Insight type: Article

Recently, the Kenya Revenue Authority (the KRA) has been aggressive in conducting post clearance audits. A post clearance audit refers to the review conducted by the KRA of the import transactions and records after goods have already been cleared and released from Customs control. The KRA employs post clearance audits as a vital tool to ensure compliance with the Customs legislation by the importers/taxpayers. Other reasons for conducting post clearance audits include protecting tax revenues by identifying revenue leakages and maintaining a level playing field for all the importers.

Africa’s agri-business export sector holds immense potential under the African Continental Free Trade Area (AfCFTA), but realising this promise requires overcoming persistent challenges. Internal infrastructure deficits, complex non-tariff measures, and global trade uncertainties, such as shifting U.S. tariff policies—remain key constraints.

Family businesses are the backbone of many economies worldwide. From small enterprises to large multinational corporations, family-run businesses play an indispensable role in shaping industries, providing employment and driving innovation. However, the unique nature of family dynamics can also pose significant challenges to business success and longevity.

Throughout this series, we have explored some of the most pressing issues that family businesses face: unlocking the family dynamic, remuneration, dispute resolution, corporate governance and profit extraction. In this article, we review how these elements interconnect and offer strategies for overcoming the challenges they present.

Over the past few years, we have witnessed the evolution of ESG (environmental, social and governance) matters and their impact on businesses in Kenya firsthand, particularly in how ESG principles influence lending decisions. How that trajectory will be impacted by the new direction the United States is taking, essentially extinguishing any reference to DEI, climate change, and “woke” issues, remains to be seen. ESG will continue to be significant to Kenya and the region since climate change is real, and in Europe, where many DFIs are headquartered, environmental, social and governance issues remain relevant.

Family-owned businesses often face unique challenges when it comes to wealth extraction. Unlike traditional businesses where shareholders may not share personal ties, family enterprises involve owners across generations, each with differing financial needs, levels of involvement and perspectives. Striking a balance between the interests of active and non-active family members, while ensuring the sustainability of the business, is no small feat. We explore key wealth extraction strategies and practical considerations to help navigate this complex landscape.

The African Continental Free Trade Area (AfCFTA) represents a monumental shift in Africa’s economic landscape, aiming to create a single market for goods and services across 54 countries, encompassing over 1.3 billion people. AfCFTA seeks to eliminate tariffs on 90 percent of goods, facilitate the movement of capital and people, and promote investment and sustainable development. According to the World Bank, the agreement could boost Africa’s income by up to USD 450 billion by 2035 and lift 30 million people out of extreme poverty.

 

Corporate governance is especially important for family businesses, which navigate unique challenges arising from their intertwined ownership structures and family dynamics. Effective corporate governance enables family businesses to balance these complexities, fostering stability, growth and harmony. We set out some salient themes to consider.

Family businesses are inherently complex, as they operate at the intersection of personal relationships and professional responsibilities. This unique dynamic often creates fertile ground for conflicts to arise, driven by differing values, goals, roles, expectations and communication styles among family members. If left unresolved, these conflicts can jeopardise business performance and continuity as well as the familial bonds that sustain it. Therefore, addressing and mitigating potential disputes is crucial for the long-term success of the family and their enterprise.

One of the most complex and sensitive issues family enterprises face is the remuneration of family members. Ensuring that compensation is fair and effective requires a nuanced approach that balances familial aspirations with the financial and operational sustainability of the business.