
Getting Into Businesses Whose Only Barrier To Entry Is Capital Is A Sure Race To Zero On Returns In The Long Term
The Kenyan business landscape is rapidly evolving, with traditional ventures that were once considered lucrative now facing diminishing returns. Experts warn that getting into businesses where the only barrier to entry is capital is increasingly becoming a precarious investment strategy.
Industries like ride-hailing (Uber), real estate (apartments), and boda boda operations exemplify this trend. These sectors often attract investors due to their seemingly straightforward models but are proving to be a race to zero on returns in the long term.
The Real Estate Dilemma
High-end real estate in Kenya has become a particularly tricky venture. According to a recent Business Daily article, the sector has been on the decline despite significant foreign investment.
Much of the market is now flooded with illicit or laundered money, making it challenging for legitimate investors to compete.
“You can’t compete with an ‘investor’ who doesn’t care much about their break-even periods because they got their money for free,” one commentator observed. This influx of questionable funds has disrupted the sector, further eroding returns for genuine investors.

Better Alternatives to Real Estate
Market analysts point to Money Market Funds (MMFs) and Treasury Bonds (T-Bonds) as more attractive options. These financial instruments are currently yielding better returns than real estate without the associated construction hassles.
Furthermore, short-term rental businesses like Airbnbs are outperforming traditional homeownership in profitability. BnB operators are making more substantial returns while avoiding the long-term commitments and maintenance costs tied to owning property.
Lessons for Aspiring Entrepreneurs
The core lesson here is to avoid focusing solely on capital-intensive ventures that lack a clear, competitive advantage. The moral of the story is to shift attention from basic or culturally entrenched investments to forward-looking, scalable business models.
Experts recommend exploring platform-based businesses that leverage technology and innovation, offering the potential for exponential growth.

Think Outside the Box
Entrepreneurs are urged to think differently and explore untapped opportunities beyond traditional investments. In today’s fast-paced economy, success is increasingly defined by adaptability and innovation rather than just the ability to raise capital. As the saying goes, “Think different. Think outside the cultural box.”
With these insights in mind, investors can better navigate the complex landscape and make informed decisions that align with long-term success. By focusing on scalable and forward-thinking opportunities, they can avoid the pitfalls of sectors dominated by intense competition and questionable practices.