There seems to be a war against ‘non-leaning’ businesses from South Africa that come to Kenya.
In the past, we saw the death of Castle Lager, the quick death of Shoprite, a good store, the demise of Massmart that operates the Game Stores.
It is a string of events that points to more than what has always been said, ‘a different business environment’.
By that phrase, Kenyan business magazines and portals brush aside state capture, corruption and crony capitalism that is so entrenched in Kenya for the collapse of those well-run entities in South Africa.
Why do they die in Kenya?
The answer is a bit complex because one would say, Stanbic Bank, also originates from South Africa’s Standard Bank.
But that answer gives the reason why other well-managed businesses in South Africa, fail in Kenya. Stanbic is propped up by a big political family from independence.
The short answer is, the businesses that fail are non-leaning towards giving a ‘cut’ to the Kenyan oligarchs.
To set up a good practice in Kenya, one must bribe their way through a thick layer of hands.
Secondly, one must also not compete with locally established brands in the same industry. Many of the Kenyan businesses churning out billions in revenues are politically connected.
Castle Lager made a mistake to compete EABL and KBL, it wouldn’t be allowed noting that big political families have a stake in the alcohol making entities.
The owner of Keroche Breweries Tabitha Njoroge has faced the same hurdle and now she has an alleged bill of Sh14 billion in taxes.
Pundits have said that she is being frustrated so that a Danish brewery can be set up in Naivasha.
The Danish Brewing Company is backed by one of the topmost political families.
You begin to get the point here, why South African businesses fail in Kenya.
The Danish brewer will be making inroads even after one of its business partners, the African Spirits owned by Humphrey Kariuki has also been frustrated to the ground.
It is African Spirits that was importing the Tuborg brand of beer. Tuborg is owned by the Danish brewer, and proved an instant hit in the Kenyan market.
ABSA Bank might be collapsed
As if from a horror movie, on 9th April 2020, the Central Bank of Kenya suspended Absa Bank from forex trading for a week.
In a statement, CBK said Absa bank had flouted anti-money laundering rules after its management failed to provide information about some specific foreign exchange trades that it conducted in March 2020.
“In investigating these and other earlier transactions it is evident that Absa Kenya did not have satisfactory assurance of the underlying commercial transactions supporting these trades, as is required, nor did the bank ensure the standard checks on anti-money laundering and combating the financing of terrorism (AML/CFT) and know-your-customer (KYC) requirements were applied,” the statement read in part.
What happened at ABSA have happened in Kariuki Ngari led Standard Chartered, Rebecca Mbithi led Family Bank and by greater crime James Mwangi led Equity Bank, but a Njoroge Patrick led CBK saw it fit to demonize ABSA Bank, a South African entity.
Sometimes in 2020, Transnational Bank, then owned by the Daniel Moi family was hacked and all customer data was shared online but the CBK has never taken any criminal charges against the heads f that bank which has now metamorphosed into a Nigeria lender Access Bank.
The new ‘war’ against ABSA Bank is the lending to EABL above the required level.
Business Daily screams in the headlines, “Absa breaches lending law in Sh18.8bn loan to EABL”.
Absa Bank Kenya has lent East African Breweries Limited (EABL) a total of Sh18.8 billion, breaching the limits placed on lending to a single borrower. The bank had a core capital of Sh46.3 billion as of June, meaning that it should not have lent more than Sh11.5 billion to one entity.Business Daily, NMG
The picture is now complete on how South Africa must grease the hands of Kenyan oligarchs in order to succeed here.
Nigerian businesses succeed because, in the moral universe, Nigeria and Kenya are sisters in corruption.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]