Section III
Geographic influences
According to Lucintel’s study, Kenya is among the leading economies in Sub-Saharan Africa. One of the sources of strength for the country is its geostrategic location in Africa (PESTLE Analysis of Kenya 2013, 2013). The country is strategically located, mainly due to the ports that enable it to receive imports from foreign countries and sell its own to nations worldwide. Besides, the country has the necessary resources to support business operations due to its favorable weather conditions. The strategic location makes Kenya one of the most competitive nations in the developing world.
Major Products and Industries
Kenya has numerous natural resources, such as its rich forests, wildlife, dry-land, wetlands, as well as aquatic and marine resources. The nation’s major industries are based on agriculture, such as sugarcane, tea, and flowers. While the country exports numerous products, its main products for exports are flowers. Other exports include tea, coffee, and horticultural products, which it produces with high comparative advantage. However, the country depends on others by importing machinery, crude petroleum, manufactured goods, chemicals, machinery, and transportation equipment. Available resources make the country favorable to international businesses since they can use them to advance their business objectives.
Current Economic Conditions
The Kenyan economy has been growing relatively well since the global recession of 2008 and was expected to outpace the growth of global GDP by 2018. Economists anticipated the economy to rise to $89 billion by 2018, but the reality was affected by various factors, such as international financial challenges (Mwai, 2019). Currently, the government attempts to grow the economy and is affected by the global outbreak of COVID-19. However, the business could benefit from the country’s efforts to modernize the agricultural industry, invest in ICT, and strengthen SMEs. As a result, the country has the hope of recovering from the negative effect of the COVID-19 crisis on the economy and grow considerably well to accommodate international businesses.
Infrastructure
Kenya has one of the most developed infrastructures in Sub-Saharan Africa, although the government can still improve this area to support business operations. The country has effective road networks to connect various regions, including the rural areas. The country has advanced technology and data analytics, which help businesses to decide strategically. Kenya has invested in ICT to support both small and big companies in different sectors across the nation. Companies are increasingly using online and e-commerce platforms to market their products conveniently to customers (Nandonde, 2019). Although infrastructure in Africa remains poor, Kenya is one of the few developed countries in this area.
Government and Politics
Kenya is a democratic state with a presidential system, which requires a regular voting system to elect the president and other political leaders. Kenya’s political situation makes it favorable for investment due to support from government policies for international investors. Kenya is one of the nations that have accepted liberalization and privatization policies, which attract businesses from the rest of the world. However, economic analysts recognize significant changes in the political environment, such as the existence of violence during the electioneering period (Mwai, 2019). Such political changes affect the feasibility of the country as a target for international business. Regardless of such changes, the country’s government remains supportive and protective of foreign companies, making the country a conducive business environment.
Formal Trade Barriers
The Kenyan government has eradicated most of the trade barriers to international business operations. The removal of price controls, as well as tariff and non-tariff barriers, makes it easier for businesses from different parts of the world to operate successfully. Nonetheless, the country has some trade barriers, such as the need to get a Certificate of Conformity from a Kenya Bureau of Standards (Mwai, 2019). While such requirements are necessary, they create a barrier for companies from other countries that might lack knowledge or resources to obtain the certificate. The trade barriers translate into a high cost of creating business operations in Kenya. The slow adoption of technology is another challenge for companies operating in Kenya.
Promoting Global Business
The Kenyan government is keen on attracting foreign investment, which is an essential part of its growth and development. For example, the country offers tax deductions to international firms intending to invest in it. Besides, Kenya has removed significant trade barriers, such as trade tariffs, to attract foreign investment (Nandonde, 2019). Multinationals desiring to invest in Kenya have attractive trade terms that allow them to perform profitably for their benefit and those of the local economy.
Intellectual Property
The Kenyan government is committed to protecting intellectual property to encourage innovation and creativity. For example, the Kenya Industrial Property Institute is the parastatal that protects IP rights in the country. Furthermore, the government protects copyright on all original productions, such as books, music, or movies. Originators of original ideas are also encouraged to file to protect patents from benefiting from their work. Kenya is one of the countries in Africa that understands the need to protect intellectual property in the age of information technology.
References
Mwai, P. M. (2019). Government Policies and Their Effects to Business in Kenya. Open Access Library Journal, 6(3), 1-14.
Nandonde, F. A. (2019). A PESTLE analysis of international retailing in the East African Community. Global Business and Organizational Excellence, 38(4), 54-61.
PESTLE Analysis of Kenya 2013 (2013). Retrieved from https://www.lucintel.com/pestle-of-kenya-2013.aspx#:~:text=Lucintel%2C%20a%20leading%20global%20management,impact%20of%20different%20macroeconomic%20indicators
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