Why multinationals prefer Nairobi to Lagos

Over the last decade or two, as African markets began to open up to Foregn Direct Investments from Multinationals around the world, a large number of the MNC have suprisingly chosen Nairobi, capital city of Kenya as their Africa or Sub-saharan headquater, overlooking Nigeria which is Africa’s biggest economy with a market size more than three times that of Kenya.

Some of the major multinatinals that have chosen Nairobi instead of Lagos or Abuja include Barclays, BASF, Bharti Airtel, Chartis, Google, IBM Research, IMF, Motorola, Nokia Siemens, Qualcomm, Rockefeller Foundation, RTI International, Standard Chartered, Toyota, United Nations, Xinhua, World Bank, Pfizer, PricewaterhouseCoopers, Posterscope, Diageo, General Electric, GSM Association, Intel Corporations, Mitsubuishi Motors, Motorola Solutions, Nestle, Nokia Research Hub, World Bank

A large number of the multinational firms used FDI as a mode of entry. It was also found out that most firms used both the centralized and decentralized system of decision making.10 MNCs have between 1-5 branches in Africa which is the most in number. These are followed by 3 MNEs which have between 16-20 branches in Africa. M-pesa has been a great determinant that has led to Kenya’s popularity.

MNCs like Kiva and GSM mainly chose Kenya because of m-pesa which has enhanced their operations within the Kenyan market.Good international relations between Kenya and China have also led to major investments by Chinese in Kenya. The Chinese have set up several head offices in Kenya mainly due to the government relationships. Several Multinationals have chosen Kenya to be the East Africa HQ but however not African regional headquarters. Improvements on our economy, literacy levels, better infrastructure and better political situations will see many of those firms get promoted to African headquarters.

However, findings have also indicated that several firms demoted Kenya from being the African head office. For example Nokia from Finland demoted the Kenyan office. This study recommends that there should be efforts channeled by the government to increase economic growth, literacy levels, better infrastructure and create a calm political scene. These efforts will definitely lead to many Kenyan offices getting promoted to African headquarters. Another recommendation is that Kenyan government should also create good international relations with several other countries which will lead to more investment.