PESTEL analysis of Kenya

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PESTEL analysis of Kenya

This is a detailed PESTEL analysis of Kenya. It examines and produces valuable insights from a number of macro environmental perspectives. Kenya is an East African country. Nairobi is its capital and the largest city. It is also a hub for business and culture.

 

Political factors that influence Kenya

The political factors that influence Kenya include constitutional and legal frameworks, the political and administrative frameworks, security, and governance. These factors affect many areas such as the functioning of the judicial system, the safety of assets, the security of natural resources and land, and the industries.

 

Kenya’s executive branch is led by the president who is also the head of state and government. The president is elected for a five-year term. According to The Conversation (2022) becoming a politician in the country is financially attractive due to highly paid salaries and numerous fringe benefits.

 

Kenya maintains very good foreign relations with the United States. According to ITA (2022), it receives significant U.S. foreign assistance every year. The collaboration between the two occur in many fields notably education, culture, sports, diverse community engagement, and security. Kenya also uses economic diplomacy to strengthens its ties with many regional and global partners.

 

However, Kenya is badly affected by corruption in many levels and areas. Scandals after scandals were unfolded over the years. Similarly, poor governance, interference in key institutions, political instability, ethnic-based political divisions, and a high rate of crime are some other challenges that the country has been facing for a long time.

 

Economic factors that influence Kenya

Economic environment is an important element in this PESTEL analysis of Kenya. The first and most obvious economic factor to look at when analysing the investment climate in Kenya is the state of the economy. According to Trading Economics (2022) the GDP is expected to reach around $110.00 Billion in 2023 which is an increase from that in 2021.

 

The state of the economy of Kenya may affect the investment climate in several ways. It has an effect on the overall health of the country. Kenya was one of the fastest growing economies in Africa in the last decade. It is worth mentioning that though lockdowns and restrictions in 2020/21 had affected it badly, the economy demonstrated considerable resilience (World Back, 2021).

 

Kenya exports several products and commodities such as tea, refined petroleum, cut flowers, coffee, gold every year to Uganda, UK, USA, Pakistan, and Netherlands. It also imports refined petroleum, palm oil, cars, broadcasting equipment, and packaged medicaments from China, India, UAE, Japan, and Saudi Arabia (OEC, 2022).

 

Some key economic challenges that Kenya faces today are rising unemployment, poverty, declining consumer spending, economic inequality, public debt, global financial turmoil, global food crisis, austerity, and weakened public investment. Both private and public initiatives are necessary to tackle these challenges.

 

Social factors that influence Kenya

Kenya is a culturally rich country. According to Worldometer (2022) its current population is near 56 million. People speak different languages i.e. Bantu, Nilo-Saharan, and Afro-Asiatic. The country is going through rapid modernization, and consumer behavior reflects a desire to embrace global brands; however, traditional practices, rituals, and customs remain very important.

 

Other social factors that affect Kenya are lack of opportunities for the poor, lack of public services, corruption, high crime rates, poverty, a large gap between the rich and the poor, food insecurity, poor nutrition, crime rates, exploitation of labor, and preventable diseases. The government needs to bring in new public initiatives and encourage private initiatives too to deal with these challenges.

 

Technological factors that influence Kenya

Technological environment is an important part in this PESTLE analysis of Kenya.  Kenya is well known as one of the best innovation hubs in Sub-Saharan Africa. The number of social media users is gradually growing, and mobile financial transaction apps are getting very popular as well.

 

Major tech factors that affect the investment climate in Kenya include the state of the telecoms sector, the digital infrastructure, the Internet and digital literacy, and availability of electricity. The state of the telecoms sector has a major impact on the amount of investment in the country. Poor phone and Internet connectivity limit the opportunities for companies to invest and create jobs. Lack of electricity also has an impact on the investment climate.

 

Environmental factors that influence Kenya

Kenya is undoubtedly one of the most gorgeous countries in Africa. Its striking natural beauty, mountains, national parks and reserves, sandy beaches, brilliant safari destinations, and many more mesmerize both locals and tourists.

 

However, Kenya faces several environmental challenges. O’Sullivan (2022) reports that a recent and damaging drought has caused mass livestock deaths and water shortage. Likewise, industrial pollution, deforestation, land degradation, desertification, and loss of biodiversity are some other challenges to consider.

 

Legal factors that influence Kenya

The last component in this PESTEL analysis of Kenya is the legal environment. Due to the limited scope of this article, detailed analysis is not attempted, rather some examples are provided. Kenya has banned plastic bags in response to environmental concerns. Likewise, smoking is banned in public space as well (except in designated smoking areas).

 

Labour laws in Kenya protect employees from exploitation by employers. However, employers have the right to terminate employment contracts on grounds such as misconduct and very poor performance.

 

Hope you have liked this PESTEL analysis of Kenya. Please share it with others if you have liked it. Other articles you may like are:

PESTEL analysis of South Africa

PESTEL analysis of Nigeria (Nigeria PESTEL)

SWOT analysis of the USA (U.S SWOT analysis)

 

Last update: 01 April 2022

References:

ITA (2022) Kenya, available at: https://www.trade.gov/country-commercial-guides/kenya-political-environment (accessed 01 April 2022)

OEC (2022) Kenya, available at: https://oec.world/en/profile/country/ken (accessed 31 March 2022)

O’Sullivan, K.  (2022) Extreme drought in Kenya causes mass livestock deaths and water scarcity, available at: https://www.irishtimes.com/news/world/africa/extreme-drought-in-kenya-causes-mass-livestock-deaths-and-water-scarcity-1.4789239# (accessed 31 March 2022)

The Conversation (2022) Money, influence and heroism: the allure of political power in Kenya, available at: https://theconversation.com/money-influence-and-heroism-the-allure-of-political-power-in-kenya-177171 (accessed 01 April 2022)

Trading Economics (2022) Kenya GDP, available at: https://tradingeconomics.com/kenya/gdp (accessed 01 April 2022)

World Bank (2021) Kenya’s economy is showing resilience….., available at: https://www.worldbank.org/en/news/press-release/2021/12/14/kenya-s-economy-is-showing-resilience-as-output-rises-above-pre-pandemic-levels-driven-by-a-rebound-in-the-services-sect (accessed 31 March 2022)

Worldometer (2022) Kenya population, available at: https://www.worldometers.info/world-population/kenya-population/ (accessed 31 March 2022)

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.