WHY Kenyan businesses are outgrowing the domestic market

A straightforward fact lies at the core of this trend: Kenyan businesses are outgrowing the domestic market. For many years, the economy has served as a launching pad for regional supremacy in industries like banking, logistics, and telecommunications. Companies like Safaricom, KCB, and Equity Group have ventured boldly into Uganda, Rwanda, the DRC, and even farther away. We are currently seeing a structural change rather than merely expansion, as Kenyan businesses are establishing presences far beyond national boundaries in pursuit of greater profits, more extensive markets, and strategic diversification.

Economically speaking, this increase in foreign investment is a reflection of a mature private sector that is self-assured, capital-rich, and ambitious for the region. It shows that Kenyan businesses are moving from being regional leaders to becoming major players on the continent. This is consistent with patterns of global development, where domestic companies that were previously centred on domestic consumption start exporting capital, corporate culture, and intellectual property in addition to goods and services.

On the other hand, this ambition has a sobering effect on the state of the domestic economy. That a lot of money is on transit. It begs the question: are businesses escaping a stagnant local environment? There's good reason to think so. Currency depreciation, policy uncertainty, delayed government payments, and an increasing tax burden have all contributed to the local business environment's decline in appeal. In certain instances, conducting business in Kenya is now more expensive than in nearby markets. This implies that pull factors overseas and push factors domestically are equally responsible for the increase in outbound investment.

This does not imply that the trend is bad. It opens up a new economic opportunity, if anything. Retained earnings, royalties, and dividends from profitable overseas endeavours will improve Kenya's foreign exchange position. Additionally, these businesses act as economic ambassadors, opening doors for international supply chains, financial inclusion, and increased integration of the region. Kenya has the potential to become a net exporter of ideas and capital.

However, there is a warning associated with this opportunity. This trend needs to be interpreted as a signal by policymakers. We run the risk of losing not just money but also leadership if we don't restore investor confidence, restore macroeconomic discipline, and lower operating costs. Kenya cannot afford to raise businesses to the pinnacle only to watch them take their profits and put them elsewhere.

The path ahead is obvious. The government must go local as Kenya Inc. expands internationally: correct the foundations, encourage the growth of the private sector, and make sure that our companies never lose hope in their homeland even as they make investments overseas.