The african business fortune magazine aug-oct 2015 by Afritech Media

VOL 2 - AUG-OCT 2015 Ksh 350 Tsh 7,000 Ush 12,000 Rw franc 2,400 SA Rand 45

EMPOWERING AFRICAN BUSINESSES

THE YOUNG ‘KING’ OF OUTDOOR ADVERTISING TRUSHAR KHETIA FOUNDER TRIA GROUP

Islamic bonds Retirement savings fears tipped to meet grip Kenyans Kenya’s infrastructure gap

New car sales hit record high on growing demand for luxury cars

3 I EAST AFRICAN BUSINESS TIMES september 2015

EDITORIAL

Why you should expect tougher times ahead

nergy regulator has increased fuel prices of petrol for the month until mid-September but has cut prices for diesel and kerosene.

The latest monthly (August) review means fuel users will pay between Sh 4.06per litre for super petrol and Sh4.76 per litre for kerosene while those using diesel will pay Sh1.21 per litre.

Motorists began feeling the pain at the pump from last midnight. In Nairobi petrol pump prices have gone up by Sh 102.65, while diesel is up by Sh 83.35 and for households using kerosene to cook will pay Sh57.98 of the commodity. Consumers in Mombasa will pay a relatively cheaper price for the products at Sh99.32 for petrol, Sh80.06 per litre for diesel and Sh57.98 a litre for kerosene.

Energy Regulatory Commission (ERC) attributed this month’s increases to the proposed additional Sh3 per litre in the pricing of super petrol and diesel to cover for the costs of maintain roads in the country channelled through the Roads Maintenance Levy (RML), announced in this year’s budget by the national treasury. “This month’s pump prices took account of an additional Sh3 per litre of super petrol and diesel to cover for RML which came into effect on 17th of July 2015,” ERC said in a statement, adding that as a result the recovery of the additional cost borne by oil marketing companies has been factored for all cargoes whose taxes were paid after the effective date. More recently, the regulator said a sharp jump in the international pricing of petro-

leum products that happened in February this year, which showed no corresponding downward adjustment, was to blame for recent hefty hike in fuel prices. The continuing rising petroleum prices also looks set to pile inflationary pressure on Kenyans who heavily rely on the commodity with the increase further affecting costs of transport, energy and manufacturing which have a trickledown effect on other key sectors of the economy like agriculture as well as having a direct bearing effect on the cost of living. The rise also hurts importers who will now pay more for fuel imports and it’s anticipated will blame the corresponding fall of the shilling value to the dollar which has not helped matters for them.

The July 2015 Consumer Price Indices (CPI) and Inflation rates by Kenya National Bureau of Statistics (KNBS), put the average CPI at 0.07 per cent from 160.46 in June to 160.57 in July while the overall inflation rate stood at 6.62 per cent last month. During the same period, housing, water, electricity, gas and other Fuels’ Index, increased by 0.76 per cent, mainly due to cost increases in respect of common cooking fuels and other household utilities.

In 2014, fuel slumped to a historic low selling at Sh 30 a litre as global oil prices crashed, but the scenario has changed since February this year as prices of crude oil continue to rise marginally.

5 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

CONTENTS

COVER STORY

the team Managing Editor Steve Remie Admin & Finance Otieno Wasonga Writers Paul Martins Emmanuel Aloo Contributors Gladys Oduor Raymond Mwangi Vincent Chege Design & Layout Walter Onditi Marketing Executives Abel Nyakundi Abigael Shon Priscah Okoth Anthony Wesonga

COVER STORY

24. The young King of Out door advertising TRADE & FINANCE

29. New car sales hit record high on growing demand for luxury cars

Circulation and Distribution The African Business Fortune Media

Publishers The African Business Fortune Media Southern House 3rd Floor, Muranga Road, Kenya P.O Box 2957 - 00200 Nairobi Tel: 0726 879 488, 0723 052 000, 0771 832 771 Email: businessfortunemagazine@zoho.com

Copyright 2015 The African Business Fortune Media is a Monthly publication Africa Media Ltd. All right reserved. No part of this publication may be reproduced or transmitted in any means, electronic or mechanical, including photocopy, or any storage and retrival systems, without prior written permission from the publishers. African Business Fortune is entirely independent of all commercial interests in all sectors and regions of its coverage. Unsolicited manuscripts will not be accepted for publication.

31. Doctor with a Sh2 billion plan ICT

8. CA sets June 2018 deadline for broadcasters to have 60 percent local content programming ENERGY

37. Azuri Technologiesâ&#x20AC;&#x2122; quest to promote clean energy ICT

Are chat apps killing sms? CORPRATES

Crown Paints targets to grow market share by 70 pc in 2015

6 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

AFRICAN BUSINESS FORTUNE

- NEWS AGENDA

Board of architects’ bets on new legislation to gag fraud members By African Business Fortune Writer

he regulatory board of architects and quantity surveyors (BORAQS) wants the proposed legislation which seeks to increase fines for rogue members to be fasttracked in order to bar unqualified contactors from invading the industry as well as control frequent cases of buildings collapse.

The proposal by BORAQS seeks to raise penalty for members whose professional works result into destruction and deaths from poorly constructed buildings by up to Sh1million from the current Sh5, 000 an architect is permitted to pay as a fine for unethical work. “The current CAP is too low, we are banking on the revised one to help sort these problems that are traced to Quacks masquerading as professionals and rogue contractors who are responsible for shoddy work,” said boraqs chairman Cosmas Maweu, during the board’s ongoing Continuous Professional Development twoday seminar in Nairobi. Draft policy was first schemed in February this year but is yet to come to force – barring the authority from issuing stiffer penalty to members found forfeiting its construction standards. The Board said yesterday that it was optimistic the legislation would be achieved soon and that all the requirements were in place after presenting its recommendations to the Attorney General’s office and is currently awaiting the presentation of

the proposal before the parliament passes it into law.

“Most of the work is nearly complete and upon its conclusion, the new law should pave way for the implementation of our five-year strategic plan which would then allow the Board to have a new inspectorate to oversee all the projects being undertaken across the country,” commented Moses Nyakiongera, Quantity surveyor in the Ministry of Lands, Housing and Urban development, who said the enforcement of building laws and regulations has been hampered by acute lack of technical and supervisory staff. Lands Ministry acting CS Fred Matiang’i further said that the ministry is in the process of beginning a review of Urban and Cities Act as a regulatory arrangement as an ef-

fort to attract investments in the building and construction industry.

The sector has registered a growth rate of over 400 percent in the last decade from Sh40billion to Sh200billion, and continues to witness intensive construction of several public and private building projects and other infrastructure projects.

“The ministry will ensure the country’s built environment is brought to standards similar to those in other parts of the world and through the board the legislation will seek to curb proliferation of poorly-constructed buildings,” he said.

Available data from the Ministry shows that over the last two decades Kenya has witnessed unprecedented urban growth which has severely strained the ability of urban area administrations to provide adequate professional services to match housing and related infrastructure demands.

7 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

AFRICAN BUSINESS FORTUNE

- ICT

CA sets June 2018 deadline for broadcasters to have 60 percent local content programming By African Business Fortune Writer

he Communications Authority of Kenya (CA) has set June 2018 deadline for Free to Air broadcasters in Kenya to attain 60 percent local content in their programming. The authority said last month that it has entered into a Memorandum of Understanding (MoU) with the Kenya Film Commission in a bid to stimulate the development of local content in the industry, and is in the process of carrying out a study to establish factors slowing down the production and uptake of local content. Most media stations are yet to meet the regulator’s local content threshold of at least 40 percent (the local content target CA had set itself for June this year) and only 36 percent of programmes being aired today by TV broadcasters have local content.

“The roadmap which was developed in 2013 in consultation with stakeholders and subsequently shared with broadcasters, anticipate Free to Air TV broadcasters to attain 60 percent local content programming by June 2018,” said CA Director General Francis Wangusi, in a speech read on his behalf by Leo Boruett, CA’s director Multimedia services, during the Local content Soko exhibition in Nairobi. As at June 2015, only five of the 14 broadcasters that were on air before digital migration had surpassed the 40 percent local content quota, and the Guild of Distributors now wants producers, distributors and broadcasters to diversify beyond their boxes in order to remain relevant and profitable in the industry.

“There’s more than enough content and especially local content which has depth and needs to be widened and treated as an investment and entrepreneurial vehicle for local content producers to tap into,” said the President of Guild of Distributors Ms. Maureen Nyanjong’, adding that the regulation would save the industry up to Sh40billion it spends annually to outsource services on content developments and advertisements done in the media outlets. CA also wants relevant stakeholders to include local content programming targeting genres like documentaries and reality shows that meet the needs the underpresented consumers such as children and people with disability. The authority had issued licenses to broadcasters to provide sign language interpretation and captioning during live news bulletin, coverage of emergencies and national events – but so far just a handful of the

6 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

broadcasters have incorporated sign language interpreters in their programming. Kenya Corporate Board (KECOBO) in partnership with CA and other stakeholders has further said it is in the process of finalizing a draft bill which seeks to encourage Content Service Providers (CSPs) to generate revenues from their locally produced content.

Industry statistics show that local content service providers are earning higher revenues from their content. Available data shows that, average revenue per user (ARPU), a measure of how each user spends on internet access, has risen to $600 in some segments of the market, a growth from $500 last year. The tool is used to gauge how much money a service provider makes from the average user and enables the CSPs to make revenue projections and determine which products are earning most revenues, as well as providing accurate picture on services and products popular with consumers in certain segments of the market.

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AFRICAN BUSINESS FORTUNE

- BRIEFS

Britam targets retirees in new pension Product

iversified financial services group, Britam has come up with an investment pension product targeting retired employees who will now have access to their retirement savings as an income.

The product tagged Platinum Drawdown Plan will be managed through a guarantee fund and runs for a minimum of 10 years during which a member is expected to receive an income from the trust of up to 15 per cent of the total savings deposited in the account as long as the fund is active for a period of one decade. Speaking last month during the product launch, Group Managing Director of Britam, Benson Wairegi said the scheme - the first in the market will target retired Parastatals employees, workers in Blue chip companies as well as retired high net earners who have money for savings but do not want annuities and have met the minimum threshold and can invest up to a minimum of Sh5million from their retirement savings into the kitty.

“The product is targets retired individuals and most especially government workers who also have an option to receive a refund of the remaining fund at the end of the statutory period of ten years,” he said, adding that upon attaining 65 years, a member will no longer pay income tax on their retirement benefits. An annuity is an insurance product that pays out income, and can be used as part of a retirement strategy.

Data from Retirement Benefits Authority (RBA) shows that Kenya’s pension investments currently stands at $7.8billion, representing a10 per cent growth in the past decade and 27 per cent increase year on year at the end of 2013, while assets held by individual retirement benefits schemes have also grown by 24 per cent in the one year to June 2014, outpacing the sector average growth of 18 per cent. About Sh5.3billion came into the insurance sector through pension schemes in 2014 alone and the segment is poised for further growth according to Insurance Regulatory Authority (IRA) technical Director Agnes Ndirangu, who says insurers should also target the group in order to boost insurance life segment whose penetration ration has remained relatively low at just 1.4 per cent. Overall according to Association of Kenya Insurers (AKI) recent data, insurance penetration declined last year to 2.92 per cent compared to 3.44percent in 2013.

10-THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

Flame Tree Group posts Sh1.11billion in profits

lame Tree Group (FTGH) has posted halfyear to June 2015 profit of Sh1.11billion, a record for the Growth Enterprise Market Segment (GEMS) listed firm.

The result is a 43 percent increase on Sh778million it posted over a similar period last year, with business verticals of manufacturing and trading contributing to the jump in profits.

Flame Tree Group Chief executive officer Heril Bangera attributed the growth to the company’s growth strategy and the group’s business’ diversification of its products despite challenges the NSE-listed company faced during the period. “While delivering a strong financial performance during the first half of the fiscal year, we continue to focus our efforts on our growth strategy. The depreciation of the shilling and the rising fuel costs meant that we faced challenges in our manufacturing, especially for plastics. But we are extremely happy with the first half results, even more so because our acquisition of Chirag Kenya brands has helped to enhance our market share and revenues,” he said.

Flame Tree Group acquired Chirag Kenya brands earlier in the year. The deal included the acquisition of Nature’s Own spice brand. It has been a strong performer in the premium natural spice category, with an excellent growth profile and is currently one of the leading brands in the spices category in Kenya.

The Group further recorded a Gross Profit increase of 51percent year on year to Sh 368 million, while gross profit margins improved to 33percent from 31percent during the same period from the previous year, and the company’s net current assets grew by 64 percent to Sh355 million.

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AFRICANAGENDA BUSINESS FORTUNE NEWS

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BUSINESS FORTUNE AUG-OCT 1212I -THE EASTAFRICAN AFRICAN BUSINESS TIMESMAGAZINE september 20152015

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AFRICAN BUSINESS FORTUNE NEWS AGEND

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THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 13 13 I EAST AFRICAN BUSINESS TIMES september 20

AFRICAN BUSINESS FORTUNE - CORPORATES

Safaricom stays put on voice tariffs By African Business Fortune Writer

afaricom has hinted that it will not heed to the unending pressure to lower its voice tariffs, offering upsetting news to it’s over 24million subscribers.

The telecoms firm said yesterday it has no intentions to review southwards the current call charges of Sh4 per minute to Sh3 per minute – a minimum fee its competitors are presently charging their subscribers to call other networks saying the current fee is here to stay, at least for now. “I don’t want to disapprove of our competitors’ strategy; we think the Sh4 call tariff in place is suitable at the moment. We run a business model that is sustainable,” said Safaricom chief executive Bob Collymore, saying the push is not viable and could put at risk the company’s tactic, adding that the move could expose the country’s largest telco firm in terms of market share to losses. The issue emerged yesterday during the company’s Annual General Meeting where some of the shareholders sort explanations of how the operator was angling itself with the current wave of competition in voice calls from its rival networks that are offering cheaper rates in the industry, while Safaricom rates were still expensive for majority of Kenyans connected to the network. “Call rates need to come down and Safaricom management seems to be adamant and is yet to react to the advertisements from other operators who are charging lesser costs,” wondered a shareholder. Safaricom to Safaricom call costs Sh4 per minute, the same as Safaricom to other networks and Sh2 on-rate between 10pm and 6am, while the cost of calling Orange line to another Orange line cost Sh2 per minute and Sh3 per minute to other networks. 14 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

Airtel to Safaricom call cost Sh4 while Airtel to Airtel calls cost Sh6.7cents percent and the same price to other networks. The subscriber has faced criticism over the last few months from its customers who are demanding that the operator reduce voice tariffs but it has been adamant to bow to the demands and is still popular among its users. Safaricom saw its total revenues jump by 13 percent and further recorded double-digit growth across its non-voice service revenues streams which grew by 27 percent driven largely by Data and M-PESA products. Safaricom also made clear its intentions that it is opposed to the idea of separating the M-PESA entity from the holding company, Safaricom, following an uproar by Airtel who had demanded that the operator be declared dominant player since its own more than 50 percent of the industry’s market share. “Each product is dependent on the other and cannot be separated,” said Safaricom Chairman Nicholus Nganga, adding that the company’s directors, management and the regulator, Communications Authority will consult further on the matter, adding that the move would punish Safaricom simply because it has significant market share. Meanwhile the operator has recommended a dividend payment of Sh 0.64 per share in the financial year ended March 2015, representing Sh25.64billion payable to its shareholders Safaricom also announced it shall this month re-introduce the Big Box tied together internet and TV services which were previously delivered using different devices

AFRICAN BUSINESS FORTUNE - ENERGY

Kenya Power signs 76MW Geothermal, hydro power purchase deals with local firms By African Business Fortune Writer

enya Power has signed a 25-year, 76megawatt power purchase agreements (PPAs) with Akiira Geothermal limited and Kleen Energy, which are developing 70MW and 6MW of geothermal and hydro power respectively, barely two months following the signing of a similar deal of a 100MW PPA with Kipeto Power in July this year.

Under the PPA, the two firms will construct, own, operate and maintain the projects with the distributor purchasing the power generated from Akiira Geothermal limited at a unit cost of US Cents 9.23per kWh while Kleen Energy limited will sell to Kenya power at 9.20 US Cents per kWh. “The PPAs provide Kenya Power with an important addition to our generation planning. These partnerships and generation projects are crucial towards meeting our goal to reach 70 percent con-

nectivity by 2017 and universal access by 2020,” said Kenya Power boss Ben Chumo, adding that the 25 year-limit, will be sufficient for the investors to recoup their investments. Development of Akiira Geothermal substation will be undertaken by Ketraco. The utility firm has so far signed 45 power purchase deals with 25 of them being operational, 10 projects have since been commissioned while 20 are still under implementation.

Kenya’s installed generation capacity currently stands at 2,298MW, having increased 21.7 per cent from 1,885 in June last year following commissioning of new projects by producers like Ken-Gen and Lake Victoria Wind Power project (LTWP) two months ago in Turkana county which seeks to generate 310megawatts by 2017. Currently geothermal provides 46.4 percent of produced power to the grid, 38.1 percent of hydro and a thermal power generation of 14.8 percent with wind energy contributing the

least power with a capacity of just 0.4 percent.

The ministry of Energy has announced plans to raise the country’s power capacity by an additional extra 5,000MW by end of 2017 to the national grid, and the distributor has set an ambitious target of connecting 9million households by 2010 as it seeks to connect at least 1million customers every year.

Kenya’s installed generation capacity currently stands at 2,298MW, having increased 21.7 per cent from 1,885 in June 2014

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 15

AFRICAN BUSINESS FORTUNE - CORPORATES

GDC calls on investors to scale-up geothermal for industrial park By African Business Fortune Writer

eothermal Development Company (GDC) is betting on both local and foreign investors to scale-up Direct-Use of geothermal projects which the authority is developing in Menengai field into commercially viable businesses. Through its four direct-use geothermal pilot projects being undertaken in partnership between GDC and the United States International Agency for Development (USAID), the geothermal company has said it will avail cheap energy to target small and big financiers as well as community investors for the production and processing of goods – with the concept expected to boost the country’s industrial sector as an emerging mid-income manufacturing hub. The four projects include geothermal powered Dairy processing Unit for milk pasteurization –which is expected to reduce energy cost by up to 60 percent, geothermal heated aquaculture ponds, greenhouses for flowers and other cash crops as well as geothermal powered laundry for cleaning and drying clothes. “These projects will revolution-

ize the way geothermal energy is utilized in the country, and when scaled up, the concept will change Kenya and communities. We are therefore championing the course of Direct-Use of geothermal energy for the economic development,” said Acting GDC Managing Director Godwin

The Menengai geothermal project has so far achieved 132.5Megawatts (MW) while the drilling process of 60MW is currently underway –105MW power project is said to be under implementation Mwawongo, during the launch of direct-use of geothermal projects in Nakuru, last week. GDC also plans to put up a gazette notice outlining guidelines and policies of the geothermal direct-use projects in an effort to attract investors to take part in

16 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

the projects, saying it has technical capabilities including drilling operation and scientific equipment for the production of enough steam for the projects. The Ministry of Energy and Petroleum, according to Energy Permanent Secretary Joseph Njoroge is expected to come up with favourable regulatory framework to attract investments into the nascent sector. “We will provide all the requisite comforts including friendly policies that will support the investor’s desires to be part of the country’s rising geothermal economy,” he said. The Menengai geothermal project has so far achieved 132.5Megawatts (MW) while the drilling process of 60MW is currently underway –105MW power project is said to be under implementation – while the construction of steam pipeline is also on course with 80percent construction complete. The steam project has also opened up geothermal investment to the private sector with three independent power producers (IPPS) taking part in the development of the project namely; Quantam Power East Africa, Orpower22 (a consortium of Ormat, Civicon and Symbion), Sosian Energy and other independent power producers who were expected to put up 35 MW each in by August 2016 but the project is likely to be delayed until 2017.

AFRICAN BUSINESS FORTUNE - PHARMACEUTICAL

High cost of treatment, soaring hospital bills push Kenyans into OTC-drugs By African Business Fortune Writer

rug prices and high hospital bills asked by most medical facilities are pushing thousands of middleaged Kenyans into popping along pharmacies to buy over-the-counter (OTC) relief drugs for mild conditions such as fungal infections, joint pains and general body distress. A spot check by African Business Fortune reveals that most patients especially in Nairobi are day by day turning to their friendly pharmacists for remedies like antacids and using these medical professions as their first port of call for minor family ailments, without a trip to the hospital. Not surprisingly many medical experts say the trend is triggered by high cost of treatment and soaring hospital bills especially in private medical facilities where drug prices and cost of treatment is out of reach for most ordinary Kenyans who now trust pharmacists for diagnostic and pills prescription purposes without a visit to a Doctor’s clinic in an effort to cut medical expenses. “Kenyans are poor and it’s hard to scrutinize what non-prescriptions drugs patients buy, let alone take in the chemists which are everywhere and there are underlying factors leading to this shift too,” says one pharmacist in Nairobi who sought anonymity, adding that majority of

consumers assume that OTC drugs can do no harm, advising that if improperly use without a specialist’s consent, heavy periods of use can be fatal and can lead to hospitalizations or generate into chronic illness and eventually death. Most patients according to medical experts opt for OCT interventions to avoid paying hospital-related bills such as consultation, diagnostic and treatment fees which in most cases are costly depending on the nature of infection and the clinic with pharmacists now taking advantage to offer related services at cheaper rates. Most Doctor’s charge not less than Sh1, 500 or more for consultation services while to purchase OTC drugs could cost up to Sh300 more or less for simple laboratory tests and minor illness such as flu or headaches which ordinarily would cost much lesser to treat. For instance to treat bacterial infection especially pathogenic ones, it would cost between Sh700 to Sh3,000 for antibiotics drugs for generic and original drugs respectively through OTC-prescription while it is further costly to treat the same infection in hospitals where lab, consultation and treatment fess are incurred. Another pharmacist says most pa-

tients want to spend less time inside clinics and prefer quick chemist visitations instead for painkillers which retail at Sh10 and Sh15 for minor headaches and stomach aches which could is costly to treat if they grow into full blown typhoid or ulcers. Chest infections such as acute bronchitis usually a mild illness that resolves itself without the need for medical treatment could escalate into pneumonia or at times heart attacks if not early diagnosed and examined by a doctor. For ordinary allergies such as coughs, most chemists charge between Sh150 to Sh700 for cough syrups but persistent cough could warrant lab tests and full diagnosis which is costly especially if it generates into Tuberculosis. It would cost you about Sh200 a tablet to treat Arthritis which has 30 pieces a dose for an original drug while it would cost a mere between Sh10 and Sh30 a tablet to treat a similar disease which is very common among Kenyans using a generic drug from over the counter prescription. Worse culprits in OTC prescriptions are middle-age population especially women and elderly who visit chemists to obtain family planning-related pills without a Doctor’s consent since they take more pills, experience more adverse reactions, and have more difficulty understanding health information.

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 17

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AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

University graduate turns idea into a business venture By Paul Martins

enjamin Sireka took the road less travelled by seizing opportunities in what many felt was a big business peril, and his Busia-based Juakali Fish Association, which he helped set up together with several other members, is a prime example of that. The 28 year old wasn’t about to let tough times in Busia County

deter him from pursuing what he reveals is his first love. “We had a positive mind and we were determined to actualize the idea. Many thought we were senseless with that idea, but those negative voices didn’t daunt our spirits,” says Sireka, a university graduate from the University of Nairobi. What started out as an idea molded from a youth group

20 -THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

would later grow to accommodate several youths from the region and eventual job creator. Now a registered Sacco, Juakali Fish Association has close to 400 active members and a source of livelihood for more than 500 other youths.

Initially, Sireka says that the idea was to start a poultry business which failed to take

AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

off. It is that set back that led to the birth of yet another idea, fish farming. The idea fascinated fifteen more members who went into an aggressive recruitment drive for more willing involvements- the number grew to 100 active members, each contributing Sh2000 to the kitty. With Sh200, 000 in the bank, three members from the group led by their leader, Sireka began a search for fish markets in Uganda, DRC, South Sudan, and Rwanda and Kenya. The search yielded much expected fruits for the members who realized that there was a dire need and huge business opportunity that needed a quick fix; they quickly grasped fish business as a perfect fit for the group. The business is 7 years today , the group has 20 fish ponds each accommodating 1000 tila-

pia fish of the highest quality, and supplements the number by buying fresh fish from Uganda and selling to other EAC regions enough to supply Kenyan markets as well as in Gikomba, City market and some parts of Nakuru. The business fast picked up and demand for more fish became evident, they then began making connections and took advantage of opportunities to feel the much needed gap.

“Fish business has been a great resource for many youth in Busia, including support from my family and wife. I enjoy learning how things are done since I believe you can’t know everything and that way I find a way to do them on my own by engaging others,” narrates Benjamin, a father of two. With that in mind, they approached a local bank, KCB and borrowed a loan worth 2.1 million to boost their operations. Part of this finance helped

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015- 21

BUSINESS FORTUNE - ENTREPRENEURSHIP

buy a track for the Association to aid them in transporting the products to their targeted markets, after they realized they spend a lot of their earnings in truck hiring, even though they still do it. The group equally invested on a studio and the returns according to Sireka have been ‘amazing.’ Music recording, video shoot and camera hires are some of the activities that generate earnings for the studio. On average, the Group spends about Sh25, 000 to hire one truck one day for transportation purposes alone and spends more on casuals for packaging as well. On a typical month, they make close to half a million profit after expenses.

Sireka knew that building a successful business would be a challenge to run without sufficient business knowledge; he didn’t let that stop him. In fact, the Sacco continues to thrive in situations where leadership and problem-solving are essential, and his self-motivated, goal-setting nature has made entrepreneurship a great fit for him, an ideal perfect match that prompted the Association to appoint him their CEO. He enrolled at a University to pursue a Degree Course in Business Administration and graduated in 2011. For Benjamin, “Business is all

about taking risks, without that that knowledge one can’t venture into any business, you will deal with goals and obstacles along the way every day-all day.” And his initial legwork as the Sacco’s CEO and continued hard work has paid off. While he concedes that there still exist challenges, he says they are ready to deal with every challenge as they arise, positively. What’s more, the Sacco has a well laid strategic growth agenda and will be looking to set up an Ice Plant to help in preservations of fish and related products as well as setting up a local radio station in

the region. If well executed, the plan could see them become a major supplier of Ice in Western region. He reveals that, they are currently talking on local banks for funding in the upcoming projects.

While Benjamin continues to plan for the Sacco’s future, he also recognizes the importance of taking time to step back and appreciate the journey. He offers this final piece of advice to aspiring entrepreneurs; “Nothing is easy, you have to be smart, you have to think big and act small. You’ve got to start somewhere.”

“Business is all about taking risks, without that that knowledge one can’t venture into any business, you will deal with goals and obstacles along the way every dayall day.”

22- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

Young “king” of Outdoor advertising

This 28-year old caused a retail earthquake when he bought a supermarket and appeared in a Forbes list in a span of few months. Trushar Khetia shares his story By Steve Remie

Trushar Khetia

rushar Khetia showed entrepreneurial instincts from an early age, and all signs pointed towards him making it big in future. When he was a young boy growing up in a village in Kitale, Trushar started renting books he had finished reading to his classmates, charging them Ksh5 (US$0.05). By the time most students were done reading the storybook, he had raised enough cash to buy the same book. This acumen has paid off for the founder of Tria Group, a transit outdoor company. The 28-yearold has been named as Kenya’s eight youngest promising entre-

preneurs by Forbes Magazine. But it has been a steep climb for Trushar. Upon completing his O-level education at Kitale Academy, he got a job as a marketer with Securex, a security company in Nairobi when he was only 18 years old. He then went to study for a Bachelor’s Degree in Business Administration in Marketing at the Manchester University in the United Kingdom. The budding entrepreneur did not stop there. He applied to join the Graduate Management Programme advertised by consumer Product Company Procter & Gamble (P&G) and got picked at the age of 21, beating other hun-

24 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

dreds of applicants. He worked as abusiness development executive for P&G before calling it a day after only three years in what was then ‘his dream job.’ “My plan was not to stay in the company for long. I wanted to acquire enough experience which would give me an insight into how to start something of my own,” he reveals during an interview in his office in Westlands, Nairobi. What is more, his father had in 2011 compelled him to return back home to help run his family retail business in Kitale town. He came back home, albeit reluctantly. But his reunion with the father would not last long. Trushar says despite having the

AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

skills and knowledge of running his father’s retail business in Kitale, he felt out of place and wanted to work in an environment where he would make both business and managerial decisions on his own without interference from family members. So he quit for the second time and went to start his “unknown” business empire.

“It is not easy making decisions when everyone around you wants to have a say. I felt caged and what followed was my departure from a business that literally raised me. I equally wanted to know what it takes to start from zero. I was eager to start something of my own,” says Trushar who is a parttime deejay.

Though he did not know the kind of business he wanted to venture in then, he was certain it would be media-related. During his studies in Manchester, Trushar says he was inspired by the seriousness with which retailers in the UK used public transportation as a medium for advertising. So he chose to gamble with the idea and tested the waters with it. “Most companies just designed the ads and placed them on the vehicles and never bothered to look after them. My team and I wanted to go an extra mile so we designed full-wraps that no one was offering,” says the man who draws his inspiration from his entrepreneurial father. He had Ksh2 million (US$21,820) in savings and borrowed another Ksh5 million (US$54,550) from a

Trushar Khetia bank to start Tria Group-a transit outdoor company.

Two and half years later, he has become a millionaire who also owns other businesses. He is also the owner of Society stores- a budding, young start up acquired from a Thika-based family owned supermarket at an estimated cost of Ksh90 million (US$981,900) late last year. Currently, the business has a turnover of more than Ksh 100 million and prospects to hit Ksh 1 billion by the end of the year. The company has partnered with major bus companies like the Kenya Bus Service Management to carry its advertisements.

Most of the branding is done either at night or early in the morning before buses start working. He now wants to expand in EAC countries and has already opened Tria Group Tanzania.

He is also planning to acquire other businesses in retail under his Society Stores. That will give him muscle to take on big players like Nakumatt, Naivas, Uchumi, Tuskys and international brands like Massmart, who want to penetrate the Kenyan market. “Retail industry is not 100 metres race, it’s a gradual process and Society Stores is going to change retail business in Kenya completely in the coming months. It is just a matter of time before you begin to see Wi-Fi (wireless internet connectivity) being offered in our stores as well as other innovations that are still in the offing,” he reveals. “I always learn to remain humble no matter what. Money is not everything but my ultimate goal is the success that comes with it. Be willing to take risks,” he advises budding entrepreneurs.

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 25

AFRICAN BUSINESS FORTUNE - PENSION

Retirement savings fears grip Kenyans

By Steve Remie

enyans are freaking out about their personal savings - and for good reason. A recent survey shows that more than 40percent of Kenya’s population will not be able to afford to retire and another 40percent are moderately worried they won’t have enough money for retirement and will have to

rely on family for support.

Only 5percent are expected to be financially independent in retirement and even fewer will live comfortably, according to Deposit Administration Survey released last month by financial services provider, Alexander Forbes. One of the challenges faced by retirement benefits industry

26 - THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

according to Shruti Shah, Resident Actuary at Alexander Forbes is the ability of members to access portion of benefits as cash on withdrawal.

“These leakages mean the funds available at retirement are not sufficient. In addition the current tax free limit at Sh 20,000 per member per month needs to be reviewed to encourage members to save more,” he says.

AFRICAN BUSINESS FORTUNE - PENSION

Many employers count on a triad of support for retirement plans from Social Security, personal savings and employer-sponsored pensions. Yet in the wake of long stretch of high unemployment and stagnant wages, most Kenyans are today finding it difficult to save for their sunset days.

“These are depressing statistics. It is very important to have a retirement plan that will provide for you during your old age like contributing into a pension scheme or provident fund. These contributions are invested in different vehicles which build up capital and provide regular monthly income and or a lump sum amount when you retire,” advises Shruti.

The report’s findings shows that the average yearly returns between 2005 to last year have been between 7.8 per cent per annum and 12 percent per annum, while the average return for all periods and insurance companies considered stood at 8.55 percent per annum. The highest return declared over the last 10 years by an insurance company was 18 percent in 2006 and the lowest return was 3 percent in 2011. Alexander Forbes Kenya CEO, Sundeep Raichura, attributes

the fluctuating returns to the volatility of the investment markets which include investment strategy and asset mix of the investment portfolio, prevailing market conditions, reserve policy, expense and profit margins as well as rates declared by other players in the industry.

Deposit Administration Funds are mainly directed at retirement scheme trustees and sponsors and are investment vehicles that pension schemes and provident funds invest in to secure financial well-being of retirees. A minimum capital of Sh150m is required to become a provider of a Deposit Administration Fund in Kenya; a new proposal seeks to raise it by up to Sh400m

Kenyan insurance firms are progressively formulating and coming up with pension plans in a bid to woo their clients. Britam for instance is one of the few insurers having already launched a product dubbed Platinum Drawdown Plan -an investment pension product targeting retired employees Latest industry data by Retirement Benefits Authority (RBA) shows that Kenya’s pension investments presently stands at $7.8billion, a10 percent growth in the past decade and 27 percent increase year on year at the end of 2013, while assets held by individual retirement ben-

efits schemes have also grown by 24 percent in the one year to June 2014, outpacing the sector average growth of 18 percent. Further growth for the industry is expected this year despite the plunge in the financial markets witnessed in the first half of 2015 which saw pension funds lose a total of Sh150billion in Q2 of 2015 alone. “The markets have been challenged for the first six months of this year which contributed to the sluggish returns in investments that fell below the expectations of most pension schemes across the country in a move that forced us to adjust our projections for the year,” said Angela Okinda, the firm’s head of Retail Solutions. More than one-third of Kenya’s pension assets are invested in Government debt; a quarter in equities are listed on the domestic stock market and a small amount in property sector while the odd sizeable ones are held in corporate bond and cash.

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 27

AFRICAN BUSINESS FORTUNE - PENSION

The benefits members receive in the pension schemes are determined by their total contributions into the fund and investment returns earned on those monies over time.

State pension scheme NSSF’s assets under management have equally grown over the years registering 8.4percent over the year to June 2014 from Sh136.2billion to 147.65billion, in spite of the pending new NSSF Act which is yet to be implemented. Upon its implementation, the new Act will see casual workers majority of who are in the informal sector make a contribution of 6 percent of their earnings to the national pension fund, regardless of the number of days contracted in the scheme together with their contributions matched by employers. 28- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

A similar arrangement is currently in place for fulltime employers. Meanwhile Pension fund manager, Alexander Forbes Retirement Fund (AFRF) scheme net assets grew by 30 pc in year to December 2014 in its latest financials released last month. It recorded Sh15billion in total net assets for the period ending December 2014, a 30 percent rise compared to Sh11.6billion it posted in 2013.

The fund’s jump in net assets is attributed to, ‘remarkable growth in participation from employers and enthusiasm of members to contribute into the fund voluntarily,’ the scheme said during the annual general meeting held in Nairobi, adding that it targets to grow its net worth to 20billion by year end.

AFRICAN BUSINESS FORTUNE - MOTOR

New car sales hit record high on growing demand for luxury cars By Steve Remie

say, is a sign that rich buyers who have disposable income have sensed that the nation’s micro-economic environment is solidly improving in ways that reinforce a willingness to splurge on expensive new car models as well as the desire to own a new high-class car.

Porsche launches its luxury cars

utomakers are rushing to fill their showrooms with expensive new car models to exploit on the rising demand for sports cars in the local motor industry. Figures from Kenya Motor Industry Association (KMI), shows overall vehicle sales have risen to a total of 9,950 between January and June this year compared to 8,929 sales during a similar period last year, with the growth being attributed to the increasing sales number of high-end cars premium segment of the car market in Kenya. KMI data shows DT Dobie’s franchise Mercedes

and Jeep led the premium segment of the car market with a market share of 48 per cent as at June this year with sales of 53 and 40 sales respectively, and the figure is poised for further boom in the second half of this year.

Dealers in luxury cars such as Porsche, Mercedes, BMW and Audi, Renault and Range Rover models have recorded highest jump in sales marking a new record of high-end auto sales for the second straight year. The surge in the luxury cars, whose prices can top Sh20 million, analysts

“Economy is improving and upper middle class and super- rich buyers are now finding it easier to own a new car without necessarily caring much about the price- as long as it’s a new, rare model in the market,” commented Stephen Mbuthi, a motor consultant. Other factors that have been linked to the increasing interest in the luxury car segment among Kenyan buyers include favourable credit-loan facilities from the banks and improved roads.

“High-end car segment is expanding in every direction and there are more compact cars sold today under prestigious brand names, a growing variety of leather-and-wood trimmed S.U.V.’s and updated models from ultra luxury carmakers,” explains Trevor Lumenya, another car expert. The prices of Porsche, Range

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 30

AFRICAN BUSINESS FORTUNE - MOTOR

Rover and Mercedes models have competitive prices ranging from Sh10 million to Sh30million for 8-year limit of high performance cars at the showrooms that previously did not have a local dealer, while franchise like Renault and CMCâ&#x20AC;&#x2122;s Suzuki are selling for as low as Sh3.5million. Porscheâ&#x20AC;&#x2122;s Cayenne Turbo S- the most expensive franchise is presently selling at Sh23.8million while the cheapest model Boxster S at Sh10.4mn, which target the burgeoning elite of millionaires who can quite easily afford to add the German status symbol to their fleet. Range rover, Jaguar and Mercedes also have almost similar price ranges.

Mercedes is currently selling its refurbished models from 3million to 30million depending on the model while Jaguar XF and XG new

models for instance have asking showroom price of $90,000 and $137,000 or $180,000 respectively. According to autobazzar. co.ke website shows second hand price for Mercedes C-200 Kompressor is retailing for Sh2.4million, E-class at Sh5.9million while Range Rover models ranges from as low as 4.2million on average depending on the model.

30- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

The prices of Porsche, Range Rover and Mercedes models have competitive prices ranging from Sh10 million to Sh30million for 8-year limit of high performance cars

AFRICAN BUSINESS FORTUNE - PHARMACEUTICAL

Doctor with a Sh2 billion plan Mandal is not afraid to take on pharmaceutical giants head-on. And Lab & Allied has just laid the ground for the tough battle ahead By Steve Remie

t’s hard to overstate the mystique surrounding Dr. Suprakash Mandal. He is a man with a vision; to give pharmaceutical giants a run for their money.

His brilliance, vision and the breadth of his ambition make him the oneman embodiment of the Lab & Allied’s future. Dr Mandal is the CEO of Laboratory & Allied ltd (Lab & Allied), a pharmaceutical firm that currently manufactures over 250 products. He has been occupying the corner office for the last four months. “We are aware of the competition in the industry and are prepared for it.

We however want to consolidate our generic market segment where we are already strong,” he says during an interview at Lab & Allied’s head office in Nairobi. The journey of Lab & Allied has not been an easy one, as Dr Mandal reveals.

Dr. Suprakash Mandal. CEO of Laboratory & Allied ltd (Lab & Allied

The firm started as a wholesale business where it imported products from Europe, United States and some in India, but later converted into a manufacturing entity in the 1970’s. It started manufacturing about 30 to 50 different medicinal products which has since grown to over 250 products today. His ambition is to propel Lab & Allied to be a market leader in the pharmaceutical industry with ethics, compassion and sensitivity. This is by bettering the health of patients worldwide through quality and innovation. He wants to grow Lab & Allied’s Ksh 1.5 Billon

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 31

AFRICAN BUSINESS FORTUNE - PHARMACEUTICAL

annual revenue by between 25 and 30 per cent over the next five years, the company therefore plans to embark on an aggressive marketing drive, competing on pricing and high standards and branding of products. The company which is estimated to command about 35 industry’s market share has so far spent Sh1.2billion investment on expansion and upgrading of its Mombasa Road plant and has set aside Sh1billion for entries into newer markets including Ethiopia, Angola, and DRC as well as in Zimbabwe and Botswana, with between Sh10million to 15million to be spent in each market. Dr Mandal says the firm is currently awaiting legislation approvals

in these markets and further targets to launch 10 new product brands in the next five years.

The expansion fund, he says will come from reserves and some components from bank loans. The marketing will change the perception by doctors and the public that medicine produced in Europe is better than locally manufactured drugs. “One advantage we have over these multi-nationals is pricing. These giant companies price their products way higher than what we price ours. If doctors and pharmacists prescribe locallymanufactured

32- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

drugs, the perception will end,” adding that the company further intends to focus on highend segment of lifestyle diseases like hypertension, diabetes and progressive diseases and antibiotic drugs. That and use of other marketing channels will lead to a rise in sales of up to 10 times by 2020. The company also plans to brand and label its products to increase customer retention. The CEO says this will be followed by venturing into providing drugs for lifestyle diseases, antibiotics, pain and chronic illnesses. “Though we had previously

AFRICAN BUSINESS FORTUNE - PHARMACEUTICAL

branded our products, we did it on small-scale and it was very difficult for our consumers to notice us,” says the father of two, who has been in the marketing profession for the last 20 years. As it enters the prescription market, it plans to segment its product portfolio into six divisions. And just like many businesses, Dr Mandal says quacks and counterfeits have hindered the growth of the company. Though acknowledging the efforts of State agencies responsible for cracking down on the menace, he reckons that a lot more needs to be done.

“Do the impossible” is one of Dr. Mandal’s slogans, and he has set out to make it happen. He’s looked to spread the costs as he seeks a mammoth package of incentives from states for the right to be the company’s home, and all things are pointed towards him succeeding in his quest to breathe fresh air of optimism and success into the pharmaceutical outfit.

“To succeed, you need to fill a market gap and have a good team behind you. The team also needs to embrace you,” he concludes. About Lab & Allied -It was incorporated in 1970 and began manufacturing of affordable and essential generic drugs. Lab & Allied is 45 years old today with a total of over 500 employees. -Tanzania is the company’s largest market state with operations in Uganda, Rwanda, Burundi, Botswana, Ethiopia, Malawi and Zambia -Plans to spend Sh2.2 billion for production capacity, Ksh1.2B on expansion and upgrades of its facilities. -Lab & Allied has operations in over 10 African countries and plans to enter five more nations over the next five years. THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 33

AFRICAN BUSINESS FORTUNE - ECONOMY

Kenyan passport ranked most influential in ease of doing business across foreign markets By Paul Martins

enyan passport has been ranked the most useful and influential travel permit across the region compared to other EAC passports in the ease of doing business across foreign territories. The Passport index survey by Arton Capital-a financial advisory firm which specializes in procuring multiple citizen-ships for clients across the globe, ranked Kenyan passport at position 50 out of 199 indexed passports across the world and found Kenyan passport holders enjoyed visa-free access to 68 nations in the world including Mauritius, Hong Kong, Malaysia, Jamaica, Bahamas, Ethiopia, Philippines and Singapore. “Visa free travel is important because it facilitates doing business in foreign markets, and for leisure travelers it reduces the costs and administrative hassles of international travel,” read the report in part.

The report further found that the Kenyan passport had a leg up on the rest of East Africa and the subAfrican regions a head of Ethiopia, Tanzania and Somalia. Tanzania passport was ranked the second most useful travel permit in East Africa with its bearers able to travel up to a total of 61 countries without having to apply for a visa while citizens of Ethiopia, Djibouti, Somalia and Eritrea, the survey found them to be less fortunate with visa-free access to just 38 countries. “Arton Capital’s assessment bodes well for Kenyans who love to travel, and it brings with it a lot of advantages for the holder of the Kenyan passport ,” commented Oluwakemi Ojo - Head of Communications for Travel start Kenya, on the report. Ugandan passport ranked at position 60 with access 34- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

to 57 markets, Rwanda at position 74 with access to 43 nations while Burundi was ranked at position 77 with access to just 40 countries. The passport index filters passports by country, region, colour of the passport cover and by passport power rank, with the ranking system allocating 1 point for each country the [passport holder can enter without applying for a visa before departure. According to the survey released last week, UK and US shared the highest passport power rank in the index with access to 147 countries, while Palestinian territories, Myanmar ranked the lowest with visa free access to just 28 countries. The Index’s visa-free count is also based on data and consultations from IATA’s Timaticweb and other sources. Passports are ranked based on their Visa Free Score. The higher the Visa Free Score, the better the Passport Power Rank, with the data based on research from publicly available sources and information shared by government agencies.

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Unique features of N.H.I.F Inpatient Cover 1. Family based cover 2. No upper age limit 3. No medical examinations required /pre-existing conditions 4. Affordable, Accessible, Reliable and Sustainable cover 5. No exclusions apart from cosmetic procedures 6. Over 650 accredited health facilities 7. Widespread branch network for your convenience 8. No deposits required on admission Our comprehensive Inpatient package covers bed , medication, doctorâ&#x20AC;&#x2122;s fee, surgical and other medical procedures in general.

AFRICAN BUSINESS FORTUNE - ENERGY

Azuri Technologies’ quest to promote clean energy By Jeff Kizillah

Raju Haria of Raj Ushanga House at his first customer in Embu, Kenya

imon Kiragu is one of the propagators of renewable energy in Kenya. Since 2013, he has been working hard to push for the use of clean energy among women and poor households locally and at times abroad. His work as the programme officer at- wPOWER -a donor funded project under the

Wangari Maathai Institute for Peace and Environmental Studies at University of Nairobi has exposed him to challenges faced by 620million people in Sub-Saharan Africa that lack access to power.

In this group are women who have to walk tens of kilometers to fetch firewood, poor families nursing their loved

36- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

ones from effects of inhaling toxic kerosene fumes and those that have to live in darkness because they are unable to afford electricity or spend as little as Sh10 on Kerosene. “The toxic emissions from such lighting and cooking sources result to 14, 000 deaths annually,” said Kiragu. It’s this scary figure that has moved players like Azuri

AFRICAN BUSINESS FORTUNE - ENERGY

Technologies, a UK based solar company, Wangari Maathai Institute among other stakeholders action.

Azuri has in the last two years intensified its market activity in Kenya. The UK firm works with a number of local distributors, most of who are based in rural areas. By so doing, the company has helped seen increased uptake of solar lighting solutions as well as contribute to economic empowerment.

The friendly purchase model by solar companies like Azuri is what has definitely seen the company sales rise over

the last two years in Kenya and also improve the uptake of clean energy. Azuri has been using a contract payment model called pay-asyou-go. This model allows consumers to own the product by making an initial deposit payment and continue to pay the balance overtime using their mobile phones.

â&#x20AC;&#x153;This mode of purchase allows particular flexibility for those with seasonal or intermittent income, especially for farmers,â&#x20AC;? said Kieran Reynold Vice President Operations at Azuri Technologies, Customers purchase customized

Azuri scratch cards which they feed in their phone. The simple transaction guarantees them light at home and serviced loan. Azuri charges a weekly rate of Sh190 to Sh250 depending on the type of product purchased.

Flexible financing options for Kenyans accessing solar and other forms of clean energy, is key in increasing uptake. The poor for instance, cannot afford large upfront payments because they are not regular income earners. However, if given time, they can make weekly or monthly payments towards the big picture.

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 37

AFRICAN BUSINESS FORTUNE - ENERGY

“The Azuri pay-as-you-go solar is a good product because of its flexibility on purchase. We find more customers inclined to products with structured payment models because they find it easy to access,” said Kiragu. Cost of a six and 10 watts solar devices range from Sh5, 500 to Sh12, 000. Kenyans still consider the value as expensive, unless they find elastic financing for it.

The Lighting Africa report by International Finance Corporation (IFC) published in 2013 indicated that the price of solar gadget was expensive. But in the year under review, the report also that the price had drastically dropped by half from 2010. It further showed that the number of solar companies in Kenya were on the rise. IFC certifies and register solar manufacturers and companies. It also conducts research on uptake of clean energy. It is true that solar device price has been on the decline attracting more sales. And it’s also spot-on to say that models such as pay-as-you-go have helped thousands of Kenyans access solar lights. Kenyan based, mobile communication company Safaricom through its solar partner M-KOPA, has to present sold 60, 000 devices on pay-as-you-go platform. This translates to 200, 000 of off grid customers.

The solar lighting devices as better as opposed to kerosene lamps because it poses no health hazard, is durable and requires no money to maintain and it has high lighting intensity (lumen).

“A single kerosene lamp provides very few lumens of light, compared to that which is provided by a solar light bulb. This means people using Kerosene lamps in Kenya are the most and are putting themselves and their families in serious danger,” said Reynold. He adds that customers have reported that Azuri’s weekly top-up is less than half the previous spend on kerosene for lighting and mobile charging fees for families. The pay-as-you-go model

however, requires experienced personnel to monitor use of the product and service it. Azuri has its agents stationed across the country. They often conduct visits to customers and fix issues that may arise immediately. Consumers’ queries on the system are also addressed during the visits. The after sale service helps build trust with customers and also manufacturers are able to vouch for the product in terms of standards. Currently, there are numerous substandard solar products in the country. As companies continue to push for solar uptake and make it easier for Kenyans to access, it’s our hope that everyone we will all contribute to a clean nation.

As companies continue to push for solar uptake and

make it easier for Kenyans to access, it’s our hope that everyone we will all contribute

38- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

to a clean nation.

AFRICAN BUSINESS FORTUNE - ICT

Are chat apps killing sms? By Emmanuel Aloo

he emergence of free mobile messaging applications (apps) such as WhatsApp have become very popular among millions of smartphone users today that the trend is now causing an irritation for local telecom operators who fear the prominence of WhatsApp and allied apps could begin to eat away their short message service (SMS) revenues in the coming years.

Back then, SMS was the dominant technology in use, providing the foundation for quick communication and an alternative fastest mode of conversation other than phone-calls which were extremely expensive at the time since fewer players in the telecommunications industry were unwilling to venture into what was considered a ‘foreign’ business undertaking.

Network operator Safaricom was one of the earliest operators to taste the waters in the industry more than a decade years ago before operators such as Bharti Airtel and Essar Telecom joined the rivalry, and since then the market has witnessed massive revolution. Recent developments have however seen phone manufacturers assemble stylish gad-

gets inbuilt with diverse mobile messaging applications which offer user to user chat services without requiring use of money when sending text messages as long as both are connected to a network data.

apps are being developed every day in an effort to substitute sms, but I believe there’s nothing like death of sms, there’s a serious concern though,” says Kisenya.

As a result mobile companies are now embarking on promotional campaigns aimed at wooing subscribers into using sms services upon purchasing data bundle. Airtel for instance has an ongoing UnlimiNET bundle campaign which offers talktime and SMS to any network in Kenya for as low as sh 50 while Safaricom has an Okoa internet bundle on credit for as low as sh7.

“Confidence of sms is going down and operators now need to devise premium services to counter the dominance apps such as Whats-app. SMS travels over cell networks and costs money and restricts you to particular number of characters and sometimes limits you for a specified duration, depending on your plan and so the apps give consumers more for less,” Nahashon Otieno managing partner Nashconsult-an IT security firm.

This new advancement is fast pushing mobile users away from relying on Pay- as-you go mode of sms chat into using new apps such as a WhatsApp which are cheaper and reliable compared to sms, and the resulting effect to this has compelled mobile operators into devising promotional substitute to WhatsApp.

These apps offer nearly free messaging and voice calling, along with other cheaper services and instant message and SMS is on the decline, agrees Airtel’s Corporate Affairs Manager Jesse Kisenya. “Internet is taking over and

While there is no data locally comparing how text messaging from local operators have performed against WhatsApp chat service, Kisenya agrees the company has recorded a minimal decline in numbers of sms sent and system has been eclipsed by messages sent using data services.

According to Communications Authority of Kenya (CAK) quarterly sector statistics report for the financial year 2014/15, the number of local outgoing SMS increased by 1.2 percent to hit 6.9 billion, up

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG- OCT 2015 - 39

AFRICAN BUSINESS FORTUNE - ICT

BUSINESS TIMES ICT TECHNOLOGY

Techies get creative Innovations week By Emmanuel By BRIAN YATICHAloo

n August, UniversityofofNairobi Nairobi n August, thethe University opened its doors for young innovaopened its doors for young intors to show case their innovations novators to inaugural show case their induring the University of Nairobi Innovations Week. Themed novations during the inaugural “Innovate and prosper” the event provided University of Nairobi Innovations a platform where innovators from various Week. Themed “Innovate and prosper” sectors such as agriculture, science, technoltheogy event a platform inmetprovided and showcased their where inventions. novators from sectors policy such disas The event also various aimed at fanning cussions on disruptive and productive disagriculture, science, technology met and coveries. their inventions. The event showcased Among the guests that graced the also aimed atfete fanning policy weeklong was Mr Sauldiscussions Singer, the on co-author disruptiveofand productive discoveries. Start-up Nation: The Story

of Israel’s Economic Miracle. Mr Langdon Morris,the one ofguests the world’s thinkers Among thatleading graced the on innovation, also gave a talk on innovation weeklong fete was Mr Saul Singer, the management at institutional level. co-author of Start-up The Story Presenters at the Nation: conference observed that while innovation is about future, of Israel’s Economic Miracle. Mrthe Langdon there one is need for world’s good planning, Morris, of the leadingsupport thinkand a whole system of thinking to make ers on innovation, also gave a talk on innoinventions successful. In addition, they vation management institutional agreed that Kenyaatneeds to knowlevel. that Presenters thebasis conference observed innovationatis the of competition hence there is need to manage each the innovation. that while innovation is about future, They also called on universities to be at the there is need for good planning, support forefront of encouraging inventions and andinnovations. a whole system of thinking to make inventions In the addition, they Here successful. are some of innovations showcased duringneeds the event. agreed that Kenya to know that in-

exerts pressure on insulators, wheelchair, however it is they a bitproduce differstatic energy. The insulators have the ent in that one can be able to sit and capacity to produce up to 10 MW, enough to adjusthouseholds the sitting according power andposition small industries.

to their specification. Smart High-

Autorun charger way In device a country where access and George Ouma, student at the university of the cost of electricity remains a chalNairobi has invented an auto-run mobile lenge, a charger Kevin that Omwenga, a generated student device, uses energy fromphone’s Nairobi activities. UniversityThe has electrical devised by engineering studentone explains that the auto a way in which can easily genercell phone device uses activities such as ate power. Omwenga has designed browsing, making calls and playing games insulators which produce electric curto automatically charge the phone. rent come Hewhen camethey up with theinto ideacontact in 2010with but ita was not vehicle. until September 2013 that he moving Once a moving vehi-

cle exerts pressure on insulators, they

novation is the basis of competition hence Convertible wheel chair there is need managewas each innovation. Among the to exhibitor Peter Mbiria, a student from Nairobi Technical University.

Mr Mbiria is the brains behind an electronic They also called on universities to be convertible wheelchair with the capability at the forefront of encouraging invento climb rough terrain, stairs, hilly areas and tions and innovations. Here are some slippery road on a click of a button. It enables of itsthe durusersinnovations to walk and doshowcased their chores easily. compared ingThe themodified event. wheelchair’s Convertibleability wheel chair to thatthe of a normal 4 wheel wheelchair, Among exhibitor wasdrive Peter Mbiria, however it is a bit different in that one can a student from Nairobi Technical Unibe able to sit and adjust the sitting position versity. Mr to Mbiria is the brains behind according their specification. an electronic convertible wheelchair Smart with the Highway capability to climb rough terIn countryhilly where access andslippery the cost rain, astairs, areas and of electricity remains a challenge, Kevin road on a click a button. It enables Omwenga, a ofstudent from Nairobi its University users to walk do their chores easily. hasand devised a way in which one easily generate power. Omwenga has Thecanmodified wheelchair’s ability comdesigned insulators which produce electric pared to that of a normal 4 wheel drive current when they come into contact with a moving vehicle. Once a moving vehicle

40 I EAST AFRICAN BUSINESS TIMES september 2015 40- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

produce static energy. The insulators have the capacity to produce up to 10 MW, enough to power households Once a moving vehicle exerts Autorun device and small industries. pressure charger Georgeon Ouma, student at the insulators, theyhas invented an university of Nairobi produce static auto-run mobile device, a charger that energy. The uses energy generated by phone’s acinsulators have the tivities. The electrical engineering stucapacity to produce dent up explains to 10that MW,the auto cell phone device uses activities such as browsenough to power ing, making calls and households andplaying games small industries. to automatically charge the phone.

AFRICA BUSINESS FORTUNE

BUSINESS TIMES ICT

George Ouma shows how to use autorun charger

He came up with the idea in 2010 but it was not September 2013 that actualised it. until The device will cost between KSh2,500 and Ksh It is attached to he actualised it. 3,000. The device will cost the phone cover. between KSh2,500 and Ksh 3,000. It isand attached the phone cover. Track monitortosecurity

system for vehicles John Kiama, showcased a network basedsysTrack and monitor security monitor andvehicles track alarm system fittedshowfor tem for John Kiama, vehicles dubbed “Leo Switcher.” The system cased a network based monitor and was developed to curb vehicle theft. track system fitted for vehicles The alarm device resembles a car alarm system dubbed “LeoviaSwitcher.” system which detects GSM and The 3G network when tries openvehicle the doortheft. and was someone developed totocurb automatically sends you a text message via The device resembles a car alarm sysyour phone. tem detects GSM and 3G It which also comes withviaseveral features network when someone to open which allow vehicle owners tries to control the vehicle with a and singleautomatically click. They can also be the door sends able off the vehicle distant youtoaswitch text message via from youra phone. location, close the door, cut off fuel and even communicate with road signs while driving. It Italso features alsocomes comeswith withseveral an audio that communicates theowners vehicle istogoing and which allow where vehicle control its state. the vehicle with a single click. They

can also be able to switch off the ve-

6WXGHQWV RXW WR VROYH WUDřF SUREOHPV hicle from a distant location, close the Patrick Waweru, a computer science student door,thecut off fuelof Nairobi has and even commufrom University invented anicate systemwith that maps parking road and signsmonitors while driving. lots. According to Waweru, system is It also comes with an the audio that designed to use geomagnetic sensors located communicates veon the streets which where will detect the if a vehicle its sensors state. ishicle parked is in a going particularand area. The will be disrupted when a vehicle takes up parking space automatically send the Students outand to solve traffic problems information to servers. The system intends to Patrick Waweru, a computer science solve the challenges most drivers face when studentfrom the University of Nairobi looking for parking spots around the city has invented a system that maps and centre.

Smart Highway

monitors parking lots. According to Waweru, the system is designed to use geomagnetic sensors located on the streets which will detect if a vehicle is parked in a particular area. The sensors will be disrupted when a vehicle takes up parking space and automatically send the information to servers. The system intends to solve the challenges most drivers face when looking for parking spots around the city centre.

Convertible wheel chair

41 I EAST AFRICAN BUSINESS TIMES september 2015 THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 41

- ICT

AFRICAN BUSINESS FORTUNE - ICT

Young Techie takes on banks with a new app

BUSINESS TIMES ICT INNOVATION

Innovator takes on banks and telcos M-Kesho app lets you monitor your business at the comfort of your home By BRIAN YATICH Aloo By Emmanuel

K K

ariuki Gathitu is an auda-

cious Gathitu man. He formed ariuki is an Zegeautechnologies, a platform that dacious man. He formed builds solutions around Zegetechnologies, a platmobile money technology, business communication & management form that builds solutions and soft solutions for companies and enteraround mobile money prises in Kenya. technology, business communication The former Computer Science student at Kenyatta University always had an & manag ment and softhas solutions for innovative spirit. companies and enterprises in Kenya.

That zeal was demonstrated at Equity Bank in 2009 where he was working on and project management. He The innovation former Computer Science stuplayed in developing Kenya’s first mobile dent at Kenyatta University has almoney revolution, M-KESHO. ways had innovative spirit. That After an working for two years in Equity, he zealleftwas demonstrated at Equity in 2010 and formed Zegetech. The firm came up with M-Payer, another moneyBank in 2009 where he was working integration product that will change his life. on innovation and project manageKariuki says that with the knowledge he ment. He played gained from schoolin anddeveloping the experience Kefrom knew he was ready to come up nya’sEquity, first he mobile money revolution, with something of his own. M-KESHO. After working for two He launched the app that will enable years in banks, Equity, he left in 2010 and other microfinance institutions and SACCOs (Savings The and Credit formed Zegetech. firm Cooperative came up to moneyintegraintegrate mobile withOrganizations) M-Payer, another payments. That is how M-PAYER came tionabout. product that will change his life. “This app simplifies the large and complex banking merging it into Kariuki says thatsystem withbythe knowla simple mobile pay system. It manages edgebusinesses, he gained from schoolandand monitors payments lets the you experience from Equity, acquire more customers,” he says. he Kariuki, to the come mobile knew According he wasto ready app helps users track payments in real up time. withUsers something of his own. can see which product in the market is doing well or not performing by reviewing reports, expenses. He launched the sales app and that will en“It is very efficient and simplifies able other banks, microfinance work inin such a way that it takes you not more stitutions and toSACCOs (Savings than two seconds do a transaction. In just click onCooperative the menu, you will see which and one Credit Organizaproducts are selling.” tions) to integrate mobile payments. The app also is able to display the Thatnumber is how M-PAYERaccrued cameinabout. of transactions a period of time and the most regular customers. Usersapp are thus able to tell who most “This simplifies thetheir large valuable clients are. and Kariuki complex banking system has high hopes that his product by merging it into a simple mowill pick up fast in the country considering moneysystem. transfer systems like Airtel bile thatpay It manages money and M-Pesa have flourished.

Kariuki Gathitu, Founter Zege Technologies

businesses, monitors payments and lets you acquire more customers,” he says. According to Kariuki, the mobile registration app helpsplatform users track payments IRU WKH 0 3D\HU DSS in real time. Users can see which product in the market is doing well or not performing by reviewing reports, sales and expenses. “It is very efficient and simplifies work in such a way that it takes you not more than two seconds to do a transaction. In just one click on the menu, you will see which products are selling.” The app also is able to display the number of transactions accrued in a period of time and

42 I EAST AFRICAN BUSINESS TIMES september 2015

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“More than 70 per cent of traders use mobile money for their businesses. That is why M-Payer will make it,” he explains. the Somost regular customers. Users far, small and medium enterprises, institutions as well insurance are thus able toastell who companies their most are using his product. After Kenya, he valuable are. Kariuki high wants theclients innovation spread tohas other hopes his product will pick up Africanthat countries.

fast in the country considering that money transfer systems like Airtel money and M-Pesa have flourished. “More than 70 per cent of traders use mobile money for their businesses. That is why M-Payer will make it,” he explains. So far, small and medium enterprises, institutions as well as insurance companies are using his product. After Kenya, he wants the innovation spread to other African countries.

AFRICAN BUSINESS FORTUNE

- CORPORATE

Crown Paints targets to grow market share by 70 pc in 2015 By Paul Martins

enyan government has rolled out several infrastructural developments in the construction sector and the resulting effect of this means local production capacity and utilization of paints and coatings in the country is set to expand significantly with industry players forecasting an upbeat year.

The market for paint manufacturers have remained at all time competitive in the last few years with entry of new players scrambling for a pie of the local market share poised to trigger business-battle for home-grown market share.

But not so for pant maker Crown Paints. A chat with Crown Paints Chief executive Rakesh Rao reveals otherwise-with the man sitting at the helm of undoubtedly a successful business empire obliging about the perceived Kenyan paint market share competition from its peers. “What competition?” He poses, we have been in the business long enough to understand it better than anyone else and we don’t make noise

Crown pains CEO Rakesh Rao

in terms of advertisements and still remain market leaders in the field,” says Rakesh with an overwhelming confidence when we visited him at the company’s premise along Lunga Lunga Road, Industrial Area. Despite the presence of other local paint manufacturers such as Sadolin Paints and Basco (Dura Coat) Paints and Berger Robillac, Mr. Rao says the market for paint makers is likely to remain relatively busy but Crown Paints will seek to offer products with a high priceperformance ratio as well

as interior solutions to counter the expected competition. A report by Frost & Sullivan on the performance of Industrial Paints and Coatings Market for South Africa, Nigeria and Kenya finds that the sales volume of industrial paints and coatings across the three countries stood at 101.2 million litres in 2012. This is estimated to reach 142.1 million litres in 2017. Crown Paints, the leading market player in terms of market share and infrastructure, registered a growth of between 17 to 20 percent both in premium and regu-

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 43

AFRICAN BUSINESS FORTUNE - CORPORATE

lar business in 2013, retaining the company’s position in the market with 65 percent premium market share at the time and 40 percent in regular market an additional 10 per cent of the economy segment compared to the two other local players who command less than 50 percent market share combined.

In Uganda the company has a 40 percent market share. Rakesh says under his leadership the company targets to increase the company’s market spit by up to 70 percent by end of 2015. But reveals the journey to the top has not been a rosy one. “Last year was a big year for us, with new expansion drive and launches across the nation and the wider regional market. Despite being market leader in the market, we are not resting we are still on cause with our showrooms expansion,” says the father of two. “It is an honor and proud to be associated with Crown Paints and so far I can confidently say that I am proud of what I have achieved since I joined the company as a CEO close to a decade years ago, but I will tell you this journey has not been easy,” he opens up. It is remembered in November 2014, Rakesh Rao won numerous awards key among them being voted CEO of the Year last year during the annual fete’ of COYA awards for being a chief executive with strong leadership and focus to surpass strategic objectives in his company.

CEO Rakesh Rao during demonstration Rao was lauded for having a great impact in both customer and staff satisfaction built towards a world-class company. He dedicated the award to his team of staff and customers whom he described as having an endearing spirit to the company.

“Am a believer in team work, and the company has won tremendous awards due to what we do; our products are of high quality. I took over when the company was making turnover in millions but now we are making billions and our target is to generate over 6billion by close of the year. “I also took over when the company had a mere 45 percent market share but now we are about 68 percent market leaders in the business and we are hopeful to hit 70 percent by end year with our new products and services. “When I joined the company we had only 120 staff working for us we have since grown the number to over

44- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

700 staff today. Today we have more than 200 distributors spread across the regionthis is no mean achievement. “We still however face many challenges till today ranging from high taxation from the government and counterfeit-we lose about 10 percent of our revenues to counterfeits and cheap products from China,” says Rao who is an avid golf player. He says the company plans to increase its grip on the regional paint market by boosting its premium and economy market shares by between 10 per cent and 15 per cent respectively, and has already set up a manufacturing plant in Dar es Salaam in Tanzania last year. “We have new launches and developments coming in place. We have already opened 5showrooms within the country and we anticipate opening seven more within the year to make a total of 10 showrooms this year,” he

“

AFRICAN BUSINESS FORTUNE

Group marketing manager (R) Stanley Kipkoech with Elly Fred- Marketing Assistant said during the interview. In February this year Crown Paints announced its entry into Rwanda with the establishment of an ultra-modern paint showroom in Kigali with a five-year plan to invest about $2.5 million (Sh225 million), with Rwanda consequently becoming the third country to host Crown Paints’ showrooms in East Africa as the paint maker also owns five other show rooms in Kenya and one in Tanzania. Rakesh Rao says the company also plans to establish a paint factory in Rwanda.

“Rwanda is an exciting market for us and our aim is to increase our presence in the region. You need to have your product spread across the region if you are going to increase your market share and remain relevant in the game,” says Rakesh.

The paint maker has been in an expansion spree. In 2014, Crown Paints announced entry into the Tanzanian paint industry and invested $3.6 million (about Sh316m) in 18 months to build a market leading company and further opened a paint showroom in Dar-es-Salaam to become the headquarters of Crown Paints Tanzania, enabling the company to expand into other provinces in the country. For Rao the journey is not yet over and he says the company is still in the process of developing more products and services in the coming years. Rakesh believes his style of leadership has greatly boosted the company’s volumes and reputation and says one has to be discipline in whatever they are tasked to do. “As a listed company I represent interests of all shareholders and I have to be at my

- CORPORATE

Am a believer in team work, and the company has won tremendous awards due to what we do; our products are of high quality. I took over when the company was making turnover in millions but now we are making billions and our target is to generate over 6billion by close of the year” - Rao

best by ensuring the company is headed in the right direction. You have to give your all as a CEO. You also have to communicate nicely to your staff, clients, learn to understand their emotions and feelings. “Also reward them with incentives and scholarships and promotion as a way of motivating them. I believe in people’s performance,” says Rakesh a man who reveals he gets most of his inspiration from the mother.

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 45

AFRICAN BUSINESS FORTUNE - WOMEN IN BUSINESS

Meet Winnie Kamuya, the woman entrepreneur behind Personal Assistants (PA’s) impetus By Steve Remie

ininie Kamuya is the well-respected and thoughtful founder and Executive Director of International Renaissance Centre (IRC), a leading management development institution involved in training and convening of conferences with the aim of bringing together managerial professionals to learn from each other. She blushes when she talks about

herself during our conversation, and speaks softly as she introduces her company. She is a graceful and quiet woman whose appearance is understated as her personality. “My leadership style is inspirational, close and loving. I enjoy spending time with people, and I care deeply about them and their efforts. At IRC we are a big family, passionate for what we do,” she says. Since its inception, Winnie says, IRC has trained and awarded a number of Personal Assistants (PA’s) otherwise known today as

Office Managers and the firm has helped transform lives of these individuals by instilling confidence and self-belief in realizing the incredible contribution they make in an organisation. “These are the most motivated individuals who are overworked, underpaid, untrained- people who previously had only typing skills and office practice schooling while some lack those basics and I felt this group of people were being ignored yet they are

Ms Winnie Kamuya

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AFRICAN BUSINESS FORTUNE - WOMEN IN BUSINESS

culates in the members’ countries. She admits to having been brought up from ‘a very humble family,’ one she believes played a great role in shaping up her destiny which prompted the desire to make individuals comprehend their hidden talents.

“I was brought up in a relatively modest family and my father was an accountant and my mother was a housewife. My experience was out of the ordinary for any conventional aspiring woman entrepreneur in a traditional environment, but I was determined to go on.

Ms Winnie Kamuya

doing a lot of work behind the scene, I thought someone needed to appreciate their input and that’s why we formed the company to train them and came up with PAYA Award,” says Winnie who spent most of her adult-life in the Kingdom of Swaziland where the idea was first pioneered. Personal Assistants of the Year

Awards (PAYA) is an extraordinary honour, one that seeks to inspire and inculcate talents of executive assistants that are nominated by their bosses who upon their recommendation look at among other things in-born gifts such as communication skills, leadership qualities and other talents. “As time went by, I realized that this ancestral tradition had to become formally acknowledged, we therefore embarked on demystifying myths and perception that PA’s were less informed individuals. These people are the most knowledgeable folks in the office who actually do everything in the absence of CEO’s and company managers,” she says.

In 2007, with a few resources on hand, she made the most momentum decision, to start IRC - a family business she co-owns with her husband. They took a leap of faith that their then- two-person team could bring a very successful training business based on the combination of passion and business acumen, a step she says gave a new leaf of life to her own entrepreneurial instinct. International Renaissance Centre is a business enterprise which offers short term training courses and seminars targeting both private and public sectors including Finance and Banking, Agriculture, IT and Health sectors among others which Ms Kamuya reckons has motivated and transformed lives of PA’s across the continent where the company has operations. The Award ceremony is rotationally held in different nations including South Arica, Tanzania, Lesotho, Mozambique and Uganda among other counties, upon which the awardees are issued with certificates, $1,500 and an award that cir-

“Growing up I never used to believe in myself, I think I was the weakest of all my siblings and my dad knew about my potential few years before he passed on- I miss him,” says the trained secondary teacher, who confesses to having had no interest in the profession. Winnie pursued Bachelors in Education just to please her dad, and reveals she was too scared of failing in it, “I didn’t see myself as a teacher but somehow my dad managed to convince me that with the course I was guaranteed a job,” she says. She has rose to prominence as a stirring business icon in IRC by sheer dint of her commitment, her goals and the craving to inspire women business enthusiasts and her effective management style that drove her organisation towards great success. “My job has exposed me and has seen me travel the world and the motivation I get is when my trained candidates come back years later to say, thank you for changing my life, not knowing that all I did was to expose their hidden talents.

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 47

AFRICAN BUSINESS FORTUNE -BANKING

Islamic bonds tipped to meet Kenya’s infrastructure gap By Steve Remie

enya is slowly embracing largescale Islamic finance as countries like South Africa and Senegal among other economies seek to tap cash-rich Muslim investors to finance infrastructure projects. The market for Islamic bonds or Sukuk received a boost last year in December when Treasury Cabinet Secretary Henry Rotich indicated he would debut issuance of Sukuk in the current financial year - as the instrument emerges as a potential game-changer in the country’s financial sector following the success of Eurobond that raised over $2billion in June last year. But a new report released last week by Standard & Poor’s Ratings Service casts doubt on the efforts being made and has cited lack of proper regulatory framework as a big hindrance to the country’s aspiration to develop an Islamic bond.

“We believe legislation gaps are the main causes of delay between a country’s intent to issue and its effective issuance of Sukuk,” said Standard & Poor’s credit analyst Samira Mensah, who thinks African governments, Kenya included will take time to introduce new regulation and fiscal adjustments to foster Sukuk markets while at the same time increasing investment options for potential investors, and attract a pool of Islamic liquidity. 48- THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

GAB CEO ABDALLA ADULKHALIK

Sukuk are bonds structured in such a way as to generate returns to investors without infringing on Islamic law – which prohibits riba or interest. Nascent market activity shows that the increase in commodity prices and huge levels of foreign direct investments (FDIs) has compelled several economies to venture beyond their borders in pursuit of investment opportunities, which have triggered appetite for Shari’ah compliant products.

Kenya for instance heavily relies on debts from Chinese firms to finance its infrastructure projects. The report further recommends that Kenya adjust its tax regimes in order to encourage Sukuk issuance as well as engage local players conversant with Islamic financing including Shari’ah compliant banks and financial institutions. “Sharia-compliant instruments require equal treatment with conventional instruments for investors to consider them. Malaysia for instance introduced

AFRICAN BUSINESS FORTUNE - BANKING

GAB CEO ABDALLA ADULKHALIK WITH MOMBASA SENATOR OMAR HASSAN various tax incentives that loosened steadily over the made Islamic finance a cheaper past decade, and according to economic alternative for insti- Fitch Ratings, Kenya’s Longtutions to raise funding,” reads term foreign and local curthe report. rency Issuer Default Ratings CBK according to Gulf African Bank (GAB) CEO Abdalla AbdulKhalik needs to critically engage local Shari’ah compliant banks and financial institutions in developing the bonds but reckons that no engagement is happening. “CBK has not involved us; I believe they are talking to other institutions from outside Kenya,” he says, who believes Kenya’s recent low credit rating might have been caused by increased national debt, “its therefore important that we issue the Sukuk sooner before we are downgraded further since our local debt is likely to get worse,” he said during a phone interview with African Business Fortune Kenya’s public finances have

(IDR) is currently ranked at ‘B+’ and ‘BB-’while the issue ratings on unsecured foreign currency bonds are rated at ‘B+’. Sukuk bonds afford investors the opportunity of direct participation in the projects, and Sukuk markets have potential to be a source of funding for long term projects, and they can also be used by an institution to unlock funds tied up in assets through monetisation for the purpose of reinvestment. Further, the Fitch expects government debt to rise to 51.2perent of GDP by FY2016, from 43.3percent in FY2013 and 36.9percent in FY2008.

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 49

BUSINESS TIMES FARMING

AFRICAN BUSINESS FORTUNE -AGRCULTURE COFFEE PRODUCTION

Enriching Rwandan smallholder farmers as export markets expand

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AFRICAN BUSINESS FORTUNE -HOSPITALITY INDUSTRY

BUSINESS TIMES ADVERTORIAL

The boom in force the hospitality and A reckoning within the tourism sector in Africa convention world in Africa

he Kenyatta International Convention Centre (KICC) was established under the Kenya Tourism Act 2011 as a State Corporation. The KICC has a national mandate to promote the business of meetings, conferences and exhibitions within Kenya and promote the destination as a preferred region for business tourism. The KICC has been in existence for over 40 years now as a venue for meetings. The corporation has a scope that is both national and regional where the complete vision of all the individuals that work under the management of the centre is to promote the East African region as a destination for conferencing. Kenya’s meetings industry has taken shape over the last few years and has rapidly taken its position as a preferred Global Meetings destination. This has been sure in case owing to the increasing number of International and regional congresses that the country hosts every year through winning the bidding process against other worthy business destinations. The KICC facilitates bids to attract international meetings and events to different venues around Kenya which include over a vast number of Hotels, Universities, Religious Centers, stadia and Conference/Convention Centers. The Kenyatta International Convention Centre is the driving force behind Kenya’s International Meetings market and it has laid down a National MICE strategy that seeks to increase the number of international conferences held in the country. In turn this will also help facilitate the aim it has to increase the delegates’ numbers attending conferences, and to market the Convention venues and facilities in the country as a whole. Conference Tourism accounts for 10 percent of Kenya’s international arrivals and our plan is to grow these numbers through bidding for more International congresses to the Country so that we are able to broadly grow the number of tourists in our country as a whole and this will contribute even more greatly to the tourism sector whereby we find that conference tourism is growing rapidly and is becoming a

major tourism commodity. The Corporation has continued to aggressively market and position the country as a preferred global Meetings Incentives Conference Exhibition (MICE) destination and facilitate bids to attract meetings and events to the proposed upcoming Convention Centres in the country and even further to different venues and regions in Kenya that support the growth of the National MICE strategy. KICC continues to seek partnership the Counties in undertaking feasibility studies for MICE development as well as highlight investment opportunities as brought out in these feasibility studies. Such counties that have already grown into the bloodline include Nyeri and even Mombasa county with whom much potential for growth is seen. Through all these efforts, Kenya is currently ranked the second best conference destination after South Africa according to International

52 I EAST AFRICAN BUSINESS TIMES september 2015

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Congress and Convention Association (ICCA) rankings last year – 2013. Other towns that have grown relatively well due to the aspects of convention meetings within their localities include Naivasha, Nakuru and also Eldoret aside from Nairobi and Mombasa that were also acknowledged in the rankings. The management and staff of the KICC are committed to professionalism as they push the MICE agenda internationally. The KICC’s mission is to deliver expert value added services in promoting Kenya as a destination for Meetings, Incentive Travel, Conferences and Exhibitions (MICE) using state of the art technology in a sustainable manner. The Corporation has and will uphold its values of accountability, customer centric, diversity, sustainability, team work, integrity and green conscious during its operations to better help grow the industry and the Kenyan economy at large.

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AFRICAN BUSINESS FORTUNE -WOMEN IN BUSINESS

How I turned hobby into a successful cheese making business ning of the then small startup and felt with my Masters in Arts, I could play an integral part in the growth of the company- even though I was hesitant of the whole idea,” she opens up during a visit to her factory in Nyeri town. Once every week, the mother of three teenagers travels to Nyeri to review the factory’s progress and development with the help of her team which she reckons, “are the best people to work with,” as most of the firm’s logistical operations are conducted from the capital, Nairobi, where she also lives.

Kalpa Padia

By African Business Writer

eet Kalpa Padia, an Indian entrepreneur who runs a multi-million cheese factory in a small township in Nyeri County. In 2001, Kalpa Padia had just momentarily left her career as an Arts professional and joined her late husband Rajesh to devote her energy full-time to the nascent cheese processing business. Rajesh had convinced her that tapping into the niche and unpopular venture, could send their business skyrocketing, and so she gave in and joined him to run the company, albeit reluctantly. “I had a career but my late husband Rajesh needed my input in the run-

Cheese making was never Padia’s passion at the beginning but it soon became her zeal and later graduated into a hobby when she began developing keenness towards the product after seeing the potential in it while at the same time she was frightened to see the business crumple now that the husband was not around to oversee its operationsshe was compelled to think fast. “It started as a hobby and everyday we’d buy 200 litres of milk from local dairy farmers. And with that we kept making cheese, not until afterwards that we realized we had several tons of cheese and didn’t know where to sell it,” she says. Rajesh was inspired to try making cheese after visiting a cheesemaker in UK in the late eighties and early nineties while undertaking hotel and restaurant business in the United Kingdom before

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taking up the risk to start his own. The pair then decided to focus their attention wholly on building their cheese making business, Raka Milk Processors in a rented premise of one of their family members before relocating to their newly leased compound which Padia says cost the company millions of shillings to acquire, and is estimated to be in the region of sh 20million for the upgrading course alone. The name Raka was coined from the couple’s name, Rajesh and Kalpa and has since grown to become a renowned brand and a darling household name among Kenyans.

She says the entry of Innscor Africa into the Kenyan market in 2002a company which operates fast food brands Galito’s, Chicken Inn, Baker’s Inn, Pizza Inn and Creamy Inn opened a new line for Raka Milk Processors and breathed fresh breath of life for the company that now boasts of generating an annual revenue of between sh 50million and sh 60million today. On top of covering the family’s living costs and debt repayments, the business is delivering between sh9 million and sh 10million monthly revenue which she says she will be targeting to reinvest in materials for a separate yoghurt-making venture which she reveals is still in the offing as she plans to expand and diversify into other dairy making products. Despite her growing success, Padia is still divided as to

AFRICAN BUSINESS FORTUNE - WOMEN IN BUSINESS

cheese. We used to make few varieties but now we make most of the popular varieties of all of the 3000 varieties across the world,” she says. She says the Raka Milk Processors cheese products are currently sold in major supermarket chains across East Africa and French speaking nations who are the major consumers of cheese and also distributed in the leading hotels and restaurants, saying the business mainly targets high-end and middle class customers who are quality conscious. Raka Milk Processors’ products can be obtained from major supermarket chains such as Nakumatt, Tuskys as well as Naivas and other major retail outlets across the country.

Factory

whether she would recommend Nyeri as a suitable business environment for such a venture. The bureaucratic struggles are constant, and she describes lengthy difficulties in buying land and getting her cheese products consumed in Nyeri county with just a mere 3 percent of Cheese being consumed by Nyeri residents while the biggest portion is consumed in major towns such as Nairobi, Mombasa, Thika, Kisumu and Eldoret. “For a foreigner thinking they are going to start a cheese business in Kenya, it’s too much. Cheese eating in Kenya is not as massive as it is in developed nations. A lot of people just give up,” saying some of the challenges she battles with every day include bureaucracy from Kenya Dairy Board (KDB) which she says only recognize two of the country’s largest milk processing companies Brookside and KICC but locks out private

companies in the business scale. Today, Raka Milk Processors collects more than 10,000 litres of milk from the local dairy farmers, cooperatives and produces over 1000kg of cheese everyday and Padia hopes the new multimillion facility with automated machines will increase production time and capacity as the demand for their products continue to grow exponentially not only locally but also outside the region.

According to Kalpa, the cheese market in Kenya has expanded drastically in the last decade, opening up opportunities for producers like her, saying that Raka Milk Processors currently command local market share of 25 percent and targets to increase its market share with diversification of new products. “A lot of people have done a bit of travelling and they know how to eat the different varieties of

“Consumers love our products due to the quality we provide in processing our cheese and I strongly believe other than quality, taste, pricing and wise marketing has led to the success of Raka,” asserts Padia, who is a keen dancer and an avid reader. Out of all the products the company produces, Cheddar is Raka’s fast moving cheese product and very popular among locals and the company exports some of its products to international countries such as Russia, USA and is Halal and Kenya Bureau of Standards (Kebs) satisfied and is currently awaiting ISO certification. The company has equally diversified into making other products such as Halumi Cheese-grilled cheese product which has an African taste and is fast becoming a gorgeous cheese brand to many Kenyans who are demanding for different taste. Raka is the only company in Kenya that makes vegetarian cheese apart from other regular brands it makes. The company boasts of over 30 permanent staff and Mrs. Padia says her huge success was

THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015 - 55

AFRICAN BUSINESS FORTUNE

mainly driven by her staff’s passion and enthusiasm for the business who she credits the achievements to.

“My staff is hard working and always working diligently in my absence in seeing smooth operations of Raka in my absence,” confesses Padia who has won several awards both locally and internationally for her proactive role in growing Raka Milk Processors to what it is today amid stringent and tough regulatory frameworks and bureaucratic challenges.

The other thing which makes Raka stands out is the consistent regular refresher trainings to its employees which are offered twice monthly for hygienic purposes while cleaning of the factory’s storage facilities and equipments are done twice weekly which are aimed at promoting thorough sanitation in the factory. Most of the factory’s equipment is shipped from Europe while other are obtained in Nairobi, this she says adds additional costs and expenses to the company’s overall operations.

Mrs. Padia has also not forgotten how far and where the company has grown from its humble abode and constantly aims at giving back to the society through Corporate, Social Responsibility (CSR) which Raka is aimed at fulfilling in sharing its success to the people who helped in growing the business. “It’s always good to give back to the community and here at Raka we aim to keep that as a priority,” she says, adding that the company is involved in numerous CSR activities and has since partnered with Girl Child Programme- An initiative for poor and orphaned girls which supports primary and secondary schooling and vocational training of deprived girl children through provision of school fees, uniforms and books, in giving back to the society. Other than that noble drive, Raka Milk Processors has ongoing programs where it visits and makes donations towards supporting needy and orphan children in partnership with different Chil-

Raka-Team-at-Nyeri-Prison-CSR-21 56 THE AFRICAN BUSINESS FORTUNE MAGAZINE AUG-OCT 2015

dren’s homes across the country. When her husband died five years ago, Kalpa took over a more active role in managing the business and made is a success it is today. “Raka has become my passion.

At the beginning I used to think I was living his dream, now it is my dream too, and am determined to grow this dream into the biggest Cheese making company in the continent,” says Kalpa, who defied calls from her ailing father to return to her native land, India and plans to remain in Kenya for as long as it takes, especially in Nyeri where her husband was born and brought up. Raka has also embraced the digital platforms and constantly engages with its consumers, clients and suppliers through interactive media daises such as twitter and face book accounts where it receives feedback and compliments on its products. “Social media is very powerful and in most cases we get feedbacks through such platforms on what our consumers want us to do different,” she offers. She draws her support from her family and employees majority of who have been with her for over decade since her husband’s demise. “Sometimes it is difficult to balance family, work and the fact that am a woman doing a maledominated field-but I manage to fit somehow. The ravels and meeting have helped me grow and it’s easy these days. “To succeed, you must have a passion for whatever you are doing. Every problem is solvable. Every lock comes with a key. Don’t give up before 1000days,” is her advice to budding women entrepreneurs.

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AFRICAN BUSINESS FORTUNE -INSURANCE

Insurance industry records growth in premiums despite a drop in penetration By African Business Fortune writer

edical and Motor (commercial & private) classes in the Kenya’s insurance industry continue to drive the sector’s growth contributing 75 percent of the total gross premiums in 2014, hitting a record high of Sh157.21billion last year compared to Sh130.65billion in 2013, a 20.3 percent jump.

According to an annual Industry report released last month by Association of Kenya Insurers (AKI), motor division (both commercial & private) accounted for 38.9percent of total gross premiums or 38.99billions during the period under review, compared to Sh33.8billion recorded a year earlier, while medical class recorded 25.20 percent or 25.31billion compared to 20billion in 2013.

The industry also incurred total net claims worth Sh 82.36billion last year, compared to Sh 65 .47billion the year before, representing an increase of 25 percent. The report further shows the appetite for life insurance uptake among Kenyans equally

AKI CEO TOM GICHUKI contributed to the growth in premiums, recording a growth of Sh56.97billion last year against Sh44.01billion in 2013 while insurance penetration on the other hand recorded a surprise decline of 2.92 percent in 2014 compared to 3.44percent in 2013. AKI attributed the dip in penetration ratio to economic rebasing witnessed last year but said continuing mergers and acquisitions (M&A) as well as new entries in the market among other factors presented opportunities for the industry to flourish. “The low penetration highlights the significant opportunities that exist in the Kenyan insur-

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ance market especially in commercial lines like oil and gas, real estate and infrastructure. Micro insurance, bancassurance and agriculture insurance are in the early stages of development and will be crucial in increasing g penetration,” said AKI chairman Justus Mutiga. Local insurance industry experienced a wave of mergers and acquisitions particularly last year as local insurance firms and financial services firms flexed their acquisition muscle in order grow their revenues, consolidate their market share as well as expanding operations at the regional markets. Saham Group of Morocco for

AFRICAN BUSINESS FORTUNE - INSURANCE

instance acquired a majority state of 66 .7 percent in Mercantile Insurance in April last year, Union Insurance of Mauritius acquired a controlling stake of 66 percent in Phoenix a year later, UK-headquartered insurance company Prudential made a return into the Kenyan market by wholly acquiring Shield Assurance in September of last year, while Britam Investment Group acquired 99 percent of Real Insurance Company in December 2014. This year’s M&A saw a UKbased financial services group Old Mutual acquire a majority stake at UAP Holdings Company following a buyout clause of 37.33 percent

of the Kenyan fir m in January, while Barclays Kenya had in May acquired a majority stake at First Assurance Company for 2.8billion-the association says it expects more mergers and acquisition particularly in view of the proposed increase in minimum capital requirements in the new Finance Bill, 2015.

“We expect more mergers and acquisition in the coming months or years judging by the market trend which is poised to spur growth in the sector,” said Tom Gichuki, AKI chief executive during the report launch. Non-life insurance premium grew by 15.6 percent while life insurance premium, contribu-

tions from deposit administration and investment linked to contracts grew by 29.4 percent.

Claims incurred amounted totaled Sh42 6 billion in 2014 compared to Sh34.8billion in 2013, a 22.4percent increase compared to 16 .5 percent in 2013, while underwriting profit dipped by 34.8 percent from Sh.3.42billion (2013) to Sh2.23billion in 2013 The report further reveals that 13 companies made losses during the year in claims compared to 12 in 2013.

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