SA Services Firms Making Inroads into the Kenyan Market

South African firms have in the last 2 years increased investments into Kenya, hoping to be second time lucky in a market that previously proved difficult to penetrate and effectively buried a number of corporate SA giants.  The major difference this time round is that SA investors have changed their strategy, in favour of mergers and acquisitions while doing away with the setting up of new establishments. 

Previously South African firms appeared to concentrate their investments in the retail distribution services sector- mostly consumer goods through home grown giants such as MetroCash and Carry, Shoprite, Wool Worths etc. Recently however, investments have cut across nearly all sectors including banking, capital markets and ICT.

In the ICT sector, SA service providers entering the Kenyan market include MTN Business, which acquired UUNet Kenya (to become MTN Business Kenya) and Telkom South Africa (with a SA Government shareholding of 39.8%) and which has gained a strong local presence through a series of direct and indirect acquisitions of local firms such as a local satellite data transmission services company, Afsat Communications and Internet Service Provider Africa Online in a series of complex transactions that also involved other companies.

In financial services, Nedbank one of South Africa’s largest banks, entered Kenya through the Eco bank-Ned bank alliance where their customers can use any or both of the banks’ services without any changes in shareholding structure. The alliance is the largest banking network in Africa, with more than 1000 branches in 33 countries since Ecobank, has a presence in more African countries than any other bank in the world.  The alliance offers clients a 'One Bank' experience across Africa and the arrangement enables Nedbank, which had operations in only five African countries, to extend its footprint to the 29 countries where Ecobank has operations without moving in directly. ingenious.

Interestingly Ecobank Transnational International (ETI), is a public limited liability company which was established as a bank holding company in 1985 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. In the early 1980’s the banking industry in West Africa was dominated by foreign and state-owned banks as there were hardly any commercial banks in West Africa owned and managed by the African private sector. Ecobank was founded with the objective of filling this vacuum and today its the leading African bank with offices in 29 countries and consisting of 746 branches.