Businesses in emerging markets like South Africa share the view that any venture considering engaging Africa, particularly growing markets like Kenya, either for the first time or reattempting to enter the space, must do its homework.
And this requires a thorough understanding of the market, including who the major players are, what would an entry and exit strategy entail (registering and deregistering a company, for example), how are contracts managed, and where can the most powerful or influential partners be sourced.
Partnerships have become an integral part of doing business in Kenya. Growth in just the ICT space alone has attracted the attention of local and international competitors.
Kenya's ICT and telecommunications environment is home to several established businesses including Safaricom, the Wananchi Group, Ushahidi, Kyamu, Jumia, Access Kenya, Orange, Airtel, ZTE, Huawei and Liquid Telecom, among others.
Companies like Google, Microsoft, IBM and Samsung have also established regional offices in Nairobi.
They look to statistics that reveal an upward trajectory in growth. Deloitte has suggested that Kenya boasts one of the highest rates of urban internet access in Africa, estimated at 72 percent of its population.
In the 2015 economic survey available through the Kenya National Bureau of Statistics, the country's ICT sector expanded by 13.4 percent in 2014, compared to 12.3 percent growth the previous year.
Q2 figures for the financial year 2014/15 indicated mobile subscriptions were at 33.5 million, up from 32.8 million recorded for the previous quarter. The number of new subscriptions increased to 863 803, while mobile phone penetration grew by 2.1 percent to 82.6 percent, up from the previous quarter's figure of 80.5 percent.
Recent initiatives and partnership announcements include the launch of an interactive mobile application for traffic users by Google and Safaricom, the introduction by Barclays Bank of the Barclays Rise Innovation programme to coincide with the government's Enterprise Kenya initiative to fund and support local innovators. However, it is within the country's active mobile money market where one sees a great deal of competition.
In July, Equity Bank, via its connection with Airtel, announced the availability of Equitel mobile money banking service, with the aim of disrupting the local market and up the level of competition.
Standard business operation planning is a given and includes compliance with local business registration processes, such as with the tax authorities.
"It's important to walk the pavements... you have to go and see what is actually happening there. Unfortunately, a lot of companies that go into places like Kenya or anywhere in Africa make a lot of assumptions. He says it's preferable to rather take the necessary time upfront and do the homework.
As Onesmus Mbogo, the Nairobi-based IDC country manager, points out, recent tax legislation has increased costs for employers as a result of raised social security contribution rates, the National Social Security Fund (NSSF) and National Hospital Insurance Fund (NHIF).
Walker emphasises the need for companies to adjust their go-to-market strategy to suit local demand to local conditions. "From a banking perspective, you have to make sure your money is in order...and understand payment terms...you've got to make sure you get paid and protect it." Market researchers agree that when it comes to Kenya, there is a policy and political will to reinforce a framework of engagement, which lends itself to innovation.
This partner-centric environment continues to attract competition, both within Kenya and from abroad. Firms from China (including telecommunications companies Huawei and ZTE), US and Norway have announced investment plans and the desire to pursue joint ventures, particularly with government.
This article was first published in Brainstorm magazine. Click here to read the complete article at the Brainstorm website.
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