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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PKF Associates collaborates with DTB to organise training programme for SMEs

30 January 2019 Consultancy.africa

Global financial advisory network PKF International has collaborated with the Diamond Trust Bank in Tanzania to organise a training and education programme, targeted specifically at the small and medium enterprise sector in the Tanzania’s Dodoma province and its suburban regions.

Specifically, PKF International’s Tanzanian member firm PKF Associates is involved with the initiative. The firm offers a range of business advisory services in Tanzania, with a special emphasis in tax and financial services. The training programme represents another dimension of PKF Associates’ operations in the country.

As Tanzania – and the broader region of East Africa – becomes an increasingly attractive region for foreign investment, it is imperative that small and medium enterprises (SMEs) operating in the region engage in innovative means of navigating an increasingly competitive market.

The programme is aimed at ensuring that these firms have a strong foundation upon which to build, specifically by informing them about the various shifting regulatory frameworks with which to comply. For instance, the workshop informed SMEs about the Finance Act that became effective in July last year.

PKF Associates collaborates with DTB to organise training programme for SMEs

The new law stipulates a number of regulations around tax and employment, which most firms might not be aware of. PKF’s partner in the initiative – DTB – introduced SMEs to its various offerings in the financial domain, including guarantees, letters of credit, premium financing, transfer services and cash in transit.

Information was disemminated via individual interactions with bank and consulting firm officials at the event, which not only represented an important training programme but also a key opportunity to network with other SMEs operating in various sectors of the Tanzanian economy.

Commenting on the event, CEO and Chairman of DTB Tanzania, Viju Cherian said, “We have set a target to conduct similar SME workshops across our branch network, to enlighten the SMEs on good business practices – from book keeping, business compliance and credit management, which are all key ingredients for successful business management.”

“SMEs are a very special segment of the economy that needs sustained support. DTB Tanzania have granted loans of more than 285 billion/- to Tanzanian SME businesses. The SME loan book represents 40% of the Bank’s total loan portfolio,” he added.