Lack of reliable contracts keeps off potential investors

There are several things that keep foreign investors away from Kenya, but only one big thing, something that the rest of us have to live with, get finished by, or survive: the absence of contract.

There is barely a word written for the outside world about business in Kenya that doesn’t make reference to the absence of any legal recourse.

It is the reason we have so few foreign ‘chains’. McDonalds has been clear. It won’t run franchises here for this one reason.

Many other world-class businesses similarly conduct the smallest investigation into Kenya and hit the ‘no enforceable contracts’ issue.

Yet as a business handicap it’s still a limp sounding thing in comparison with the reality of its impact.

For what it means is that even a publicly listed company, or any party at all, can simply turn round at any second and say: the contract is gone. If spiteful with it they might even add: ‘challenge us in court if you want to - it will take five years in the Kenyan court system.’

And the bit we all know is that even with a clear cut case, the legal costs will be huge and Transparency International rates our court system one of the most bribed in the world.

It would be a challenge that would be long, costly and without too much relationship to justice. So why do it?

There are reasons. The case will be aired. The media will cover it. The power of sunlight will be poured onto the matter.

And when we don’t challenge wrongdoing, we only keep feeding the culture of impunity.

However, my own observation, as editorial director of one media house where we specialised in covering the global pharmaceuticals and food industries, was that court cases over contract disputes had a remarkably predictable way of killing both parties - through the loss of focus on the retained business, through the court costs, and through the whole psychology of war over conciliation.

Court cases anywhere are best avoided. But in Kenya, the lack of enforceability makes it commonplace for contracts to be torn up.

Which makes it extremely important for all of us in business to select our contracts and our partners with very great care indeed: greater care here than anywhere.

As it is, there are so many ways in which combining forces across different specialisms and sectors, needs and projects, can add up to a sum of enormously more than one-plus-one.

For which reason my own company has entered so many partnerships it has even represented a challenge for outsiders in grasping the multi-layered nature of the mix.