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When will Kenya produce an African market leader?

May 16, 2008 Business Daily, Strategy

“In 2005, the Chinese computer company Lenovo bought I.B.M.’s P.C. division, and the Mexican cement company Cemex acquired the British cement giant RMC. Last year, India’s Mittal Steel paid thirty-three billion for the Belgian company Arcelor, and Tata’s steel company bought the British-Dutch steel producer Corus for more than eleven billion.”

James Surowiecki (The New Yorker, January 28, 2008)

You know where I’m going with this: when are we going to get a Kenyan company on this particular roll of honour? When are we going to hear of a Kenyan corporate giant taking on the world’s best in their home markets, beating them or buying them? Or are we just a small playground for others?

Tata, India’s huge conglomerate with thirty billion dollars in sales, also has Britain’s Tetley Tea and more recently, the renowned marques of Land Rover and Jaguar in its portfolio. Kenya has yet to produce a continental leader, in pretty much any industry.

Why is this? Part of it is explained by our business model. As I have written here and elsewhere many a time, what has crippled us in the past is our love of monopolies. We are not great competitors by nature; we prefer an orderly approach where one dominant supplier delivers the goods – aided and abetted by government. We squandered many decades controlling licensing, prices, access to resources and importation rights. The businesses we produced were not fit for purpose in the villages, let alone the global market.

A second reason is competitive advantage. What is the unique advantage of many a Kenyan firm? its connections. Not connections with customers or employees, mind you – those would have taken us far. No, we preferred to make connections with politicians, so that they could help us build those monopolies we love. The problem with that form of advantage is that you can’t export it. A business held up by Kenyan politicians can only exist in Kenya.

Thirdly: an unfriendly business environment. A company that spends most of its time fighting with power-crazed regulators and publicly-paid extortionists is hardly going to cut it on the world stage. If, on top of that, our ambitious local business has to deal with the world’s highest power costs and the world’s worst roads, then its global strategy dies before hatching.

Do you want a last one? This one is about you: undemanding customers. We possess some of the most timid, docile and unassertive consumers in the world. We are routinely given shoddy products and sullen service, and we routinely come back for more. Having a demanding customer base that wants only the highest standards is one of the best things that can happen to a business. Sadly, that advantage is rarely bestowed here.

Fortunately, things are changing. Many of Kenya’s new breed of companies do things differently, and have genuine African ambitions. They are aiming to rub shoulders with the best in the world, and are working continuously to become continental leaders. Who will get there first? Will it be East African Breweries or East African Cables? Bidco or Nation Media Group? TPS Serena or Nakumatt? At least the race is finally on. I look forward to toasting the winners.

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