag-pros","tag-startups"],"_links":{"self":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/posts\/606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/comments?post=606"}],"version-history":[{"count":0,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/posts\/606\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/media?parent=606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/categories?post=606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/innovationiseverywhere.com\/fr\/wp-json\/wp\/v2\/tags?post=606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}