Crisis or not, Kenyan businesses will stay

March 27, 2009

, NAIROBI, Kenya, Mar 27- A new survey indicates that most Kenyan businesses are going to survive the current hard economic times as well as the global financial crisis.

The Business Leaders Confidence Index released by Synovate (formerly The Steadman Group) shows that business confidence in the country has dropped significantly over the past three years. Worse still, business leaders don’t find the current political climate conducive for business. 

According to the survey post election turmoil in the first quarter of 2008 cut by half the confidence that business leaders had previously articulated in the Kenyan economy.

“Recovery in confidence has been slow and patchy and levels of business confidence in the economy are significantly lower than at any time in the past four years,” the report reads.
The survey reveals that businesses have come up with strategies to help them wade through the turbulent times.

Key among the strategies include downscaling, restructuring and the innovation of new products. According to the business leaders interviewed, ‘cutting down’ is the most popular alternative which entails reducing the costs of doing business and on capital spending.

“From any angle, these ‘downscalings’ will most likely have a negative impact on the labour force, meaning direct loss of jobs. They will also determine cutting down supplies, in which case the ‘supplier’ companies can expect to suffer some losses.”

Restructuring is also on the cards for at least half (51 percent) of Kenyan business leaders.

Further, seven in every 10 businesses (68 percent) will engage in ‘Forced Innovation’ (non-planned new products and services for customers) which suggests that the current ideas might not ‘rule the game’for long, and the non-planned innova¬tions will help mitigate the turmoil.

“What this means is that, as businesses innovate, we are likely to witness better, cheaper products and services. More efficiency (where technological innovation is involved)  and also time efficiency. Consumers will be prime beneficiaries in these outcomes; which will most likely include affordability,” the statement indicated.

Other options for business leaders are mergers and acquisitions, according to the report.

Regardless of the economic downturn, there are plans to expand businesses into both local (52 percent) and foreign (49 percent) markets.

“One in every four businesses plan to merge with other companies in the next six months, or form partnerships.”

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