Family businesses in Kenya are increasingly weary of international competition

28 March 2019 Consultancy.africa

As Kenya looks to become an East African hub for foreign investment, smaller family businesses in the country are significantly under threat from the stream of new international firms looking to enter the market, according to new analysis from global professional services firm PwC.

East Africa has gained a certain degree of political stability in recent years, which has combined with the relatively high level of economic diversification in the region to make it one of the most lucrative regions for prospective foreign investment. Kenya is the economic hub of the region.

The country is among the largest economies in Africa, and the domestic economy has done comparatively well to keep pace with the wave of digitalisation sweeping across the continent. The market for digital and cybersecurity services in the country is set to grow rapidly in the near future.

Family businesses in Kenya are increasingly weary of international competition

Much like the rest of Africa, Kenya is looking to investment from the international business environment to help drive its economic growth in the near future, although new analysis from Big Four accounting and advisory firm PwC suggests that this might not be the best scenario for all segments in the country.

The large pool of international firms that are set to enter the Kenyan market as a result will pose significant competition to family businesses across the country. Alongside corruption, which has been a major issue in the country, most family businesses cited international competition as their biggest challenge in coming years.

Among the causes for concern surrounding foreign competitors is the cost-effectiveness of their products. Chinese goods, in particular, are flooding the supermarkets in Kenya and are trumping local products due to their low costs. The same issue is being faced by the pharmaceutical sector as well.

“Fifty-two percent of local family businesses worried about increasing international competition more than the global average of 38 percent. This is the second greatest challenge after corruption. Both globally and in Kenya our survey respondents shared concerns about new market entrants and their potential to topple established businesses,” said the PwC report.


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