Kenyan corruption top obstacle to Chinese companies

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Corruption, crime and personal security have emerged the biggest obstacles cited by Chinese companies operating in Kenya, according to new research.

Conducted by the Sino-Africa Centre of Excellence (SACE Foundation), the Kenya 2014 business perception index (BPI) survey included 75 Chinese organisations with operations in Kenya, with the survey identifying the top ten major obstacles perceived by Chinese companies in doing business in Kenya.

Respondents were asked to rate the significance of 18 obstacles to business in Kenya, namely – tax rates; tax administration; business registration and permits; corruption; court system; crime, theft, disorder and personal safety; practices of competitors in the informal sector; access to finance; electricity; water shortage; transportation; customs and trade regulations; labour management; obtaining work permits; inadequately skilled workforce; access to land; investment information, and political instability.

Corruption emerged the most prominent obstacle to respondents, with 40 of 75 companies – or 53 per cent – saying the challenge posed by corruption is a “very significant obstacle”, and a further 11 – another 15 per cent – saying it is “significant obstacle”.

Crime, theft and personal safety was ranked the second biggest obstacle; 37 per cent of respondents identifying this as a “very significant obstacle” and 25 per cent “significant”.

The obstacles taking third place differed according to industry.  Those respondents active in labour-intensive manufacturing and construction companies cited obtaining work permits as the third obstacle in Kenya; while service sector companies named customs and trade regulations in third place.

While results were similar irrespective of the size of the organisations surveyed, a few exceptions emerged.   For example, micro-enterprises said access to finance was a key obstacle; small firms perceived more threats from competitors in the informal sector; and large companies were more troubled by issues such as the court system, inadequate skilled workforce and labour management.

Differences were also tangible between privately-owned companies and state-owned ventures; the former more troubled by tax rates, customs and trade regulations and an inadequately skilled workforce; the latter with access to finance and practices of competitors in the informal sector.

The BPI survey for Kenya was launched in February 2014; with the SACE Foundation planning a second phase of research to be completed in 2015, covering five further African countries – Angola, Ghana, Nigeria, South Africa and Tanzania.  The project may expand to even further countries.

 

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Inspired and excited by the African tech entrepreneurial scene, Gabriella spends her time travelling around the continent to report on the most innovative tech startups, the most active investors, and the latest trends emerging in the ecosystem.

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