How will this new development affect Businesses in Kenya? This question is lingering in many if not all Players in the Businesses in Kenya and hence we have decided to break it down for you so that you may take advantage of the new opportunities and plan for the likely challenges that will come along with the Signing of the African Continental Free Trade Area (CFTA).
Africa has been for a long time now operated as estranged siblings with everyone for themselves and God for them all, this is as a result of the mindset impacted on us by our colonial masters as well as the existence of both the Tariff and Non –Tariff Barriers.
Once the African Continental Free Trade Area becomes a reality, it will result into a border-less Africa in terms of Trade in goods, Services, Jobs, Investment, Free movement of people, Intellectual Property Rights and Competitiveness.
Benefits of the African Continental Free Trade Area to Businesses in Kenya include the following;
Access to Expanded Markets – Businesses in Kenya will have access to a larger pool of consumers increasing from the 45 Million Kenyans to the 1.2 Billion people in Africa.
Lower Costs of Production – The Agreement will ease the processes for importing Raw Materials from other African Countries and it also brings about the Possibility of setting up an assembly firm in another country in order to access cheaper Factors of production and hence increase the bottom line of their Business.
Larger access to Human Resource – The CFTA will enable workers to move freely across boarders and hence Businesses in Kenya will have more options when hiring because they can Hire Foreigners without worrying about Work Permits.
On the Flip side Businesses in Kenya should brace themselves for the following challenges that may arise from the CFTA; Increased Competition from foreign Firms, Theft of Intellectual Property and Commodity Dumping.
In Conclusion, we are of the Opinion that the CFTA is good thing for the Businesses in Kenya and the Businesses in Africa despite the few challenges. We shall be giving you more insight on the CFTA in successive Blogs.
All the Best 🙂
Branch vs Subsidiary Company Registration In Kenya – Which one is the Best for me? Many clients often ask us the above question and our answer to it is that “It all depends on the Business approach you want to take”. This is because in some instances, a Branch would be the most ideal entity while in other instances a Subsidiary would be the most ideal.
The major difference comes in when paying Taxes because a Branch Company will be taxed at 37.5 % Corporation Tax while a Subsidiary Company will be taxed at 30%.
However, having paid Tax at the higher rate, a Branch Company may remit after tax profits to its head office without any further deduction of tax whereas a subsidiary company must then deduct a further 10% on dividends paid to its parent.
See below a Comparison of a Branch vs Subsidiary Company Registration In Kenya
|legal Status||Not a separate legal entity but an extension of the Parent Company||Separate legal Entity distinct from its Parent Company|
|Liabilities||Liabilities Extend to Parent Company||Liabilities Limited to Subsidiary|
|Entity Name||Must be the same as the Parent Company||Can be the same or Different from Parent Company|
|Allowed Activities||Must be the same as the Parent Company||Can be the same or Different from Parent Company|
|Validity Period||Registered forever until closed||Registered forever until closed|
|Taxation||Taxed as non-resident entity, local tax benefits not available||Taxed as resident entity, local tax benefits available|
|Annual Filing||Must file Branch Office as well as Parent Company’s Accounts||Must file Accounts of the Kenyan Subsidiary|
|Bank Account||Can open Bank Account in Kenya||Can open Bank Account in Kenya|
Click here to talk to one of our Business Set-up Expert for More Insight on Branch vs Subsidiary Company Registration In Kenya and East Africa
Market Research In Kenya – In the Previous article, we took a look at why your company should do Market Research. We also analysed the periods when it’s appropriate to do a market research in Kenya.
This article will answer to other questions. What do you research during your company Market Research In Kenya?
What to Research
Market Research in Kenya can be a daunting task. Especially for foreigners who do not yet have a full grasp of the diversity of the country’s economy.
As such, it can be challenging to determine the areas your market research should concentrate on. However, here are the key sections a successful research analyses:
Find out their gender, age, income level, occupation, lifestyle, level of education attainment. Also look into the size of the potential customers, their language and religion.
Find out what they are currently buying now. What are their current buying habits? Which suppliers do they prefer and what features of their products do they prefer most?
Research into why they buy what they currently buy and what it would take to have them buy from you.
Once you have this basic information, it’s time to delve deeper. This implies doing projections based upon your target audience. Sample questions include:
Tools you can use to do customer market research in Kenya include:
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle” Sun Tzu
Market research in Kenya isn’t complete without a careful look at what your competition is up to. Only when you have a clear understanding of the forces at play can you set a plan of your own in action.
The first step in your competition research is to find out who they are. Make a list of all the major competitors within your range of operation. You can do a search on the internet, look at local listings or even the yellow pages.
Competition may be local or from companies not based at your current location. Therefore, find out the source of all the competing products in the market.
Once you know the competition, it’s time to gather data about them.
Answering these and other questions may be the hard part in doing competitor market research in Kenya. However, here are a few tips that could help:
The above can look daunting. The good news is, you do not, and probably will not, get all the information on your competition. It’s true, the more you know the better you will be prepared. However, don’t get stuck trying to understand them perfectly. Know enough and move on.
When doing market research, taking a look at your industry can be especially eye opening. For an in-depth perspective, your research should look at:
When looking at industries in Kenya, your research should focus on:
The industry data gives you a strategic view of the entire scene. Its importance cannot be underestimated.
Doing market research in Kenya is not a walk in the park. However, the importance of this step cannot be overstated. As you embark on the journey of doing market research for your company, keep the above factors in mind.
When Should Companies Conduct a Market Research in Kenya?
Is there a wrong time to do Market Research? Not really. However, Conduction Research at the right time can significantly alter the results you get.
Market Research is critical to new start-ups survival. Before launching a Company or a Product, Entrepreneurs should make sure they have a detailed Research Report.
This, however, does not exempt established companies from conducting a Market Research. Understanding the Market and Formulating a plan is important to both new and established companies.
Your company should do research;
These are a few scenarios where your company would need a detailed market research report. However, the information you gather will play a key role in day to day operations of your organization.
Market research is a crucial step that every start and business should do on a regular basis. The information gathered will not only help them plan for success, but avoid pitfalls that they would not have seen. Now that you understand the why and when, we shall cover how to do it in over the coming articles.
To help you Understand what Companies do when they fail to Carry out a proper Market research, We shall look at a Popular game normally played during birthday celebrations by groups of children. It’s called, “Pin the tail on the donkey.” The rules are simple, a child is given a pin with a tail attached and all he has to do is pin it on a donkey attached to the wall. But, there is a catch.
The child has to be blindfolded and spun around till they are thoroughly disoriented first. Of course, after such a scenario, it is almost impossible to hit the mark. This is what Most Companies do when they launch new Products or Establish new Business Locations without carrying out a Proper Market research.
Market research is the process of Collecting and Analysing Data on your Market, Target Customers and the Current Competitive Environment.
In this article, we’ll take you through the Importance of Market research in Kenya
Why do Market Research in Kenya.
A well planned Market Research gives you valuable information that helps your company start on the right foot. It could mean the difference between goods flying of the shelves or goods rotting on the shelves.
The data you get will help you understand:
Part of Market Research involves doing a thorough analysis of your potential and current clients. You might questions such as:
2. Your Market
This involves analyzing the forces of Demand and Supply in your market. Question to consider:
Your Industry and Environment play a critical role in how you operate. Questions you should ask include among many others:
3. Your Competition
Your competition is a key component of every Market Research in Kenya. To find out as much as you can about your competition, ask questions such as:
These are just a few of the questions that detailed market research can answer.
Market research gives an edge that helps your business sidestep potential potholes in your path. The data you gather can help you:
You now understand why it’s important to do market research. Lets take a look at when it’s the right time to conduct one.