The Difficulties of Doing Business in Kenya


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doing business in Kenya

Kenya is the East African hub for small and medium-sized enterprises or SMEs. SMEs play an important role in many economies because they create jobs, contribute to GDP, and aid industrial development. SMEs also meet local demand, provide innovative input to large firms, and so on. Doing business in Kenya is becoming harder as new challenges emerge.

SMEs account for 80% of employment in Kenya, where a new middle class is growing and stimulating demand for new goods and services.

Infrastructure investment and strong private consumption have aided economic growth in countries such as Kenya. Many African countries rely on entrepreneurs to help them grow in the future. Without investing in such enterprises, reaching the economic national goal may never be achieved. 

Entrepreneurs have a special opportunity to start a business trade and investment in Kenya’s private sector that they may not have elsewhere.

To succeed on their way to the top, these entrepreneurs must, however, be aware of the difficulties of conducting business in Kenya.

Here are some issues that Kenya’s small and medium-sized businesses must deal with:

Better Training for Doing Business in Kenya

In contrast to other countries, SMEs in Kenya generally develop their management strategies through trial and error. Their managerial practices typically prioritize operational plans over long-term strategic plans.

Kenyan entrepreneurs employ managerial techniques that differ from other global practices, preventing them from dealing with future challenges. Unless the government chip in by standardizing managerial global practices, it will continue to be a challenge to SMEs. 

Limited Access to Finance & Credit

It is difficult for SMEs to obtain financial assistance, such as a line of credit, from Kenyan institutions and commercial banks.

Kenya’s lending conditions differ from those of other countries. A loan typically requires collateral, and smaller businesses, such as SMEs, may be unable to provide such assets due to their size.

Rapid Development in Technology

Technology is one of Kenya’s fastest-growing industries. Changes in technology pose a significant challenge to the growth of SMEs because many of these businesses cannot afford to invest in new innovations on a regular basis, if at all.

In Kenya, investing in new technologies pays off only occasionally. Because of the lack of technology in the area, a small business in a rural area, for example, cannot reap the full benefits of the internet.

SMEs should begin to change with technology to register positive growth. Some managers still hold to the old primitive techniques of managing business instead of technology to their peril. 

New Laws & Regulations

Every day, new laws and regulations are imposed on Kenyan industries and businesses. The government and stakeholders frequently enact new laws to regulate the operations of businesses. 

These laws can pose a significant threat to economic growth because businesses lack control over certain operations, limiting their potential. If the potential of these businesses is limited, so is the economy’s growth.

Lack of Education & Skills Hinders Doing Business in Kenya

Every managerial role requires both the necessary education and expertise. Every managerial position necessitates an adequate education as well as relevant skills.

Most Kenyan business managers are uneducated, which prevents companies and other employees from reaching their full potential. When a business faces a challenge, managers are unsure how to handle it because they lack experience or background.

Other challenges that SMEs face in Kenya include inadequate infrastructure, poor resource management, and insufficient government support. While SMEs have the potential to revitalize many crippled African economies, the government must intervene and assist these businesses in gaining traction.

Overcoming these obstacles will take time, but Kenya has a lot of potential to be a success story for other upcoming entrepreneurs.

Before starting a small or large business, you must conduct market research to determine whether your product meets the needs of the surrounding community. Invest in a company like Kasi Insight to provide you with the consumer data you need to differentiate yourself in the Kenyan market.


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