CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
by James Pod, Kenya, August 1999
THEME = ECONOMY
The opening up of the Kenyan market has resulted in an avalanche
of reasonably priced high quality imports from South Africa.
This is good news to the consumers,
but bad news for manufacturers and Kenyan jobs
At a glance, the list of items in Kenya's supermarkets and retail outlets reads likes a manufacturer's inventory from South Africa. From fast foods, cars, magazines, machinery, clothing, television programs and advertising materials - including television commercials and billboards - the impact of South Africa on Kenyan business has been overwhelming. Kenyan consumers are generally a happy lot; pleased with the pricing and better quality of the South African goods.
A majority of Kenyan consumers have no sympathy for the predicament now facing local manufactures. These are viewed as having been complacent and used to overpricing, and are now unable to deal with a competitive environment that survives on low margins. But, unable to compete with the higher quality and low prices of South African goods,, Kenyan manufactures are crying "foul" and warn that the manufacturing sector is teetering on the brink of collapse. They are calling for a halt to South African merchandise on sale in the markets.
Also, there are allegations of dumping and restrictive tariffs by South Africa, on Kenyan goods. Both these accusations been raised by the Kenyan business community and even mentioned in President Moi's statement during the COMESA Summit in Nairobi in May. The President said that Kenya was considering putting restrictions on South African imports as a way of protecting the local industry.
Among the measures being discussed is the possible introduction of new tariffs to bridge the price gap. The pricing advantage South African goods enjoy on the Kenyan market, is largely due to the subsidy which their government grants their own manufacturers. South African High Commissioner Griffith Memela is obviously upset by the impression that his country is advancing unfair trade practices. He says that the focus should not be to fight his country, but "rather on the unfolding scenario of the One World concept, which aims to turn the world into a single market by the end of the year. I'm saddened by the remarks that were made against South Africa during the COMESA Summit, because we are not really the issue."
The opening up of South Africa is indeed credited for the boom in Kenya's small business sector in the last four years, through the sale of merchandise from that country. Much of this is in the sale of clothes and household goods. South Africa's easy Value Added Tax refund procedure - which is done at the airport - has been an incentive for small traders. After all, South Africa is not so far away! When launching into the car selling business, Kenyan dealers use South African importers, and those dealers lacking funds to ship the vehicles from South Africa to Kenya, drive the vehicles to Kenya and on into their showrooms.
Over the past four years, affiliations in the local advertising industry have created a shift that could favour the future marketing and promotion of South African businesses in Kenya.
After the fall of apartheid, multinational advertising agencies such as Ogilvy & Matther and Mcann Erickson - both of which have operations in Africa, made Pretoria their headquarters for the African continent. Major Kenyan agencies - such as Century Advertising and Scanad, Adapt and Ayton, Young & Rubicam and Marketing Communications - are all affiliated to international agencies using South Africa as their head office for Africa.
The Chairman of the Advertising Practitioners Mr. Bipin Sony says that the implication of this is that "major decisions relating to media campaigns, are made in Pretoria and Johannesburg, and it does give an advantage to South African products in Kenya. South Africans prefer to create all their concepts, and only adapt them to the Kenyan market, as opposed to doing the whole operation here.
For example: South African Brewery Products and MultiChoice and Steers, prepare all their brochures and commercials in South Africa. However, some Kenyan advertisers see the "South African invasion" as having a positive impact on local standards. There is a lot to be learnt from the South Africans so long as Kenyans stay focused and apply the knowledge to local situations.
Analysts agree that Kenya will have to adopt more progressive attitudes (as South Africans have done) in order to survive the emerging one-world-market order. Kenyan business and the government have been slow to respond to new challenges and the country is virtually unprepared for changes in world trade. At the current pace, Kenya's dream of industrialization by the year 2020 is unachievable. One reason for this is insufficiencies in the marketing and promotion of local goods.
When South Africans come to Kenya to seek new markets, their government gives them a 50% rebate on their costs. Kenyans, on the other hand, have to seek export markets at their own expenses. Besides direct investment In kenyan industry, South Africans have made indirect entries through franchises with local companies. The fast-food penetration through Steers, Nandos and Chicken Licken has changed restaurant cuisine in Kenya through the use of recipes from South Africa.
Kenyans are afraid that President Moi's call for restrictions is that it could wind the clock back to the wretched old days, when consumers lived at the mercy of local manufacturers who charged exorbitant rates for shoddy products.
END
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