A country risk assessment (CRA) is an evaluation by the firm that assesses a country’s economic situation, policies and politics to determine how much risk exists of losing an asset or not being paid. Therefore, risk assessment is a powerful tool for making business decisions. Following is a risk evaluation of the country, Kenya. Kenya is located in East Africa bordering Central Africa to the East and the Indian Ocean to the west.
This country forms a connection to other countries. For a long time, Kenya was recognized as a beacon of peace in Africa. The country had experienced peace and stability for a long time rivaled by only a few countries in Africa (Coombes et al., 2013). However, the recent political events have immensely cast a different image of this country on the foreign investors. The events of the country’s 2007 elections did not only scare away investors but also led to a significant drawback in the country’s economic growth.
Its proximity to Somalia, a country which has been under no proper governance for some time, only worsens Kenya’s security case. Additionally, there have been cases of the terror attack targeting the country’s business hub, Nairobi.
Kenya has a proper framework for collection of tariffs and duties. The country has a trade ministry that controls and oversees all the trading activities in the country. The trade ministry licenses companies and enforces the country’s trade regulations. The country through the Ministry of trade collects import duties on all import goods and services, a task which is carried out by the Kenya Ports and Authorities (KRA) (Kenya Revenue Authority, 2014). Additionally, the Kenya Revenue Authority ensures that all the goods entering into the country through the ports are up to standard. The duties that KRA charge on commodities has a given structure that considers the nature and cost of the import goods.
Shilling is the Kenya’s currency. Generally, the country’s currency is stable. The shilling’ money value has been fairly constant against other currencies. In the East Africa region, this currency has the highest money value. The drop in the shilling’ money value over time is as a result of inflation that has hit many countries in Africa. The country also enjoys a fairly stable banking system, which is controlled by the ministry of finance. Like other countries in Africa, Kenya is still developing.
This country is hence experiencing industrialization and civilization simultaneously. Kenya majorly has unskilled labor. However, with renewed investment in education and training seen over the last decade, the country boasts a good supply of skilled labor that can greatly influence the production industry. Kenya also has labor organizations, which are under the umbrella of the national labor union. The interactions between the labor unions and the employers are usually healthy and inclusive.
Kenya has a legal framework for the acquisition of intellectual properties. The country provides for licensing and copyrights for individual properties. The trade ministry has clearly outlined procedures and requirements for doing business, which includes licensing, payment of tariffs and procumbent procedures. While there has been a general outcry on the country’s judicial system, the country has since initiated a rapid judicial reform process, aimed at regaining the public trust through public acquisition of the judiciary stuff. Companies and investing groups have protection of the constitution that was recently promulgated.
Additionally, there are trade acts that provide for the protection of the companies. The recognition of companies as separate entities from the owners provides the companies with the legality to associate with other companies or individuals. The existence of the industrial law courts provides a means of settling the legal disputes that may arise in the course of executing the business operations.
Kenya also boasts a large number of tribes, approximately 42. These 42 tribes contribute to the country’s joint population of about 42 million (Kenya National Bureau of Statistics, 2014). The 42 tribes have different cultural practices. These cultural practices influence the business practices. Some cultural practices across the country outlaw consumption of some products. Therefore, companies looking forward to setting up their branches in areas occupied by such communities should ensure that their products are acceptable to the immediate community. Most Kenyan communities have friendly cultures which encourage foreign investment.
The official national language of Kenya is Kiswahili, which is also used across the East African countries. Kenya being a British colony; English is also used extensively across the country. However, majority of the people especially in the rural areas still suffer from the language barrier. Most companies, therefore, like to set up their base in the urban centers before spreading out to the in rural areas. Since most communities in Kenya are conservative, business organizations should concentrate on delivering commodities that suit their culture. Providing acceptable commodities will ease penetration into the market more so in areas where there is stiff competition.
Putting all factors under consideration, Kenya remains a good investment region for companies and investment groups planning to expand their operations internationally. While there is a general concern about security and the justice system in the country, the overriding factors such as good transport network, hospitality, readily available market, and stable currency are a useful pointer towards better performance in the trade industry.
References
Coombes, A. E., Hughes, L., & Munene, K. (2013). Managing heritage, making peace: history, identity and memory in contemporary Kenya. IB Tauris.
Kenya National Bureau of Statistics. (2014). Kenya Facts and Figures. Web.
Kenya Revenue Authority. (2014). The Purpose of KRA. Web.