Kenya has incubated three multinational corporations that rank among the most successful in black Africa, says a new report by a global alliance of business leaders.
Kenol Kobil is listed in the study as the second-largest sub-Saharan multinational outside of South Africa. Kenya Airways and Kenya Commercial Bank, ranked 6th and 30th, respectively, are also on a top-30 roster headed by Oando, a Nigerian petroleum corporation.
The joint report by the Initiative for Global Development and Dalberg Global Development Advisors aims to direct Western investors’ attention to a set of African MNCs with growth rates far greater than those achieved in recent years by US and European multinationals.
Although these MNCs recorded annual growth of nearly 30 per cent from 2006 to 2009, there remains “so much untapped potential in these markets — potential for revenue as well as opportunity to create jobs and reduce poverty,” says James Mwangi, CEO of Kenya’s Equity Bank.
While it is not included in the top-30 list, Equity Bank’s strategy of growing through acquisition is highlighted in the report entitled “Pioneers on the Frontier: Sub-Saharan Africa’s Multinational Corporations.”
Mr Mwangi explains that his company, which now has six million customers in East Africa, chose Uganda as its first market for acquisition because it could capitalise on the existing brand recognition.
Uganda’s economy is also expanding more rapidly than Kenya’s, the report points out.
“Reconciling employees of the acquired bank with Equity Bank’s corporate culture was time-consuming and expensive,” the report adds in a cautionary note to African MNC executives considering a similar acquisition strategy. “To mitigate these costs for new operations in Rwanda and Tanzania, the company brought 100 employees from those markets to work at headquarters before they began work at the branches abroad.”
Gulf Energy is cited in the report as an example of a “beachhead” approach to expansion.
Companies relying on this model will launch a successful product line to cement its reputation in a target market and provide a base on which to build distribution and sales networks.
“Founded in 2005,” the report states, “Gulf Energy has quickly become an important trader, distributor and retailer of petroleum-based products by creating a sophisticated, vertically integrated supply chain capable of overcoming inefficiencies in East African logistics.”