Current Normal: Trends that will define business in Kenya 2021

Published on Feb. 25, 2021, 10:14 a.m.

Kenya’s economic growth projection, as is in many countries, remains uncertain and will partly be influenced by how the COVID-19 pandemic continues to play out in Kenya and the International landscape.
The COVID-19 virus was first reported in Kenya on 15th March 2020. The government’s immediate actions focused on strengthening the health system which faces an extraordinary challenge to contain the spread of COVID-19 and care for the infected. Further health policy measures such as working from home, travel restrictions, the closure of schools, bars, the suspension of public gatherings, cessation of movement into and out of hotspot Counties and a nightly curfew, were all instituted as measures to curb the spread of the virus.  Some of these measures have since been relaxed.
Though these measures were unavoidable they were quite costly to the economy by reducing social interaction, production and demand across all sectors.  Several businesses closed down which led to loss of many jobs and especially in the informal sector. An estimated 6 million Kenyans lost their jobs. Sectors such as tourism, real estate and the hotel industry have been adversely affected by the pandemic.
COVID-19 has impacted negatively many economies around the globe. The pandemic points out to the dire need for policy actions to cushion its consequences, protect vulnerable populations and improve Countries’ capacity to cope with similar future events. The policy actions that the government of Kenya will keep taking to mitigate the situation will continue to play a great role in determining how businesses in the country shape up.
It has been encouraging to see that as the year began Kenya's meetings, incentives, conferences and exhibitions (MICE) segment finally pick up as hospitality players seek to market conference tourism in global markets amid the pandemic (source: XinHuaNet).
Kenya’s economy is also predicted to expand this year as many businesses have been seen to resume activity which will generally boost tax revenue and government spending. According to Bloomberg Africa, the Treasury estimates that gross domestic product increased 0.6% in 2020, which would make Kenya one of few countries in the region that did not record a full-year contraction amid the coronavirus pandemic.
The Corona virus pandemic has taught Kenyans a lot. So many have realised how versatile and innovative they can be amid this global challenge thus proving their resilience. From a global perspective, McKinsey have come up with 5 trends which we also feel will define 2021 and beyond:

  1. Data-informed scenario planning: The uncertainty around C19 will continue in 2021 both globally and locally. Businesses need to maintain a dedicated COVID-19 response team to track data, assess business impact, and dynamically plan for different scenarios.
  2. Capitalize on shifting supply chain dynamics: COVID-19 has underscored the need for global supply chains to be both cost-efficient and resilient, to withstand future disruptions. East African businesses must future-proof their supply chains while positioning themselves to benefit from global businesses that are looking to do the same. This may involve inshoring manufacturing of previously imported products or orienting businesses to capitalize on global trade shifts.
  3. Align portfolio with evolving consumer needs: Consumers have adjusted spending, driven by financial necessity and personal adjustments to the new reality of social distancing and the type/level of adjustments can vary by consumer segments. Business value propositions need to align with evolving needs, which may require changes to product, portfolio, and channel mix.
  4. Invest in the digital customer experience: Consumer behaviour developed during crises can become sticky. Investing in digital offerings can be a no-regrets move, given the increasingly digitally savvy population and expectation for more digital engagement in the new reality.
  5. Explore M&A opportunities to save, grow, or extend the core: For businesses that retain financial flexibility and have cash on hand, the disruptions caused by COVID-19 create a compelling landscape for greater M&A activity. We expect different types of M&A strategies to emerge as a result, in order to save, grow, or extend core business operations.