For a small business, there are more than one thousand ways to die. In Kenya, the surest way for a business to die is to do business with the government.

Most micro and small enterprises do not live to be 5 years old.

Even those that make it to 5 years have a hard time getting to the tenth year. Market forces, wrong team, competition, lack of capital and unfavorable regulations all play a role in sending the businesses to their grave. However, in Kenya, it has turned that the person supposed to protect these businesses most is one of their killers; the government.

Doing business with Kenya's government

Doing business with the government of Kenya is a lucrative venture, sometimes with a markup of up to 1000%.

The government is the single largest employer and spender, thus the lure to trade or do business with the government for most young people is high. Even the government has been encouraging young people to do business with it through the Access to Government Procurement Opportunities.

But that is only where the beautiful story ends.

Most businesses that have tried to do business with the government face major hurdles that are surmountable with some determination. Many young people have gone ahead to register companies because they have seen the business opportunities presented by the government, and now the county governments. But the end result is goods and services being delivered as required, but payment never forthcoming.

Late payments

The government is notorious for late payments for goods or services rendered. Businesses in Kenya have had their property auctioned because they have not repaid bank loans they took to finance a government project. Yet the government owes them large amounts of money. When there is a change in government, pending bills become something that is ignored. It is for this reason many legit businesses do not do any business with the government.

Besides the late payments, the process of securing a government tender is tedious, with a lot of paperwork to do and physical documents to deliver. Yet, in most cases, the winner of the tender is usually predetermined using corrupt means, leaving other businesses that participate just wasting their time and resources which could be used for other promising business development.

Why does the government do this to its entrepreneurs?

Why does the government devour its children?

While the system is not designed to kill small businesses, it is the corruption that makes the system a killer. Tenders are paid depending on the number of kickbacks that one is willing to give. If you have nothing to offer, then your pay will take a long. It is corruption that is killing small businesses in Kenya.

If you want to succeed as a small business in Kenya, stay away from the government.

Share this via: