What does future of doing business looks like in Kenya? Practical advice for international attorneys

The regulatory landscape is supporting business growth across Africa – hear from 4 leading legal practitioners as they share their perspectives on the evolution of business law across different sectors, and attorneys across the globe can partake in joint ventures.

Africa is a fast-growing population, with its workforce about to hit 1 billion people – the world’s largest working workforce by 2024. So what opportunities do these present lawyers and law firms interested in doing business is the content?

We spoke to four leading legal practitioners from Kenya and Nigeria in a panel discussion on doing business in Africa.

We took a deep dive into what the regulatory climate looks like, the state of doing business in Africa, what a foreigner needs to know about doing business in Africa, and the regulatory considerations when it comes to employment, corporate setup, business setup as well as IP protection.

On the panel we had Joe Amisi and Pauline Kamunya-McAsila from Kenya, and Aderonke and Seun Timi-Koleolu from Nigeria.

This article focuses on the Nigeria perspectives – You can hear from Joe and Pauline and their take on the business law landscape in Kenya and advice for international lawyers wanting to do business there, in this article.

Joe is the principal attorney at Lehman Associates, where he counsels clients on intellectual property protection, all the way through conveyances, corporate and commercial law.

Pauline is the managing partner at Menezes and Partner Advocates, a full-service law firm.

Q: what is the state of doing business in Kenya today and what opportunities are presenting themselves for overseas attorneys and business owners?

Pauline:

Practice in Kenya has expanded over the last 10 years, particularly in regards to cross border transactions.

We’ve seen a big move towards law firms merging, creating bigger outfits because then it’s easier to be able to attract more transactions and more clients on a cross‑border basis.

We’re also seeing a move towards bigger law firms. That doesn’t mean that small law firms are not doing well.

There’s been a good shift towards practice areas like intellectual property and entertainment law is definitely something that’s picked up with the growth of the entertainment industry in Kenya.

With the pandemic, one of the significant things that have helped law firms, whether small or big is moving more into the digital era.

Now all law firms, in order to survive, have had to properly invest in some sort of digital equipment and training for their staff. It’s definitely something that will help Kenyan law firms compete better with other law firms out there.

Joe:

I completely agree with Pauline, based on what’s happening here in Kenya – the coming together of firms. Smaller firms, merging and creating more partnerships.

We have had an explosion of limited liability partnerships, which are still pretty new in Kenya as a legal vehicle. There is consolidation in the market.

I’ll agree with Pauline that it doesn’t mean there’s no space for the smaller law firms, but what I see from that angle of smaller law firms is to survive, you need to pick one or two or maximum three key areas of practice.

An interesting area that I see growing very fast in Kenya, East Africa, and basically the Africa region is intellectual property in terms of protections, challenges, prosecution of patents and so on, licensing – that is a big opportunity and a lot of activity in that area.

On the counter side of that, there’s a lot of counterfeiting, a lot of fake counterfeit things moving around in the market. So there’s really a big opportunity in that field. And I see it growing very big over the next few years.

With a focus on globalized business and integration into other markets, what does it take for foreign companies to do business in Africa today?

Pauline:

The good thing in Kenya is that foreign investment is something that’s been encouraged for quite some years now.

There’s been a big shift over the last, five to 10 years to ensure that this becomes seamless for people who either want to come and do business and reside as they’re doing it or if they still want to do it while they are not residing within the country.

The first thing would be identifying the industry that the client wants to start the business or to invest in. That is critical to understand the legislation that you’d need to advise them on.

Then there’s the issue of understanding what kind of business structure do they want to set up? Is it a small business? Is it going to be a big business?

We advise them on issues regarding whether they’ll need to set up some sort of HR or policies. Then there’s the tax element. It’s important for foreign business people to understand the tax legislation that are governed here in Kenya.

Also what kind of professionals they need to consult with, because of course lawyers are not the only people that they need to talk to. They need to talk to accountants or auditors, they may need to talk to company secretaries or HR professionals.

If they also want to reside in Kenya, it’s important for them to understand, like in any other country there’ll be regulations about what kind of work permits or visas or licenses that would need in order to operate here.

In the legal sector, you would first need to pass the requirements, which would be either getting admitted in the bar as an advocate of the high court of Kenya.

When it comes to venturing into the law firm sector, most foreign law firms tend to collaborate with law firms within the country, that are already set up. This is because you avoid all the hurdles of trying to get admitted as an advocate of the high court.

You’d rather use the local law firms so you either merger with them or you have some sort of joint venture scenario. So it really does depend on the purpose of why somebody wants to come and actually do business within the country.

Q. If you were advocating an entrepreneur who wanted to understand and do business in Kenya, how would you be advising them?

Joe

I look at it in terms of the three key areas that I really practice a lot in: commercial and conveyancing practice, intellectual property and immigration.

So from the commercial aspect of things, for anyone coming into Kenya, it’s really important to understand the industry, but also the goals that they wants to achieve.

You would have to look at what type of vehicle do you need, what legal vehicle are you going to use? Is it going to be a company or a partnership? Are you in business for profits, or are you coming in with a non-profit angle?

Answering those kinds of questions informs a lawyer like me in terms of, giving good advisors on what legal vehicle you should get.

For instance, if you went for a commercial private limited company in Kenya, it would be very hard to get tax breaks. But perhaps you are doing something that’s more socially acceptable or non‑profit in nature. The vehicle like a company limited by guarantee is really a non‑profit vehicle, which could qualify for some bigger tax breaks.

In intellectual property law, a big area that I practice in, against the backdrop of a lot of counterfeiting, not just in Kenya, but generally in Africa, it needs to be carefully considered.

Not many people coming into Kenya, in my experience, think about there trademarks are their copyrights. They really just want to get the business on the ground.

I think the term that’s used is they’re called ‘pirates’. For example, you might have your company X in Europe or the US or Australia, and somebody on the ground sees the website and registers that name or that domain, and just waits for you to enter into the country. They then may want to sell it to you.

So I really advise a lot of my clients to take some time and think about the intellectual property and protecting it against the backdrop of intellectual property, being territorial. You might have your trademark out there, but if it’s not registered in Kenya under the law in Kenya, it’s pretty much useless in terms of enforcement.

On immigration, which Pauline talked about quite a bit, if you’re here to stay for instance, in Kenya, the wider African region, there are certain classes of entry permits that allow you to stay and work.

You wouldn’t be here on your visitor’s visa and be able to work for three, six, nine months. At least when you’re coming into the country, you have your two, three, four core people that you need to get the right immigration paperwork in order to build your business or your practice.

I look at law firms coming into Kenya and the biggest barrier to, entry is getting admitted as an advocate of the high court of Kenya. So we see a lot of strategic partnerships, law firms from outside of Kenya partnering with the law firms in Kenya where qualified lawyers like us, can do the work, but to the level and satisfaction of the clients of the other law firm out there.

I’ve seen a really interesting thing – some law firms kind of open like a commercial enterprise, a company that’s not really a law firm. It is a way for lawyers from outside Kenya can interface – come in, get a work visa and work in that company, but not really practice law. So still be in the country and still get stuff done.

Q. What is the regulatory climate for business leaders today in Kenya, with a focus on the future outlook?

JOE:

In terms of the regulatory climate, our laws are changing. Early this month, there were some laws that were put in place regarding the reporting of beneficial ownership of companies. That puts the duty on the company to report to the registrar of companies about who is the ultimate beneficial owner of this company.

In the context of an international business environment and globalization, you may have your company in Kenya owned by someone who has shares in say, New Jersey, through a trust or a nominee account.

As a business leader in Kenya right now, many people are thinking of how to go around that new law. How much do you go into reporting? How much can you report and still keep your clients or customers happy? So the regulatory environment is changing really quickly.

Another thing I’d just like to point out the regulatory environment is that governments are generally very slow. When you expect to get your licenses and everything, you might want to have them in a matter of hours or a matter of days.

However, in practice, when you’re trying to get your licenses and get your compliance in order, you have to interface with so many government departments. Sometimes it takes very long – one month, 30 days, 60, 90 days, even in some cases.

It depends on how aggressive you are, what sort of legal advice you have, and how you approach it. In that context, you also have the elephant in the room: somehow corruption kicks in. You have to be a little bit cognizant of that fact it may not present itself in a raw way like ‘Hey, give me this and I’ll get you your license’.

Someone could ask a certain question or ask you for a cup of tea – something of that sort. It’s sort of a cultural way of saying scratch my back and I’ll scratch yours.

However, if you have a company for example, from the US, where if anything of this nature comes up, you could have sanctions being imposed for corrupt activities in Kenya or anywhere else in the world.

So business leaders coming in from abroad into Kenya and Africa have to look at things of that kind. Business leaders need to be ready to seek good legal advice. and keep in touch with resources like your home country’s embassy in Kenya.

When I have American clients or clients from the UK or Australia, I’ll tell them to keep some strong ties with the embassy, they have of a lot of information that they can share with their citizens. Even with us as Kenyans, I’ll find those as very big resources. I encourage my clients to keep those networks open.

For any lawyer coming here into Kenya, the environment is English Common Law. It might have changed here and there, but by and large, we are an English common law country, and our laws will mirror all that carrying through.

I would advise any lawyer coming into Kenya, maybe to practice or to keep in the back of their mind that it’s an English common law country and everything should be done within that context.

Q. Is there anything that you see on the horizon from the regulatory bodies that may impact global business leaders?

Pauline:

When it comes to the regulatory climate, seek legal advice from the actual specialist, because there’s a lot of information on the internet.

You would think that it’s easy to just get that information and then proceed on that information.

I don’t know about Nigeria, but in Kenya there’s a tendency to publish regulations, but then when it comes to implementation, it’s implemented a little bit differently.

So as you might expect that there’s a certain way things might be done, but when you go on the ground, it’s actually totally different. You get to learn that it’s pointless to then start arguing with the person who’s supposed to be implementing it. That’s why it’s very important to ensure that you’ve got proper legal advice, and the right people that you talk to.

In terms of the future, one thing that has really picked up here is the FinTech area. The central bank has been trying to bring in some stronger regulations because it’s an area that really picked up. The regulations took a long time to come into play. They have now they realize that they need to get some tighter regulations.

Especially with the pandemic, there was a lot of focus on the FinTech area because a lot of people got affected because the same way you deal with your bank turned out wasn’t the same kind of regulations that were dealing with a FinTech industry.

That is mainly the direction that we headed. When we talk about the natural resources area or the oil sector, I believe those regulations and those laws had already actually come into play.

The biggest futuristic direction that we’re headed towards is mainly in digital regulations. And as Joe said, things move a bit slower here.

In terms of legal regulations, it takes a little bit longer for either the government or for the regulators themselves to realize that they should be actually monitoring what’s actually happening on the ground.

Q. Can you share one final thought about you or your practice that lawyers reading this may be interested to hear?

Pauline:

Here in Kenya, we have had a big step in data protection law. A week ago the president appointed someone as the director of the data protection agency.

In terms of managers and partners, we are a full-fledged practice area law firm, and we are not just Based in Nairobi, we are based across the country. We’re able to have branches in the West and the East so that we’re able to give our clients full coverage of the whole country.

I can’t really say that we have any specific specialization because our associates and partners actually have broad training and expertise in quite a number of areas. We can handle all types of practice areas.

In terms of Kenya, it’s definitely a place that’s booming in terms of the financial and tech sector. One area that we’re definitely looking at is the entertainment law sector because that’s definitely something that’s not been very, very exploited.

The intellectual property is definitely one area that we’ve also been seeing quite a big, huge growth, especially with it the cross border transactions.

So we welcome everybody to come to Kenya and get in touch with us and we’ll definitely be able to collaborate and do some joint ventures together.

Joe:

At Lehman’s and Associates, our key focus areas are commercial law, intellectual property and immigration law. We assist people coming into Kenya in those areas, people who are already in Kenya and to a great extent, we do assist people in Kenya, in those areas, trying to move out of Kenya.

For instance, we’ve done registrations of patents in South Africa, register of trademarks in South Africa, Uganda Rwanda. We also do litigation in those niche areas.

For the future of Kenya in terms of business, legal, we have a big population of the youth, so there’s going to be a lot more energy and innovation in entertainment – things that really strike a chord with the youth which can actually make a living for younger people.

One thing that I see in the short-term, is some little bit of political risk. We have an election coming up in about two years’ time, so things do slow down around that. However, the future is very bright for anyone trying to do business in Kenya, or anyone in Kenya, trying to step out and do business in the wider East Africa in the Africa region.

If you are interested in getting in touch with Pauline, Seun, Joe or Aderonke and want to explore the options of doing business in the Africa Markets on behalf of your firm or client, you can do so on NEXL.

Create your profile on the platform, start your FREE trial and then contact them directly using our private attorney communication channel.

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