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Kenya: South African investors cry foul

Discussion in 'Kenyan News and Politics' started by Rich Dad, Jul 26, 2011.

  1. Rich Dad

    Rich Dad JF-Expert Member

    Jul 26, 2011
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    wadau nimesoma hiyo habari hapo chini nikaikumbuka Netgroup solution!!! kweli wenzetu wakenya wanapiga hatua.


    South Africa has unleashed a trade war with Kenya over investment barriers against its nationals. South Africa believes that deliberate efforts are being made to frustrate potential investors in Kenya. By Blamuel Njuri.
    Whereas Kenyan authorities are upbeat to woo foreign investors, South Africans, who have invested billions of dollars in other countries on the continent since the fall of apartheid in 1994, have not found it easy to put their money into the Kenya economy. South Africa is now the third largest foreign investor nation in Kenya, after the United Kingdom and the United States, but it is experiencing covert hostility from Kenyan authorities, and is convinced that there are intentional efforts to lock its investors out.
    The concern in South Africa follows the closure of the Castle Brewing Plant at Thika. Outwardly, it would appear that the South African Breweries-owned Castle Brewing Kenya Ltd plant was shut after a gentlemen's agreement following falling sales. But there is more than meets the eye. The firm had been subjected to high cost raw material imports which pushed its production costs higher than those of the Kenya Breweries. It was subsequently engaged in a cut throat rivalry with East African Breweries, before a pact was reached to end their rivalry and form an alliance.

    Business and diplomatic circles tell a story that would not encourage any foreign investor to set foot on Kenya. They say Castle's decision to leave the Kenyan market was the most visible indication of the frustrations foreign investors suffer in Kenya as they struggle to compete with businesses in which top political and government officials have interest. East African Breweries is one such firm in which Ministers, permanent secretaries and a retinue of wellconnected politicians double as directors, shareholders and suppliers and distributors.
    A top South African embassy official complained of intrusive Cabinet Minister for demanding bribes of up to 25% to allow new business. He moaned that there were no clear rules of what a foreign investor should or should not do and that the authorities intentionally concealed trade regulations.
    IMAGE PHOTOGRAPH 8President Moi (third from left) opening SAB's Kenya Breweries.

    Former Castle managers and diplomats reveal that foreign investors find Kenya's market confusing. South Africa investors particularly feel they are not wanted. Like other foreign investors, they find the long list of taxes, bureaucracy, and corruption that comes with it, unbearable.
    Former Castle marketing director Joe Wanjui, who is a Kenyan, had no clue that the firm was to change hands. He heard about the takeover from news bulletins like several hundred employees. He admitted the company had been pitched against odds that were far from a level playing ground. He observed that despite the mounting competition fostered by globalisation, Kenya government officials still behave like there is no competition and the borders are still closed.

    "Government Ministers still call foreign directors of various companies and demand that relatives and friends be employed in certain positions or such directors will have their work permits cancelled," said Wanjui.
    Manga Mugwe, the vicechairman of the Kenya Association of Manufacturers, said Castle's fate and the complaints by foreign investors indicate that the government needs to get to the roots of the problems foreign investors face in Kenya.
    "There is no law barring government officials from owning businesses. But it should now be dear that we need a level playing field." he said.
    South African Breweries which owned Castle is one of the biggest breweries in the world. If it pulls out of a country, smaller businesses will not come in. Castle has moved to Tanzania. That is a huge statement. The company is signalling that it has confidence in Tanzania, Mugwe said. "What the South Africans have experienced here will scare everybody away," he added

    But former Kenya Association of Manufacturers chief, Chris Kirubi said Castle's problem was not exceptional as various companies have undergone similar experiences. He however, conceded that its closure would send negative signals to other companies that wanted to come to Kenya.

    But a former manager with Castle said: "When you have Ministers and civil servants in business, how can foreign business compete? In modern countries, you cannot do that. No investor will come here unless the ethics of doing business changes."
    Just a week after it pulled out of Kenya, South African Breweries announced that it was buying one of America's largest brewers, Miller, owned by the tobacco giant, Phillip Morris. The new company is called SAB-Miller.
    "South African Breweries is investing billions in China, Russia and Poland. Yet Kenyans expect the world to believe that the same company has failed to compete here. You can't say SAB has been swallowed here. Nobody with the right mind can say that," a manager with the firm said.
    A South African diplomat was more explicit, "When business executives go to other African countries, they are begged to stay. I know countries where the President will sit down with a company executive just to find out what the government can do for the firm. Kenya's potential will remain blocked until there is complete openness.
    With the exit of Castle from Kenya, South African investors now list a number of their businesses that have been frustrated in their attempts to enter the Kenyan market.
    They have interests in insurance and re-insurance, television entertainment (Multichoice), soft drinks (Coca Cola South African Bottling Company) and Engen Kenya Ltd, an oil firm that only moved in recently.

    In June, last year, a team of businessmen from the South African Industrial Development Corporation visited Kenya to find out what investments opportunities are available. Sources say the team planned to invest up to $100m in Kenya. For a start, the team wanted to put $25m into failing Kenyan firms and become shareholders. The team was to be guided by government officials to identify where opportunities existed. It left the country with nothing.
    "The people we met were asking for 10% before we could invest here," a businessman who was in the delegation said. "We were not even asked what opportunities there were. Of course, the delegation left and might never return."
    Around the same time, South Africa's cotton industry officials visited Kenya with plans to revive several collapsed ginneries. After an extensive survey of the cotton market, the South Africans concluded that "Kenyans are sitting on oil." They, too, left with nothing after frustrations.
    The dilapidated industry has yet to begin its recovery after years of stagnation and competition from cheap imports, mainly second hand clothes commonly known as mtumba.

    Source:interstitials | Business solutions from
  2. Geza Ulole

    Geza Ulole JF-Expert Member

    Jul 27, 2011
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    halafu hao jamaa ni wajinga kweli wanajifananisha ati na SA kwamba wanaweza ku-compete! they are a day dreamer for sure!
  3. Rich Dad

    Rich Dad JF-Expert Member

    Jul 27, 2011
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    Mi napenda confidence kama hii, lazima uanze na kwa kujiamini wewe mwenyewe kwamba waweza kufanya jambo fulani. Si watanzania hatujiamini kwanza wenyewe na hatuamini watu wetu na ndo maana tunaishia kukumbatia investors uchwara.
  4. Bantugbro

    Bantugbro JF-Expert Member

    Jul 27, 2011
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    Usidanganyike Rich Dad,

    hiyo yote ni rushwa wanasiasa ndio hao hao wafanyabiashara wakubwa wano-control uchumi wa nchi. Ndio maana wanazuia wawekezaji toka nje kwa kuogopa competition. Yote hiyo ni kulinda tu biashara zao na sio kwa maslahi ya nchi...