Reading a new market: a research plan for first-time investors

Kenya and the wider East African Community draw investors for good reasons. First-time entrants still get caught out by the same few things: a market smaller or more informal than it looked, a licence that took longer than planned, or a local partner who was not what they seemed. Most of these risks can be found before you commit, with a research plan built around the decision you need to make.

Start with the decision

Good market research answers a question, so write the question down first. It might be whether to enter Kenya at all, which segment or city to start in, or whether to set up your own company, appoint a distributor or buy into an existing business.

Then list what you would need to believe to say yes. For example, that enough buyers will pay your price, that you can reach them through existing channels, and that you can obtain the licences in a workable time. Agree in advance what evidence would change your mind. These become the criteria for the go/no-go decision at the end.

Desk research: the public sources

Desk research gives you the size and direction of a market and the rules around it. Useful starting points include:

• Kenya National Bureau of Statistics. The annual Economic Survey, the Statistical Abstract, census data by county and price statistics.
• Central Bank of Kenya. Monetary policy statements, exchange rate data, economic bulletins and the annual bank supervision report.
• Sector regulators. Bodies such as the Energy and Petroleum Regulatory Authority, the Communications Authority of Kenya, the Insurance Regulatory Authority and the Pharmacy and Poisons Board publish licensing rules, lists of licensees and, in many cases, sector statistics.
• Government and counties. National budget documents, the Kenya Investment Authority and county integrated development plans.
• The wider region. The national statistics offices of Uganda, Tanzania and Rwanda, and the East African Community secretariat.

Read official data carefully. Check the date, the definitions and what is left out. Much trade in East Africa is informal and won't appear in published figures, which is one reason field research matters.

Field research and competitor mapping

Field research shows how buying actually happens. Interview the people who would buy from you: end customers, distributors, retailers or procurement teams. Ask how they buy today, who decides, what they pay, how they pay and what would make them switch. Visit outlets, check shelf prices and follow the product through the supply chain. Talk to people in more than one town, because Nairobi is only part of the market.

Use a structured interview guide so answers can be compared, and avoid leading questions. If you collect personal information, handle it in line with the Data Protection Act, 2019, with consent and secure storage.

Map the competition from the customer's side. List who serves them now, including importers, regional players and informal suppliers, and record price points, channels, reach and reputation. Regulators' licensee lists, published tender awards, trade fairs and your own interviews all feed the map. The useful output is a clear view of where you can win and where you can't.

Regulatory and licensing scan

Before you plan a launch date, map every approval you need and the order you need it in. A typical scan covers company registration under the Companies Act, 2015, tax registration with KRA, sector licences, county business permits, product standards with the Kenya Bureau of Standards, data protection registration and work permits for foreign staff. Some sectors also set local ownership requirements, and some acquisitions and joint ventures need approval from the Competition Authority of Kenya.

Record who issues each approval, what it depends on and how long it takes in practice. The result is your critical path. If you plan to serve neighbouring countries, repeat the scan for each one. EAC membership eases trade between partner states, but each country keeps its own company, tax and licensing rules.

Partner due diligence

Many investors enter through a distributor, a joint venture partner or an acquisition. Check the partner as carefully as you check the market:

• An official CR12 search to confirm directors and shareholders, and the beneficial owners behind them.
• A current KRA tax compliance certificate.
• Searches of court records, the Registrar's register of charges and the Collateral Registry.
• Audited accounts, bank references and references from customers and suppliers.
• The licences the partner holds, and whether they can be used for your business.
• Integrity and reputation checks, including any links to politically exposed persons.
• A site visit to see the operation for yourself.

From findings to a go/no-go decision

Bring the evidence back to the criteria you set at the start. For each one, summarise what you found, how confident you are and what remains unknown. Flag anything that would stop the project outright, such as a licence you cannot obtain or a partner who fails the checks.

The answer is rarely a plain yes or no. The options include entering in full, entering in stages with a pilot in one city or segment, entering through a partner first, waiting for a specific change, or walking away. Whichever you choose, set the points at which you will review the decision and the evidence that would trigger a change of course.

How we help

Epiidosis Africa's research, data and market intelligence practice designs and runs the research plan: desk research, buyer and distributor interviews, competitor mapping, the regulatory and licensing scan and partner background checks. We bring the findings together in a decision paper set against your criteria. Through the Market entry programme, our other practices then support company set-up, finance readiness, local hiring and the insurance review.

We provide evidence and a recommendation. The investment decision stays with you, and legal and licensing points should be confirmed with your advocates.