Kenya beckons SA firms again

BLUE-chip South African companies such as South African Breweries and Nandos have endured a spanking in Kenya.

Their experiences have left local firms scratching their heads about how to successfully access Kenya, but there are new efforts to build commercial bridges between the countries.

Kenya’s ambassador to South Africa, Patrick Wamoto, recently led a business group to his country to illustrate its importance as a gateway to East African commerce.

Standard Bank gutsed it out in Kenya, and is now planning to use this foothold as a springboard into the rest of the region. The bank is preparing to set up offices in Ethiopia and the Ivory Coast, in West Africa. As Africa’s most populous country after Nigeria, Ethiopia is seen as a potentially big market for foreign banks.

This year, Kenya saw leadership changes as Raila Odinga was voted out as president in favour of the controversial Uhuru Kenyatta. Wamoto said the country’s investment policy was guided by “Vision 2030”, which is anchored by macroeconomic stability, governance reforms, wealth creation and infrastructure development.

He assured potential South African investors that the Kenyan government would not rob them of their investment. He stopped short of mentioning Zimbabwe, where large firms were effectively dispossessed of control of their Zimbabwean as- sets under President Robert Mugabe’s “indigenisation” policy.

However, Wamoto failed to state how his country has protected its private sector as more companies from South Africa, China and former colonist Britain try to use it as a regional springboard.

Three years ago, South Africa’s Deputy President Kgalema Motlanthe paid Kenya a visit to straighten out some of the issues facing South African investors there — including the fact that companies were being hit by tax in both countries.

Part of the tension is that South Africa gains more from its trade partnership with Kenya than the East African country does from its southern neighbour.

Trade between the two countries in 2011 totalled R8.4-billion, but South African exported R8.04-billion of that to Kenya — and only R345-million was exported to South Africa.

Deloitte tax partner Nikhil Hira said countries doing business in Kenya faced challenges — including the fact that the cost of doing business is very high.

The World Bank’s “ease of doing business” ranks Kenya as the best out of 46 countries in sub- Saharan Africa. It is ranked second behind South Africa when it comes to how easy it is to get business credit.

EY (Ernst & Young) lead director for the Africa business centre Michael Lalor said Kenya remained the obvious hub from which companies could push into the region.