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Conducting Business in Kenya

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Conducting Business in Kenya
February 13, 2015

Abstract

As a business consultant for XYZ Medical Group, our mission is to travel to East Africa and build a HIV/AIDS clinic. Our goal is to educate different communities on the importance of safeguarding their health against contracting this disease. XYZ Medical Group has designed a program that has been successful in New York City and Philadelphia. Pursing international endeavors will be challenging when it comes to cultural and business practices. Understanding the different cultures and how to interact to convey the message is crucial. In order to be successful there must be policies and a strategic framework for mobilizing and coordinating resources for the prevention of HIV/AIDS transmission and provision of care and support to the infected and affected people in Kenya. AIDS is an epidemic throughout Africa and Kenya is not excluded. Currently, most people are not educated on the dangers of this disease due to ethnic, cultural, and religious beliefs. The country’s diverse culture, customs and gestures, political imbalance, economic state, and how they conduct business with foreign influences are some issues that will be addressed and solved before entering this venture.

Conducting Business in Kenya

Kenya or the Republic of Kenya is a newly independent country that gained its independence in 1963 from British colonial rule. Kenya is located in East Africa and is bordered by Tanzania, Uganda, South Sudan. Ethiopia and Somalia. The Republic of Kenya is one of the most culturally rich countries in all of Africa with a beautiful blend of several different cultures and ethnic groups. There are at least 40 different ethnic groups living in Kenya. The country is bustling with a total population of 45 million people with the population growth rate around 2.3% (Africa and the World, 2012). Kenya has a wide range of geographic features that include grasslands, forests, deserts and cities. Nairobi is the capital city and is home to more than three million people, but only a minority of all Kenyans live in urban areas. The population is concentrated in the southern two-thirds of the country, where most people reside in rural towns and villages. Despite its rich culture and diversity, Kenya is faced with major health and economic hardships. In an effort to conduct business in Kenya, one must understand and weave through the several different cultures, customs and gestures, political imbalances and the weakened economic state.
Cultural Differences in Kenya

Kenya has enough ethnic groups or tribes to fill several countries, with such a diverse group of people how is business conducted? It is important to first understand the different cultures and how they coexist. The largest ethnic group is the Kikuyu, they make up 22%, the Luhya make up 14%, Luo make up 13%, Kalenjin make up 12%, Kamba 11%, Kisii 6%, and Meru 6%. Smaller groups include the Embu, Maasai, Mijikenda, Samburu, Somali, Taita, Teso, Turkana, and others (see map below). About 1 percent of the population consists of Europeans, Asians, and Arabs (CultureGrams, 2015).

While Kenya's ethnic groups generally coexist peacefully, certain qualities are associated with each group. For example, the Luo are viewed as proud and outspoken. Distinctions are made within groups as well, and members of each clan are believed to possess different characteristics. Among the Kikuyu, those living in Nyeri are believed to be serious and industrious, and those in Murang’a are seen as humble and peaceful. Clan and tribe distinction were very important in past generations and were often the basis for choosing spouses and sometimes friends. The younger generation pays less attention to distinctions between tribes. With several tribes in Kenya each of them have their own dialect, it could be daunting trying to start a business there if you do not speak any of these languages. How do you have so many cultures and dialects and still be able to conduct business? Fortunately, Kenya has two official languages that are spoken.
Due to the British colonization most Kenyans are fluent in English. One can go as far as saying Kenya is privileged enough to speak “The Queens English.” The second language is Kiswahili or Swahili. This language was predominately used as a trade language between Kenyans and neighboring countries, however today it is spoken widely in Kenya. English is predominately used in business, schools and in government. It is beneficial to learn Swahili while conducting business in Kenya because despite the numerous dialects and English speaking Kenyans, a large majority of Kenyans speak Swahili. Individuals who live in the slums of Nairobi may not have the education and knowledge of how to speak English but nearly all Kenyans are fluent in Swahili. Building a HIV/AIDS clinic in Kenya, it is imperative that someone speaks Swahili.
Customs and Gesture Kenyans are very proud people; they pride themselves in fostering lasting relationships with people due to their warm and welcoming demeanor. As a result of the large number of tourists who visit Kenya, Kenyans are not threatened by other cultures. As a matter of fact, they welcome and help not only tourist but also support foreigners coming in to start businesses. Kenyans understand the importance of business and are willing to support different cultures knowing that it will eventually help their economy.
Starting a business in Kenya, one must become familiar with the customs and gestures used in everyday life. Every dialect has their way of saying hello; however the standard business greeting is with a handshake. Supporting the right forearm with the left hand while shaking shows special respect for a leader or elder. Kenyans are friendly and greet others with warmth and politeness. They often ask about each other's family and welfare. In coastal areas, a traditional Swahili greeting is Jambo (Greetings). Habari gani? (What is the news?) or just Habari? The usual response is Mzuri (Good) or Salama (Peaceful). English greetings are also acceptable. Upon departing, Kenyans might say Tutaonana (We will see each other), or in the evening, Lala salama (Sleep peacefully). Maasai children greet elders with a slight bow; the elder responds by placing an open palm on the child's head (CultureGrams, 2015). Political Imbalances

With Kenya gaining its independence 52 years ago, the political arena is still in chaos and that usually trickles down to business. During the past three decades, Kenya’s economic stability has been affected not only by a series of droughts and the volatility but also by ethnic conflict and political instability (ILO, 2013). Political influence in Kenya’s business world is rampant. Corruption is a major factor in the way business is conducted. It is important when establishing the HIV/AIDS clinic in Kenya that there is a system of checks and balances to ensure that money is not stolen or corruption is not present. Having a relationship with politics is something that should be avoided due to certain tribes feeling that you may be showing favoritism to another group. Corruption in government leads to the misuse of funds and high ranking officials tend to use their power to shake down businesses.
In a recent article by the “Christian Science Monitor,” newly elected president Mwai Kibaki vowed to end such corruption. Kenya's higher education minister was first to go, followed by Nairobi's mayor, and now the foreign minister and his permanent secretary. The series of senior resignations from Kenya's government may be showing that the new Constitution has teeth and the president finally has the muscle to root out corruption (Pflantz, 2010).
The new director of the Anti-Corruption Commission in Kenya, Patrick Lumumba, vowed that he had "four Cabinet ministers" and at least 45 other senior government officials in his sights. He is aided by a clause in the new Constitution, which demands officials stand down if accused of corruption. (Pflantz, 2010). The fact that corruption is being policed, businesses can conduct operations knowing that the crackdown is happening. Corruption also brings up a frightening issue for business being conducted in Kenya. A recent survey suggested that Kenyan policemen demanded bribes during 96.9% of encounters with the public, last year the figure was only 82.1%, according to a survey by Transparency International (TI), a Berlin-based anti-corruption watchdog. The same group revealed that corruption in Kenya was found to have improved from "highly acute" to merely "rampant", prompting local newspapers to demand to know why foreign companies were not flocking back to set up new ventures in Kenya (The Economist, 2004).
The HIV/AIDS epidemic is not secluded from the corruption in Kenya. Unfortunately, people are misusing funds donated to AIDS clinics. According to Agence France-Presse, the United States ambassador to Kenya, William Bellamy, said government corruption was a primary reason that only a fraction of the $70 million given by his country last year had been spent in Kenya. Addressing Vice President Moody Awori, Bellamy said: "The government of Kenya must change how it spends the money it already has, and it must insist on obtaining results from that spending. I ... urge you, again, to use all your influence to get this government to start spending responsibly the funds it already has to fight HIV/AIDS." (Africa News Service, 2005). Due to the mismanagement of funds other donors were hesitant in donating money to the AIDS cause.
The Foreign Corrupt Practices Act (FCPA) is an important anti-corruption tool designed to discourage corrupt business practices in favor of free and fair markets. The FCPA prohibits promising, offering, giving, or authorizing giving anything of value to a foreign government official where the purpose is to obtain or retain business. These prohibitions apply to U.S. persons, both individuals and companies, and companies that are listed on U.S. exchanges. The statute also requires companies publicly traded in the U.S. to keep accurate books and records and implement appropriate internal controls (Embassy of the US, 2015). Due to economic hardships corruption leads to desperate measures.. The chart below describes some factors that potentially lead to corruption.

During election seasons, businesses tend to suffer and the result of riots, looting and violence can leave a business with nothing. It is important to understand the political climate when starting a business in Kenya. For example, in 2008, economic recovery ended abruptly due to the post election violence that broke out. As a result almost every sector of the economy suffered during the first quarter (ILO, 2013).

Economy

Today Kenya’s economy is booming with agriculture leading the way, other sectors such as small scale consumer goods product such as furniture, soaps, and cigarettes just to name a few are contributing to Kenya’s economy as well (See chart below). Tourism is a major contributor to Kenya’s economy. However recent terrorist attacks have threatened that business sector. According to an article by BBC News titled “Violence Threatens Kenya’s Economy,” Kenya's tourism industry, which brings in some $900m (£455m) a year and attracts more than one million visitors a year, is sure to take a hit after four days of rioting and ethnic clashes following the election in 2007. The Foreign Office warned British tourist to stay indoors during the political upheaval (Hunt, 2008). Establishing a business in Kenya one has to anticipate delays and shutdowns especially during election seasons. Ethnic tensions run high because tribalism is prevalent. The article continues to chronicle the several attacks on Kenya and yet tourism picked back up. Holidaymakers steered clear of Kenya after the US embassy bombing in Nairobi in 1998 and the Mombasa attacks in 2002, however, the economy would likely survive any drop in tourist numbers. The Kenyan economy is in a position of strength. Tourism flows have been strong so there will be room to withstand any temporary downturn.

According to the Embassy of the United States, Kenya’s key economic challenge is to increase its real GDP growth rate. Sustained rapid economic growth is essential if Kenya is to address its high unemployment rate (officially about 10.5 percent, unofficially in excess of 40 percent) and widespread poverty. Significant growth is also necessary for Kenya to achieve the goals outlined in its Vision 2030 development strategy, which aims to make Kenya a globally competitive middle-income country by 2030. Achieving high growth, however, will depend on improved economic governance and greater economic reform to improve the country’s investment climate.

Riots are a big factor in Kenya’s economy. Disruption of business seems to have a trickledown effect on other industries as well. For example, with agriculture being the quarter of the country’s gross domestic product, exports like tea, flowers, and vegetables could be halted when riots ensue. Unofficial roadblocks by rioters armed with weapons are likely to interrupt transport of such products between Kenya's major cities, ports and airports. Any disruption would be very costly for suppliers of perishable goods such as cut flowers, of which Kenya is the main supplier to Europe (BBC, 2010).

Business Solutions

Establishing the HIV/AIDS clinic in Kenya is a great endeavor because it not only helps individuals who do not have access to health care but it will so help bolster Kenya’s weakened economy by supplying jobs. Our first task in setting up the clinic is the infrastructure. Acquiring land, transport and contractors to build our clinic is important. Utilizing the tools and guidelines set by the FCPA should help our organization avoid corrupt con artist who may take advantage. The clinic should be located in an area where locals do not have to travel a great distance to get care. Setting up outreach “pop up” clinics in rural areas is also something that can be done, where once or twice a week a team will go to rural areas and dispense medicine and educate people on the prevention of HIV/AIDS.
Personnel are another critical element in the success of the clinic. The clinic will need qualified nurses and doctors to work. A select number of doctors from the United States should go to Kenyan hospitals and recruit qualified nurses to assist in the clinic. An organization such as Doctors Without Borders is a great resource of doctors who are willing to travel to developing countries and provide care. It is important for the hiring personnel to hire nurses from different tribes and also who can speak Swahili. This is especially important when you leave the urban city of Nairobi and travel to more rural areas where English is not the main language.
Safety is extremely important in safeguarding the clinic and staff especially when traveling. It will be imperative to have weekly meetings to discuss not only the goals of the clinic but also issues such as political upheaval, or corruption within the business community and strategies to avoid them. A code of conduct should also be established to uphold the integrity of the clinic. As mentioned, Kenyans are polite and humble people, having a cross cultural training with all the staff, American and Kenyan will help foster a closer relationship and build a stronger team.
Conclusion

Despite the many challenges that Kenya presents, there are several great opportunities that a business can take advantage of by opening their business there. Using what is available to them is essential in creating a positive environment. It is important to understand the different cultures, and how to interact with them. Also, embracing the customs and gestures of the Kenyan people will build trust and help business relations. Avoiding involvement in politics and corruption is another major factor in building a successful business. Starting a business such as the HIV/AIDS clinic in Kenya is not only a humanitarian gesture, but also from an economic standpoint a major contribution.

References
Africa and the World: AFRICAW. (2012, June 26). Retrieved February 11, 2015, from http://www.africaw.com/
Africa News Service (2015, February 3). Kenya: AIDS Funding Hindered by Corruption. Retrieved from General Reference Center Gold. Web. 13 Feb 2015.
Corruption Graph (2015, February 12). Retrieved from images.fromp.com
CultureGrams (2015, February 13). Kenya. Retrieved from ProQuest
Embassy of the United States (2015, February 12). Retrieved from nairobi.usembassy.gov/doing- Business-local.html
Hunt, K. (2008, January 2). Violence Threatens Kenya’s Economy. Retrieved from www.bbc.co.uk/2/business/7168060.stm
International Institute of Labor Studies (ILO)(2013). Studies on Growth with Equity: Kenya Making Quality Employment the Driver of Development.
Kenyan Tribes Map (2014, July 23). Retrieved from http://mkhalj3.worldpress.com/2014/07/ kenyan.tribes.
Pflantz, M. (2010, October 29). In Kenya, Corruption Probes Bring Unprecedented Government Shakeup. The Christian Science Monitor. Retrieved from ProQuest.
The Economist (2004, December 18). Where Graft is Merely Rampant: Fighting Corruption in Kenya. Retrieved from Academic OneFile.…...

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Doing Business in Kenya| Kenyan Social and Business Culture

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