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Monday, February 12, 2007

Can Kenyan Firms be the Indians of the Africa?

Harking back to an earlier blog that incensed some folk when I suggested Kenya is an economic laggard when compared to India...

There needs to be a concerted effort by the GOK & local firms to stamp their authority all over Africa starting with our backyard (East & Central Africa).

Therefore, I want to pose a series of questions:
  • Are Kenyan firms expanding abroad (esp into Africa) just as Indian firms are doing in Nepal, Afghanistan, Russia & even China?
  • Are Kenyan firms using their (IMHO) superior balance sheets to power their way into neighbouring countries?
  • Is the Kenyan government ensuring the protection of Kenyan firms (e.g. closure of Nation Media's outlets in Uganda) abroad?
There are some successes e.g.
  • Bidco - in Uganda but they moved coz of the hostile Kenyan business environment!
  • Chandaria Group - Mabati, etc in TZ & UG
  • Nation Group - in UG & TZ. They face lots of government opposition but nary a word of support from Kenya.
  • Kenol - One of the best example with stations in Rwanda now Ethiopia. They have LPG sales distribution in TZ. They also wholesale Oil Products in UG & Congo.
  • KQ - I think GOK has realised their importance to the economy but it needs to do more to help a true homegrown company fight for more flights.
Furthermore Kenyan firms (esp in the Tea Sector) need to aggressively purchase downstream assets. Kenya is the world's largest exporter of CTC ("black") tea. Whereas Indian firms e.g. Tata Tea are buying Tea distributors (Tata bought Tetley's) in the UK, what are we doing?

KTDA & GOK needs to be in the forefront since small tea growing operations provide among the best teas that can benefit from substantial value addition.

Kenol which is expanding its African footprint suffers from delayed tax refunds especially for bonded export markets e.g. in Uganda, Rwanda & Congo. This is a disincentive to Kenol while we allow Libya's TamOil an entry into our markets.

Just as KR's operations were privatised, we need to privatise the inter-province road system in Kenya. Most Kenyan firms would prefer a road that is free of axle-breaking potholes, safer & well-lit for transporting goods 24-7-365 rather than the current set-up.

Many toll (pay-to-drive) roads in the USA are well maintained, have constant police patrols, emergency crews, etc & these services are paid for through tolls/fees. Some are privately managed, others public-private partnerships & some are state-owned but with Road Boards in charge.

In the meantime, while the GOK gets its act together, are Kenyan firms helping their own cause or do they just shoot themselves in the foot?

Extras:
India still remains a 3rd World Country - Can Kenya benefit as a secondary location/option?
Foreign Investments continues in Indian Firms - I wish Kenya had the same draw!

7 comments:

Riba Capital said...

CT: Good post.
Though we may lag slightly behind South Africa, I guess we are not doing so badly putting into perspective the minimal Govt. support our firms get when venturing abroad.
By the you left the banks out;
KCB - Kenay,Sudan, Uganda, London
FINA - Kenya, Rwanda
DTK - Kenya, Uganda, Tz

and Insurance companies
UAP - Kenya, Uganda, Tanzania
Jubilee - Kenya, Tz

Atleast Kenya is dominating regionally, now we have to venture further and see what we can achieve.

coldtusker said...

Riba - You are right.

I was perplexed when the Banking Amendment sought to slow down expansion outside Kenya by having the CBK license every branch/subsidiary!

It adds costs & delays to the process.

MainaT said...

CT, why we are where we are i.e. few in the govt have any private sector experience, I'd rather they concentrated on creating an enabling environment for firms to grow. So the judiciary, infrastructure (privatising some of the major roads maybe worth an experiment e.g. the NBI-Kisumu road), political environment and security (reading that scenario this morning won't do us any good).

pesa tu said...

Our labour costs are too high we cant compete with India in basic manufacturing.Maybe , highly specialised Services like Financial Advisory But manufacturing.uh..uh... we cant do it

Sijui said...

Let's first out-compete the South Africans who are eons ahead of us!!!! Both in terms of a coherent expansion policy and the economic muscle to accomplish it.

Definitely the potential is there, and Kenyan firms will scrabble and duke it out on their own with no political support to put wind in their sails. Infact Kenyans should be glad that far more progressive governments in East Africa are pushing for regional integration.....yes, I know on the books TZ, UG and the rest whine about Kenyan hegemony however the proof of the pudding is IN THEIR ACTIONS. Bidco's move case in point.

Sijui said...

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/10/AR2007021001216.html

stumbled upon this tidbit....and who said the Chinese are stingy and exploitative?

coldtusker said...

MainaT - We need a professional civil service that is well trained about what makes business sense. I like the idea of policy makers being drawn from the private sector.

Pesa - True dat.

Sijui - Great article on SA in China... SA was arrogant when they entered Kenya (SAB, Metro, etc) & were beaten back.

Kenya needs to subtly expand its reach across Africa.

I think Kenya can become a net food exporter to China.