The Case of Kenya
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Hamilton Harrison & Mathews in legal services. Younger service firms are constantly building their brand equity and reputation by striving to win awards such as the Financial Reporting (FiRe) Award of Institute of Certified Public Accountants of Kenya, Business Daily’s awards for the top 100 small and medium-size enterprises, or technology service partner international awards (Microsoft Partner awards). Brand equity is a competitive advantage in acquiring foreign work. Challenges for Kenyan Service Exporters An examination of the challenges facing Kenyan business service firms helps identify the factors that firms see as the key constraints to exporting. The factor that constrains most service providers from exporting is a widespread lack of knowledge about exporting opportunities, markets, and processes and a lack of awareness about how to acquire such knowledge. This dynamic is demonstrated by the surveys conducted for this chapter, which show that 48 percent of the surveyed Kenyan service exporters do not have a plan for exporting, and 54 percent of the surveyed exporters do not conduct any market research before exporting. This finding indicates that although Kenyan services firms may be innovative and successful domestically, many do not engage in any systematic attempt to export their services. Similarly, if nearly half of Kenyan exporters do not have an export business plan, then likely many other firms do not export but would be able to do so if given the opportunity. In the context of increasing Kenya’s exports of business services, this dynamic is an important constraint that must be overcome rapidly. Very often, Kenyan service providers—especially smaller ones—lack international networks and find obtaining market intelligence on foreign markets very difficult. For example, they do not know the largest firms in each sector, the tax implications of exporting, or the key contacts that would allow them to access opportunities. Kenyan service firms are also very unaware about what trade support services are available from the government, such as the institutions that support trade and services they offer. For example, surveyed exporters were unclear about the activities and role of the Kenya Chamber of Commerce. Another important constraint identified by the surveyed firms is difficulty in penetrating foreign markets. Partially this difficulty is caused by the trade and domestic regulatory restrictions faced by Kenyan firms in local and foreign markets. But the global perception about Kenya—if not negative, at least not positive, especially given the political turmoil during the 2008 election—also acts as a disincentive for potential clients to work with Kenyan service exporters. Current and potential Kenyan service exporters face a series of regulatory barriers that affect their operations and export opportunities. Surveyed firms mention tax-related restrictions, excessive procedures and licensing requirements to