Mid-Year Intake. Applications for mid-year intake are now closed.

Kenya’s retail sector diversifying amid a changing market

Kenya’s retail sector is diversifying with the entry of new players and international brands into the market. This is despite the retail sector growing at a “lethargic rate” compared to economic growth in the East African hub in 2018.

The retail sector has been impacted by increases in taxes and government regulations following the drawn-out elections of 2017, despite the Kenyan economy growing at a fast rate. GDP is expected to grow by 5.9% for 2018 overall, on the back of improved weather conditions and a stabilising macroeconomic environment.

These are some of the key insights contained in the latest Nairobi, Kenya Retail Snapshot report (H2: 2018) by Broll Property Intel, the research division of leading property services group, Broll.

Head of Research and Valuations at Broll Kenya, Vivian Ombwayo, who contributed to the report, comments: “While Kenya recorded strong economic growth in 2018, the retail sector grew at a slow rate. Increases in taxes and business regulations as a result of Kenya’s new Finance Act (2018) may have played a role, but it remains to be seen to what extent this act will affect the retail and broader real estate markets.”

The Finance Act was signed into law in September 2018. One of the big changes is the introduction of 8% VAT on petroleum products, which was previously VAT exempt. Ombwayo says that the increase in fuel costs is likely to induce a ripple effect on food and other prices. However, a positive for the property sector is in the Real Estate Investment Trusts (REITs) space, where transactions related to the transfer of assets into REITs are VAT exempt.

According to Ombwayo, the growth of aspirational consumers and Kenya’s middle class has influenced Food and Beverage retailers to diversify into Nairobi’s CBD. She also says that international fashion brands such as Hugo Boss and Turkey’s LC Wakiki, as well as French sports retailer Decathlon, have a growing presence in Kenya.

The French supermarket Carrefour is expanding in the country, while South African retail giant Shoprite opened its first Kenyan store in December 2018. Another South African brand, Game, which is owned by US-based global retail heavyweight Walmart, is also expanding as are other supermarket retailers.

There is an estimated 526,000m² of formal retail supply in the Kenyan capital of Nairobi, according to the Nairobi, Kenya Retail Snapshot report (H2: 2018). This is up 5% from the first half of the year when supply was at around 502,000m². Ombwayo says community centres account for some 39% of this, followed by small regional and neigbourhood centres, each at 24%.

She says retail development in Kenya is expected to pick up as the country stabilises from a macroeconomic standpoint following uncertainty caused by the country’s drawn-out election in 2017. A new development to watch out for is the Waterfront project in Karen, which will include 19,000m² of retail space for which Broll Kenya is managing the leasing.

“Several other retail projects are in the preliminary stages of planning and development, for example the 28,500m² Beacon Mall, but investors are still somewhat cautious at the moment. A new trend in Kenya seems to be mixed-used developments that will include office, retail and hotel space. Major mixed-used projects such as The Pinnacle and Le Mac, are ones to also watch out for,” says Ombwayo.

She adds that despite the Central Bank Rate in Kenya dropping to 9% in July 2018, the weighted lending rate on commercial bank loans was still high at just under 13%. This makes it difficult for developers to borrow locally and has resulted in mainly dollar-based funding coming from outside of the country for real estate developments. Dollar based funding had its own challenges, with local retailers having to deal with dollar-based rentals.

Broll’s latest Kenyan retail study reports a shift in rent charges from largely a space occupied basis to either turnover-based rent or a combination of turnover rent and base rent.

“Due to the demise of a major local Kenyan food retailer – Nakumatt Supermarkets – last year, most landlords have taken a cautious approach by leasing smaller spaces to more than one anchor tenant at retail centres. Nakumatt closed dozens of stores, but a lot of this space was taken up by competing retailers,” notes Ombwayo.

She says the minimum lease period for securing retail space in Kenya is 5 years and one month, but notes changes may be on the cards.

Elaine Wilson, Divisional Director of Broll Property Intel, advises that the Broll Nairobi, Kenya Retail Snapshot (H2: 2018) is a helpful tool for both investors and occupiers to have a brief understanding of the country’s prevailing retail market conditions. She adds that Broll’s Intel department is proud to provide the market with research intelligence and that this is just the tip of the ice berg in terms of what the Intel division is capable of offering.

Click here to download the full Nairobi, Kenya H2: 2018 report or go to www.broll.com/publications

What’s next in Africa starts now

In recent years many companies have struggled with the accelerating pace of change within Africa’s dynamic landscapes and have been unable to adequately anticipate and evolve to capture the inherent growth opportunities on the continent, writes Ailsa Wingfield. Companies have been blindsided by challenges, competition and other factors that warranted reassessment within thier own businesses, pointing to a growing need to incorporate future-focused insights and planning.

In the past change was more linear, the world was less connected, and companies could prosper by  understanding their consumer, their industry and their market. More recently, however, change comes from a multitute of different factors, often from outside our industry – such as technology, legislation, resources, and innovation. Today we are more connected to change and more vulnerable to elements from areas that we may not have previously considered influential to our business.

African societies also often “leapfrog” the stages of development seen in other advancing markets, therefore providing little basis for comparison and learning. Yet we must understand the overall environment and consider a variety of different outcomes that businesses might encounter, and then work to find the growth opportunities.

The challenge of change

Africa’s change and advancement are occurring at an uneven pace across the continent. In some areas, the change is even more rapid than outside of Africa or in other developing markets. Moreover, it is broadly acknowledged by leaders in government, industry and corporates that we need to fast-track advancement in some areas for the overall wellbeing of consumers, corporates and countries.

This has positive implications for consumers and business, and reaffirms the need not to wait until the major drivers of change have played out or reached certain levels, but to reconsider business’s roles in the short, medium and longer term, and be part of shaping this development.

Some of the big drivers of change that will influence Sub Saharan Africa over the next 5-10 years include the following:


Nowhere else have we seen the population explosion of Africa over the past 50 years, due to high birth rates, lowering mortality rates and extended life expectancy. Notably, the population of Sub Saharan Africa (SSA) will expand to 15% (1.2-billion) of the global population by 2025 – nearly one in every six people in the world will be in SSA. This is similar to the increase forecast for Asia, but with an SSA growth rate of 28%, versus that of Asia at 7%.

The rate of growth will vary from country to country. Nigeria and Ethiopia will account for 30% of the increase (80-million more people), while more mature countries like South Africa will see their growth slow. Bigger populations mean a larger workforce and more consumers, and many multinationals faced with declining growth in developed markets will increasingly look to SSA for growth.


Urbanisation will be rapid, with 2.5 times higher growth than rural areas, as consumers migrate for employment, access to infrastructure/amenities, trade, education, health, connectivity and other social reasons. Cities with more than 1 million inhabitants will increase from 37% to 43% (225-million people, +90 million). This will add strain to aging or lagging infrastructure and services, but will open doors to retailers and brands in more densely populated areas.

Conversely, 42% of urbanites will live in ‘smaller’ urban areas (<300,000 inhabitants). These offer equally substantial opportunities, but often with greater complexity in terms of reach, income ability and product requirements.

Understanding environmental and consumer diversity across urban areas will be necessary to generate the differentiated and meaningful offerings necessary to tap into the varied needs of consumers.

Urban Agglomerations

With the massive influx into urban areas and the vast expanse of SSA, companies need to be prepared to deliver to consumers in different ways.

  • 12 countries account for 69% of the SSA population.
  • By 2025, six countries will have urban concentrations of more than 10 million people (Nigeria, Cameroon, the Democratic Republic of Congo (DRC), Angola, Tanzania, and South Africa).
  • Five countries will experience growth ahead of 50% (Nigeria, Angola, Uganda, Tanzania, and Zambia.)
  • Four countries will see absolute increases of more than 4 million people (Nigeria, the DRC, Tanzania, and Angola).
  • Three countries, Nigeria, Angola and Tanzania, feature across all three criteria – size, speed and absolute change.

This may mean making tough choices on where and how to focus and prioritise. Additional factors will need to be incorporated into planning, to fully assess the ability to unlock potential.

Big Cities

Narrowing this down further, there are 46 cities spread across 12 countries with more than 1-million inhabitants. Twenty-eight of these cities will each add another half a million people by 2025. Over half of these cities are concentrated in just two countries (17 in Nigeria, 7 in DRC), but country homogeneity does not naturally mean that these 24 cities are the most straightforward or viable for growth. Corporates must assess the attraction of individual cities relative to how they can action these prospects via their operational structures and product portfolios, to meet consumers’ needs.

The implications for urban society and industry are immense. Beyond the constraints of congestion and infrastructure – where we will continue to see advancement in spatial planning, roads, construction, amenities, jobs, technology and formalised retailing – some of the most influential change will be the shift in economic density. From this will come an ‘opening’ of trade beyond country borders, accompanied by the easing of trade restrictions to bolster collaboration. This will manifest in improved living conditions and shifting consumption choices. For industry, this provides massive, scalable potential, with the right products – those which are localised, agile and in-tune with consumers.


Many developed markets worldwide face diminishing workforces and slowing growth due to aging populations, resulting in a significant change in the products and retailing experiences required. Conversely, Africa will continue to have the youngest population globally (47% younger than 20 years old), with evolving consumer needs near the opposite end of the spectrum. Innovation cues from developing markets will be less relevant for Africa’s youth. The Africa youth conundrum is complex: whilst this group is largely economically inactive at present, companies need to engage and invest in them today to unlock future consumption.

Technology to facilitate experiences and encounters in this demographic will be crucial. The good news is that digital usage is as evolved (sometimes more so) than other developed markets; penetration and utility are rapidly following. Stemming from the broader external exposure now facilitated by technology, there will be a shift from traditional to more contemporary and aspirational influences, and therefore demand for products. Traditional invention processes, brand building, retailing and engagement are likely to be disrupted, and will need to be repurposed with more inclusive and interactive development, encompassing Africa’s heritage and preferences.


Investments in infrastructure are among the most significant any society can make, as these substantially propel and sustain a country’s economic growth. In SSA, these are essential, and a major driver of industrial advancement.


Adequate transport infrastructure will facilitate economic integration and support agricultural value chain development. Industries will be able to distribute to underserved areas and achieve economies of scale while reducing time, distance and cost. Investment in roads, simplification of border controls and reductions in duties will result in an estimated 52% boost in trade in the next 5 years (UNECA).

New transport veins will pave the way for access and efficiency in reaching additional consumers, transport optimisation and the provision of extended product portfolios and services to meet consumer needs across the spectrum.


Currently only 37% of SSA has access to electricity, with 600-million people without access – rural areas have the biggest gap at 18%. Urban electrification is higher at 69%, with many organisations working towards achieving 80% residential electrification by 2030, and 90% business/industry electrification.

Achieving a brighter future is difficult as it requires high levels of funding, and innovative combinations of renewable or off the grid solutions. One of the most significant societal implications of affordable electricity is the upliftment from poverty which is crucial for growth, prosperity and quality of life.


Many argue that the spread of the internet and mobile phones has been the biggest driver of consumer change, yet only about 50% of the global population has access to the internet. In Africa this is considerably lower. Here, technological change is largely linked to mobile penetration. SSA is the fastest growing region for mobile subscriptions, at 50% higher than the global average, and the continent’s uptake of services such as mobile money are a global exception and an example of best practice.

Smartphone connections in the last two years have doubled to 200 million, due to increasing affordability, network coverage and a growing market for second hand devices, as well as the uptake of broadband driving demand for digital content. Data traffic is forecast to grow twelvefold over the next five years. SSA will transition to higher levels of engagement in the coming years, underpinned by access to tech infrastructure, devices, data services and the youth population.

Mobile is a vital tool in delivering financial inclusion, previously accessible only to the limited few with a bank account. Great progress has been made in expanding financial inclusion in SSA, and will continue to drive change by giving access to more complex financial products and services. Investors and enterprises will also be able to leverage the large area coverage of mobile networks to deliver scalable and commercially viable services.

Lastly, there are two unfolding scenarios that will have inward and outward transference effects:

  • At present SSA may not have high rates of obesity, but the growth rate in many markets is sky-rocketing. Today, sugar and other sin taxes are being considered and implemented in more than 30 markets worldwide, and high on the agenda for new legislation. Companies trying to get ahead of the curve have already started product reformulation, and are looking into “healthier” options for their portfolio as this early signal of change rapidly impacts their core business.
  • By 2027 the world will not be able to feed itself and current agricultural powerhouses (the US, Brazil) have limited land available to expand output. A quarter of SSA is undernourished; environmental and supply issues, conflict and the displacement of people, as well as the reliance on aid and imports are at epic proportions in many countries. However, Africa has vast amounts of arable land and therefore significant potential for large yields, potentially feeding not only the African population but helping to meet the global shortfall.

These are some of the major change drivers, signals and opportunities in Africa. Forward-focused companies must seek options to capitalise on these signals, and act now to benefit from consumer and retail opportunities. We need to be part of the foundation, architecture and construction today, to reap the benefits of tomorrow.

Change is inevitable (except from a vending machine)

Boardroom Bingo relieves the tedium of those seemingly aimless and endless management meetings like nothing you’ve tried before – other than a Valium smoothie.

The Boardroom version is just like regular bingo, except that instead of someone calling out random numbers printed on ping-pong balls, you mark your card whenever a piece of hideous business jargon escapes from the lips of one of the overly keen yes-men managers smugly sipping their skinny soya cappuccinos around the boardroom table. And believe you me, in this age in which superficiality is admired more than substance, it doesn’t take long for your Boardroom Bingo card to fill to the brim. The jargon just flows, relentlessly, like a river of utter meaninglessness.

The words and phrases that score you points are things like “disruption”, “paradigm shift”, “game-changing”, “swimming upstream”, and “zigging when the others zag.” These are just a few of the dozens of entries in the Boardroom Bingo lexicon, but they are certainly among the most frequently used. And the eagle-eyed among you may have noticed that these expressions all allude to that much-praised business strategy of having an appetite for risk and challenging the status quo.

So why (to use another couple of BB front-runners) do we not “walk the talk” or “put our money where our mouths are”? After all, we’re more than up for a bit of risk-taking in our personal lives – think about the experimentation we enjoy with clothing (my gold sequined cat-suit springs to mind), restaurants, travel, adventure sports and so on. Yet the moment we park the company car in our designated bay at the office, we become another of those obsequious cowards whose only war cry in business is “steady as she goes, captain”, and whose only strategy for forward planning is “last year plus ten percent.”

Perhaps it’s human nature to resist change and to seek comfort in the familiar. Just look at the outcry whenever a well-known brand adopts a new identity – Absa being the most recent in a long line of new visual identities that have been pilloried for no better reason than being different from what we’re used to. This is somewhat ironic when we consider that the one thing that is beaten into every aspirant brand manager’s brain is the importance of differentiation.

There’s a further irony in the fact that attitudes to novelty evolve over time. What began as a knee-jerk “I don’t like it” reaction at launch, matures to tolerance and then from acceptance to outright preference. So hang in there, marketers, let a little time go by and everyone will be wondering what the fuss was all about.

But the most important lesson to be learnt about creatively-driven change is simply that it works. The debate is over; it has been proven in countless empirical studies that brands that embrace responsible risk-taking outperform those that watch cautiously from the sidelines. We need to grab hold of that willingness to experiment in our private lives and bring it into the boardroom. We need to behave like the brands are our own possessions, built or destroyed by our own actions.

We need to have some “skin in the game”.


A highly regarded and influential strategist, speaker and writer, Andy Rice is one of South Africa’s best-known branding and advertising experts. He headed up Ogilvy Johannesburg’s account planning department before founding specialist brand strategy consultancy Yellowwood.