Staying Ahead of the Herd

into East Africa

Why Africa?

Changing global order - declining growth in mature markets and significant opportunities as the performance of Africa’s economies improves

There have been considerable improvements in ease of doing business, flights and accommodation options, communication and technology, and provision of financial services

Africa is seeing the tangible benefits of a decade of positive economic growth – an exciting frontier economy , rich with opportunities

Infrastructure deficit is a major opportunity (power, road, rail, energy, water)

March 2000 December 2011 March 2013

Why Africa?

Resources are abundant (mining, minerals, oil & gas); and the second wave of investment is well under way (banking, telecoms, retail, hospitality) driven by consumer demand and changing demographics:

Growing middle class – increased consumer spending

Youthful profile of Africa’s population

Rapid urbanisation - 50% of Africans will most likely be living in cities by 2030

Levels of local capacity and talent are growing

Africa’s Challenges

It is not easy or cheap to bring expatriate talent into African countries (return of skilled Africans has been one positive from the global financial crisis)

Balancing risk and opportunity - striking a balance between managing risk and stifling growth; many see greatest risk as not having a presence in Africa

Security – of people, assets and payments

Bureaucracy

Africa’s Challenges

Some lessons from companies who succeed (many of them South African):

Spending time getting to know the market – respect each market as a unique one , very diverse in terms of culture, language, infrastructure

Putting down roots in a country – developing local partnerships

Doing business in a way that benefits the long term interests of local communities – creating opportunities, skills development, manufacturing locally , franchise operations /partnerships with local entrepreneurs

Initially using expatriates who understand the business and then migrating to local management with a deeper understanding of the local market

Kenya │ Tanzania │ Uganda

United Republic of Tanzania │ President Jakaya Kikwete │ 48.1 million people │ GDP Growth of 7% │ Key City: Dar es Salaam

Republic of Uganda │ President Yoweri Museveni │ 36.8 million people │ GDP Growth of 4.8% │ Key City: Kampala

Republic of Kenya │ President Uhuru Kenyatta │ 40.9 million people │ GDP Growth of 5.9% │ Key City: Nairobi

Country Overview – Tanzania

Tanzania Overview - Housing

Masaki

Msasani Peninsula

Oysterbay

Mikocheni

Ada Estate

Kawe

Mbezi

Popular Dar es Salaam Suburbs for Expatriates

Rentals • Apartment rentals range

from $1,730 (2 Bed) - $4,600 (4 Bed) monthly

• Houses and maisonettes range from $1,500 (3 Bed) - $11,500 (5 Bed)

Lease Practices • Rental practices are biased

towards the landlord

• Rentals are paid 6 months – 1 year, in advance

• Taxes are high and include VAT, a Stamp Duty and Withholding tax

Tanzania Overview - Schooling

Schooling

Available schooling in Dar es Salaam covers the American, British, French and International Baccalaureate curriculums. The most popular school amongst expatriates is the International School of Tanganyika.

School Grades Location

International School of Tanganyika

Kindergarten – Grade 12

Masaki

Aga Khan School Pre-School – Grade 12

Upanga East

Haven of Peace Academy Kindergarten – Grade 12

Kunduchi

Ecolé Française Arthur Rimbaud

Ages 3 – 14 Oyster Bay

Dar es Salaam International Academy

Kindergarten – Grade 10

Masaki

International School of Tanganyika

Country Overview – Uganda

Uganda Overview - Housing

Muyenga

Popular Kampala Suburbs for Expatriates

Rentals

• Apartment rentals range from $690 (2 Bed) - $3,470 (4 Bed) monthly

• Houses and maisonettes range from $1,390 (3 Bed) - $5,780 (5 Bed)

Lease Practices

• Rentals are paid 6 months – 1 year, in advance

• A Stamp Duty applies to leases in Uganda

Kololo

Ntinda

Naalya

Bukoto

Lubowa

Uganda Overview – Schooling

Schooling

Available schooling in Kampala covers the American, British, and French. The most popular school amongst expatriates is the International School of Uganda.

School Grades Location

Aga Khan School Nursery – Year 13 Old Kampala

Ambrosoli School Pre-School – Year 6 Bugolobi

Ecolé Française Kampala Primary School Lugogo Bypass

Galaxy International School

Kindergarten – Year 13

Lubowa

Heritage International School

Nursery – Grade 12 Kampala

International School of Uganda

Playgroup – Grade 12 Kampala Outskirts

Kampala International School

Playgroup – IB Level Bukoto

International School of Uganda

Country In Focus – Kenya

Kenya In Focus

Kenya is a relatively easy African expatriate location – investor friendly, hospitable, well educated middle class

East Africa’s hub - Multinational, SA companies well represented, large US Military and Aid representation

Key Challenges:

Infrastructure deficit

Traffic congestion and Transportation

Housing

Schooling

Safety & Security

Kenya In Focus – Key Challenges

1. Infrastructure deficit

Development has not kept pace with rapid growth and urbanisation (roads, power, water & sanitation systems)

Roads in particular are in poor condition (new bypasses and motorways are currently under construction)

Relatively frequent load shedding due to power shortages (great strides are however being made in new areas of power generation such as wind and geothermal energy)

Kenya in Focus – Key Challenges

2. Traffic Congestion / Transportation

Nairobi’s roads are very congested, especially during peak traffic. Roads are often pot-holed / not well maintained, signage is poor, making it difficult for newcomers to find their around

Selecting a home (and school for families with children) in close proximity to each other and work location is an important consideration to avoid hours on the road

Drivers are courteous , if robust , and drive on left hand side of road. However, navigating traffic circles and dodging pedestrians requires a certain skill set!

A car is essential (and for families two vehicles) as public transport is not recommended for expats – limited to Public mini buses or ‘Matatu’ which are often overcrowded, or taxis which are an expensive option

Expats can drive on home country drivers license for 1 year and thereafter are required to obtain a Kenyan Drivers License

Kenya in Focus – Key Challenges

3. Housing Quality secure and affordable housing is in high demand, and choice often

limited to a maximum of 5 – 7 properties

Setting appropriate housing budgets / allowances upfront, factoring in additional charges such as Service Charges (if in a compound); Lawyer’s Fees and the Stamp Duty

Aligning security guidelines to the assignee’s choice and budget

To avoid disappointment, it is essential to move quickly to secure selected property – , signing of lease contract and payments while complying with due diligence and company vendor requirements

Landlords’ philosophy remains ‘Cash is King’

Balancing location of office to school

A pre-assignment orientation is highly recommended

Kenya In Focus – Housing in Nairobi

Popular Suburbs

Most offices used to be located in the CBD, but over the past few years many businesses have moved out and relocated to more traditionally residential areas.

Westlands, Parklands and Upper Hill have offices, apartment blocks and shopping centres – a good option for couples and singles. Closer to the City Centre, Kitisuru is popular – the location of the Kihingo Village gated community

Within the region of Kasarani (UN & Embassies), these areas are in high demand:

Gigiri; Runda and Muthaiga – these areas have very good schools.

Karen and Langata, in the East of the city. Becoming increasingly popular due to the number of excellent private schools, new malls . Commute to CBD or Westlands is challenging .

Kenya In Focus – Housing in Nairobi

Types of Housing Available

1. Apartments Typically rented unfurnished and

usually 3 bedroom units

1-2 bedroom furnished units are typically serviced apartments for short term lets

The more modern apartment blocks have facilities such as communal swimming pools, gyms, tennis courts and club houses

Most expat level apartment blocks will have a back-up generator and 24 hour security

Kenya In Focus – Housing in Nairobi

Types of Housing Available

2. Townhouses

Typically small compounds of 6-10 units with 24 hour guards

3-4 bedrooms

Attached and have a small yard either at the back or the front of the property

Some have a communal swimming pool, gym, tennis courts etc. This is however rare.

Kenya In Focus – Housing in Nairobi

Types of Housing Available

3. Homes in Compounds Stand alone 4-5 bed homes within a gated community, manned by 24 hour security

Private garden and may differ in appearance

Typically managed by the compound’s property managers (maintain generators, security systems, common areas)

Upscale complexes typically have a communal swimming pool, gym and sports facilities

Most popular type of housing for families with children and most expensive

Kenya In Focus – Housing in Nairobi

Types of Housing Available

4. Free Standing Homes Larger homes and gardens, sometimes with a private swimming pool

Back-up generator and water supply required – and maintained at tenant’s expense

An alarm system and a security guard are recommended.

Kenya In Focus – Housing in Nairobi Monthly Rental Guidelines

Muthaiga, Gigiri, Runda (Expensive Housing)

3 Bedroom Apartment $1,200 $2,500

4 Bedroom Apartment $1,700 $3,200

3 Bedroom Townhouse $2,800 $4,000

4 Bedroom Fee-Standing / Compound $3,500 $4,500

5 Bedroom Free-Standing / Compound $4,000 $6,500

Lavington, Karen (Moderately Expensive)

3 Bedroom Apartment $900 $2,200

3 Bedroom Free-Standing $2,000 $3,000

4 Bedroom Free-Standing $2,600 $5,000

5 Bedroom Free-Standing $3,200 $6,500

Westlands

3 Bedroom Apartment $1,000 $2,600

Serviced, Temporary Accommodation

1 Bedroom Apartment $2,300 $3,500

2 Bedroom Apartment $2,900 $3,800

Kenya In Focus – Housing in Nairobi

Standard Lease Practices

Securing a Property: On selection of a property, the agent will draft a Letter of Offer detailing the basic terms the landlord is prepared to accept for the tenants acceptance – there is seldom much scope of negotiation as currently a landlord’s market (demand outstrips supply of quality secure properties)

Security Deposit: The standard security deposit is one month’s rent and payment is required on signature of Letter of Offer – usually prior to the lease agreement being signed

Drawing up the Lease Agreement: The lease agreement is typically drawn up by the landlord’s attorney and is landlord friendly, including the requirement to redecorate the property on lease termination

Rental Cost: Rent is typically paid quarterly and escalates annually (typically by 10%)

Additional Costs: The tenant normally pays the following: stamp duty (1.5% of the rent payable); agency lease administration fee (varies between 10,000 and 40,000) and the cost of the landlord’s attorney drawing up and review of the lease

Lease Termination: Upon termination of a lease in Kenya, Tenant is typically required to ‘re-decorate’ (repaint the interior walls and re- varnish floors /woodwork )

Kenya in Focus – Key Challenges

4. Schooling

Nairobi offers a good choice of quality schools – both International schools and Private schools

The availability of places in these schools, especially those in Muthaiga, Runda and Gigiri, is very limited and long waiting lists can be anticipated

Recommend that families start school search process as early as possible in the relocation process and before choosing a home – commuting long distances between school and home is not viable

Muthaiga, Gigiri and Runda – Peponi School, Potterhouse School, Rosslyn Academy, the German School, and International School of Kenya

Karen and Lavington – Hillcrest School, Braeburn, Rusinga, GEMS International School, The Banda School, and Brookhouse

The cost of schooling ranges between $ 5,100 (for the lower levels) to ($19,900 for senior levels)

Kenya in Focus – Key Challenges

5. Safety & Security

Kenyans are generally gentle and peace loving people and crime levels in Kenya and Nairobi are not high by comparison with other locations in Africa. Safety and security is still a concern, and opportunistic crime does exist

The Islamist extremist group, Al Shabaab remains a threat to the country’s security. The group’s terrorist activities have increased since the Kenya sent its military to Somalia

Compounds or secure apartment complexes are recommended

Homes should be fitted with alarm systems linked to a security response company.

Free standing homes should have an alarm system, burglar bars, perimeter fencing, a security guard, and a back-up power supply

Kenya in Focus – Other Challenges

Household Goods (port congestion in Mombasa resulting in lengthy delays). To contain costs, attempt to align immigration, home search and HHG timelines

Settling-In Issues:

Mobile coverage is excellent.

Utilities need to be set up in the assignees name and payment made directly to the local authority either in cash or by cheque

In order to receive HHG and to transfer utilities a PIN is needed – a Personal Identity Number

Kenya in Focus - Healthcare

Nairobi has a number of good private hospitals and medical facilities offering a wide range of specialist and routine treatment

Private medical care in Nairobi is generally more than satisfactory for most healthcare, dental and paediatric problems

Healthcare insurance is essential

Medical check-ups are recommended prior to moving to Kenya, as with any other African location, qualified advice should be obtained on immunizations (Yellow Fever required) and precautionary measures for malaria (not common in Nairobi)

Tap water is not recommended for drinking

Kenya In Focus – Goods and Services

Shopping – significant development , with many new shopping malls and many familiar South African retail outlets (Woolworths, Checkers, Mr Price, Steers) and brands available. Nakumatt is Kenya’s largest local retailer and suppliers everything from hardware to bread. Quality of fresh fruit, vegetables is particularly good

Although predominantly a cash economy, mobile banking is sophisticated, and credit cards are accepted at major hotels and retail outlets but there are some restrictions

Telecommunications – Mobile services in Nairobi are widely available with four main service providers. Internet connectivity has improved substantially

Televisions – The full DSTV bouquet is available in Kenya.

Questions?

A Scenario

Relocation into

Nairobi, Kenya

Toolkit: Planning a Relocation to

Nairobi, Kenya