The Experience of South African Firms Doing Business in Kenya

The report examines the experiences of South African companies in Kenya, noting that while Kenya is an attractive 'natural entry point' to East Africa due to its skilled labor and business-friendly history, South African firms face significant hurdles. These include poor infrastructure, high electricity costs, corruption, and local resentment toward perceived South African corporate arrogance. The study highlights specific failures, such as the 'beer wars' and the closure of Metro Cash and Carry, while suggesting that South African firms must better accommodate local sensitivities to avoid being seen as economic hegemons.

• Kenya is viewed by South African investors as a strategic 'natural entry point' for expanding into the East African region, favored for its educated workforce, enterprising population, and a history of being 'markedly business-friendly' because it never underwent a socialist phase.
• Infrastructure is identified as the primary obstacle to business in Kenya, specifically the poor state of roads, inadequate energy supply, and slow processing of goods at the main port. Notably, the cost of electricity in Kenya is reported to be four times higher than in South Africa.
• Administrative and regulatory hurdles significantly hinder investment, characterized by excessive red tape, vague regulations subject to varying interpretations, and resulting corruption, alongside high customs duties.
• South African firms have faced significant competitive failures in Kenya, including the 'beer wars' where South African Breweries lost to Kenya Breweries, the 2005 closure of Metro Cash and Carry after eight years of losses, and the failure of MTN International to succeed in the Kenyan market.
• There is notable local resentment toward South African investment, with some Kenyans perceiving South African corporations as 'patronising, even arrogant' and unwilling to collaborate with local partners.
• Political instability and uncertainty are cited as 'software' constraints that disrupt long-term project planning and can suddenly change the viability of investments.

APA

Hudson, J. (2007). The Experience of South African Firms Doing Business in Kenya. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2007/04/East-Africas-Hub-Experience-Doing-Business-Kenya.pdf

Chicago

Hudson, Judi. The Experience of South African Firms Doing Business in Kenya. South African Institute of International Affairs, 2007. https://saiia.org.za/wp-content/uploads/2007/04/East-Africas-Hub-Experience-Doing-Business-Kenya.pdf.

Wikipedia

{{cite report |last1=Hudson |first1=Judi |title=The Experience of South African Firms Doing Business in Kenya |publisher=South African Institute of International Affairs |date=2007 |url=https://saiia.org.za/wp-content/uploads/2007/04/East-Africas-Hub-Experience-Doing-Business-Kenya.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hudson2007experience, author = {Hudson, Judi}, title = {{The Experience of South African Firms Doing Business in Kenya}}, institution = {South African Institute of International Affairs}, year = {2007}, url = {https://saiia.org.za/wp-content/uploads/2007/04/East-Africas-Hub-Experience-Doing-Business-Kenya.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }