Ideas & Debate
Why Kenyan investors should worry as the West moves isolate RussiaMonday March 24 2014
If you have any love for history or political science, you are now subject to the curse in the old Chinese adage— you are living in interesting times.
Vladimir Putin’s brazen power grab in Ukraine, which has brought up the spectre of long-departed wars and dictators, has been the animating feature of the international landscape for the past few weeks.
What began in the soul-deadening winter months in Kiev has transformed into the annexation of Crimea, and Mr Putin has evolved from some vaguely menacing head of state into a toxic combination of Mao Tse-Tung and Adolf Hitler.
For any Kenyan manager or chief executive, the happenings in Eastern Europe are so far away as to seem inconsequential. Should a CEO sitting in an office in Nairobi or Eldoret care that Simferopol is now full of Russian troops?
On the face of it, international affairs and governmental decisions do not matter much, if your primary task is to grow your office supplies business.
If you wake up every morning wondering how to increase milk sales, these issues can be so distant as to be nonsensical. But is that really the case? Is the Kenyan executive so isolated that she can afford the luxury of a blind spot?
Most Kenyan businesses have been happy living in blissful ignorance of anything outside their immediate purview.
As long as your premises were not getting raided, and the demands for bribes were not too onerous, you were happy to muddle along and grow your business in the single digits—idly waiting for the day you would land the big contract —or, bar that—hand over the keys to the next generation and proceed on your retirement.
People who kept close tabs on the government were either cowboy contractors or the well-connected. Either way, these were people with a whiff of the undesirable about them, and you were well advised to keep your distance.
There is a recognition now, though, that these issues do matter, and this is the case almost regardless of the business you’re involved in or the size of your operations. This is in three main ways.
Firstly, businesspeople are coming to the realisation that government policy is key to their operations and to their profitability. Time was when you could keep your head down.
As long as you weren’t making too much money (which would bring you to the attention of avaricious public officials), you could keep going for decades with no one the wiser.
Now, however, laws and regulations are being formulated at such a clip that it is almost a full time job to keep your business on the right side of these.
The coming of county governments means that there is a layer of officials, and new rulebooks, that need to be kept up with.
Lobbying in Kenya used to be carried out in secret, over dodgy drinks and indiscreet brown envelopes. In the last five years or so, however, savvy companies are now developing public affairs departments, staffed full of lawyers and communications experts.
Formerly one-trick-pony public relations firms are hanging out their shingles as government affairs experts, ready to guide companies through the thickets of these laws and regulations.
The second way that the world is coming into your boardroom is through the recognition that Kenya is no longer as isolated as was once assumed. Government action or inaction does go directly to the bottom line, as decisions made can affect corporations and individuals that carry a Kenyan passport.
Last year’s election, with the eyes of the world trained on us and with foreign diplomats making unsubtle threats, did cause many an executive to sit up and take notice.
Would Kenya be isolated? Could the Kenyan chief executive continue to count on open access to markets and suppliers?
The third element is perhaps the most obvious. Many Kenyan companies have realised that this market is too small for them, and, for reasons of competitive advantage and market growth, have spread their operations regionally.
Kenyan professionals, as well, have realised that they are in great demand, and have settled in neighbouring countries in significant numbers.
The events in South Sudan last December, however, put paid to any feeling of isolation that these companies and professionals may have felt. South Sudan’s implosion meant that Kenya was involved in trying to restore order. Your identity as a Kenyan, if it didn’t already, began to matter.
In short, therefore, as the world begins to look in on Kenya, and Kenya on the world, corporate decisions have to be made with an international outlook in mind.
The Kenyan government had begun to reach out to countries such as Russia as trade partners (in flowers and other horticulture, to begin with).
If Russia gets isolated from the West (which is currently our biggest and most lucrative market for this horticulture), will we run the risk of isolating ourselves as well?
If China sides with Mr Putin on the world stage, what does that mean for our infrastructure projects during Cold War II?
All in all, Kisumu no longer seems that far away from Kiev.
Mr Kantai is the NTV Business Editor.