International Marketing Focus on Kenya

INTERNATIONAL MARKETING: FOCUS ON KENYA 9

InternationalMarketing: Focus on Kenya

Kenyaand the International Marketing

Internationalmarketing is a dynamic field of business that is significantlyinfluenced by the social, political and economic environment of acountry. To explore the dynamics that influence internationalmarketing environment, this paper will analyze the republic of Kenyais the country as the selected developing country. Kenya is adeveloping country located in the eastern Africa, and is a leadingeconomy in the east Africa region. The country has a highly activesea port, developing infrastructure and multi-ethnic population. Todevelop a practical analysis of the international market involvingKenya, this paper selects coffee as the product of focus among otherproducts. According to the USTR (2014), coffee is among the goodsthat the United States imports from Kenya. At the same time, Kenya isone of the biggest producers and exporter of coffee in the world.

MarketingEnvironment factors

Thegovernment structure of Kenya is parliamentary democracy with anexecutive presidency. This was the government structure that thecountry adopted since its independence from Britain, their colonialmasters and original political influencers. However, the country hasadopted a federal governance system since she enacted a newconstitution in 2010. This ushered the country into a new governmentstructure where there are 47 counties that have their own governanceheaded by a governor and legislated by a county assembly (CIA, 2015).According to KNBS (2015) the county governments are complete systemsbut are under the national government that is headquartered inNairobi, the Capital city of Kenya. This gives the country a neweconomic look as these counties can trade and open more opportunitiesfor local and international business.

Beingan agricultural country, Kenya produces a number of products that areuniquely Kenyan. However, just like other developing countries inAfrica, the per capita output is very low (Gore et al, 2012). Apartfrom coffee, the country produces high quality tea in the centralhighlands that surround Mount Kenya. The tea from the country isconsumed locally and exported to other countries, with United Statesbeing one of the biggest destination (USTR, 2014). Horticulturalproducts such as flowers are another range of products that thecountry produces and exports. The high quality flowers grown in theslopes of the Great Rift Valley are uniquely good and loved by theEuropean countries that consistently import them. Finally, Kenya hasunique tourism destinations that are incomparable, as it boasts alarge coastline and the seventh wonder of the world in the migrationof the Wild beasts.

Howeverthe country faces difficulties in getting products to the market. Themain difficulty is in the value addition of the products it produces.As a developing country, Kenya cannot afford mechanization andcapital-intensive industrial establishments that can process most ofits agricultural products into finished products (Gore et al, 2012).For instance, the country sells coffee that is not fully processed tothe international market, thus earning lower income. Consequently,the country faces the challenge of transporting her agriculturalexports since they are bulky. Moreover, the country hasinfrastructural challenges especially roads and rail that is notdeveloped to the interiors of the agricultural lands in the country.It is worth to note that the country has been relying on the colonialrail, which is unable to support massive import and export business.

Theeducational level of the population is moderately high compare withother developing countries in the eastern African region. Accordingto KNBS (2015) the country established provision of free primaryschool education in 2003 which saw the current population of youngpeople acquire basic education. As a result, majority of the laborforce is gradually changing from unskilled to semi-skilled, therebymoving the country to better economic status. On the intellectualend, the country boasts of the largest number of universities in theregion and high quality institutions of higher education. This hasled to the production of learned graduates who have no jobs toaccommodate them in their respective industries (CIA, 2015). The As aresult, the unemployment level in the country is high, making laborcheap due to the high supply of workers and low demand in thecommercial world.

Monetarysystem and Debt

Kenyahas a poorly managed monetary system when comparing it in theinternational standards. This is because the country’s monetarypolicy is not effective in maintaining the economic goals of suchpolicies in a developing country. As a result, the country facesunstable inflation that affects the buying power of the currency.However, the country has tried to maintain the inflation tomanageable levels with the Central Bank of Kenya working effectivelyin its own capacity. Like other African states, the country isstruggling with high interest rates that the banks charge on capital(World Bank, 2014). As a result, the cost of capital is high, therebymaking it expensive for existing and new investors to invest invarious industries in the country.

Inaddition, the debt structure of the country is significantlyunhealthy on both internal and external debt. The country has a bigexternal debt and has continued to borrow from the internationalfinancial institutions over the past years. Kenya has also borrowedheavily from foreign investors through issuance of foreign bonds suchas the 2014 Euro Bond to develop the infrastructure in the country(KNBS, 2015). This has put the country at a high gearing level, justlike many other African developing countries. The debt deprives thegovernment more financing to invest in supporting agricultural andtourism industries that require investment to increase the income ofthe country. As a result, the products of the country lack thehighest mark of international quality that increases theircompetitiveness.

Toallow the Kenyan people to invest in their country, an elaborate debtrelief system should be developed to caution them from the deficitsof borrowing. The most appropriate system that this paper would focuson constitutes three parts. One is a consistent local debt repaymentpolicy where the government should be paying local investors who havelent money to the government in the past. Repayment of external debtowed to countries and private investors is the second part of thedebt relief system. The Kenyan government should also do the same tothe external debt that is owed to individual countries that cannotwave it. This can be done by allocating a certain percentage of theKenyan annual budget towards the debt repayment program.

Theother part of debt relief is having gradual negotiations withinternational monetary institutions such as the World Bank and theInternational Monetary Finance to wave the debt burden. According toWorld Bank (2014), the financial institution is a partner, of all theAfrican countries in bilateral and multilateral perspective. Theworld finance institutions would waive debts to such a country inresponse to proper governance mechanisms and development projects.This would also follow the realization of efforts by Kenya to clearher international debt burden. Through these mechanisms, localinvestors would be left to invest in their country after such a debtrelief.

Imports,Challenges and the Government

Kenyareceives large quantities of imports from international tradepartners, of higher value than the exports the country makes. Forinstance, in 2013, the country received $651 million worth of importsfrom the United States, compare to the $451 million that she exportedto the U.S (USTR. 2014). According to the USTR (2014), the importsproducts that are currently being delivered to Kenya from the UnitedStates are machinery, aircraft, medical and optical instruments,electrical machinery and sorghum cereals (USTR. 2014). The countryfaces challenges in producing such products locally, leading toimports solutions. It is not economically viable for a country with ahigh agricultural potential like Kenya to import farm products.

Atthe same time, the country faces significant challenges in the importbusiness, especially when the imports are being delivered in thecountry. One of the challenges is poor infrastructure in the countryand incapable transportation capacity to import goods from foreigncountries (CIA, 2015). The country relies on water transport totransport goods to the coast port of Mombasa, which is not managedwell (KNBS, 2015). Air transport is still not fully available sincethe country lacks a direct flight to some major world destinationssuch as the United States. The road transport that follows is notcapable to handle bulky goods that should otherwise be transportedthrough rail transport. As a result, the delivery of such imports isdelayed after arrival in the country and not during the internationalfreight. This delay affects the business interests of the importers.

Poormanagement of the country’s sea ports and airports is perhaps thebiggest challenge in the delivery of imports. Among the factors thatlead to poor management is the incapacity of the officers andcorruption that prevails in these systems. Due to corruption, theports are made porous to goods that favor the officials and delay inthe normal delivery of imports. At the same time, the customsoperations are hampered in clearing goods and the government losestax revenue to the corrupt port managements. Another challenge is thelack of enough revenues to finance the importation of qualityproducts into the country. This has led to the development ofimportation of substandard goods such as the second-hand clothing.

Therole of the government in international marketing is essential increating a healthy business environment for both imports and exports.This is done by providing efficient services to allow traders totransact and deliver goods on time. The government also provides themechanisms of facilitating payment and transfer of funds as well asfinancial services like insurance and guarantee, a role also playedby international banks. The government can also adopt the standardsof Asset/Liability to promote is debt status (Howell, 2012). Thegovernment further provides guidelines that guide operations ofhandling imports and exports to and from the country.

Conclusion

Kenyais an active developing country in the international market andtrades with other countries. The infrastructure in the country isgradually developing to accommodate the business demands of theinternational market and facilitate growth of her agriculturaloutput, especially coffee. At the same time, the education system isexpanding to increase labor force and improve the country’smonetary system that serves trade relations. However, the countryfaces challenges of debt burden, infrastructure and publicmanagement. By adopting a sustainable debt relief system and propermanagement of infrastructure, the country will encourage itsinvestors and create an efficient environment for internationalmarketing.

References

CIA,World Fact Book: Kenya. Retrieved From,&lthttps://www.cia.gov/library/publications/the-world-factbook/geos/ke.html&gtJanuary 31, 2015

Gore,C., Lebale N., Osakwe, N., Bolaky, B., &amp Sakai, M. (2012). TheEconomic Development in Africa Report 2012.UNCTAD/ALDC/AFRICA/2012, UNITED NATIONS PUBLICATION

Howell,K.L. (2012). Modernizing and Enhancing BEA’s International EconomicAccounts: A Progress Report.

KenyaNational Bureau of Statistics, KNBS. RetrievedFrom, &lthttp://www.knbs.or.ke&gt January 31, 2015

USTR,2012. U.S.-KenyaTrade Facts.RetrievedFrom, &lthttps://ustr.gov/countries-regions/africa/east-africa/kenya&gtJanuary 31, 2015

WorldBank, 2014.AfricaOverview. RetrievedFrom, &lthttp://www.worldbank.org/en/region/afr/overview#1&gtJanuary 31, 2015

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