Wednesday, April 8, 2015

The scam that is online forex trading in Kenya

Investors storm VIP Portal's forex bureau offices in Limuru Town, Kiambu.

Investors storm VIP Portal's forex bureau offices in Limuru Town, Kiambu. VIP Portal promised a five per cent commission per month for every new member an investor brought in. As investors in Limuru shovelled their hard-earned savings into VIP Portal, so did their counterparts in Nyeri, Kisumu, Kisii, Nakuru and Nairobi. PHOTO | ERIC WAINA 

By SIMON MBURU
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Mr Robert Siahi had big dreams last year. He wanted to pursue a degree course in a local university.

Already an established trader in Limuru, Mr Siahi thought of financing his dream. During a meeting with one of his friends, he was encouraged to put his money in VIP Portal, a forex brokerage firm based in Limuru, Kiambu County.

“A few days later, I saw Mr Alfred Wangai discussing how profitable forex was on a local TV,” Mr Siahi says. “The figures whetted my appetite and I decided to invest.” Mr Alfred Wangai is one of the proprietors of VIP Portal.

On April 16, 2014, Mr Siahi invested Sh106,000 and on May 22, 2014, he put in an additional Sh500,000. “My contract with Mr Wangai was supposed to bring me Sh1.2 million after 75 working days. It was to be disbursed within three phases but this never happened.” The loss was devastating. It ended Mr Siahi's dream of joining university.

Mr Siahi is among 13,000 investors, who have lost over Sh1.1 billion to VIP Portal in what could turn out to be the biggest forex scam in Kenya’s history.

REGIONAL GROUPS

According to investigations carried out by Money, unsuspecting investors were subdivided into groups, with the Nairobi team claimed to have lost about Sh300 million.

According to police investigations carried out last year, VIP Portal received over Sh1.08 billion between October 2013 and September 2014.

The deposits were from unsuspecting investors in Limuru, Nairobi, Nakuru, Nyeri, Kisii and Kisumu.

According to Mr Siahi, Mr Wangai first opened his offices in Limuru on or around June 2013. “After opening his offices at K-Unity Building (also known as Ushirika House), Mr Wangai tapped the locals to market his firm,” Mr Siahi says.

“It was easy for us to believe in the people we were accustomed to.”

By October 2013, VIP Portal had spread across Limuru. In some cases, Mr Wangai asked investors to sell their land and deposit the money with VIP Portal with a promise that he would more than double it in less than a month, Mr Siahi said.

VIP Portal promised a five per cent commission per month for every new member an investor brought in. As investors in Limuru shovelled their hard-earned savings into VIP Portal, so did their counterparts in Nyeri, Kisumu, Kisii, Nakuru and Nairobi.

The minimum the investors were required to part with was Sh25,000. Meanwhile, Mr Wangai turned to television talk shows to market his firm. His right-hand man, Mr Felix Oluoch, was his chief online publicist.

In messages to investors, Mr Oluoch, who describes himself as “a technical forex trader, a technical qualitative analyst and a strategist, a hedge fund trader and an international entrepreneur”, said Mr Wangai was paying 60 to 80 per cent dividends in four months.

He claimed that VIP Portal had a global office at a little known island St Vincent and the Grenadines.

A few weeks before investors began demanding payments, Money has learned, they questioned the existence of an international office.

Contacted, the Financial Services Authority of St Vincent and the Grenadines denied licensing VIP Portal. But in a sworn affidavit on July 17, last year, Mr Wangai maintained that the firm was incorporated under the Companies Act on August 1, 2013 and incorporated as an international business in St Vincent and the Grenadines since August 2013.

OFFSHORE ACCOUNTS

On 7 July, last year, a Nairobi court stopped any transaction in VIP Portal’s four accounts — VIP Portal Ltd, VIP Forex Savings and Co-operative Ltd, VIP Institute of Forex at Family Bank, and VIP Portal Ltd at Barclays Bank.

By the time the accounts were frozen, the firm had a balance of Sh174 million since its directors, Mr Wangai, Mr Collins Thumbi Mundia, Mr Daniel Komo, and Ms Nkatha Karimi had withdrawn much of the Sh1.08 billion.

In a letter dated July 30, 2014 from the Law Society of Kenya to the Inspector-General of police and copied to the CID director and the Central Bank, VIP Portal received deposits from Ms Bernise Kirungi, Mr Francis Thuo and Mr James Mbuthia amounting to Sh3,061,585 between April 29, 2014 and June 10, 2014.

In a reply to the law society, the Inspector-General of police noted that VIP Portal had been under the investigation of the DCIO, Limuru, since March 2014.

The DCIO wrote to Central Bank seeking to establish whether VIP Portal was registered by the regulator to trade in forex or carry out any banking business. Central Bank denied licensing it.

Additionally, in a letter signed by officer in charge Joseph Mugwanja, on May 20, 2014, the Banking Fraud Investigations Unit started an inquiry, which established that between October 1, 2013 and May 28, 2014, VIP Portal received Sh1.08 billion from investors.

Of this amount, Sh7.6 million was paid out to Ms Karimi and Mr Mundia, Sh19.3 million was wired to the accounts of FXCM Markets Ltd of US, while Sh528 million was noted to have been paid out to the investors.

In August 2014, VIP Portal opened new ‘accounts’ abroad to facilitate deposits. “We have over 5,000 accounts abroad that need to be catered for and hence the reason why we partnered with UBA Bank,” Mr Oluoch told investors.

Mr Daniel Njuguna Mwangi, UBA Kenya, head of marketing and corporate relations refutes the claims by the forex trading firm.

"VIP Portal approached us with a view to opening an account. However, after conducting our due diligence, the bank declined to open any accounts for both the company and the investors," Mr Mwangi said.

Notably, closing of the three local accounts has since become the reason that VIP Portal uses to counter accusations by its investors.

Take this message by Mathews Mutonga to VIP Portal: “I invested Sh50,000 in April 2014 and I received Sh30,000 once and the dividends stopped coming. I paid Sh400,000 and received Sh320,000 once and the dividends stopped.

Then I paid Sh300,000 and got nothing.” In its response, VIP Portal said, “It is the banks that are holding your money, not VIP Portal.”

As the reality dawned on investors that they were conned, some started begging.

Mr Mutonga, together with another investor, Ms Anne Wangui, wrote to VIP Portal: “I have been told that I would be paid within three days since June 2014. The money invested is what my family is relying on to pay for my children’s school fees.

You told me that my papers were among those taken by Central Bank anti-fraud police but all I know is that you owe us Sh750,000. I hope I will one day get my money back.”

MISSING FILES

During a meeting at Alders Restaurant in Limuru, the aggrieved investors invited Mr Wangai but he declined to attend, says Mr Siahi.

“The last I saw him was near K-Unity, where he was heavily guarded.”

The investors’ pursuit for justice has also been characterised by delaying tactics.

“The case was to start last year, but we had instances where files disappeared and others where Mr Wangai refused to accept summons or claimed he wasn’t served,” says Mr Siahi.

Even with claims of conning investors over Sh1.08 billion, VIP Portal has since launched a new forex product dubbed PAMMOJA.

“You fund your account via Netteller, then we trade on your behalf and share the profits,” Mr Oluoch told an investor, Mr Boniface Ndichu.

According to Mr Oluoch, PAMMOJA is a deal between investors and VIP Portal, where the firm has full access to an investors’ money, which it uses to trade on their behalf and later share the profits every 29th working day of the month. 

EDITOR'S UPDATE: UBA Kenya response to the claims by VIP Portal.

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Wednesday, April 8, 2015

Processor puts smiles on the faces of dairy farmers

Mukurweini Wakulima Dairy general manager Mr Fredrick Muriithi outside the plant at Mukurweini town in Nyeri county on March 30, 2015. With over 70 distributors in Nairobi County, its main market, the firm is giving established rivals a run for their money. PHOTO | JOSEPH KANYI

Mukurweini Wakulima Dairy general manager Mr Fredrick Muriithi outside the plant at Mukurweini town in Nyeri county on March 30, 2015. With over 70 distributors in Nairobi County, its main market, the firm is giving established rivals a run for their money. PHOTO | JOSEPH KANYI 

By FRANCIS MUREITHI
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It may not be playing in the same league with the big boys of Kenya’s dairy industry such as Brookside, New KCC and Githunguri Dairy at least for now.

But barely nine months after it ventured into the pasteurized milk market, Mukurwe-ini Wakulima Dairy is causing ripples.

With over 70 distributors in Nairobi County, its main market, the firm is giving established rivals a run for their money.

“We want to stamp our footprints in this competitive market by growing our volumes and enabling our farmers to maximise on their efforts while at the same time eradicating poverty,” said general manager, Mr Fredrick Muriithi.

For the group of peasant dairy farmers, who started as a self-help group and could hardly transport their produce to the market, theirs is a story of tenacity, their dream has finally come true — after waiting for 25 years.

Today, Royal fresh milk processor has a fleet of vehicles. The company, which could not dare step into any financial institution as it was dismissed as credit unworthy, has an investment asset base of Sh200 million and is attracting many lenders as its investment portfolio rises steadily.

FARMERS SACCO

“Today, we’re able to service a Sh90 million loan from CFC Stanbic Bank that has enabled us to put up a modern plant with a capacity to process 100,000 litres of milk per day but due to the prevailing drought, we are only processing 24,000 litres daily,” said Mr Muriithi.

Apart from the lenders, who want to partner with the processor, Nyeri County government has also stepped in, pumping Sh26 million into the firm.

“With this kind of assistance from Governor Nderitu Gachagua, we have elaborate plans to expand our production and in the next four months, we shall be producing yoghurt, ghee, butter and cheese,” said Mr Muriithi.

The company has also attracted assistance from Agriterra, a non-governmental organisation from the Netherlands, which has trained its staff on extension services, animal husbandry besides good governance.

With a view to help the local farmers, Mukurwe-ini Wakulima Dairy has scored another first by establishing Wakulima Commercial Savings and Credit Society where over 6,000 milk suppliers access cheap loans.

According to the chief executive officer John Mwaura, the Sacco has been rated as one of the best in Nyeri County for the last five years in a row. Last year, the Sacco’s 17,000 shareholders were paid a dividend of Sh6.5 million.

The company has increased its investment portfolio by constructing a four-storey administration block besides a modern laboratory for testing the quality of milk.

“Dairy industry is very sensitive and we have employed qualified personnel, who test the milk at the collection point. The company laboratory makes sure that we maintain the best industry practices as we grow our business,” added Mr Muriithi.

The processor’s plan is to transform Mukurwe-ini sub-county into a metropolitan within Nyeri County and towards this end, it has employed 11 university graduates, 38 diploma holders and a number of certificates holders from the Rift Valley, eastern and western parts of Kenya, making up a total workforce of 133 from the initial four.

QUALITY CONTROL

But it is the company’s focus on the farmers that has seen it win the hearts of many and today apart from its core suppliers in Mukurwe-ini, the company is attracting dairy farmers from neighbouring Tetu, Mathira and Othaya.

“We pay our farmers Sh33 per kg and apart from the prompt payment, we have opened a food store where the farmers buy wheat flour, maize flour, sugar, tea leaves among others on credit,” said Mr Muriithi.

The company has also put up an animal feeds factory and a veterinary services arm where dairy farmers get Artificial Insemination services for their stock.

“One of the main reason for poor milk production is substandard animal feeds and that is why we put up a plant, where we control quality and this has paid dividends. Our farmers get quality feeds at a subsidised and affordable prices, which translates into increased milk production,” he said.

But what has been the processor’s success secret? “We rally the stakeholders and make sure they are focused and believe in the company’s vision. When every player knows the path of success, turning the company into a profitable cash cow becomes the easiest thing to accomplish,” said Mr Muriithi.

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Wednesday, April 8, 2015

Why you need to save until it hurts

I know many people have piggy banks and even children bank accounts. As you teach your the young ones how save, be sure not to conflict yourself with spendthrift habits. PHOTO | FILE

I know many people have piggy banks and even children bank accounts. As you teach your the young ones how save, be sure not to conflict yourself with spendthrift habits. PHOTO | FILE 

By MUTHONI NGATIA
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How time flies! The Easter holidays are here. The first quarter of the year is gone.

When I last wrote about developing a savings culture, I received many responses from the readers of this column.

Several people wondered when is the right time to teach for example your children how to save. I know many people have piggy banks and even children bank accounts.

How well does your child understand why they own a piggy bank and for the older ones, a bank account? You need to take these lessons seriously and ensure that the culture is developed when they are young.

They need to own it too. I know of a parent, who deposited Sh50,000 to his children bank accounts as pocket money right after Form Four exams.

The children used the money very differently with one almost wiping out the account in no time.

SAVING CULTURE

The other child was very careful and seemed to take care of the money only taking small amounts, which he could explain why. These were two children of the same age.

As you teach your the young ones how save, be sure not to conflict yourself with spendthrift habits.

Be sure also not to conflict each other as parents. Remember, if your children do not learn the value of money, they are likely to demolish your estate in no time the day it will be transferred to them.

How much savings have you put away since the start of the year?

Have you been faithful to your goals? If the main reason you have not kept the promise is less cash, be sure to review your business so far and work on those things that can help you meet your half year or annual savings goals.

Don’t give in to the self excuses that will prop up when you ask yourself this question.

It is a fact that we are a society weak in raising savings. Indeed, this is one of the biggest challenges of growing wealth. Wealth is accumulated over time. As a business owner, you need to work keenly on your saving culture.

Try saving little every day or per week if monthly goals are catching you off guard. Sometimes, the larger sums of money may not be visible at hand, say in your bank account but you will be surprised by the total ins and outs when you examine your monthly bank statement.

How much should you save every month? We all make different income every month, for this reason, we all cannot save the same amount.

Treat your savings like airtime. I do not know how many people today have the discipline of not loading airtime just to have it or incase you need to communicate on your phone. You want to always be prepared to send that text or make that call.

Well, be as prepared for a rainy day by putting away some money every so often. Ensure you keep aside an amount of money every month without fail.

SAVE FOR A PURPOSE

But is the old saying that we should save 10 per cent really what we should be comfortable with?

Depending on your income and wealth goals, it may or may not be enough. A good way to know if you are saving enough is to save until it hurts.

Once you start to feel a bit tight, there is a likelihood that you are saving enough. It is safe to begin with 10 per cent and keep increasing until you feel a pinch. You will be surprised how much money was passing through your hands and was never trapped into your savings scheme.

Remember to always save with a purpose too. Otherwise, you will blow off all your first quarter savings with Easter holidays just because you feel you can afford.

This is what happens when you have no plan. An opportunistic plan will strike and wipe out your hard-earned savings mocking your very self discipline and destroying your pride in learning how to save.

You should be fully aware of your long-term plan for your savings. You will be surprised how fulfilling this is.

Your savings will grow very quickly if you diligently save every day, week or month without fail.

If you are not saving any money currently because your expenses sweep away all your income, look through each expense and establish what costs you can cut.

Always budget for your income too to avoid unplanned expenses. Happy Easter holidays and saving!

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Wednesday, April 8, 2015

How to retire wealthy as an entrepreneur

Your business is also where the large majority of your wealth will be created during your lifetime. So if it’s to be your primary production and wealth vehicle, why not also have it be your top investment priority? PHOTO | FILE

Your business is also where the large majority of your wealth will be created during your lifetime. So if it’s to be your primary production and wealth vehicle, why not also have it be your top investment priority? PHOTO | FILE 

Retirement planners give the same advice to entrepreneurs as they do to everyone else — divert savings into retirement accounts that invest in mutual funds.

That advice is suspect for the average person, but for the entrepreneur, who owns a business, it’s counterproductive and completely ignores your best wealth creator.

So what should you do instead?

The surest way to manufacture wealth is to invest in what you know. And there’s nothing that you know better than your business. Your business is also where the large majority of your wealth will be created during your lifetime.

So if it’s to be your primary production and wealth vehicle, why not also have it be your top investment priority? 

Said differently, why not let your business be your retirement plan?

However, many entrepreneurs struggle to retire in their business because they overestimate their importance to it. 

In truth, no one is irreplaceable in a well-structured company. So if you can’t replace yourself yet, it’s time for a new strategy.

Taking this forward-looking approach will increase your production and decrease your business’s dependency upon you, making it easier to retire into a business that has greater potential for long-term success.

FIVE STEPS

So if you’re ready to get started, here are five steps to put into action as soon as possible. 

1. Have a practical mission statement 

Your mission statement should lead toward clarity in action and live in the hearts of your team, rather than be some wordy, forgettable statement hanging on the wall. When your team is clear about the mission, it’s easier for them to take the lead when you’re not physically present.

2. Build focus

Apply division of labour principles articulated by Adam Smith in his 1776 work, The Wealth of Nations, by creating new divisions in your business with a depth of talent and skills.

3. Compensate effectively

Build a production-based economy and mindset with a compensation programme that gives incentives for hitting objectives, such as more money or other bonuses. This is much more effective than an “entitlement economy” where employees are only interested in getting paid for showing up.

And it gives employees something to work hard for even when the boss is away enjoying their retirement in the business.

4. Share your ideas

Build one-page project plans on any new idea, new position to be filled or any other action idea. This creates a framework so that the knowledge isn’t just stuck in your head and allows the team to assist you in building the idea.

5. Stay updated

Create weekly pulse reports on the key stats in your business. This will allow you to quickly make course corrections and adjustments at a glance — even if you’ve been out of the office all week.

In summary, instead of just being stuck as an employee in your business, build a business that relies on systems, protocol and other people’s abilities rather than resting on your shoulders alone.

This approach allows you to keep the business long-term and maintain the monthly cash flow it provides while also freeing yourself from the daily management and workload.

As you adopt this new paradigm, you’ll clearly see the folly in giving your money away to fund someone else’s vision before you have fully funded your own.  

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Wednesday, March 18, 2015

New market to help you hedge against risks

Nairobi Securities Exchange CEO Geoffrey Odundo (left) and Chairman Eddy Njoroge during the NSE leadership and diversity meeting in Nairobi on March 4, 2015. The exchange is planning to open a derivatives market in June. PPHOTO | SALATON NJAU | NATION

Nairobi Securities Exchange CEO Geoffrey Odundo (left) and Chairman Eddy Njoroge. The Nairobi Securities Exchange (NSE) plans to buy out the Central Depository and Settlement Corporation (CDSC) in a bid to bring the clearing and settlement of securities under its control. PPHOTO | SALATON NJAU | NATION 

By JOSHUA MASINDE
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Investors would soon boast of a new investment vehicle to bet their money on as they diversify from the current products on offer within the capital markets.

If all goes according to plan, a new platform — derivatives market — which enables investors hedge against market risks, would be operational starting June, this year.

This would provide a fresh investment stream with a more predictable assessment of risk and returns as opposed to trading shares on the securities market.

Already, optimism among analysts and traders is high regarding the broadening of investment options in the capital markets.

“The derivatives market is expected to increase avenues for investment and reduce investor risks as it gives investors the opportunity to know whether or not they are making money,” Equatorial Commercial Bank’s head of treasury, Mr Benard Omenda told Money.

In December 2014, Nairobi Securities Exchange (NSE) received preliminary regulatory approval to establish a derivatives market, which will be trading futures contracts and options that hedge against risk.

PRICE CHANGES

In February last year, the bourse incorporated NSE Clear, which would settle trades, collect and maintain funds for transactions and report trading data.

According to the exchange’s chief executive officer, Mr Geoffrey Odundo, the market would provide new investment options for investors and also help them manage risk. The risk mitigation avenue arises from the fact that investors can use hedging tools to ensure that they do not lose their money.

“The exchange is introducing new asset classes to provide investors with additional instruments to not only invest in, but provide tools for efficient and effective management of risk,” Mr Odundo said in an interview with Money.

The derivatives market is regarded as one of the most affordable and convenient means by which investors can cushion themselves against interest rate fluctuations, volatility in exchange rates and commodity price swings.

The NSE’s new platform would facilitate spot (immediate) and futures trading of multi-asset classes such as equities, currency, interest rate products and various forms of agricultural commodity contracts. It would benefit investors seeking a cushion against interest rate fluctuations, volatility of exchange rates and commodity price changes.

The derivatives platform would be modelled along the Johannesburg Stock Exchange derivatives market that trades futures and options on equities, bonds, currencies, indices, interest rates and commodities. In futures contracts, parties agree to buy or sell assets or commodities at a price agreed in advance during a given time in the future. Option contracts on the other hand give the buyer or the seller the right to buy or sell a given asset at a given price on or before a set date in future.

Informed decision

“If you are in the derivatives market and you know that a certain asset will be going for a certain price at a certain date in the future, you are able to position yourself and make a more informed investment decision,” Mr John Kirimi, an executive director at Sterling Capital, said in an interview.

For a start, the products to be traded will include currency futures (because of an existing over-the-counter and very active foreign exchange market, the single stock futures and the index futures (because of an existing listed and liquid stocks).

SINGLE STOCK

Single stock futures is a type of agreement between two entities to exchange a specified number of shares in a company for a price agreed today with delivery occurring at a later date in the future. Index futures are deals where buyers and sellers agree to pay or receive payment for the cash value of an underlying stock index in the future.

“The most obvious opportunity is for the market to trade and clear interest rate, foreign exchange and equity based derivatives (futures and options),” the capital markets master plan 2014 – 2023 states.

The NSE indicates that basing on conservative estimates on the analysis of early growth of derivatives markets in China, South Africa, India and Mexico, growth rates for currency derivatives between 2015 and 2017 are expected to reach 40 per cent. The growth rate for index-linked products are to hit 30 per cent while growth of single stock futures is expected to reach 20 per cent.

In the first three years of the operation of the derivatives market at the Johannesburg Stock Exchange, currency derivatives grew at 205 per cent with index-linked ones increasing by 27.5 per cent.

Single stock futures on the other hand grew sluggishly at 0.10 per cent, Mr Odundo said.

Already, the potential seems huge with Kenya’s capital markets master plan envisaging the value of outstanding exchange-traded derivative contracts to reach an ambitious $200 billion (Sh18 trillion) by the end of 2023.

Analysts, however, argue the new market may take time to attract the requisite support from local investors.

This is augmented by the fact that less than four per cent of Kenyans are active investors in the stock exchange.

Even with backroom plans to launch the new exchange, there are fears the investing public is still in the dark regarding the derivatives market and the trading procedures.

Little understanding would mean muted interest in participating in the market until such an unforeseeable time when the market would have been adequately tried and tested.

“People are still not aware of what the derivative market is all about,” Mr Omenda indicated.

Further, the capital markets master plan indicates that a derivatives market can only develop successfully if there is real demand from users for its products for hedging purposes.

ASSET CLASSES

This is owing to the fact that many derivative markets fail given that they are set up to appeal more to speculators and there is no local trading in the given assets.

The NSE says it is conducting workshops for market participants in collaboration with the industry to raise the required awareness of the derivatives exchange among retail and institutional investors.

Despite the fears on low levels of awareness of the new platform among investors, Mr Odundo is optimistic that foreign and local retail investors would be among the first to invest using the new platform.

“This is because the foreign investors already do have exposure to these asset classes.

The retail investors are usually front runners for new products especially when the products are well understood and we foresee them doing the same,” he observed.

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Wednesday, March 18, 2015

Five tips on how to talk like a boss

If you have spent any amount of time around top executives or business leaders, you’ve probably found that most of them don’t speak like your typical employee. PHOTO | FILE

If you have spent any amount of time around top executives or business leaders, you’ve probably found that most of them don’t speak like your typical employee. PHOTO | FILE 

If you have spent any amount of time around top executives or business leaders, you’ve probably found that most of them don’t speak like your typical employee.

There is a recognisable confidence, timbre and clarity to their vocal presence that can motivate and inspire the masses.

From Benjamin Franklin to Martin Luther King Jr. to Bill Clinton, great leaders are first and foremost great communicators all of whom are masters of the five following speaking tips.

1. Um... and other verbal crutches

These crutches are most pronounced during pauses that occur while delivering a speech or presentation. They can come in the form of unintelligible sub-vocalisations such as “um” and “er” which awkwardly fill the silence, or as a subconscious habitual cough, lip-licking or overused hand gesture.

They can also manifest as any number of verbal ticks which can be distracting and ultimately undermine your credibility (think phrases such as “you know,” “like,” “frankly,” or “to be honest”). The problem is that few of us recognise our dependence on these crutches.

The quickest cure for this is to record yourself using a smartphone app speaking extemporaneously for a minute or two on any topic. Then, listen back and count how many of these crutches you use. This simple exercise will help you be more conscious when you speak.

2. Keep going despite verbal miscues

If you slip up or stumble over words while delivering a presentation or speech, don’t stop and apologise. Keep going as if nothing happened.

Most people don’t even notice those types of verbal flubs until the speaker draws unnecessary attention to it by stopping and apologising for the misstep.

Not only is that disconcerting to the speaker, it’s disconcerting to the audience as well.

3. Avoid introductory qualifiers

These are those wishy-washy throwaway phrases that we work into our speech to be polite or build consensus, phrases such as “perhaps,” “kind of,” “hopefully” or any other mealy derivative of the same.

Such limp words will only weaken you and your status as a leader.

4. End sentences cleanly

Too often, people make great points but they keep going to the point where they talk themselves into a corner and don’t know how to end the conversation. So they tag on a throwaway phrase that adds nothing to the discussion.

Examples of these types of sluggish nomenclature include “and what not,” “things like that,” and “you know what I’m saying.”

These lazy linguistic lapses should be avoided at all costs.

5. One thought per sentence

This last tip will help eliminate most of the aforementioned issues. When we isolate one concept per sentence, verbal pauses between sentences can become powerful attention grabbers with no room for crutches.

There’s also less chance for a verbal mix-up if each sentence is a single, crisp idea. Plus, a punchy concept blasts through paltry qualifiers and sentence tag-alongs.

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Wednesday, March 18, 2015

Buy Equity, hold Safaricom shares

Equity Bank chief executive James Mwangi (left) and his Safaricom counterpart Bob Collymore. Buy Equity, hold Safaricom shares. PHOTOS | FILE

Equity Bank chief executive James Mwangi (left) and his Safaricom counterpart Bob Collymore. Buy Equity, hold Safaricom shares. PHOTOS | FILE  NMG

By SIMON MBURU
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Equity Bank: Last week, Equity Bank released its annual financial results.

The bank recorded a record net profit of Sh17.2 billion making Equity the most profitable bank in Kenya. The impressive earnings were a 29 per cent jump from the Sh13.3 billion recorded in a similar period in 2013.

Despite the huge gains, the stock remained fairly flat at the Nairobi Securities Exchange, trading between Sh52 and Sh53.

Securities analyst Chambua Ogoti says this was due to Sh1.80 per share dividend payout. “There were investors who expected a higher payout relative to the recorded profits. There were other investors who saw the sale of Housing Finance to Britam as a minus.”

Nonetheless, he sees the counter as a buy for medium- to long-term investors. Investax Capital head Ndindi Nyoro agrees. “This is a stock that will make investors who look at buying value companies and are willing to buy and hold on to their investment,” he says.

Equity Bank is a buy with a target price of Sh59.41 per share, notes NIC Securities in a report. “We expect to continue seeing a strong growth in non-funded income to adequately compensate for interest margin contraction,” said NIC Securities.

Over the past one year, Equity Bank has touched a high of Sh63 and a low of Sh31 apiece.

According to Mr Ogoti, news that Equity would be launching a mobile money transfer platform, Equitel, propelled the stock to its all-time high of Sh60 last year. “This means that until the mobile business is fully launched, the share price is likely to be depressed or plateau with a small upward movement towards the closure of the counter’s books,” says Mr Ogoti.

DIVERSE INTERESTS

On Friday, the stock opened at Sh52 per share having closed at Sh52 apiece on Thursday with a high of Sh52.50 and a low of Sh51.50 from a traded volume of 3.24 million shares.

Safaricom: Safaricom has been very resilient at the NSE, trading at highs of Sh15, says Mr Nyoro.

On Friday for instance, the counter opened at Sh15.90 per share and touched a high of Sh16. It had closed the market at Sh15.95 on Thursday.

NIC Securities had recommended Safaricom as buy at around Sh14.25 with an exit at Sh15.95 a month ago. But Mr Nyoro sees otherwise. “Investors should hold. Safaricom has been growing its income streams and now its entering the set-top boxes import and distribution market.

Last week, the firm entered into a deal with KCB to offer Safaricom’s M-Pesa and KCB customers loans of up to Sh1 million,” he says.

“All these will work to bring in more revenue given that they are not Safaricom’s core line of business.”

Further, with the telco having set a new profitability record of Sh14.7 billion, net profit for the six months to September last year, the company is expected to break new records in its annual profit.

Early this year, investment analyst and Rich Management CEO Aly khan Satchu recommended the counter as a buy at the then price of around Sh14 with a target of Sh20! 

Mumias: Analysts in this column last week asked you to avoid Mumias Sugar stock. After rising to a high of Sh2.95 per share on Monday followed by an early surge to Sh3.20 on Tuesday morning, the counter finally tumbled.

By end of trading on Thursday, it was trading at Sh2.60 per share, an 18.75 per cent drop from Tuesday’s high. “The counter is still recommended as a reserve for speculators with ability to cushion instant losses as its fundamentals remain weak,” says Mr Ogoti.

On Friday, the counter opened at Sh2.70 apiece.  

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Wednesday, March 18, 2015

A couple’s plan to help maids save for a rainy day

Mr Joseph Gichunge (left) and his wife Leah Imaita, founders of Jazza Centre with some house helps under training at their office in Nairobi . PHOTO | SALATON NJAU

Mr Joseph Gichunge (left) and his wife Leah Imaita, founders of Jazza Centre with some house helps under training at their office in Nairobi . PHOTO | SALATON NJAU 

When Joseph Gichunge and his wife Leah Imaita founded Jazza Centre two years ago, their plan was simple, to find decent jobs for their recruits — housekeepers.

They wanted to better their lives by bringing professionalism is a service industry that is often put to the back burner. Their quest was to better the quality of service for their potential clients by connecting them with skilled workers.

Today their dream is benefiting about 200 servants from the initial five. And they are seeking to introduce a new element, the culture of savings among the housekeepers.

“I want to do something that will result in improving the lives of the house-helps as well as ensure their future is secured. I plan on introducing a Savings and Credit Cooperative Society (Sacco) that is tailor-made just for them,” Mr Gichunge told Money.

Plans are already underway with a view to partnering with established saccos in order for them to model a product that fits the requirements of housemaids.

WELL PAID

“For now, the membership will only be open to our employees, but subject to change in future, and contributions will be done on a monthly basis ranging from as low as Sh200,” he said.

The house-helps, though they work for his clients, are sorely under Jazza Centre’s employment.

“We operate on the same principle that security companies do. We have clients depositing money with us as payment for the services offered, then we process our employees’ pay slips every month. This is the same way we shall process sacco contributions,” he notes adding that the project is in its initial stages and he is coming up with the necessary paperwork to realise the savings dream.

“Members would enjoy benefits similar to those offered in other saccos but we would model the products to suit our employees,” he says.

According to Mr Gichinga, when one of their employees leaves employment, they would recover their savings.

“Provided that there are no outstanding debts,” he points out and is quick to add that all his employees are paid reasonably well.

“Their salaries range between Sh10,500 and Sh20,000 depending on their job description and with proper facilitation, they are able to cater for their daily expenses and save as well. To begin with, the major objective of this sacco is to inculcate a savings culture in our employees to ensure that they grow and sustain their livelihoods,” Mr Gichinga adds.

Jazza Centre currently operates at Muthaiga estate, in Nairobi, but the couple plans to set up a larger office that can board hundreds of trainees along eastern bypass.

“This will also help up have a backup of employees to supply our clients in case of off sick or other emergencies,” Mrs Imaita said.

Mrs Imaita, who is also the human resource manager, is proud of the progress the entity has made since she quit her job to help launch it. She has a background in engineering.

SAFETY SKILLS

“We train them on housekeeping, laundry, cooking and nutrition, early childhood development, personal hygiene and etiquette, health and safety skills as well as communication skills,” she said.

The workers under Jazza Centre have National Social Security Fund and National Hospital Insurance Fund memberships.

Once a client seeks a worker, they are expected to state their working hours — the time they leave and arrive home, the size of their house, number of children and their age groups and the types of chores they would like the house-helps to do.

This centre came up with a salary structure for house-helps based on the duties to be handled.

Ensure quality

“It also helps us match the requirements with the best suited individual to ensure quality. In addition to that, we do a monthly review of our employee’s work with the client. This helps us know if we have met our clients’ expectations.” Mr Gichinga explains.

Introducing a savings and credit scheme, Mr Gichinga notes, would play a major role in retaining our employees because of the huge turnover in the sector.

“The benefits will be immense and this will help secure their future and pursue their dreams,” he says.

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Wednesday, March 18, 2015

Give us waste cloth, we’ll make doormats

Phoebe Wanjiku displays a hand-woven doormat. PHOTO | MORAA OBIRIA

Phoebe Wanjiku displays a hand-woven doormat. PHOTO | MORAA OBIRIA 

By MORAA OBIRIA
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Tailors may be quick to throw them into the dustbins but wait a minute! Would the many pieces of different types of fabric make up something pretty?

A group of youth from Mombasa are turning this into a reality. They are making doormats that are comfortable to sooth your feet once you walk into your house.

And while they contribute to reducing the amount of waste scattered in the coastal town’s environment, crocheting doormats using the large scraps of fabrics leftover from a different tailoring jobs is turning out to be not just an eco-friendly, but a profitable venture.

The 15-member group, which is funded by Uwezo Youth Development Programme, aims at promoting protection and the preservation of a clean environment.

The waste, which when turned into re-usable products cuts down on emission of carbon-dioxide, a gas that is responsible for increasing global warming and whose impacts are heavily being felt in Kenya.

FREE FABRIC

“Recycling pieces of fabric is a simple way of protecting the environment. We cut effects of climate change since burning of waste cloth releases carbon dioxide into the air,” says Phoebe Wanjiku, a member of the group.

Started in 2011, each member collects pieces of fabric from tailoring shops in Mombasa and its environs, which Ms Wanjiku says are in plenty.

They get the pieces of fabric for free. All they need is a gunny bag which goes for Sh10, a crocheting needle sold at Sh5 and a thick woollen thread that goes for Sh150 a roll.

Once the gunny bags are cleaned, they are then cut into pieces of 50cm by 50cm before sewing the strips of cloth. “Each member decides on the kind of pattern to draw on the doormat,” she says. “It can be the pattern of an animal, a flower or anything attractive that a member desires. At the moment, however, we are currently not doing large drawings,” she adds.

One creates knots on the patterns upon which the fabric is sewn. Ms Wanjiku says they are only limited to work with the materials they collect.

“All you can do is to mix them according to your taste. Our main challenge is having a variety to choose from,” she says.

Aged between 18 and 28, many of the group members just finished high school while others are in college and therefore they face a challenge getting capital to buy fabrics of their own choice, which they could come up with new and better designs of doormats.

Each doormat measuring 50cm by 50cm goes for Sh800 and the members make up to four pieces a day. Each gunny bag helps produce four doormats.

The group uses social media to market its products. They also employ door to door marketing besides getting referrals from previous customers.

On Saturday, they meet to evaluate their progress and use the opportunity to collect their weekly savings.

“But when a member gets an order, he informs the group: we collect mats from members and sell collectively,” says Mr Benard Otieno, a member.

GREENING THE TOWN

The group has capped savings at Sh100 per week for every individual.

Although, their current savings is Sh34,000, their plan in the next three years is to launch a school for training youth on how to capitalise on available waste to make money while at the same time conserving the environment.

Fred Onyango, who is in charge of marketing the doormats says many people at the coast love art, a preference which has boosted the group’s sales among the residents in Mombasa.

“There is a lot of excitement when people see what we do. But above all, they buy and this encourages us to continue making more products,” says Mr Onyango.

Even though their efforts are yet to match with their vision of a totally clean environment in Mombasa town, they are happy with the progress achieved so far.

As a way of taking back to the society, the 15 members are involved in training pupils and students on the importance of protecting the environment.

Uwezo youth development programme is among the 50 groups making up the Kenya climate action teams with members drawn from across the county.

Among its core activities is to initiate projects aimed at conserving the environment and sensitising communities on the benefits of a clean habitat.

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Wednesday, March 11, 2015

Wealth lessons from the world’s richest

This combination of file photo shows Mexican telecom tycoon Carlos Slim(L) and Billionaire philanthropist Bill Gates. Gates kept his spot as the world's richest man, a rank he has held for 16 of the past 21 years. PHOTO | FILE

This combination of file photo shows Mexican telecom tycoon Carlos Slim(L) and Billionaire philanthropist Bill Gates. Gates kept his spot as the world's richest man, a rank he has held for 16 of the past 21 years. PHOTO | FILE 

By SIMON MBURU
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Last week, Forbes magazine released its 29th edition of the world’s richest.

The 2015 list of wealthy men and women has an astonishing 1,826 billionaires with an aggregate net worth of Sh635 trillion.

Holding $79.2 billion fortune, billionaire philanthropist and Microsoft co-founder Bill Gates leads the pack. Mr Gates is followed by Mexican Carlos Slim with a $77.1 billion wealth, Warren Buffet comes third with a $72.7 billion fortune, and Amancio Ortega with a 66.4 billion sum.

Interestingly, newcomers whose businesses broke even were propelled to the 2015 list with Ali Baba founder Jack Ma, prominent among the group. Others are Africa’s richest man Aliko Dangote, who is planning an entry into Kenya’s cement industry.

Locally, Bidco Oil Chief Executive Vimal Shah’s father Bhimji Depar Shah and investor Naushad Merali made it to Forbes Africa’s richest at $700 million and $550 million fortunes late last year.

Other notable local billionaires include Chris Kirubi and Equity Bank’s James Mwangi.

Well, today Money looks at some of the key highlights you can borrow implement to better your personal finance journey.

ART OF SAVING

According to Warren Buffett, entrepreneurs who focus on getting rich quickly lose the plot by failing to save. “I think the biggest mistake people make is failing to learn the habits of saving properly early,” he told Forbes. “Saving is a habit and anyone looking to get rich must learn and act it.” Personal finance expert Waceke Nduati–Omanga agrees. While you may think you’re earning enough or the income your enterprise is giving you is sufficient, she says, you may very well be on the wrong path in wealth creation.

“You may know how to earn money, or be in a well-paying job, or own a good business; but this does not mean you’re creating wealth or know how to create wealth,” she says.

According to Mr Buffett, you should understand that the art of compounding riches doesn’t happen overnight, and neither does saving.

“Money doesn’t fall like manna; it takes a long time to build and anyone looking to save should have a long-term mindset.”

Interestingly, this art of saving and reinvesting savings was the fuel that propelled billionaire Li Ka Shing, who owns a fortune of around $28 billion to the billionaires club.

The billionaire observes that you should never save for the sake of saving.

“Save your money in your bank and grow it as your very first start-up capital. Then after saving it, engage it in entrepreneurial exercises that will double it. Even if you lose money while growing it, you will not lose as much as you would had you not saved,” he notes.

DIVERSIFY YOUR INTEREST

Shortly after billionaire Jack Ma was listed on Forbes with a net worth of $22.7 billion, his company Ali Baba announced that it had acquired 8.8 per cent stake in Enlight Company, a film production firm based in China.  Mr Ma, though is not the only top money-maker spreading his tentacles to net more wealth.

In Kenya, billionaire Chris Kirubi has been diversifying  his investments through Centum Investments where he is the majority shareholder. Centum has branched into coal-mining, banking, and bottling.

In the same vein, Bidco Oil under the watch of billionaire Vimal Shah is eyeing soft drinks market with a Sh1.7 billion beverage plant along Thika-Garissa highway.

According to Mr Kirubi, venturing into new markets requires bold decisions. “When I bought Capital FM, no one believed in the changes I wanted to make. In fact, I received letters from the audience grumbling that I would ruin the new station,” he wrote on his blog.

But perhaps no one portrays the essence of diversity in business than Africa’s richest man Aliko Dangote who holds around $14.7 billion fortune. According to audit firm, PwC, Mr Dangote has ventured into cement industry, salt and sugar refining, real estate, poly products, port management, flour milling, and transport.

“My business strategy is to diversify business, hence the businesses are well equipped to cushion each other. Some businesses will have greater or lesser profitability,” he told PwC.

TURN DEBT INTO REVENUE

Very few billionaires are free from debt. According to Patrick Wameyo, a wealth management coach, the difference is that many of the top billionaires have mastered how to reap the most of debts by leveraging rather than borrowing.

“The rich usually go to a bank to get capital for plans they have already laid out while the common man usually takes a loan to settle debts,” says Mr Wameyo.

He adds that while a billionaire would shape their debt to acquire income-generating assets, the common man will only amass liabilities.

“Similarly, learn to leverage on debt to grow richer, while cautiously staying away from debts that would just pile up your dues. This will keep you from consuming your future income to settle past problems.”

According to Warren Buffett, stay away from things you can’t pay for until you put yourself in a paying position.

“I have found that it is easy to prevent financial trouble than to get out of it. Staying out of debt is staying out of financial trouble.” He says.

START SMALL

Many of the world’s top billionaires such as Bill Gates and Mark Zuckerberg started small. For instance, Mr Gates and Mr Zuckerberg, who hold $79.3 billion and $ 35.7 billion fortunes respectively, birthed their business ideas and enterprises from their university hostels. Apple founder Steve Jobs started in a garage.  

LEARN FROM FAILURE

Billionaire Richard Branson, who is valued by Forbes at $4.8 billion, has endured insurmountable failures.

Among his famous failures include Virgin Drinks, social networking platform VirginStudent, wedding dress business Virgin Brides, online car sales outfit Virgin Cars, and lingerie store line Virginware.

According to Mr Branson, the failures have sharpened his business skills. “Mostly, people are likely to venture into wealth creation projects that go head to head with existing big corporates.

And while it may seem flattering to receive attention from a bigger rival, it quickly becomes clear you made a mistake venturing into a certain field and your competitor will wipe you out.

“Virgin Drinks wanted to go head-to-head with Coca-Cola and this was pure madness. But my mistakes gave me the chance to bounce back and make smarter choices in my subsequent moves.”

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Wednesday, March 11, 2015

Avoid Mumias stock but buy or hold Unga

Investment Brokers on the Trading floor of the Nairobi Securities Exchange (NSE). Avoid Mumias stock but buy or hold Unga. PHOTO | FILE

Investment Brokers on the Trading floor of the Nairobi Securities Exchange (NSE). Avoid Mumias stock but buy or hold Unga. PHOTO | FILE 

By SIMON MBURU
More by this Author

Mumias Sugar: On Thursday last week, Mumias stock leapt to Sh2.70 apiece from Sh2.50 per share, with a high of 10 per cent gain at Sh2.75 per share.

According to Chambua Ogoti, a securities analyst, the surge followed a successful effort by the government to secure a one-year Comesa extension.

“This seemed like a relief on the counter, which is currently laden with liabilities.”

On Friday, though, the company took a nose dive. After opening the market at Sh2.80 per share, the stock quickly tumbled by 12.96 per cent to Sh2.35.

The free fall came hot on the heels of the miller’s half year results, in which the firm suffered Sh2.08 billion half-year loss.

This was a bigger loss compared to the Sh407.4 million hit sustained a year earlier.

Net revenues for the half-year ended December 2014 fell by 62 per cent to Sh2.67 billion, the firm said.

SURGING PROFITS

Mumias attributed the huge loss to the closure of its factory last November for maintenance, illegal sugar imports, low sugar output, low prices and high production costs.

“These results indicate a greater degree of rot that the company is suffering from. It is fundamentally very fragile, and the half-year results will further push it downwards,” says Mr Ogoti.

But the company sees a better second half. “The company looks to better performance in the second half of the year following the resumption of production,” said Mumias.

Mr. Ogoti, though, sees it differently. “Unless strict restructuring is done on the firm, losses will continue to stream in. At the moment, this is the counter to avoid,” he notes.

Unga Group: This stock is recommended as a Buy.

In its half-year financial results released a few days ago, Unga Group reported a 59 per cent growth in half-year pre-tax profit.

In the six months ended December 2014, the flour miller’s profit before tax surged to Sh527.2 million from Sh330.7 million recorded in a similar period a year ago.

“Although the miller did not offer a dividend, its earnings per share improved to Sh3.41 from Sh1.96,” says Mr Ogoti. Unga’s turnover went up by Sh900 million to stand at Sh9.7 billion while operating profit grew by Sh116.3 million from Sh293.5 million realised in a previous accounting period.

NEW ACQUISITION

According to Ndindi Nyoro, the head of Investax Capital, Unga’s growth was attributed to its sale of a 51 per cent stake in packaging firm, Bullpark, which gave it Sh335 million. 

The company has also installed a new wheat mill which contributed to high output, resulting in increased revenue,” he says.

On Friday, Unga opened at Sh48 per share after closing at Sh46.75 per share on the previous day.

The counter has touched a low of Sh22 per share and a high of Sh56.50 apiece. Mr Ogoti adds that Unga’s diversification through its new acquisition Ennsvalley Bakery is a big plus to the counter. “Unga will be rising in the medium-term.

It is a Buy for those yet to take position and a Hold for those already in it,” he notes.

Bamburi Cement and Carbacid: Shareholders of Bamburi Cement are set to pocket Sh12 per share in dividend following improved financial performance that saw the cement maker post Sh3.9 billion net profit from Sh3.6 billion net profit recorded a year earlier.

This is a nine per cent improvement from last year’s Sh11 per share dividend.

On the opposite extreme, Carbacid shareholders will be coming to terms with the company’s half-year, 6 per cent drop in net profit to Sh221.2 million.

The two companies are trading at Sh159 per share and Sh24 per share respectively.

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Wednesday, March 11, 2015

Woman brings back to life once-vibrant trade in Nyanza

Beatrice Obara, supervises the collection of cotton from over 2,800 farmers contracted by her company in Kisumu, Homabay, Migori, Siaya and Busia counties. PHOTO | CORRESPONDENT

Beatrice Obara, supervises the collection of cotton from over 2,800 farmers contracted by her company in Kisumu, Homabay, Migori, Siaya and Busia counties. PHOTO | CORRESPONDENT 

By ANITA CHEPKOECH  
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It is harvest time for cotton farmers in Nyanza. The season offers some of busiest days for Beatrice Obara.

Other than tending to her crop, she supervises the collection of cotton from over 2,800 farmers contracted by her company in Kisumu, Homabay, Migori, Siaya and Busia counties.

Mrs Obara, also an hotelier, weighs and pays the farmers Sh42 for every kilogramme before transporting the produce for processing at Makueni ginnery.

“My agents have finished weighing the cotton and farmers are now waiting for me to send money to their co-operative society,” Mrs Obara said when Money visited her Desert Rose hotel.

The ginnery separates cotton seeds from the lint. The lint is exported while the seeds are taken back to western Kenya for planting. Mrs Obara’s company, Dedeby Green Ventures capital, treats and re-packages the seeds into seven kilogramme bags — enough for an acre — and sells them to farmers at Sh40.

WOOING FARMERS

“The seeds should be in the market by now so that immediately the rains start, we plant,” she said.

Mrs Obara’s passion for cotton growing is bringing back to life an industry that has been on its knees in Kenya for decades.

Cotton business in western Kenya has been battered since the closure of Kisumu Cotton Mills Limited (Kicomi) in the early 1990’s. Its collapse denied income to thousands of small-scale farmers.

But the passionate farmer has been going out of her way to find a market, not only for produce from her 10-acre farm in Uyoma, Siaya County, but also for other smallholder farmers.

Global fibre quality

“Since I was young, my parents used to enjoy good returns from cotton. And since black cotton soil is still our pride, I thought of outsourcing a market to encourage cotton farmers,” she said.

In 2009, Mrs Obara registered Dedeby Green Ventures capital limited and lobbied 300 farmers to start supplying her with cotton. She was assisted by Rural African Ventures Investments, a company which supports young entrepreneurs, to identify a buyer.

Having met global fibre quality standards, they started supplying Makueni ginnery with 30,000 kilos of cotton.

“The ginnery needed a lot, which we could not meet, but we had to start. We went out to motivate more farmers to venture into cotton,” she said.

To woo more farmers, Mrs Obara partnered with a Swiss financing company, which provided capital enabling farmers to be paid on delivery.

“We called it cash-on-the-bags since it was paid immediately the bags of cotton were delivered. With this, more farmers saw the need to grow cotton,” she said.

Deliveries to Makueni ginnery from the region has since increased from the initial 30,000 kilos to 90,000 kilogrammes in 2013 and 270,000 kilos last year.

REVIVING COTTON INDUSTRY

The company has employed three agents to collect and store cotton in the region. The agents, who run stores in Uyoma, Ndiwa and Nyakach, check the harvests’ quality, weigh, and label it. At times, they transport to Makueni ginnery.

Cotton quality is established by colour and length of the fibre. High quality fibre is usually long and white.

Mr Michael Onyura, a cotton farmer in Nyakach, Kisumu County has been making good business through Dedeby Green Ventures.

“We had been having problems with cotton market for a long time. After closure of Kicomi, Kibos ginnery was set up in Kisumu but it was a short-lived relief for farmers. We got word that its licence was revoked,” he said.

“But Mrs Obara came in handy to resuscitate the trade. I have increased the acreage under cotton from three to 10 acres,” he added.

The highest that previous buyers paid was Sh60 per kilo. But the Sh42 paid by Dedeby Green Ventures was fair since it factors high cost of transport, notes Mr Onyura. Mrs Obara pays about Sh40,000 to transport five tonnes of cotton to Makueni ginnery.

To improve their income, however, Mr Onyura says, the government should cut the cost of pesticides. “A common pesticide — bulldog — has shot from Sh250 per 50ml packet to Sh500. It means a small farmer spends Sh2,000 to control pests in an acre of cotton. This is too high,” he said.

Mr Wilson Haya, an agent and farmer from Siaya said growing cotton was profitable since the company trains on inter-croping cotton with green grams, beans and maize.

“The company also helps farmers find market the other crops in supermarkets,” he said.

Cotton takes about five months to mature after which it requires manual labour for picking. The farmers are careful not to let them fall on the ground to avoid discolouration, which would see them rejected by the buyer.

“We are operating far from the market. For every three kilos of raw product, only a kilo of lint is retained while we bring back the other two as seeds. It makes little business sense,” Mrs Obara said.

“It’s either we get someone, who accepts the produce as a whole or identify a market in Nyanza for seeds, since Makueni ginnery buys lint only,” she said.

HAND-CRAFTED

Mrs Obara has formally requested Kisumu County government to partner with farmers with a view to establish village ginneries. “If we had a ginnery in Nyanza, it would be cost effective. The lint and seeds would be separated before any transportation,” she said.

Dedeby Green Ventures hopes to establish a ginnery that would process cotton seeds into animal feed besides starting textile centres for locals to make hand-woven materials as it happens in India.

“We will also ask local seed companies to give farmers certified seeds so that we eliminate use of seeds from previous harvests,” she said.

Profitable cotton farming requires at least an acre for a farmer to record a profit. Mrs Obara said the total cost of inputs (farm preparation, fertiliser, disease control and storage) goes up when the farm is below two acres.

“Storage costs the farmer an average of Sh26 per kilo, which is the break-even point. But when it’s less than an acre, cost goes up to Sh33,” she said.

The average land size in Nyanza is 2.5 acres.

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Wednesday, March 11, 2015

Man who coaches children self-defence

George Buge is a living testimony that passion for the martial arts sport can also help one earn a decent living. ‘Coach’ as he is fondly referred by his pupils, started taking lessons in taekwondo at St Joseph’s youth group hall, Christ the King Cathedral where the cardinal law was that taekwondo practitioners must never engage in crime. PHOTO | SULEIMAN MBATIAH

George Buge is a living testimony that passion for the martial arts sport can also help one earn a decent living. ‘Coach’ as he is fondly referred by his pupils, started taking lessons in taekwondo at St Joseph’s youth group hall, Christ the King Cathedral where the cardinal law was that taekwondo practitioners must never engage in crime. PHOTO | SULEIMAN MBATIAH 

By MAGDALENE WANJA
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Taekwondo black belt holder George Buge trains children how to defend themselves.

However, he always insists that the tactics learnt are for peace not fight.

This tenet defines Mr Buge’s all-time coaching to his pupils. And he is a living testimony that passion for the martial arts sport can also help one earn a decent living.

‘Coach’ as he is fondly referred by his pupils, started taking lessons in tae kwon do at St Joseph’s youth group hall, Christ the King Cathedral where the cardinal law was that tae kwon do practitioners must never engage in crime.

“No one should get an idea that you are a decorated tae kwon do expert but practice it for fitness and self-defence,” he says while taking pupils at Shah Lalji Nangpar Academy’s auditorium through an afternoon tae kwon do lesson.

FLAWLESS MOVES

Working with children in various schools in Nakuru for at least two hours a day, Mr Buge makes between Sh20,000 and Sh30,000 in a month, which has ensured that he keeps his passion alive day and night.

Apart from catering for his family, Mr Buge said that he has learned new ideas and also found self-fulfilment in using his hobby to earn a living.

“Everyday I learn something new from the experience. This has also helped me to stay healthy because of the exercise,” said Mr Buge pointing out that children are fast learners as they have less responsibilities compared to adults.

“Children have the ability to heed instructions and quickly master the move as I shout out orders. Nothing draws joy from my heart than to see children repeat the moves flawlessly especially when you engage them at a tender age, they grow with it as part of their life and they eventually become ‘peaceful’ stars,” he said.

He added that helping children understand the sport ensures that they grow up to become disciplined, humble and tolerant citizens.

“Apart from taking part in various competitions, tae kwon do is used for self-defence,” he said.

His counsel to those who want to be successful in the sport is that they must vow to maintain a high level of self-discipline.

“They should not use the skills they have learnt to execute crimes, but instead use them for the right purpose,” he said.

He added that for the 14 years he has been training children, he has seen hundreds of them excel in the sport both locally and internationally and also in their academics as many have learnt the importance of taking charge of their lives with a lot of confidence.

GOLD MEDALLIST

He said the sport could reach greater heights if officials overseeing the sport at the national level shun involvement in politics thereby attracting all Kenyans regardless of their political affiliation.

“Every form of sport should be free from any form of politics as this has been a major challenge in the sector,” he added.

Like any other form of sport, taekwondo has faced a number of challenges which include lack of proper equipment and national recognition by the government that has denied it funds to develop it from the villages to the national level.

“While working with children, a lot of patience is required. Young children get tired very fast and therefore they require time to rest in between the sessions,” he added.

Mr Buge has won a number of awards in various competitions, including the Kenya Open, where he won a silver medal, Korean Ambassadors championship, where he bagged bronze, Rift Valley Open, and inter-club competitions, where he won gold in both categories.

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Wednesday, February 25, 2015

Handy tips from giants on how to seal long-term deals

Director of Medical Services Nicholas Muraguri (left) shows the President and his Deputy William Ruto ICU equipment on February 6, 2015 during the signing of contracts for the managed equipment services. PHOTO|JEFF ANGOTE

Director of Medical Services Nicholas Muraguri (left) shows the President and his Deputy William Ruto ICU equipment on February 6, 2015 during the signing of contracts for the managed equipment services. PHOTO|JEFF ANGOTE 

By VERAH OKEYO
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About two weeks ago, Health Cabinet secretary James Macharia hailed the Sh38 billion public hospitals equipment purchase deal  “the first of its kind in sub-Saharan Africa.”

And from the five multinationals that are participating in the project, and others that have been struck with county governments, investors can draw valuable lessons on how to enter into long-term business relationships.

As Money trailed the histories of two multinationals that have a long commercial presence in Africa, Philips Healthcare and drugs maker GlaxoSmithKline, it is evident that it is not just financial muscle that has won them business.

For Netherlands-based Philips Healthcare, the company set to supply Intensive Care Unit equipment worth Sh3.3 billion in the giant plan, it was a case of drawing a parallel between the country’s diseases burden and the market opportunity in Kenya’s healthcare system.

In defending the mode of acquisition, Mr Macharia said that the government could not raise all the money at once, hence the need for collaborations.

In 2013/2014 financial year, health expenditure was Sh22.6 billion, a drop in the ocean for an ailing system: by 2013, there were only 8,682 doctors, about 21 doctors for every 100,000 people according to the economic survey.

OPPORTUNITY MEETS PREPAREDNESS

Kenya is not only hurting from diseases that have been eradicated in other parts of the world, but also non communicable ones such as cancer that claims 27,000 lives every year.

This leaves gaps for investors, as noted by Kenya Healthcare Federation and founder of Avenue Healthcare, Dr Amitt Thakker. “Supply chain, pharmaceutical, medical education and training, infrastructure… the list is endless,” Dr Thakker said.

Philips East Africa boss Roelof Assies said he is aware of the need that Kenya has for medical equipment and his firm’s presence in the country is simply ‘opportunity meets preparedness’.

After seeing the opportunity, Philips invested in building reputation and running projects targeting low income Kenyans.

During the launch of Sh38 billion project, President Uhuru Kenyatta said that it is in healthcare that stark realities of inequality show up.

Money established that the equipment were made after research, Philips dedicates a substantial percentage of its budget into research, studying infrastructural and the socioeconomic challenges that plague Kenya’s healthcare.

For instance, in its road show last year, Philips launched an 11-inch tablet ultrasound machine, in collaboration with African Medical and Research Foundation Health African (AMREF).

The tablet, VISIQ, which was later taken to a public health centre in Kibera, in Nairobi, was designed to run against the infrastructural odds that even hospitals with conventional imaging equipment face.

It uses re-chargeable batteries meaning it can operate off the grid; it weighs 1.2 kilos and can fit in backpacks so that healthcare workers can carry it even to patients in areas where there are poor road networks.

In a country with few personnel who can interpret radiology images, X-rays, computerised tomography (CT) scans, the machine not only has an interface so simple it could be interpreted by anybody with simple knowledge of a phone, but it’s also fitted with universal serial bus (USB) ports so that it can transmit images over wireless channels such as WI-FI.

Its price, $14,500 (about Sh1.2 million) is a far cry from the collosal amounts paid to buy a modern ultrasound machine.

So, even as health care providers cringed Kenya’s unacceptably high rates of maternal mortality caused by, among others lack of imaging equipment, Philips merged the need and business in VISIQ.

HOLISTIC APPROACH

A similar holistic approach to health care would be replicated in the company’s partnership in Kiambu Lang’ata community life centre where it donated solar-powered medical equipment. The company also drilled a borehole and installed a water purification system to endear itself to the society.

With its record of offering sustainable solutions, Philips’ reputation was in sync with the tender requirement.

“The legal document limited those bidding to be original manufacturers of the equipment because we wanted people who will not only supply the equipment but also keep them running” said Health minister James Macharia.

Compared to the developed world, sub-Saharan Africa does not offer instant payments to companies that seek to invest in health care.

Conscious of this reality, GlaxoSmithKline (GSK), the world’s second largest drugs maker, has embraced a rare trait, patience, to enjoy a huge market share in the manufacture of the many drugs used in local hospitals, especially for HIV and Aids.

Kenya is one of the three countries in Africa where GSK makes drugs apart from South Africa and Nigeria. Earlier this month, it announced plans of investing up to £100 million (about Sh14 billion) in expanding its factories in Kenya, and Nigeria. And in trying to rewrite a silent contract it has with the society and the vast business community, GSK has made a radical and altruistic strategy in Africa that seems to have paid off.

In 2009, GSK’S head Andrew Witty was quoted in the Guardian saying that the firm would slash prices on all drugs to countries that fall into its “least developed” category to no more than 25 per cent of the levels in Europe as well as give back 20 per cent of its profits to be spent on hospitals and clinics in these regions.

And just recently, GSK shared the sacred cow of pharmaceuticals by donating 800 patents to an intellectual property pool.

GSK’s vice-president in charge of Africa and developing countries, Mr Ramil Burden, said that the company operates on a ‘differential time frame’ in Kenya.

“The money we get from Africa is very little as compared to the US or the UK,” he said, adding that: “we have accepted that the lower prices and margins mean we will take perhaps 10 years to get substantial returns.”

Kenya, like any other growing economy in Africa, needs medical supplies, which it would pay gradually, hence the patience that companies such as GSK have expressed.

“Take time to learn the culture and then make products integrated into that culture,” Mr Ramil said.

Perhaps most visible strategy of the aforementioned companies is their partnerships with local organisations, a strategy that may have built goodwill.

In 2013, GSK partnered with global charity firm, Save the Children to “save the lives of one million children” by broadening access to vaccines, investing in health workers, improving child nutrition and researching new medicines in Kenya, and Democratic Republic of Congo.

HOW TO PREPARE YOUR BUSINESS FOR THE LONG-TERM

 

1. Scout for opportunities in different sectors of the economy. Turn to research and come up with viable ways of solving the problem.

 

2. Build a good reputation with both the society and the government founded on business ethics, quality products and consistency.

 

3. Patience pays: consider cutting prices in the short-term with a view to earn profits in the long-term.

 

4. Develop products that meet the needs of the target market in terms of expertise and affordability.

 

5. Partner with other organisations to broaden your reach.

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Wednesday, February 25, 2015

How I earn millions cutting deals in counties

Mr Ngahu who owns a fleet of vehicles in Nakuru for hire. PHOTO | SULEIMAN MBATIAH

Mr Ngahu who owns a fleet of vehicles in Nakuru for hire. PHOTO | SULEIMAN MBATIAH 

By MORAA OBIRIA
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Joram Ngahu would probably be at the centre of his former employer’s success story if he hadn’t quit his job.

But the exposure he gathered in the vibrant tourism business and the huge amounts of returns that his boss was making challenged him to start thinking smart about his future.

At the start of his three-year employment of organising safaris for foreign tourists visiting parks in Kenya, Mr Ngahu knew little about the money changing hands.

But a few months down the line, he learned a lot through experience and looked forward to the day he would make his millions.

And true to his dream, Mr Ngahu who then worked as a driver resigned in 2002 to launch his business, Rhino Tours, which has gradually evolved into a multi-million enterprise.

WIDER NET

Despite the rather poor perception of his maiden car, Probox, it became the trademark for his young business. The car, bought at Sh700,000, has so far seen him buy five more cars, eight years into the travel business. “I created a website and it became easier for tourists to reach me as all they needed were my contacts,” he states.

“This was better than depending on referrals from previous customers. Going online expanded my customer base,” he adds.

But Mr Ngahu is no longer depending entirely on travel industry. He has diversified, investing in bigger and expensive vehicles and equipment with a view to get a slice of the huge profits in mega capital infrastructure projects underway in the counties.

He is the man behind Ngahu Engineers Limited, a company registered in 2013. The firm leases out vehicles for use in road construction. If you are a road contractor and want tipper trucks, graders, front loaders, rollers or any of his six double cabin cars; he is at the ready to show you how quick he can settle your needs.

Talking about his collection of construction equipment, it comes out with so much ease and calm tempting one to draw the conclusion that acquiring them was too easy. This is not so, he notes.

“I first bought a tipper truck for Sh6 million, an amount raised through loan and savings. And it is has yielded enough to enable me buy the other vehicles,” he says.

Mr Ngahu who comes across as skilful negotiator, aggressive, and optimistic businessman finds business opportunities in the increasing number of road construction projects being undertaken by county governments. At the moment, he has business agreements with Narok, Bomet and Laikipia counties.

So, is it that easy to get business deals? “No,” Mr Ngahu says, adding that it is very tough to get a contract since it requires a lot of negotiations. However, once you get the contract, he says, it becomes easy to sign another from the same organisation or even get a referral.

As for Mr Ngahu, he says his fees gives him an edge over rivals. To hire any of his vehicles for a month, a contractor should be ready to part with between Sh600,000 and Sh1 million depending on the type of vehicle sought.

Working to his advantage is also the element that he services his vehicles regularly, he notes.

MENTORSHIP

“Assuring your customers of the good state of your vehicles is one thing that builds their loyalty in your services. Nothing can kill your business as when your customers take your word for rumour,” he notes.

Not yielding to his current millionaire status, Mr Ngahu has a new list of clients that he is planning to win — Tullow Oil, the multi-national oil and gas exploration company and Kenya National and Kenya Electricity Generating Company Limited.

Among the strategies that have worked for Mr Ngahu in advancing in his business is planning and getting mentorship from well-established businessmen as well as using competition as a yardstick to improve on his startup’s inadequacies.

“Each day, there is something changing in the business environment and it needs not just thinking but strategic minds to succeed. If not so, you cannot break through the stiff competition,” says the father of one.

Patience and commitment are the virtues that the businessman says a person starting off cannot ignore to take into account in order to eventually make progress and fetch good returns. 

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Wednesday, February 25, 2015

Why succession plan is healthy for your firm

The chairman of this family owned group of companies has a very interesting management strategy. He had employed his children and hired managers to assist his children in their roles. PHOTO | FILE

The chairman of this family owned group of companies has a very interesting management strategy. He had employed his children and hired managers to assist his children in their roles. PHOTO | FILE 

By MUTHONI NGATIA
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I was once employed in a family owned business. It was an interesting job.

The family firm had interest in hospitality, real estate, farming and also clearing and forwarding.

The chairman of this group of companies has a very interesting management strategy. He had employed his children and hired managers to assist his children in their roles.

He too had a list of informers in his payroll. Many of his informers were either old men who he had natured a special relationship with or women many of whom would end up being in his list of wives.

Some were well known as formal wives others were providing handy information to gain trust and perhaps, become wives one day.

I have been closely observing family owned businesses and realised that many of the founders depend on informers or close associates to gather business intelligence.

Sometimes, the informers are so trusted that even family members may struggle to get things going because of constant consultation with the intelligence agents.

I must say that some businessmen have been very successful with this strategy and grown multi-billion businesses with this governance plan.

IDENTIFY POTENTIAL

Just like any strategy, it works well when all the people involved are alive and are trustful. This strategy, however, comes tumbling down with the death of the founder.

I know of many business empires in Kenya that are in “wait and see” situations. I was recently engaging some business support consultants who expressed shock at how some businesses transacted billions of shillings but there was little or nothing to show for sound governance structures.

Indeed, these business consultants could not understand how these entities succeeded.

However, when trust is good and relationships are strong, people can go far together.

But the trouble strikes when the nucleus of the business dies. This is an eventuality that must happen one day.

And when it does, many businesses begin to falter. Rivalry may erupt in family owned firms and the informers may wonder what would become of them. This situation turns into the many fights we see hurting once-thriving business empires.

It is very important to strategise on succession planning for your business.

If the cases you may have seen on the press touching on other family businesses sadden you, do not sit and console yourself with the thought that it will not happen to you.

Be proactive and start succession planning. Identify and mould people with the potential to fill key leadership positions in the business. In short, in a family business, it is a plan put in place to transition from the founder to the next.

Succession planning is often critical in family owned businesses where one individual has become not only the face of the company but also has an immense amount of business knowledge and contacts that are critical to the entity’s future survival.

SENSE OF ENTITLEMENT

Ask yourself; Do you have a plan or strategy in place should you as the business patriarch or matriarch be unable to return to work for a long period of time perhaps due to illness or death?

If you have the plan, is it well documented and has it been communicated to key business stakeholders?

From your family and the informers circle, do you have a process in place to ensure that well-trained people take over competently?

Will you have some family members or informers with a sense of entitlement bring down your business empire in months due to a feeling of entitlement for example?

Have you effectively communicated the vision of your business to all key people?

Do you have a will?

Be sure to ask yourself all these questions and perhaps even more. Seek the answers too.

Tragedy, be it death or disease does not come knocking. Be prepared so that your business empire does not go with you but instead provides prosperity for your future generations.

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Investment Brokers on the Trading floor of the Nairobi Securities Exchange (NSE) in Nairobi on September 12, 2014. The bourse was rattled when stockbrokers threatened to suspend trading pending the outcome of a court case on whether brokers should or shouldn’t collect capital gains tax on behalf of the taxman. PHOTO|SALATON NJAU
Wednesday, February 25, 2015

I make Sh250,000 from milk sales in a good month

Geoffrey Kariuki, 34, quit his plum job in 2012 to follow his passion in dairy farming is turning out to be the best decision in his life. PHOTO | SULEIMAN MBATIAH

Geoffrey Kariuki, 34, quit his plum job in 2012 to follow his passion in dairy farming is turning out to be the best decision in his life. PHOTO | SULEIMAN MBATIAH 

By FRANCIS MUREITHI
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After stay for 12 years in the United Kingdom, he decided that East or West, home’s best.

And for Geoffrey Kariuki, 34, quitting his plum job in 2012 to follow his passion in dairy farming is turning out to be the best decision in his life.

Mr Kariuki, an aesthetic doctor trained in the UK wanted to try out something new after working for just five years.

His colleagues and relatives expected him to set up a private clinic. But they were in for a surprise when he instead used his savings to buy a Friesian cow and calf at Pokea farm, in Njoro, Nakuru County.

His idea of dairy farming in a semi-arid area did not look viable and warnings from his friends couldn’t stop him either.

Today, the Sh280,000 seed capital he used to buy his stock has seen him emerge as one of the highest milk producers in Nakuru County.

“I wanted to do something different. I love dairy farming and since my childhood, my passion has been dairy farming,” he told Money.

“I started off with two animals but my herd has increased to 17, five of which are pedigree cows. In a good month, I earn Sh250,000 from milk,” said Mr Kariuki who delivers his produce at Brookside’s Kiptang’wany cooling plant.

HARSH CLIMATE

“What makes me happy is that I am doing something, which gives me satisfaction and above all, it gives me a lot of joy as I have convinced other farmers to start dairy farming in an area that is known for its harsh climate,” said the University of Hertfordshire graduate.

His farm at Miti Mingi in Elementaita, about 40 kilometres off Nakuru-Nairobi highway is a beehive of activity as farmers from across the country come seeking fresh ideas on how to boost production.

“Many farmers, particularly from dry areas visit my farm to learn how I have managed to stay afloat. However, I don’t charge them,” he said.

From his current lactating stock, he gets an average of 350 to 400 litres of milk each day. He milks them at least four times a day and sells a litre at Sh34 to Brookside. The proceeds have seen him acquire a brand new pick-up at Sh3.4 million, which he uses to deliver the milk.

“I deliver 700 litres of milk from other farmers to the cooling plant, which earns me extra money. I charge the farmers Sh4 for every litre of milk I transport,” he said.

He sells heifers at between Sh180,000 and Sh250,000.

“I sell between three and five heifers every year,” says the farmer who is currently insuring his animals.

To get healthy offspring, he buys semen from Germany at between Sh7,000 and Sh9,000 each to serve the cows, a plan that he says ensures he gets female calves.

MAXIMUM ATTENTION

“I started with two acres but today I have 15, which I plan to increase as I expand my herd to 200 in the next five years,” said Mr Kariuki.

But it has not been a walk in in the park for the dairy farmer to realise his roaring success.

“Dairy farming needs a lot of commitment and close monitoring as the cows are like children, who need maximum attention and care,” he says.

“I invite a veterinary doctor, whether the animals are sick or not, at least twice a week.”

But what is his secret? Mr Kariuki uses the best animal husbandry practices. To begin with, he feeds his cows with millet and sorghum silage.

“Miti Mingi is an arid place and maize silage is scarce that is why I switched to sorghum and millet, which I mix with napier grass, lucerne, oats, dairy meal, salt and molasses in equal ratio,” he explains, adding that feeding is an area in which many dairy farmers score poorly.

“You have to group your animals so that you feed them according to their needs. We feed a cow that produces an average of 40 litres of milk 40kg silage while those producing less require less concentrates. We feed them between 20kg and 25kg of silage,” he said.

He says hygiene is crucial. This is why  he cleans the cowsheds at least twice a day to ward off mastitis and other diseases.

Water is essential in any dairy farm. Mr Kariuki has constructed a 30,000-litre water tank that ensures his farm has a reliable supply of clean water. He has employed two workers who are trained on animal husbandry.

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Tuesday, February 17, 2015

Want to join real estate? Here is where to bank on

Newly constructed apartments in Hurlingham Nairobi. Apartments and bungalows have the highest returns on investment, the first housing survey by Kenyan banks reveals. PHOTO | NATION

Newly constructed apartments in Hurlingham Nairobi. Apartments and bungalows have the highest returns on investment, the first housing survey by Kenyan banks reveals. PHOTO | NATION 

By RAMENYA GIBENDI
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Apartments and bungalows have the highest returns on investment, the first housing survey by Kenyan banks reveals.

The Housing Price Index survey found that the two types of housing units are the most popular across the country with the expanding middle class and the rapidly rising value of land cited as the key accelerators of the trend.

Between the second quarter of 2013 and last year, the average price of an apartment increased by 12 per cent while that of a bungalow rose 10.2 per cent over the same period.

“The overall change in quarter-to-quarter basis shows higher price movements in the two housing unit types than any other,” said Mr Jared Osoro, Kenya Bankers Association centre for research director.

SCIENTIFIC APPROACH

A consistent increase in the price of a commodity is usually a pointer to high demand. The bankers said the middle class has been driving up the uptake of houses.

“Apartments are seen to be more attractive to the middle class and that is why we are witnessing the sharp upward price movements,” Mr Osoro noted.

On the other hand, the demand for bungalows, houses with mainly one storey, is driven by buyers’ desire to own the land they sit on.

“A prospective buyer for a bungalow looks at the possibility to put up apartments which would ultimately push up their returns upon selling,” Mr Osoro said.

The bankers said their survey seeks to provide policymakers and investors with a scientific approach to tracking changes in the vibrant housing industry.

The bankers association found that prices of penthouse — an apartment on the top floor of a tall building — and other housing types such as town houses and maisonettes did not display strong positive price changes, indicating low demand.

A real estate developer who invested in a maisonette in June 2013 only to resell it a year later for instance made a return on investment of 5.7 per cent, according to the research that tracked real estate performance in 21 key urban areas across Kenya.

A recent survey by HassConsult, a firm that also monitors property costs, said land prices in Nairobi have increased five-fold over the past seven years with Upper Hill emerging the hottest address in the city.

GROWING MIDDLE CLASS

The study indicated that land prices in the capital have appreciated by a massive 535 per cent with an acre that cost around Sh30 million seven years ago now going for Sh170 million. This underlines the speed at which the value of land is gaining value across the country.

Land in Upper Hill is the most expensive with an acre going for Sh470 million, followed by Milimani at Sh370 million.

Besides the growing middle class and the ever rising value of land, proximity to social amenities was also found to be pushing up demand and therefore the cost of houses.

Housing units located close to modern and luxurious social amenities and high-end neighbourhoods are on high demand despite the fact that they are very costly.

The recent re-basing of the  country’s output pushed the economy into a middle-income status, meaning demand for houses can only go up.

According to a recent analysis by the World Bank on mortgage access in Kenya,  the expanding middle class would continue to  push up demand for houses.

The global lender says Kenya has a housing deficit of 156,000 units every year.

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Tuesday, February 17, 2015

State could pay creditors of grounded Nyayo Bus millions

The Nyayo Bus Service was established in 1986 to provide affordable transport to Kenyans and compete with the Kenya Bus Services, a company ran by the City Council of Nairobi. Nyayo was declared insolvent in 1995.

The Nyayo Bus Service was established in 1986 to provide affordable transport to Kenyans and compete with the Kenya Bus Services, a company ran by the City Council of Nairobi. Nyayo was declared insolvent in 1995. FILE PHOTO | NATION MEDIA GROUP  

By ABIUD OCHIENG
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The ghosts of the collapsed Nyayo Bus are back to haunt the government. This comes 18 years since the Kanu-era transport firm was grounded.

The High Court has ordered the official receiver to take stock of all claims that the company has not paid within a month.

The order could see government pay millions.

High Court Judge Erick Ogola has directed the official receiver to call for a meeting, through an advert within 30 days, of all creditors of Nyayo Bus Service Corporation. The forum will allow them to officially make their claims.

The government will fund the meeting and pay genuine debts, the judge said.

“The said meeting shall take place in the offices of the official receiver,” notes Mr Justice Ogola.

GENESIS OF DISPUTE

The list of creditors who will attend the meeting will be availed in court on a date to be agreed on by the parties.

“The official receiver shall source the funds for the said advertisement within the offices of the Attorney-General, failure whereof the Office of the President,” Judge Ogola said.

The dispute emanates from a winding-up order issued against Nyayo Bus Service on May 5, 1997. Since then, it is alleged that the official receiver has never briefed the court on the status of the corporation.

However, following a demand by one of the creditors who said the business wound up before their claims were settled, the official receiver filed a report on the  status of the firm’s liquidation on October 9, last year.

Mr Justice Ogola ruled that the receiver’s report had gaps and omissions, which “automatically renders it incomplete.”

The court said the report did not show whether or not there was a “settlement list of creditors” as required by law. There was also no indication whether the official liquidator took custody of Nyayo Bus assets after its collapse.

“There is no indication whether public examination of the corporation’s officials was undertaken. There are no audited reports for the over 17 years the liquidation has been ongoing,” Mr Justice Ogola said.

In addition, there are no periodic reports given to the court, since the  winding-up  order was issued.

The Judge said it also appears that “some creditors have been paid through the Office of the President in the process, which is not made clear to some of the creditors.”

The Judge said given the circumstances, “the only sensible thing to do is to require the official receiver to do the right thing, and to start the entire process afresh, if need be.”

BRIGHT FUTURE

Nyayo Bus Service was established in 1986 to provide affordable transport to Kenyans and compete with the Kenya Bus Services, a company ran by the City Council of Nairobi.

The buses, donated by the Dutch government, were initially meant to transport National Youth Service personnel. In 1988, the youth service operated a fleet of 89 buses, which included Isuzu, Leyland, and DAF brands.

The company apparently had a bright future given its rapid growth.  When the public transporter became too big for the National Youth Service to manage, the government set up the Nyayo Bus Service Corporation.

The new parastatal received more buses from the Italian, Dutch, and Belgian governments expanding its fleet to more than 300.

Some of the areas the buses operated in are Nairobi, Mombasa, Nakuru and Eldoret.

However, lack of expertise in managing public transport and stiff competition from other bus companies drove Nyayo Bus to a halt, even as corruption shook it to the core.

The controller and Auditor-General declared the corporation insolvent in 1995.

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Tuesday, February 17, 2015

Work on Sh9bn Nyali bridge to start 2016

The current Nyali bridge that faces huge motorist congestion during evening and early morning hours paralysing traffic flow in this picture taken on February 3, 2015. Construction of a 35-kilometre bridge in Nyali, Mombasa, is scheduled to start next year with completion date set for 2018. PHOTO | LABAN WALLOGA

The current Nyali bridge that faces huge motorist congestion during evening and early morning hours paralysing traffic flow in this picture taken on February 3, 2015. Construction of a 35-kilometre bridge in Nyali, Mombasa, is scheduled to start next year with completion date set for 2018. PHOTO | LABAN WALLOGA 

By JOSHUA MASINDE
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Construction of a second bridge to ease pressure on the existing Nyali bridge in Mombasa, is scheduled to start next year with completion date set for 2018.

This is part of the larger Mombasa transport master plan that will see various projects built on the coastal city to reduce congestion.

Audit firm, Deloitte East Africa, is doing the feasibility study for the Sh9 billion bridge after which construction would start by the end of next year.

“We are at the early stages to help determine in a very detailed fashion the feasibility for constructing and operating this bridge in Mombasa.

This work has to be conducted both from a financial modelling and the technical engineering feasibility in order to put together a package of financial and technical information that we can then take to the market for private investors,” said Deloitte’s head of infrastructure and capital projects, Mr Mark Smith last week at his Nairobi office.

The feasibility study will cover location of the bridge, its size and cost. The report would be presented to domestic and global investors to finance its design and construction. The investors would operate it once it is built.

This process is expected to take about 16 months. Mr Smith said the audit company has always been keen to participate in energy, road, rail and port infrastructure projects through public-private model.

PRIVATE INVESTOR

“From Deloitte East Africa, we envisioned this about three years ago. We knew there was going to be a lot of discussion around infrastructure in Kenya. We knew this was going to be an area where the national government as well as private investors were going to be focused on and would need specialised advisory,” he said.

At the feasibility stage, the financial advisory services firm would consider a group of partners comprising both  investors and contractors.

Motorists would pay a levy for using the bridge. The money collected would be used to maintain it and part of it would go into  recovering part the construction costs. A private investor would operate the bridge for between 30 and 40 years.

“We are hoping that in mid-2016 or sometimes towards the end of the year, we will have some ground-breaking at the site,” Mr Smith said.

Other infrastructure deals Deloitte is looking to engage in are the Lapsset corridor project, expansion of Mombasa-Nairobi highway, geothermal energy projects, hydro-electric dam projects, commuter rail service and port development in Mombasa.

Deloitte  is the lead transaction adviser in the construction of the bridge. The public-private deal is a joint venture between Deloitte Consulting and Deloitte Touche Tohmatsu India.

The two entities are to conduct a feasibility study, due diligence and transaction planning. 

“This new bridge will ease congestion and drive the economic growth of the entire East African region since the Port of Mombasa is an important gateway into the region,” said Mr Sammy Onyango,  Deloitte East Africa chief executive officer, when the announcement for the deal was made by the Kenya Urban Roads  Authority.

ALTERNATIVE LINK

The bridge will be an alternative link between Mombasa Island and the North Coast. The current bridge was built about 35 years ago and is the only connection between Mombasa mainland and the island.

Approximately 95 per cent of Kenya’s international trade is handled at the Port of Mombasa.

The current bridge was built by the Japanese when the population of Mombasa was estimated at less than 200,000.

“Over the last 35 years, the population has increased fivefold to over a million people. If you look at the population growth over the next 10 years, it might grow by a million to two million people.

“Clearly, there is a critical need for another bridge. With the horrendous traffic in Mombasa, a second bridge is needed now,” Mr Smith noted.

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Tuesday, February 17, 2015

Canadian oil firm seeks Sh11bn for exploration in Turkana

Ngamia 3 oil exploration site in Nakukulas village, Turkana South Sub County on July 13, 2014. Africa Oil Corporation, a Canadian exploration company, plans to raise Sh11 billion to finance ongoing appraisal and pre-development work in an oil field in Turkana. PHOTO | FILE

Ngamia 3 oil exploration site in Nakukulas village, Turkana South Sub County on July 13, 2014. Africa Oil Corporation, a Canadian exploration company, plans to raise Sh11 billion to finance ongoing appraisal and pre-development work in an oil field in Turkana. PHOTO | FILE 

By IMMACULATE KARAMBU
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Africa Oil Corporation, a Canadian exploration company, plans to raise Sh11 billion to finance ongoing appraisal and pre-development work in an oil field in Turkana.

This will involve running tests to establish the exact amount of oil in South Lokichar basin and development of a plan for exploitation of the resource. An estimated 600 million barrels are said to be underground in the area.

Africa Oil and its partner, Tullow Oil Plc of the United Kingdom, have the licence to explore oil in the area.

“The company expects that the net proceeds from the private placement, together with the company’s existing working capital, will be sufficient to perform necessary work and analyses to upgrade its assets in the South Lokichar basin with the intent of submitting a field development plan around the end of 2015,” said Africa Oil in its latest update.

FALLING PRICES

The cash will be raised through the sale of the company’s 57 million shares.

The oil and gas company has appointed Dundee Securities Europe LLP and Pareto Securities as the transaction advisers.

The cash call comes at a time when falling  global crude prices have negatively impacted on the cash flows of oil and gas exploration companies around the world, prompting some to make announcements of plans to slash their budgets.

At the moment, four international companies operating in Kenya, such as Tullow Oil, Swala Energy of Australia, BG Group and Afren Plc, have in the recent months announced exploration spending cuts in the light of the weak crude oil prices that are currently at about $50 a barrel, the lowest since 2009.

On Wednesday, Tullow Oil announced that it expects further reduction on its global capital expenditure budget of $1.9 billion, which could affect exploration in Norway, Kenya and the Republic of Suriname, in South America.

The company said it would  concentrate its business on oil production in its West African assets to boost cash flow.

The firm expects to save about $500 million over the next three years through capital expenditure cuts, operating costs and administrative expenses.

Africa Oil is expected to submit an application for approval of the offering to the Toronto Stock Exchange. Closing of the share offering is on February 23. 

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Tuesday, February 17, 2015

Obi Mobiles enters Kenya, launches new eight devices

Obi Managing Director Amit Rupchandani (left) and the company's head of marketing and communication Yusuf Khan during a media briefing announcing their entry into the Kenyan market at the Norfolk Hotel on January 21, 2014.

Obi Managing Director Amit Rupchandani (left) and the company's head of marketing and communication Yusuf Khan during a media briefing announcing their entry into the Kenyan market at the Norfolk Hotel on January 21, 2014. Obi Mobiles has ventured into the Kenyan smartphone market, unveiling eight new devices in Nairobi. PHOTO | DIANA NGILA 

By JOSHUA MASINDE
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Obi Mobiles has ventured into the Kenyan smartphone market, making its debut in East Africa. The firm is owned by former Apple CEO John Sculley.

The company that recently signed DESPEC as an exclusive channel partner in the distribution of its brand in the region unveiled eight new devices in Nairobi. Obi had earlier revealed its intention to capture five per cent market share in the region by the end of 2015.

Obi Mobiles Managing Director Amit Rupchandani, said the entry into the Kenyan market was prompted attracted by the current high transition from the feature-based phones to smartphones.

NEW VENTURE

“Consumers are increasingly looking to upgrade from feature-rich phones to smartphones. However, the high cost of investment on new-age devices is a huge deterrent for a large number of aspirational buyers,” said Mr Rupchandani.

“We hope that our high quality, desirable price points, and the support of strong channels that reach every segment of the market will help us succeed across Africa.”

The eight new devices launched include the flagship Octopus S520 that runs on Android Kit Kat 4.4, a 1.7 GHz Octa Core processor and dual SIM capability, among other futures.

The smartphones go for between Sh6,000 and Sh26,000. Obi Mobiles also introduced one feature phone that doubles as a power bank, thanks to its high-capacity 3000mAH battery.

Microsoft recently estimated that Kenyan smartphone purchases currently stands at above half of the total phone purchases per year.

Obi Mobiles is a new venture launched by Sculley’s Toronto-based Investment and Acquisition Company, Inflexionpoint.

The brand marked its global launch in India and the Middle East in 2014.

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Thursday, January 29, 2015

Kenya IT firms to benefit from Sh100m fund

A man working on a computer. Kenyan information technology firms will benefit from a Sh118 million fund from International Trade Centre. FILE PHOTO | NATION MEDIA GROUP 

By JOSHUA MASINDE
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Geneva-based International Trade Centre (ITC) has launched a Sh118 million ($1.3 million) fund to boost the competitiveness of Kenyan information technology firms in offering services in the global market.

The three year project, which aims at improving the ability of Kenyan technology small and medium enterprises (SMEs) to offer business process outsourcing and other IT-related services in the international market, will be implemented through the Netherlands Trust Fund (NTF) III programme.

The funds, to benefit 33 SMEs, will also support training and advisory services on export marketing and access to finance.

It will also facilitate business-to-business events in Europe and Africa between international buyers and Kenyan companies.

“The NTF III programme will play an overall coordinating role to help stakeholders to network and exchange experiences with each other, as well as with other international networks, so that they can find new ideas and strength in numbers,” a statement from ITC indicated.

The ITC is the joint agency of the World Trade Organization and the United Nations.

The NTF III programme will also build the capacity of the Kenya Information Technology Outsourcing Services the industry’s association.

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Saturday, December 27, 2014

Roasting smokies pays my bills

Samwel Ngochi at his open-air-cooking stall where he ekes out a living by roasting and selling smokies on the edges of Langata’s Ngei Phase Two estate in Nairobi. PHOTO | PHILIP MAOSA

Samwel Ngochi at his open-air-cooking stall where he ekes out a living by roasting and selling smokies on the edges of Langata’s Ngei Phase Two estate in Nairobi. PHOTO | PHILIP MAOSA  

By PHILIP MAOSA
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Samwel Ngochi repeatedly pours buckets of water on a section of the dusty road on which he operates an open-air-cooking stall to prevent dust from getting into his wares.

Satisfied that the place is dust-free, he lights up a charcoal stove and gently places the rolls of smokies on an aluminium foil to roast as he fans the burner. The job that feeds the 22-year-old man and pays his bills has just begun.

Samwel is among the youth who have refused to become part of Kenya’s soaring unemployment statistics by creating their own jobs, albeit on a small scale.

He ekes out a living by roasting and selling smokies on the edges of Langata’s Ngei Phase Two estate in Nairobi.

Previously, he was employed at the same job for six months, earning a Sh200 wage a day, before buying out his employer— a close friend of his.

“He left and sold the stove and the space to me at Sh10,000,” Samwel recalls, his face beaming with happiness.

BASIC CULINARY SKILLS

Initially, he only sold smokies but later on diversified his menu by adding boiled eggs to boost profits.

A smokie goes for Sh25 and he sells two, 22-piece packets every day— raking in Sh1,100 daily and Sh7,700 weekly.  On the same wavelength, he sells 20-25 boiled eggs daily at Sh20 per egg, making about Sh500.

However, on a busy day, such as Sunday, customers consume four to five packets of smokies and one and a half 30-egg crates— making Sh3,300 a day.

He buys the smokies from Farmers’ Choice company at Sh330 per packet and makes a Sh220 profit on every packet. He spends Sh150 daily on onions, tomatoes, dhania and pepper.

Since he starts cooking at 2pm till 9pm, the Nairobi City County government categorises Samwel as a hawker and charges him a daily levy of Sh30.

While he wishes to operate from morning to evening, the county government would require him to have a licence— something he can’t afford for now.

Samwel’s customer base has been growing exponentially courtesy of his simple but effective marketing strategies that include giving an occasional free smokie or egg to his regular customers.

He says he likes his job because he is his own boss. Roasting and selling smokies is also stress-free and he makes money every day— at least Sh500.

While his job requires basic culinary skills, Ngochi is a strong believer in education as the key to a better and self-sustaining life. As such, the entrepreneur is pursuing a diploma in Education at Embu College.

“Business ends but education does not,” he says emphatically as he turns the smokies on the smoking-hot foil.

He pays fees with the money he saves every week with two chamas. He contributes Sh300 and Sh100 every seven days to the six-member and four-member groups, respectively.

Samwel is not the only young man living off his brain and sweat. Samwel Peter also hums the same tune.

LUCRATIVE VENTURE

He started out roasting smokies at a city hotel where he was earning a paltry Sh150 per day. Three months into the job, he realized that it was a lucrative venture, nudging him to branch out.

Like Samwel, Peter’s is chief product is smokie but he also sells bread and boiled eggs.

“I want to add chapatis,” he says.

The third-born in a family of four empties three packets of smokies (Sh1,650) and 30 eggs daily. One smokie goes for Sh25 whereas an egg sells at Sh20. A combination of bread (six slices) and a smokie is Sh50.

According to Peter, cleanliness is one of their trade secrets.

“Customers look at how clean the place is and also how you talk to them,” he says.

With only one year on the job, the husband of one, has bought two goats, rented a garden and is planning to build a house.

Samuel and Peter believe self-employment is the way to go for the youth.

They advise their jobless peers to take the loans that the Jubilee government rolled out last year through Uwezo Fund and set up businesses.

 “It is not good to stay idle. There are many jobs that people can do instead of stealing from others,” Samwel advises.

This can be used as utility

The challenges they face:

1.       Bad debts from defaulting customers.

2.       Lack of space: Whenever it rains, dirty water from the trench adjacent to Samwel’s food stall overflows, flooding the whole place and forcing him to close the shop.

3.       The wrappers Samwel uses to serve the smokies to customers are not enough, which compels him to use nylon papers that customers don’t like.

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Tuesday, December 23, 2014

Tabitha Karanja: Why I plan to celebrate x-mas, New Year in style

Tabitha Karanja, CEO Keroche Breweries, receives the top Business Woman of the year in East Africa trophy from Marie Leclercq- CNBC Business Development Manager (E.A). PHOTO | NATION

Tabitha Karanja, CEO Keroche Breweries, receives the top Business Woman of the year in East Africa trophy from Marie Leclercq- CNBC Business Development Manager (E.A). PHOTO | NATION 

By MACHARIA MWANGI
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After being decorated in the continental arena for her achievements in the business circles, Keroche Breweries chief executive officer Tabitha Karanja is resting easy as she savours her success in beer making industry.

In less than two months, she scooped two coveted awards, the CNBC Business Development Manager East Africa and the CNBC Africa All Africa Business Leaders Award. This has catapulted the amiable CEO to the pinnacle of high-end achievers in the business.

Buoyancy is now what is driving Mrs Karanja, with the glamorous awards having raised her stakes as well as social ranking. “It was a humbling experience that has pushed my efforts a notch higher.” She notes.

“It will inspire others harbouring valid dreams of making it no matter the obstacles,” says Mrs Karanja, with measured confidence.

She is steering a Sh7 billion investment, having started with Sh100,000 focusing on making fortified wines. “We used the capital to buy a second-hand machine that could only manage 100 cartons a day.” She said.  Luckly, the market was receptive and soon, demand went beyond supply, calling for expansion.   

THANKSGIVING PARTY

Seated behind an executive mahogany table, Mrs Karanja cannot wait to take a well-deserved Christmas break. “Since venturing into the liquor making business… perhaps this would by my most relaxed Christmas. In the past, I had little time to celebrate,” adds the CEO.

A devout Catholic, she appreciates the importance of Christmas but the demands of her work meant she had little time to make merry as she plunged in the uncharted waters of beer making, a monopolised market, hitherto.

Her well-deserved break will come with goodies for her family. “I love cooking. I will ensure I will be the one in the kitchen cooking for my family. It has been a while,” says Mrs Karanja.

To cap what has turned out to be a promising business for her, on November 29, this year, Ms Karanja surprised her husband and Keroche Breweries chairman Joseph Karanja with a “thanksgiving party” for his support in ensuring that their brewery thrives.

“He has been a pillar of my success. Not many in his shoes could afford their spouses such a leeway to chase their dreams and ensure they emerge tops,” reminisces Ms Karanja.

Adding, “together with my children, we decided to fete him and catch him by surprise. The trick worked.”

The guests list included Mr Karanja’s blossom buddies and it was quite a “refreshing” moment for the down-to-earth chairman, who likes to pull strings behind the curtain.

But with a mega brewing plant coming up, Mrs Karanja will only have a few days to unwind, as she works on the final logistics for grand opening of the Sh5 billion factory in early 2015.

The of Head of State is expected to grace the occasion, with a tentative opening date slated for March

With a production capacity of 600,000 bottles per day, the CEO is conscious of the fact that she needs to step up her game in marketing with a view to capture 20 per cent stake. “The new production plant has the capacity of producing 30 different brands, thus having my work cut out,” says Ms Karanja

And, she has hit the ground running, meeting traders from different counties, exploring ways of expanding her sales in readiness of the increased production. She is leading from the front accompanying the sales team to the potential markets.  

Contented that she will ably satisfy local demand, Mrs Karanja will start making inroads into Tanzania and Uganda before spreading wings to the continent.

“The work has just begun at Kercoche Breweries. More is to come,” she reveals.

She ventured into a market where few could have dared, taking on a decade-long business monopoly and conquering age–old gender prejudice to become a major player in the country’s profitable drinks industry.

Mrs Karanja prides herself of having broken an individual borrowing ceiling, managing to secure Sh5 billion loan to fund what is probably the biggest investment in Kenya, this year.  

CLOSING THE GAP

After trading in manufactured products for close to a decade, she decided to do something more challenging. At the time, she was already running a hardware in Naivasha but an urge to get into manufacturing saw her take the leap of faith. The year was 1997.

She was not sure what type on manufacturing she wanted to venture since she was not an industrialist. She conducted research.

“I found a gap in the liquor industry. Drinkers in the lower end and middle income bracket were left to consume cheap brews of unknown quality that were readily available. That is where thought of venturing into the liquor industry was born,” she recalls.

Little did she know what she was getting into; expecting a smooth sailing as her business continued to register impressive growth, she oozed confidence. But she was in for a rude shock, entering an industry that had been monopolised for over 80 years and, soon after, she was in the deep end.

On a Tuesday afternoon in 2003, a lawmaker tabled a motion in Parliament saying her business was making killer brews. The MP alleged that the liquor had killed two of his constituents, allegations that could not substantiated and motion was defeated on the floor of the House. But CEO was ordered to furnish the August House with papers to prove that, indeed, her brews were up to the set standards. She complied.

Always on the tenterhooks. She did not know what to expect. And in what appeared to be a well-orchestrated plan to eliminate her in the market, she endured intimidation. As the storm raged, her billboards were defaced on the evening of October 20, 2006. The Kenya Revenue Authority (KRA) was also in pursuit, demanding Sh1.2 billion as back-dated tax arrears, to be paid up in 14 days.

The Sh1.2 billion did not include interest and penalties. In total, she owed the taxman about Sh2 billion. “At the time, I was paying 45 per cent tax but they were now demanding 65 per cent back-dated to 1998. “

Having weathered the storm, the high flying CEO current range of products include, two ready-to-drink vodka brands, four spirits and three wines. With a current five per cent market share of the beer market, Keroche plans to capture 20 per cent of the beer market and 30 per cent of the spirits market from the current 20 per cent next year.

QUALITY BREWED

The company produces Summit Lager, Summit Malt, Vienna Ice, Viena Ice Lemon Twist, Valley Wine; Pinotage’ , Chenin Blanc and Savignon Blanc and recently launched a Crescent range of triple distilled spirits; Vodka, Whisky, Dry Gin and Brandy. 

To budding entrepreneurs, Mrs Karanja says, “whatever you feel you want to start, you must be conscious of your priorities, otherwise when you face one challenge, you will be tempted to bolt away. Secondly, whatever you are doing, you must offer a superior quality and be convinced beyond doubt that it will succeed. Happy holidays.” She concludes.

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Tuesday, December 23, 2014

Passion for art helps sculptor carve out a bright future

Nickson Ekirapa has perfected his skills in interior and exterior design, an art which involves carving flower designs and other kinds of beautiful patterns on walls.   PHOTO | PAULINE ONGAJI

Nickson Ekirapa has perfected his skills in interior and exterior design, an art which involves carving flower designs and other kinds of beautiful patterns on walls. PHOTO | PAULINE ONGAJI  

By PAULINE ONGAJI
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AT 35, he has perfected his skills in interior and exterior design, an art which involves carving flower designs and other kinds of beautiful patterns on walls.

However, away from the usual wall designs that incorporate stone carvings, Nickson Ekirapa’s touch is quite different.

He makes a variety of designs of flowers and other patterns, using cement, soil, paint and coffee tray wire. His business sees him earn about Sh50,000 profit on average every month.

It is his uniqueness that has seen him secure contracts to work on buildings not only here in Kenya, but in nearly all East African countries.

“I have been receiving calls from impressed customers in Uganda and Tanzania,” he says. For instance, early this year he signed a contract to beautify a perimeter wall in Uganda, a deal that saw him pocket Sh350,000 in two months.

PLENTY OF WORK

“Two weeks ago, I completed beautifying a perimeter wall and also managed to pocket a similar amount of money,” he says, adding that he is already working on another project in Ruiru, in which he expects to make Sh180,000 in just a month.

The workload normally depends on the seasons, but even in times when there’s plenty of work, he has to complete one project at a time, as every pattern comes with unique challenges.

With the help of his students however Mr Ekirapa has been lucky to complete all his projects in time.

“My students usually step in to assist in simpler tasks such as measuring and mixing ingredients as they continue learning from me,” he says.

On the other hand, he provides transport and lunch for his learners. “The thought of charging them a substantial amount of fee kills me, considering that many of them come from poor families,” he adds.

Hotels, schools and individuals who feel that they need an extra touch of beauty on the walls of their buildings form a reliable stream of customers for him.

“The design and the cost depends on the needs of an individual, with the average time of completing a simple design ranging between two and three days, and at least three months for a perimeter wall,” says Mr Ekirapa whose passion for art began 15 years ago.

“At the beginning, things were a little bit hard because I had to learn all the skills while on the job meaning there were times when I made many mistakes. This made it difficult to find and retain customers. I also did not have the crucial tools to succeed in this trade,” he adds.

It is for this reason that he sought employment from one local company, with a plan to save money in order to revamp his business.

PREPARE FOR LOSS

However, he soon ran into troubles as his employer could hardly pay him. It is for this reason that early this year, he quit employment to take a leap of faith in business.

When Money met him, his phone couldn’t stop ringing as customers who want a taste of his unique art sought his services.

But the going hasn’t been all easy for Mr Ekirapa given that the increasing number of customers has brought forth a number of hurdles, with the main one being how to deal with defaulters.

“Sometimes a client pays the down payment for the start of the work but immediately you are through, they disappear,” he says.

It is a challenge that has seen him lose up to Sh1.2 million through non-payment of contracts but he insists that this has not in any way dampened his dream.

“As a business person, you have to be prepared for losses as much as you anticipate to make profit.”

Further, the high cost of construction materials, which forces him to adjust his price upwards, hurts his trade. However, he says that is part of business, as he seeks to registering his company, as well as set up a college in future.

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Tuesday, December 23, 2014

Turn your passive shoppers into active buyers

Two women window shopping. As a trader, you must learn how to convert  window shoppers into active customers. People who come to your business to inquire are potential customers. PHOTO | FILE

Two women window shopping. Many consumers will be disappointed to hear that they will have to wait for up to five months to see any reductions in the prices of goods. PHOTO | FILE |  NATION MEDIA GROUP

By MUTHONI NGATIA
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Imagine you are walking down one of the streets in Nairobi. Suddenly, the tempting smell of freshly baked pastries slips past.

A quick look and its coming from the cafe across the street. The cafe’s display is filled with mouthwatering foods and the door is wide open.

The pastries in display leaves you hungry, they look fresh and just what you need for your mid-morning tea break. You decide to check in, and suddenly the waiter, with a wide, beautiful smile, comes up saying: “welcome, would you like to taste?”

The woman holds up a tray full of samples and you grab one. With your mouth all watered, you are surely hooked. “We are having a promotion today” she adds.

Buy three now and get a free cup of coffee. It will be a lovely mid-morning snack.

And just then, you take the next table to enjoy.

Just then, you realise you have spend yet you were just walking down the street window shopping. It can happen to you any time, especially during this festive season.

WEIGHING OPTIONS

As a trader, you must learn how to convert  window shoppers into active customers. People who come to your business to inquire are potential customers. I know many people discredit window shoppers. They may not be actively engaged but they are all invariably interested in your goods or services.

Think about yourself, you only bother to look through the windows of a shop when you notice something that interests you, whether to buy immediately or in the future. Window shoppers gaze at your products or services for a few reasons. First, they are thinking about buying what you sell even if not immediately.

They are gathering information before making a decision on whether to buy or not. They are also weighing their options on whom they will buy from once they make up their mind. Lastly, they are one of your fans and may be admiring what they can’t afford at the moment.

A passive buyer stays so until you hook them up. Just like a rounded ball sitting on the floor, it will not move unless you push it. And when you do, it will roll. Give your window shoppers or indecisive prospects a little push.

They will begin rolling, that is, buying from you. You make the push by encouraging them to take a small step.

For example, if you sell clothes or shoes, ask for their size and encourage them to fit. Its called the foot-in-the-door technique, once a person has set foot in the door, he is more likely to make a buy.

Converting window shoppers is all about the looks, perception, desire and emotion that draws them closer so that then can become a lead or spot buyer. Ensure you have a great display, it welcomes and excites people around your product. As a business, your job is to garner good feelings with prospects and even window shoppers.

There is nothing worse than walking into a store and not even being greeted because the shop attendant knows or thinks you are just a window shopper. The shopper may be just looking for now, but could have bought if they were treated like a potential customer.

DEFERRED DECISION

You can push the buying decision in your favour by acting as an adviser on the best choice for their needs.

It’s a great opportunity to build a relationship with a prospect. The trick is simple, say I walk into a shop looking to buy a pair of shoes.

The attendant walks up to me an asks for my size and what type of engagement say business meeting, work or wedding do I need the footwear for.

The sales person will quickly figure out my needs and can easily show me the most suitable shoe for my planned use.

The faster I can see what they have to offer, the more likely I will be satisfied with their products. I always feel satisfied by value sellers who educate me. I tend to stick with such sellers.

Treat window shoppers well. They are actually customers in waiting. Let them leave your business with positive feelings.

Welcome them, guide them, inform them, help them, and let them go home with a smile. They will surely come back with a smile even if it will be a year later.

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Tuesday, December 23, 2014

Big plan that brought my village back to life

George Tafaria Waititu (in red shirt) with artist Bertiers Mbatia at Tafaria Castle. PHOTO | COURTESY

George Tafaria Waititu (in red shirt) with artist Bertiers Mbatia at Tafaria Castle. PHOTO | COURTESY 

By YVONE KAWIRA
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On Christmas Eve, about four years ago, Wiumiririe village was a quiet area save for the occasional noise from a few vehicles ferrying travellers back home from towns for the holiday.

But today, the once sleepy little village has suddenly become a tourist destination, welcoming guests paying a high of Sh60,000 per night, thanks to a plan by one of their neighbours.

And as George Tafaria Waititu pockets the tidy sum, local residents, many of whom are low income workers, are welcoming the sudden change with glee.

In just four years, the price of land has ballooned, from an average of Sh60,000 an acre to the current quote price of Sh1 million.

The story of Wiumiririe village is one of transformation and what entrepreneurship can do beyond satisfaction to the business owners. The secrets behind such a turnaround and some of the things taken for granted but mean a lot to individuals’ lives is equally telling.

APPRECIATING VALUE

“Four years ago, banks could not accept title deeds from this area as security for loans,” Mr Waititu notes adding that his primary aim was to bring social prestige in his home village.

“Nobody wanted to be associated with Wiumiririe,” he recalls. The rural area had been neglected and as a result, it was cut off from mainstream communication, roads, water systems, and electricity network among similar social amenities.

“In fact, I did not come here to look for land to build a hotel, this is where I grew up since I was a five-year-old,” Mr Waititu noted.

Having left the corporate life, the former Synovate managing director made a decision to return to his village and transform it.

“The environment was very brutal. This was a migratory corridor for animals from the park which is only four kilometres to the Tafaria,” he recalls.

Mr Waititu had done his homework well.

“Tafaria is a deliberate effort to come to the rural village and transform it by bringing social amenities in terms of water, electricity, and roads as well as to create jobs,” Mr Waititu states.

Tafaria opened its doors to the first visitor in 2012 and two years later, Mr Waititu says he has seen land adjacent to his property appreciate in value exponentially.

“An average cost of an acre now stands at about Sh1 million in just a span of two years,” he remarks adding that, “banks are now willing to take the title deeds as collateral.

“Before that they were never interested in taking the title deeds as collateral. Now people even come to invest back home and this has reversed the rural urban migration.”

According to Mr Waititu, investors need to look beyond the cities.

“By building Tafaria alone, there was massive skill transfer to the village,” he added.

According to him, rural areas are normally condemned as zones of low social prestige and the residents are viewed as less brainy.

“However, having done the project, I can bear witness that all that the people in rural areas  need is inspiring leadership towards a good course and they can achieve greatness. There is talent in abundance,” he notes.

Achieving all this has, however, not been an easy ride for the investor and his co-founder-cum-wife Eunice Tafaria.

PLINTH OF HONOUR

Today, he urges the government to support local investors by providing infrastructure to ensure accessibility, water and electricity among others.

“We got no help from the government in terms of infrastructure. We still are not getting any support,” he said adding, “right now, when I see a road, I have a lot of respect for it because I know how much hard work has been put into that and the continuous repair needed.”

“We have been very deliberate about our target market which is 100 per cent local tourists,” says Mr Waititu who also adds that the farm products used to make delicacies at the centre are bought from the village.

Mr Waititu brought Wiumirire village back to life by making a bold step to look and see a great opportunity where others couldn’t

As a way of thanking those who worked with him to achieve this dream, Mr Waititu set up a plinth of honour for 200 constructors in memory of their contribution to the Tafaria Castle.

“Very often or indeed at all times, fundis (constructors) go un-noticed after a building is complete. What remains is a shining plaque of ‘this building was officially opened by so and so.’ And the fundis are forgotten soon thereafter, but is different at Tafaria Castle where all the fundis who build the castle are immortalised at the plinth of honour,” Mr Waititu explains.

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Tuesday, December 23, 2014

Buy KPLC, Centum stocks this season

Brokers on the trading floor of the Nairobi Securities Exchange. For the week ended December 19, 2014, the NSE 20 share index recorded a slight drop, shedding 47.41 points to close the week at 4910.10 points. PHOTO | FILE

Brokers on the trading floor of the Nairobi Securities Exchange. For the week ended December 19, 2014, the NSE 20 share index recorded a slight drop, shedding 47.41 points to close the week at 4910.10 points. PHOTO | FILE 

By ABC CAPITAL

For the week ended December 19, 2014, the NSE 20 share index recorded a slight drop, shedding 47.41 points to close the week at 4910.10 points.

The All share index was down 1.37 points to close at 156.19.

Centum Investments Ltd

The equity company has been in the news lately as a result of Two Rivers project and the acquisition of K-Rep bank.

The Two Rivers project is taking shape well while Centum is just beginning to exert its influence on K-Rep Bank.

Other projects that are expected to drive value in the short- to medium-term for the bank include Pearl Marina project and the Geo-thermal project.

Other contingent projects include the Rea Vipingo takeover and the Lamu Coal-Power project.

In spite of the above, the share price seems to have dipped from a high of Sh84.50 to its current levels of Sh55.50 which happens to be a multiple of approximately 1.5 times its book value.

This makes the share looks attractive. Centum is a recommended buy.

KPLC

In the coming years, the company is expected to see higher revenues as a result of the Jubilee government’s pursuit of increased development of power. Most of the new power, such as, geo-thermal energy, natural gas and coal, is expected to come in at much lower costs.

This should see the company benefit from better margins and volumes.

The recently announced results seem to back this argument. Profits were improved with earnings per share coming in at Sh3.31 compared to Sh1.76 last year.

This suggests a price-earnings ratio of 4.38 times earnings... for a company that consistently delivers a double digit return on equity, this is a bargain. We recommend you buy.

Uchumi Supermarkets

The retail chain just managed a successful capital call. The rights issue managed to raise Sh1.6 billion against a target of Sh895 million. This was a strong vote of confidence against which the share price is expected to benefit from.

The performance of this rights issue was commendable as operationally, the company’s numbers weren’t solid.

However, this should be remedied by a change of strategy where the company will use less funds for its working capital. This will be achieved by adopting on new policies on procurement of inventory to bring it in line with industry standards.

It will also use less cash for expansion as it will opt for leasing of stores and equipment meaning less capital will be tied in long term assets. This should free some cash.

Uchumi also has some properties that it could either develop or enter into a Sell-lease-back arrangement that will allow it to raise more funds.

From a strategic perspective, Uchumi makes a very interesting opportunity to generate wealth like all company turn-arounds. However, this can only be established by a return to operational profitability. This is a speculative buy.

 

Email: [email protected] Thorough care has been taken in preparation of this document, we do not guarantee accuracy or completeness, nor will the company be held liable whatsoever for the information contained herein.

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Thursday, December 18, 2014

Cereals board ordered to buy maize against regulator rules

Trucks loaded with maize queue at the National Cereals and Produce Board, Eldoret depot on December 05, 2013. Agriculture Cabinet Secretary Felix Koskei insists that county governments should buy and market maize on behalf of farmers. FILE PHOTO |

Trucks loaded with maize queue at the National Cereals and Produce Board, Eldoret depot on December 05, 2013. An agriculture meeting is taking place to work on a policy that if implemented will see at least 30 per cent of the annual food requirement kept as a reserve for emergencies. FILE PHOTO |  NATION MEDIA GROUP

By MWANIKI WAHOME
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Maize will be bought in a 90-kilogramme bag instead of the legal 50 kilogramme.

This means the government will flout its own regulation on packaging of farm produce.

The National Cereals and Produce Board has been ordered by Agriculture Cabinet Secretary Felix Koskei to buy the maize in 90kg bags.

This comes as the new agriculture regulator started a campaign to enforce the rule that came into effect last month.

A new law passed last year set maximum weight on a single package of farm produce to 50 kilogrammes. The law has, however, been largely ignored by traders and now the government.

The interim director-general of the regulator, Mr Alfred Busolo, said: “The development and marketing of food crops was left to market controls and culture.”

MARKET RATES

The crop directorate, Mr Busolo added, will bring order and spur growth by applying standard measures.

Flouting the rule attracts a penalty of Sh500,000 or jail for a period not exceeding a year.

In his directive, Mr Koskei asked the cereals board to buy a 90-kilogramme bag of maize at Sh2,200.

He also offered to increase this to Sh2,700 (by Sh500 rebate per bag) to “compensate the farmer for the challenges of maize disease and delayed rains.”

Briefing the media at Kilimo House, Mr Koskei said the price was set in line with the prevailing market costs that range between Sh1,300 and Sh2,300 to be consistent with the free trade area created with other East African Community member countries.

“The price considered that we are in a free trade area with other East African Community states and the consumer prices locally. The price is competitive and will compensate farmers on the cost of production and get a profit margin out of it,” he said.

Mr Koskei said experts had placed the cost of production per bag in the North Rift at between Sh1,500 and Sh1,800 and around Uasin Gishu at between Sh1,400 and Sh1,600.

“This year we saw bumper harvest that came against concerns over delayed rains and maize disease,” he said.

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Thursday, December 18, 2014

Mall terror attack group wipes tears with award

Officials from Premium Ventures Kenya limited pose with their trophy and certificates after they were declared the East Africa Investment Group of the Year during the inaugural East Africa Chama Awards 2014 at the Safari Park Hotel in Nairobi on December 16, 2014.  PHOTO | SALATON NJAU

Officials from Premium Ventures Kenya limited pose with their trophy and certificates after they were declared the East Africa Investment Group of the Year during the inaugural East Africa Chama Awards 2014 at the Safari Park Hotel in Nairobi on December 16, 2014. PHOTO | SALATON NJAU 

By EDWIN OKOTH
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A youth group comprising last year’s Westgate siege survivors wiped their tears when they were announced winners in the inaugural East African Chama Awards.

Premium Ventures (K) Ltd, comprising  seven women and a man were colleagues at a beauty spa when terrorists attacked the mall on September 21, last year.

The workmates’ venture was meant to avert imminent joblessness. They won Sh1 million and one acre of land from Rafiki Microfinance Ltd — the event’s main sponsor.

The runners-up, Coast-based Umoja Muslim Women Group bagged two awards; Most innovative investment group and best investment group in social responsibility. The group was feted for producing a herbal ointment that kills jiggers and bedbugs.

Bethosawa Development and Investment Ltd from Kayole in Nairobi scooped both fastest-growing investment (second) as their chairperson Beatrice Akoth came second to former Rongai civic leader Ruth Wakapa in the Chairperson of the Year category.

ECONOMIC TRANSFORMATION

East African Cables chairman Zephania Gitau bagged the lifetime achievement award.

Congratulating the winners during a dinner at Safari park Hotel, on Tuesday, Nairobi Securities Exchange Vice Chairman Bob Karina said investment groups would prosper more if they scale up ideas and diversified investments. He was the event’s chief guest.

“These chamas will be the next big tools for economic transformation in the society. They must now start being professionally managed with good corporate structures and diversified investment plans. I would encourage them to seek listing on the Nairobi Securities Exchange, as well as buy stock for maximised returns,” said Mr Karina.

Rafiki Bank Chief Executive Daniel Mavindu told the groups to stay committed to their goals and seek professional guidance if necessary.

He said the idea of awarding best groups was meant to stimulate them into implementing bigger ideas.

Nation Media Group was the event’s media sponsor. CEO Linus Gitahi described the investment group idea as “a revolution that will alleviate the youth from poverty”.

In a speech read on his behalf by the group’s advertising director, Mr Michael Ngugi, the NMG boss said the media house was proud to be associated with the initiative.

Mt Kenya University, which is Rafiki’s knowledge partner, produced the bulk of the judging panel.

Rafiki Microfinance Bank was formed three years ago and has 10,000 members.

The awards were organised by the bank  under the theme, the power of many. It rewards the best investment groups in categories that include member contribution, rate of growth, innovation, social responsibility and portfolio diversity.

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Friday, December 12, 2014

Ministry proposes tough rules for commercial vehicles

Heavy commercial vehicles at the Kitengela junction near the Mlolongo weighbridge. The ministry of transport and infrastructure is the process of developing tough guidelines in an attempt to reign in rogue trucks. PHOTO | FILE

Heavy commercial vehicles at the Kitengela junction near the Mlolongo weighbridge. The ministry of transport and infrastructure is the process of developing tough guidelines in an attempt to reign in rogue trucks. PHOTO | FILE  NATION MEDIA GROUP

By RAMENYA GIBENDI
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The ministry of transport and infrastructure is the process of developing tough guidelines in an attempt to reign in rogue trucks.

Similar to the tough rules that were developed for public transport operators, the proposed guidelines are aimed at enforcing self-regulation among heavy commercial vehicle operators in observing traffic rules.

National Transport and Safety Authority is the body tasked with developing the guidelines.

They propose to impose heavy blanket penalties to transport companies whose members shall be caught flouting existing laid down rules.

“Chief among the proposed guidelines is a strict observation of the axle load requirements…we want to make it very expensive for them to break the law,” Transport Principal Secretary Nduva Muli said in a statement.

HEAVY FINES

Granted, Commercial vehicle companies and owners shall have to take full responsibility for their truck loads with the aim being to deter the ferrying of illegal imports along the northern corridor.

All commercial vehicle owners shall also be required to be licensed by the National Transport and Safety Authority before being allowed to operate in the country.

There is a proposal to have operator’s present details of their designated parking areas along the entire northern transport corridor before being registered by NTSA.

Late last year, the transport ministry also developed tough rules that were aimed at taming disorganization in the public transport sector.

The rules restricted the issuance of public service vehicle licenses to companies that owned at least five vans, resulting in the formation of matatu Saccos by abolishing individual investors.

Mr Nduva said that they have not arrived at the fine to be met by those fail to observe the proposed guidelines but in the Matatu sector, failure to observe any of the provisions attracts Sh100, 000 or up to one year in jail.

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Friday, December 5, 2014

Sh10bn to set up markets in two counties

Potatoes on sale at Wakulima Wholesale Market in Nakuru on January 8, 2014 About Sh10.3 billion will be used to set up a model farm produce wholesale and retail market in Murang’a and in Machakos counties. PHOTO | FILE

Potatoes on sale at Wakulima Wholesale Market in Nakuru on January 8, 2014 About Sh10.3 billion will be used to set up a model farm produce wholesale and retail market in Murang’a and in Machakos counties. PHOTO | FILE 

By YVONE KAWIRA
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About Sh10.3 billion will be used to set up a model farm produce wholesale and retail market in Murang’a and in Machakos counties.

According to senior assistant director of trade at the ministry of East African Affairs, Commerce and Tourism, Mr Jared Nyaundi, the two projects are in response to challenges cited by farmers and supermarkets in accessing farm produce.

The plan is also informed by the fact that farmers do not get value for their produce by selling them through middlemen.

“We need to set up an organised market place where producer business groups distribute their produce to wholesalers who then sell to retailers,” Mr Nyaundi told participants attending the second retailers forum in Nairobi, yesterday.

The wholesale hub model market in Maragua, Murang’a County, will be set up on 20-acres of land donated by the county government.

The market will be equipped with modern equipment to service retail outlets, especially in Nairobi and its environs.

A retail market model will also be set up in Athi River, in Machakos County, on 30-acres of land donated by the Export Processing Zones Authority. Designs for the Athi River retail market model is ready.

EMBRACE TECHNOLOGY

The two projects are expected to address the inefficiencies in supplies  and at the same time, create more jobs.

“The markets will be using modern electronic trading system,” Mr Nyaundi added.

There will also be hospitals, banks and a recycling plant.

“Both markets are expected to be completed by 2017 in order to improve the quality of trade for the export and other markets,” Mr Nyaundi noted.

Nakumatt Holdings Limited regional director, strategy and operations Thiagarajan Ramamurthy urged the government to ease the process of setting up manufacturing industries in Kenya in order to ensure that prices of products were brought down.

He also called on retailers to embrace modern technology and innovation in order to improve consumer shopping experience.

However, insight retail project director Titus Korir warned against aping each other’s innovations saying that this could negatively impact on some retailers.

“Depending on your target market, an innovation that works for one retailer could be a total flop for you,” Mr Korir said citing cases where some retailers have set up escalators for their customers only for them to turn away buyers because they are not used to such technology “especially in the rural areas,” he said.

“We all need to build resilience and sustainability to ensure we keep up with the changing demands as well as trends in the retail sector,” Mr Ramamurthy urged.

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Friday, December 5, 2014

Thousands of farm machines to be imported soon

A tractor at the Hola irrigation scheme. Talks with four industrialised countries have started to help mechanise agriculture in Kenya in the next two years. PHOTO | FILE

A tractor at the Hola irrigation scheme. Talks with four industrialised countries have started to help mechanise agriculture in Kenya in the next two years. PHOTO | FILE 

By Nation Correspondent
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Talks with four industrialised countries have started to help mechanise agriculture in Kenya in the next two years.

Speaking in Kikuyu on Wednesday at the Kenya National Farmers Federation annual general meeting, Cabinet Secretary Felix Koskei  listed the equipment the government wants to import. 

The government has entered into an agreement with Brazil and some 1, 520 assorted farming equipment will be shipped and sold to farmers and their associations. 

In an arrangement with India, farming equipment worth USD 100 million will be imported. From Korea, the country will get 11,000 assorted farming equipment. 

Discussions are still ongoing with the government of Holland, where more equipment is to be sourced from, said Mr Koskei. “Kenya must follow the best practices of other countries where farming is raking in billions in revenue to improve the living standards,” he said. 

The ministry is also developing  livestock and crop insurance schemes.

The livestock scheme is being piloted in Turkana, while the crop one is still in its initial stages of development, he said. 

He also addressed problems raised by some of the 400 farmers present, that included packing of farm produce in sacks exceeding 50kg weight in spite of the Crop Act banning the practice. 

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Friday, December 5, 2014

Watchdog gets nod to effect market studies

All recommendations made by the Competition Authority to streamline agriculture products markets must be implemented immediately, the President said Thursday. PHOTO | BILLY MUTAI | FILE

All recommendations made by the Competition Authority to streamline agriculture products markets must be implemented immediately, the President said Thursday. PHOTO | BILLY MUTAI | FILE  NATION MEDIA GROUP

By MWANIKI WAHOME
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All recommendations made by the Competition Authority to streamline agriculture products markets must be implemented immediately, the President said Thursday.

Addressing delegates at the World Competition Day celebration, President Uhuru Kenyatta said this would boost wealth creation by farmers.  

He told the Competition Authority to work closely with other government agencies in implementing the recommendations of market studies in tea, artificial insemination, seeds and sugar.

“Eradication of marketing distortions may reduce our poverty levels by a further 1.5 per cent. This is our key agenda and we have to achieve it,” he said in a speech read on his behalf by National Treasury Cabinet Secretary Henry Koskei.

FINANCIAL INCLUSION

The function was at Safari Park Hotel, Nairobi.

The President also told the Competition Authority to expedite the Product Market Regulatory Indicative Study, which it is conducting and have the findings discussed with stakeholders in February.

This will aid in modernising regulatory aspects and help in realisation of Vision 2030, he said.

The study covers telecommunications, transport, investment policy, retailing, banking, insurance and energy.

The President said the government had increased the authority’s budget to enable it conclude cases such as abuse of market dominance in telecommunications.

“These cases will go a long way in deepening financial inclusion, through easing access to mobile money transfer and also lead to consumer savings,  as a result of increased competition,” he said.

He told county governments not to introduce regulations and restrictive conditions in issueing licences that could impede the proper functioning of demand and supply of products.

 

ACTION PLAN

The progress made so far 

  • Competition Authority: We dealt with 88 merger applications by June, compared with 65 the previous year, says Director-General Wang’ombe Kariuki.

  •  Also finalised 23 cases of restrictive trade practices, compared with 16; and 15 consumer cases compared with six in 2013.

  •  World Bank: An impact assessment supported by the global lender shows that the retailing trade restrictive case resulted in consumers saving about $1 million (Sh90 million), while money transfer rates fell by 67pc.

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Wednesday, December 3, 2014

Equity bank in online bid to support youth

Equity Group Chairman Peter Munga (left) and chief executive officer James Mwangi during the firm's Extra-Ordinary General Meeting held at the KICC in Nairobi on November 24, 2014. Equity Bank Kenya has launched an online campaign to provide support to young entrepreneurs. PHOTO | SALATON NJAU

Equity Group Chairman Peter Munga (left) and chief executive officer James Mwangi during the firm's Extra-Ordinary General Meeting held at the KICC in Nairobi on November 24, 2014. Equity Bank Kenya has launched an online campaign to provide support to young entrepreneurs. PHOTO | SALATON NJAU 

By NATION CORRESPONDENT
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Equity Bank Kenya has launched an online campaign to provide support to young entrepreneurs.

The campaign will target youth between the ages of 18 and 30 years.

Within the Vijana na Equity scope, the first campaign seeks to support fledgling fashion designers to attain their dreams while enjoying commercial returns.

Speaking when he confirmed the launch of the online initiative, Equity Bank Group CEO and MD James Mwangi said the programme will be actively pushed through social media channels as part of attempts to reach out to a wider youthful audience.

 

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Tuesday, December 2, 2014

When to hire a smart accountant

A good reason for hiring an accountant however is to create a business plan, form a company, apply for loan, during tax audit or simply in order to delegate some duties. PHOTO | FILE

A good reason for hiring an accountant however is to create a business plan, form a company, apply for loan, during tax audit or simply in order to delegate some duties. PHOTO | FILE  

By Dorcas Muthoni
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Accountants help out in the growth of your business. They handle more than just tax and payroll.

This question has become all too familiar. “When should I consider hiring an accountant?” It depends on your immediate needs.

Out of your needs, you will either get a full-time accountant, part-time one or contract one.

A good reason for hiring an accountant however is to create a business plan, form a company, apply for loan, during tax audit or simply in order to delegate some duties. However, since we have a number of rogue ones out there, recruit your accountant carefully.

Here are some moments when an accountant would be a smart hire. Say you need to write down some financial projections, a business plan or the usual business finance management and reporting. An accountant can help you use an accounting software to generate reports.

MONITORING THE PULSE

The earlier you hire one, the better. This way, you benefit from sound financial knowledge. It saves you a lot of money and helps you mitigate risks associated with poor financial management.

An accountant can also advise you on the best legal structure for your business.

For example, it is a fact that you will have business liabilities.

When you operate as a sole trader, you could be held personally liable for business deals whereas in a limited liability company, the burden of the enterprise is limited to its assets.

SME accounting can easily become complex when you do it yourself, and can get overwhelming since you are stretched across many control points.

An accountant can help you fix your cashflow by computing key business metrics that help you ensure that the outfit is on track.

Say ratio of salaries and other employee payments to total revenue, cashflow analysis, your gross margins and net margins. These are reports that help you understand your business’ financial standing at a glance.

It is even better if you are using an accounting software that is online as this can allow even an external accountant to review your financial records for regular reporting.

These kind of reports help you monitor the pulse of your business.

With the reports, an accountant is able to offer input on how to improve your business model, pricing or even inventory.

Generally, you need an accountant to prepare and file tax returns. Although we have software that simplifies this, it is always safe to get a seasoned hand to deal with the taxman.

RECRUIT WISELY

A good accountant should help you complete and file all legal and compliance company returns, prepare regular annual statements of accounts, handle your payroll, ensure all individual taxes and payments are recorded and bank reconciliation is done monthly.

A good accountant will help you meet tax obligations. If external auditors are coming, your accountant should ensure that all necessary reports are ready.

You might need an accountant when applying for a loan, overdraft or securing a fresh investment.

An accountant will help you develop the financial statements your bank will need.

Your accountant can help you know if the loan interest, terms and conditions are favourable.

Overall, at some point, you will need to hire an accountant, recruit wisely.

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Tuesday, December 2, 2014

We have built a profitable portfolio of stocks

An investor can ask their stock broker or investment banker to buy or sell shares at the best price or to trade only when the stock has attained a certain price or better. PHOTO | FILE

An investor can ask their stock broker or investment banker to buy or sell shares at the best price or to trade only when the stock has attained a certain price or better. PHOTO | FILE 

By JOSHUA MASINDE
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Nairobi-based marketer, Kennedy Waweru, 21, began investing in shares in 2008.

He was still at the university then but was inspired by the countless stories of how investors such as Warren Buffet made wealth from stocks.

While in school, Mr Waweru used to see his mother and grandmother earn dividend from the shares they held in a number of companies.

“I started investing in the stock market out of curiosity and interest of how other people made money,” he told Money.

While pursuing his degree, he researched about stock brokers as well as how to invest in shares. And in 2008, he settled on a stock broker, with whom he deposited Sh1,000 every month.

He would make an order on the stocks he wanted to buy after every two months. His first bet was Equity Bank where he bought shares soon after the lender’s initial public offering (IPO) in 2008. Each share, then, was going for about Sh10.

He later invested in Sameer Africa, Express Kenya, Safaricom, Barclays Bank, Co-operative Bank, Mumias, Britam, KenGen and Liberty Kenya Holdings.

THINK LONG-TERM

He purchased Safaricom shares in the post-IPO period when it was trading at about Sh3.

The stock is currently trading at over Sh13.9 apiece, having appreciated by more than 300 per cent from the time he bought his shares. Since buying Equity’s stock at about Sh10, the share price has gained 400 per cent to Sh50 apiece as of Thursday last week.

He bought Britam’s stock at Sh9 during IPO. The stock has since appreciated by over 180 per cent to Sh25.5 as at the end of trading on Thursday, last week.

Although he has since sold some of the stocks to focus on a few firms, his portfolio is currently at about Sh220,000.

One of the first things that a stock market investor is told is to think long-term. This is what Joe Nyagah, a 26-year-old marketer bears in mind. He quit his banking job after two years to focus on sales and marketing and venture into both stock market and real estate industries.

He says the salary he received as a banker was not impressive. The job also lacked flexibility that would allow him take financial classes as well as research on available investment opportunities.

Each month, he saves 60 per cent of his salary for investment. His bank has a stock brokerage arm, making it easy for him to wire his savings for purposes of investing in stocks.

“What I learned about stocks is that you take risks for long-term gain. When you invest in the stock market, you are simply making your money work for you,” he said.

Early this year, he bought about 2,000 Equity Bank shares which were going for about Sh44 apiece, valuing his portfolio at over Sh88,000 then. The bank’s stock as at close of trading on Thursday, last week, was going for Sh50 each valuing his stake at Sh100,000, a 13 per cent capital gain.

On Thursday, last week, he bought 5,000 Safaricom shares, each of which was trading at Sh13.9 by the close of trading. He believes Safaricom’s share is still way below its value and will appreciate significantly in the next two years.

“I am looking to diversify my portfolio. Safaricom and Equity are getting into competition. I, however, see a lot of potential in Safaricom, which I think is undervalued,” Mr Nyagah told Money.

According to the Capital Markets Authority, the first step one should take when buying shares is to establish which companies are experiencing a robust performance.

POINTS TO PONDER

While a lot of investors invest in the stock market to get capital gains through appreciation of share price in the long-run, others do so to get investment income in the form of dividend.

“An investor who invests for this purpose (investment income) should invest in firms with a concrete dividend declaration policy or history,” the markets watchdog  notes.

Some of the things an investor can also bear in mind before buying shares include evaluating the target company’s management.

Are the board of directors and key management personnel people of repute? Are they reliable? Can they be trusted to run the company?

Are the company products or services vulnerable to vagaries of weather or are they likely to be subject to international trade restrictions?

Is the firm a monopoly or an oligopoly? Is the company’s future clear or imprecise?

Stock brokers and investment bankers are the authorised agents which investors approach when they intend to invest in the stock market.

An investor can ask their stock broker or investment banker to buy or sell shares at the best price or to trade only when the stock has attained a certain price or better. An investor can also ask the broker to sell his/her shares when the price falls below a certain level.

Mr Geoffrey Injeni, an accounting and finance lecturer at Strathmore Business School says that an investor in the stock market must invest for the long-term if they are to realise full potential gains.

“You must then have a strong heart to withstand the bad times, for instance, when the share prices go down. Don’t buy shares today in the hope to sell in a week when there is a slight increase in prices. Generally, share prices go up, but in the long run,” Mr Injeni told Money.

He also says that there is no formula that guides an investor’s entry or exit from the bourse. This will depend on an individual investor’s situation, especially with regard to risks and returns.

A look at the specific fundamentals — the industry and overall economy — may also give an investor the insights into the direction of a company’s share and the stock market.

“Unfortunately, there is some speculation or gambling. If you suspect there will be an upward trend in share prices, then buy and hold. If you suspect there will be a downward trend in the share prices, then sell or exit,” Mr Injeni said.

EXIT COUNTERS

A lot of retail investors have often exited some counters at the earliest sign of poor performance. A number of retail investors, who did not want to go on record, said they burned their fingers after putting their money in Mumias and Eveready counters, which have sharply depreciated.

Since its opening in 1954, the Nairobi Securities Exchange (NSE) has churned out millionaires and also eroded investors’ wealth in equal measure. Total investor wealth at the NSE has nearly doubled within two years to Sh2.3 trillion as at the end of last week compared to Sh1.2 trillion as at the end of November 2012.

Apart from Mumias and Eveready, Home Afrika is among companies that have performed poorly.

Home Afrika listed 405 million shares on the Growth Enterprise Market Segment in July 2013 at Sh12 apiece. Its share price shot up by 108 per cent to Sh25 apiece on the listing day valuing the firm at Sh10 billion.

The stock however traded at Sh4.1 at the end of trading on Thursday, last week.

Mumias on the other hand did a secondary IPO in 2006. Its shares were going for Sh49.5 apiece.

The stock traded at Sh2 at the end of trading on Thursday. Eveready, which listed on the NSE in August 2006 at Sh9.5 per share, traded at Sh3.7 each at the end of Thursday, last week. Some of the best performing stocks are in the banking, investment, insurance and manufacturing sectors. Investors are now required to pay a capital gains tax of five per cent on their shares.

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Tuesday, December 2, 2014

Carry out survey on cybercafé

The first thing you need to do is to plan and carry out research on the cybercafé business in your target area. Formulate an idea of how you would like to run your cybercafé and write it down. PHOTO | NATION

The first thing you need to do is to plan and carry out research on the cybercafé business in your target area. Formulate an idea of how you would like to run your cybercafé and write it down. PHOTO | NATION 

Starting a business is exciting and will probably be one of the biggest decisions of your life.

However, it can be a daunting task particularly if you have not done it before. Therefore, before embarking on the road to being a successful trader, you should check how deep the waters are before you lower your anchor.

The first thing you need to do is to plan and carry out research on the cybercafé business in your target area. Formulate an idea of how you would like to run your cybercafé and write it down, the different amenities and services you intend to offer and your target market.

Research the feasibility of the business idea. Investigate the demand for the services as well as your potential competitors in the area and estimate how much money you will require to launch the outfit.

SEED CAPITAL

Put down every detail, from computers that you need to purchase to the type of environment you intend to create, and all the operating costs involved.  Once you have done research and planning, write your business plan.

This is important because, you could use your business plan to source for funds by pitching your idea to potential investors and lenders.

It is always advisable to minimise the amount of debt you incur until your business’ cash flow and customer base is well established. Take note, that if you default in repaying the loan, you may lose the collateral you had pledged for the credit.

You could consider if the business is registered as a limited company, and sell shares in the outfit to like-minded individuals with a view raise long-term capital.

Alternatively, you could borrow money from friends and family; however, bear in mind that whenever you take money through a relationship that involves either friendship or blood ties, it may get very complicated in case you default.

You could also borrow from your Sacco, if you are a member of one, or join an investment group or chama where you pool resources together with like-minded peers.

Many investment groups or chamas allow members to borrow from their accumulated contributions and investments and pay back at an agreed rate of interest.

Also, many Saccos are likely to give you a loan, say three times the amount of savings you have accumulated with them.

To stay afloat when one arm is not doing so well, you need to apply some unique features that differentiate your business from others.

SUITABLE LOCATION

For instance, you may offer related services such as selling and servicing computers, design websites, offer search engine optimisation services, networking, computer and software installation, selling of security systems, colour printing and photo copying, hosting computer game competitions or other services such as selling snacks and drinks.

You need to find a suitable location for your venture. Hire and train your employees who are technology-savvy, friendly and easy to work with.

Also try to promote your cybercafé in the neighbourhood using fliers, posters, word of mouth, and other channels.

Finally, you need to listen and incorporate feedback from your customers and take the necessary action.

Internet café business is indeed very interesting and equally challenging. The business plan should be prepared with an eye for detail. When in operation as a means of differentiating yourself, remember to always go the extra mile for your customers. The customer should be your first priority and be sure that they are satisfied.

Finally, continue to evaluate your performance as a business and keep track of what works and what does not.

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Tuesday, December 2, 2014

How to get a slice of Sh205bn tender pie

President Uhuru Kenyatta with Treasury Cabinet Secretary Henry Rotich and  Deputy President William Ruto at KICC on 13th of August,2014  during the launch IFMIS e-procurement system. Government says at least Sh205 billion worth of contact are up for grabs, but decry the lack interest and awareness from the youth  PHOTO | EVANS HABIL

President Uhuru Kenyatta with Treasury Cabinet Secretary Henry Rotich and Deputy President William Ruto at KICC on 13th of August,2014 during the launch IFMIS e-procurement system. Government says at least Sh205 billion worth of contact are up for grabs, but decry the lack interest and awareness from the youth PHOTO | EVANS HABIL 

By JOSHUA MASINDE
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When former president Mwai Kibaki announced in 2012 that 10 per cent of the value of all government contracts should be allocated to the youth, Francis Mureithi, a Nairobi-based businessman moved with speed to exploit the opportunity.

The policy directive of Mr Kibaki’s government was aimed at tackling spiralling levels of youth unemployment in Kenya.

In a company he had formed with a friend, Mr Mureithi applied for a tender to supply attire to be used by government officials at a national event. The deal earned himself over Sh300,000.

Later, last year, President Uhuru Kenyatta directed that procurement rules should be amended to apportion 30 per cent of government contracts to the youth, women and persons with disabilities (PWDs) without competition from international firms.

TRAINING THE YOUTH

Government says at least Sh205 billion worth of contact are up for grabs, but decry the lack interest and awareness from the youth for the disappointing no show in tendering for the contracts.

A spot check by Money, however, shows that many young people are not taking advantage of the opportunities created by the new government directive largely because of inadequate information and lack of patience to walk through the tendering red tape.

Mr Mureithi partly puts the blame to the poor documentation and quotation by youth-run enterprises when applying for the contracts. He says that a lot of youth do not stick within stipulated price guides of specific contracts. They either over-price or grossly undercharge the government. This makes them ineligible.

This has, however, changed with the new government imitative to conduct tendering through online platforms.

This allows everyone to get access of government tenders irrespective of their location in the country.

The government’s financial platform, Integrated Financial Management Information System, (IFMIS) has made this process easy.

And with implementation of electronic procurement program, the IFMIS has made it possible for the applicant to apply tender online and track the process, a strategy that is injecting transparency.

IFMIS has thus become a source of information to the suppliers and the public in general on matters relating to public procurement.

“What we have decided now is to offer training to the youth to enable them to be entrepreneurs,” National Association of Youth Enterprises chairman, Mr Brian Randieh said.

The Public Procurement Directorate, which is under the National Treasury, administers the Access to Government Procurement Opportunities (AGPO).

TARGET GROUP

In order to access government procurement opportunities, the youth, must register a business enterprise as a sole proprietorship, partnership, a limited company or a co-operative.

At least 70 per cent of the membership of the registered entities must comprise of the youth and the outfits’ leadership must be 100 per cent youth, women and PWDS.

A PIN and tax compliance or tax exemption certificate from the Kenya Revenue Authority is also required.

The target group should also acquire requisite certifications from professional bodies and authorities such as the National Construction Authority, Insurance Regulatory Authority, Institute of Certified Public Accountants of Kenya, the Law Society of Kenya, the National Council for Persons with Disability, the National Environmental Management Authority, the Energy Regulatory Commission and all other authorised bodies.

Finally, the target beneficiaries can access the website www.agpo.go.ke and register online or visit the county government headquarters to register their entities.

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Tuesday, December 2, 2014

Couple beats all odds to earn big from tobacco

Mr Joseph Imeli, 42, and his wife, Catherine Amoit, 34, who are large-scale tobacco farmers in Teso North. From their six-acre farm, they produce an average of 10 tonnes of the cash crop. PHOTO | RAPHAEL WANJALA

Mr Joseph Imeli, 42, and his wife, Catherine Amoit, 34, who are large-scale tobacco farmers in Teso North. From their six-acre farm, they produce an average of 10 tonnes of the cash crop. PHOTO | RAPHAEL WANJALA 

By RAPHAEL WANJALA
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Tobacco farming has for long been viewed as a fruitless venture in Western Kenya by many farmers.

There are various myths about the business that see people steer clear of it. First, is a notion that the farmers end up poor as a result of growing the crop since they do not have any money left for themselves at the end of the season when tobacco processors deduct cost of farm inputs advanced to the growers.

Second, there is word that tobacco farmers are a hungry lot. They dedicate all their land to the cash crop leaving little or no room for subsistence farming.

However, a couple in Changara, Teso North sub-county, are changing the business. Mr Joseph Imeli, 42, and his wife Catherine Amoit, 34, are large-scale tobacco farmers.

JOURNEY TO PROFIT

The two have registered a remarkable journey in tobacco business and they help fellow farmers to reap better yields from the crop.

The couple has been farming tobacco since 1998, a year after Mr Imeli was retrenched. They started small, on an acre of land, which they were given by their parents.

They started off using hand hoes to cultivate and prepare the farm. Their first harvest earned them Sh25,000, part of which they bought a bull to help them ease tilling the land. The impressive returns season after season encouraged them to proceed with the business and by 2000, they had bought four dairy cows to augment their earnings as well as more bulls.

The returns enabled them to buy a two-and-a-half-acre piece of land in 2008 valued at Sh250,000 where they have set up their home.

Today, their tobacco farm is covers six acres. Part of it has been leased from their neighbours.

At the moment, Mr Imeli says, they produce an average of 10 tonnes of dry tobacco leaves every year earning them Sh1.5 million annually. This, he says, is their pay after the contracted company deducts its input costs.

Farmers prefer getting inputs from companies because tobacco is very specific on the type of inputs needed to get the best yields, he notes.

Further, the companies knows where to source the right inputs and they are able to supply them at a lower cost as opposed to the farmers buying them in the market.

“Many farmers start a project without a goal. If one has proper planning and goals, they will surely succeed,” said Mr Imeli.

READY MARKET

The couple noted that tobacco growing as a cash crop is beneficial than other crops since there is ready market for the produce at the end of the season. Once contracted by a company, farmers are assured of a market devoid of middlemen.

The prices for tobacco leaves are set and agreed upon at the start of the planting season.

“The price of tobacco is fixed. Once it has been agreed upon by all stakeholders, it can only be changed after a meeting,” said Mrs Amoit. Last season, each kilo fetched the Imelis Sh163.

The ready market and prices gives the couple an upper hand against other crops grown in the area such as sugarcane and at maize.

Mr Imeli’s only plants maize for subsistence. So far, the only challenge in growing tobacco has only been erratic weather, especially hailstones that destroy the leaves before harvesting. Their counsel to other farmers is to be transparent with their earnings and also be focused on what they want to achieve.

“We are always transparent with our finances. We plan ahead what we want to do with the cash we have received,” said Mrs Amoit. So far, tobacco has seen them educate their eight children and the future looks bright.

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Tuesday, December 2, 2014

Matatu sacco fights licence suspension in stripping case

A bus belonging to Nazigi Sacco on Thika Road. The sacco has cried foul over the suspension of licences for all its 243 vehicles. PHOTO | JENNIFER MUIRURI

A bus belonging to Nazigi Sacco on Thika Road. The sacco has cried foul over the suspension of licences for all its 243 vehicles. PHOTO | JENNIFER MUIRURI 

By BRIAN WASUNA
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The public transport firm whose licence was suspended after two of its employees were accused of stripping and sexually assaulting a woman passenger has moved to court to appeal against the decision.

Nazigi Sacco wants the High Court to withdraw its 14-day licence suspension, arguing that the decision was made before it was given a hearing, contrary to the rules of natural justice.

The sacco has cried foul over the suspension of licences for all its 243 vehicles, arguing that the collective punishment of its members by the National Transport and Safety Authority (NTSA) was draconian and unfair to its members who were not involved in the alleged crime.

“The NTSA has violated the Constitution in meting out collective punishment to Nazigi Sacco’s members in order to solve a social malaise and is discriminatory of the said members, innocent of committing the said crime,” said the Sacco.

It has further claimed that the government was using it as a scapegoat in reaction to the recent cases of stripping of women in public that have caused a storm in the past two weeks.

“No such action has been taken in the police force against police officers on account of a police officer who stripped a woman,” added the sacco society.

The action was taken on Friday after a bus driver and conductor operating a vehicle under the Sacco were arrested and charged with sexually assaulting a woman.

The two were accused of being part of a group of men who launched a sexual attack on the female passenger.

Devolution and Planning secretary Ann Waiguru last week announced new rules that will see other saccos suffer a similar fate in the event that other sexual assault incidents are reported to have occurred in their vehicles.

The move is aimed at curbing the vice, after several incidents of women being stripped by men suspected to be matatu crew were reported.

The article first appeared in The Business Daily.

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Sunday, November 30, 2014

Sh350 million plan to assist dairy farmers in Murang’a

Murang’a Governor Mwangi wa Iria. FILE PHOTO | NATION MEDIA GROUP

Murang’a Governor Mwangi wa Iria. FILE PHOTO | NATION MEDIA GROUP 

By NATION CORRESPONDENT

Dairy farmers in Murang’a County will benefit from a Sh350 million programme meant to raise productivity and boost cooperative groups in the region.

The county government will buy high-yielding dairy cows that will be sold to farmers at subsidised prices to improve milk production and marketing.

Governor Mwangi wa Iria, who presided over the launch of the programme, said the move is meant to position the dairy sector as one of the industries that will unlock Murang’a’s investment potential.
County officials said they had released the first batch of over 200 dairy cows to various farmers affiliated to cooperatives.

The county chief officer in charge of agriculture and livestock, Mr Joseph Ndung’u, said an additional 340 farmers from various parts of the county had been registered to benefit in later phases.

“The programme is meant to ensure that farmers acquire quality breeds that will lead to increased milk production,” Mr Ndung’u said in a statement.

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Saturday, November 29, 2014

Taxman backs down after boycott threats over seized Ugandan cargo

Cargo at the Mombasa port. Top imports in the region remained motor vehicles and industrial products including steel.  FILE PHOTO |

Cargo at the Mombasa port. The level of trade and investment between Kenya and Slovakia has not reached its potential. FILE PHOTO |   NATION MEDIA GROUP

By MWAKERA MWAJEFA
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The Kenya Revenue Authority Saturday started releasing Uganda-bound goods that were being held at the port of Mombasa after a pre-pay tax dispute between the authority and traders.

Responding to questions by the Sunday Nation, revenue authority marketing and communication southern region manager Fatma Yusuf said the issue was resolved in Bujumbura, Burundi, when it came up at a meeting.

She said the commissioners of Customs of Kenya, Uganda and Rwanda met in Bujumbura on Friday and reached an agreement.

The Kenya Revenue Authority response was prompted by a boycott threat of the port of Mombasa by traders who had given the authority two weeks to unconditionally release the Uganda-bound cargo.

Business people under Kampala City Traders Association had given the ultimatum following after the Kenyan taxman told traders to pre-pay tax for all goods that dock at the port when making orders. Previously, traders have paid port fees and handling charges when collecting, reported Uganda’s The Monitor.

ARBITRARY TAXES

According to Kampala traders’ chairman Everest Kayondo, by Wednesday, about 4,000 containers were being held at the port because of arbitrary taxes that the authority had introduced. This, he added, was not only against the spirit of the East African Community integration, but also hurting Ugandan traders and the country’s economy.

“And for that, we are giving them two weeks (effective Thursday) to release all cargo bound for Uganda, for which all port charges and other logistical fees have been cleared, or else we relocate to the Dar es Salaam port,” he said.

In addition, the traders had also resolved that should their conditions not be met, they would put pressure on their government to block Kenyan products from entering the Uganda market.

The association’s spokesperson, Isa Ssekitto, also said they will write a formal letter to the governments of Uganda and Kenya to communicate the traders’ resolutions, as well as remind Kenya government to pay Ugandan traders Sh1.3 billion that they lost during the post-election violence of 2007/2008.

REJECTED TAX PAYMENT

Meanwhile, local and regional importers have rejected the payment of taxes using the Single Window Territory Customs Document on transit goods before they (goods) are released for the port of Mombasa.

A port user, Peter Mambembe, noted that the Single Window has no backing in law.

He argues that the Simba System of collecting revenue online was also introduced without any regulations, and it is therefore illegal to interface it with other online systems of the East African Community states.

Mr Mambembe, who is also the chairman of importers, warns that this unlawful practice is frustrating trade in the regional market and has made the port of Mombasa expensive, making it to lose business to other ports.

He cited the transfer of a motor vehicle unit from the port to a private Container Freight Station which costs an importer Sh2,500 while a 20 and 40-feet containers cost Sh15,000 and Sh20,000 respectively.

“But when an importer clears goods directly through the port, he or she pays nothing,” he said.

“In fact, it is impossible to lodge claim with the Kenya Ports Authority because the private entities are not regulated by the National Assembly.”

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Saturday, November 29, 2014

Pressure rises to lift biotech cotton ban

Women pick cotton at a farm in Ahero, Nyando district. In the face of declining cotton yields that threaten to disrupt Kenya’s textile industry, pressure is on to lift ban on biotechnology.  PHOTO | JACOB OWITI | NATION MEDIA GROUP

Women pick cotton at a farm in Ahero, Nyando district. In the face of declining cotton yields that threaten to disrupt Kenya’s textile industry, pressure is on to lift ban on biotechnology. PHOTO | JACOB OWITI | NATION MEDIA GROUP 

By MWANIKI WAHOME
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In the face of declining cotton yields that threaten to disrupt Kenya’s textile industry, pressure is on to lift ban on biotechnology.

This is because countries like Burkina Faso, Sudan and India have used biotechnology to increase their cotton production.

“Average production of cotton in Kenya is between 200 to 300 kilos compared to 800 to 1,000 kilos an acre in these countries,” said Mr Patrick Muriuki, managing director of Icoseed, a non-governmental organisation in Kirinyaga.

The organisation was contracted by World Bank in 2005 to study cotton production.

Attempts to increase production using non-biotech seeds have been been poor so that even if the prices were to rise, farmers would get little.

MAJOR DECLINE

“There has been a major decline in cotton production in the country and ginneries are now importing from neighbouring countries,” Mwea Cotton Ginnery director Mugo Makanga said.

Kenya produced 22,000 bales of cotton in 2013, against a demand of 200,000.

“The extension of the African Agoa (Growth and Opportunities Act) will be of no value to farmers if cotton production does not grow. This is the time to embrace biotechnology so farmers can earn more and restore Kenya’s textile industry,” Mr Makanga said.

Kenya, with other African states, has petitioned the United States to allow cotton products from sub-Saharan Africa to access the US market tax-and quota-free.

Textile industries established in export processing zones are major consumers of the cotton lint and yarn, but have to import the bulk of the raw materials. By 2008, the national demand for lint was about 111,000 tonnes of seed cotton against a supply of about 24,975 tonnes, according to a report prepared by a task force on the textile industry.

According to sources, the Kenya Agriculture Research Institute is holding final trials for biotechnology seeds.

“The ban on biotechnology should be lifted to increase production of crops in the country. It is not enough to declare that non-food items can use the new technology,” said senior assistant director of research at the ministry of Education, Science and Technology Roy Mugiira.

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Wednesday, November 26, 2014

Bookpoint shuts down after family dispute

Pedestrians walk past Bookpoint on Nairobi's Moi Avenue on June 25 2013. Bookpoint, one of Nairobi’s oldest bookstores, shuts down after more than seven decades in operation.

Pedestrians walk past Bookpoint on Nairobi's Moi Avenue on June 25 2013. Bookpoint, one of Nairobi’s oldest bookstores, shuts down after more than seven decades in operation. FILE PHOTO | PHOEBE OKALL 

By SIMON CIURI
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One of Nairobi’s oldest bookstores, Bookpoint, has shut down after more than seven decades in operation over what a manager of the shop attributed to a family dispute.

Bookpoint, which is located on the busy Moi Avenue, closed earlier this month.

A former manager of the iconic bookstore, Ashwin Shah, said in an interview Thursday that the shop has been closed indefinitely with no plans to reopen it.

“We have decided to close due to family-related issues that are not important to discuss for now,’’ said Mr Shah, declining to discuss the matter further.

He, however, said that two of his uncles who inherited the stores from their father had relocated from Kenya to seek medical treatment abroad, affecting operations of the business.

CLEARANCE SALE

“My two uncles were the ones who were mainly involved in the running of the business,” said Mr Shah, adding that there were disagreements “on certain issues”.

He said that there are plans to have a clearance sale, but a date has not been set.

The Bookpoint heirs are also said to be the owners of Loan House, which hosted the bookshop, and the adjacent Guilders Centre, which houses K-Rep Bank on the ground floor of Moi Avenue.

Bookpoint is said to have been started way back in 1938 by businessman Jethalal Shah, who opened the shop under the name Hemraj Hirji and Bros, according to an earlier story in The EastAfrican newspaper published in August last year.

He began by selling nuts and fruit juice to movie-goers.

Later, he diversified into Indian magazines and newspapers in Gujarati, Hindi, Punjabi and Urdu.

By 1948, Mr Shah was selling English syllabus books, stationery and greeting cards in Ngara to students close by at the town’s government Indian schools, today’s City Primary and Jamhuri High schools.

His descendants Dipak and Sudhir Shah continued the tradition that later led to the creation of the now collapsed Bookpoint.

The article first appeared in The Business Daily.

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Tuesday, November 25, 2014

Why Internet may soon be the domain for big firms

A mobile phone user browsing the Internet. A debate playing out largely in the United States and Europe could change the way consumers access internet.  FILE PHOTO |  NATION MEDIA GROUP

A mobile phone user browsing the Internet. President Uhuru Kenyatta has directed government institutions to shift from advertising using the traditional media to digital platforms. FILE PHOTO | NATION MEDIA GROUP 

By CHARLES WOKABI
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A debate playing out largely in the United States and Europe could change the way consumers access the Internet.

The big question is whether an Internet user in a cybercafé or on a mobile phone should be treated equally with big firms ready to pay more to have priority in sending their information.

The debate, which has been going on for the past ten years, is now gaining momentum as multinationals spend billions laying high-speed Internet connection.

As more and more processes get automated, speed of delivery of data is increasingly becoming the biggest differentiator for companies.

Thus, the pressure to stay ahead of the competition is threatening to auction the broadband megabytes to the highest bidder. 

“We have held this discussion at the International Telecommunication Union (ITU) but the issues are still fluid.

"As a country we have not taken a stand on the issue but we recognize access to the Internet as a human right. It is an important issue that we are following keenly and studying as a country,” Communications Authority of Kenya Director-General Francis Wangusi told Smart Company in a phone interview.

However, at the ITU level, Mr Wangusi said most of the discussions are driven by political interests.

“But we must not let those interests mature into frustrations for consumers. The Internet is borderless and a necessary tool for development,” Mr Wangusi said.

In the US, the debate on net neutrality — the principle that all traffic on the Internet should be treated equally — has pitted Republicans against Democrats.

TIGHTER REGULATIONS

In the past few days after President Barack Obama called for tighter regulations to safeguard the principle of net neutrality, the Republican-controlled Congress and American telecommunication service providers such as Vodafone, AT&T and Verizon, which are championing for an “open Internet”, hit back, saying it is another instance of Obama championing his "socialist" agenda.

The US service providers, who are backed by Republicans, have held that the whole issue is a free-enterprise question that should be guided by the market forces on the basis of willing buyer willing seller.

Their argument is that because Internet connectivity is a service they provide, they should be able to decide how to deliver it and how to charge customers.

But the net neutrality camp, mainly composed of such giant content providers as Google and Facebook, have termed attempts to introduce open Internet as one of the most blatant web injustices in the history of the Internet.

In Europe, the debate is also heated, with service providers like Vodafone and Orange, the parent companies of Safaricom and Telkom Kenya, respectively, calling for constructive dialogue on the issue. They say resolving the issue amicably could encourage innovation and new business models.

Basically, what the service providers in the West are fighting for is the authority to determine who gets faster Internet access as opposed to the current situation in which all web content is, ideally, treated equally. There is no discrimination on the basis of type, destination, origin or any other criteria.

The conclusion of this debate is likely to determine whether, in future, a consumer could be forced to pay a premium for their content to receive top priority from service providers, such as Safaricom, Airtel, or Orange, or cable providers such as Liquid Telecom. It means that your email or tweet could be delivered faster if you can pay a fee.

CATEGORIES

Big corporates would be well-placed to have faster access to their websites and the content they generate thanks to their financial muscles.

Ultimately, the debate could lead to the splitting of Internet into two categories. On one hand, there would be the high-speed network with smooth connectivity for those with deep pockets. On the other hand, there would be the slow connectivity for those who cannot afford the fast lane.

Locally, demand for pay-for-access could be driven by financial institutions as competition on mobile and online banking takes root. Already more than 50 per cent of Kenyans are accessing mobile financial services, forcing banks to deploy mobile banking riding on Internet connectivity.

Companies that require big Internet bandwidth like Netflix, the American movie streaming service, or Google’s YouTube, would most likely be forced to pay more for faster access. Google is opposed to this.

Safaricom corporate affairs director Nzioka Waita said the same debate should start in the country with a focus on future regulation.

“It needs to be happening everywhere, including here, particularly regarding future regulation approach. Regulation needs to move from just being telecoms-centric to neutral, to include all other providers of connectivity,” Mr Waita said.

“What we are saying is infrastructure developers such as Safaricom need to continue investing in the same and so the content providers need to pay for the same.”

PAY FOR SERVICE

Service providers feel that because of their big investments in telecommunication infrastructure used to carry content to the end users, content providers should begin paying for the service. Currently, the cost is largely borne by the consumer.

Safaricom for example is spending Sh5 billion to deploy 4G, the next-generation Internet connectivity. It is also using Sh10 billion in the first phase of laying fibre-optic cable around the country.

To recoup the investment, Safaricom would be happy to let big firms send and receive their data faster than the non-paying customers. The government has spent over Sh12 billion to connect the 47 counties to high-speed Internet.

The Kenya’s National Optic Fibre Broadband Infrastructure (NOFBI) is being funded by the Exim Bank of China on a concessional loan. NOFBI is currently managed by Telkom Kenya.

Mr Michuki Mwangi, the senior development manager for Africa at the Internet Society — a global organisation that lobbies for proper public policies for the Internet — said the country should take interest in the debate but from the perspective of ensuring open access for the end user.

“Net neutrality is covering a lot of issues ranging from the technical perspective, the business perspective as well as the end user rights. For Kenya, we should mainly concern ourselves with ensuring that consumers have access to the Internet and encourage competition to stir innovation,” Mr Mwangi said.

He said the focus of the country on the debate should be different from that of the US because the two countries are at different levels of development with respect to the Internet.

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Tuesday, November 25, 2014

Neglect, hyacinth ground trade at the Kisumu Port

Fishermen struggle to break through a blanket of water hyacinth at Bala Beach in West Nyakach in Kisumu County on April 10, 2014. FILE PHOTO | TOM OTIENO | NATION MEDIA GROUP

Fishermen struggle to break through a blanket of water hyacinth at Bala Beach in West Nyakach in Kisumu County on April 10, 2014. FILE PHOTO | TOM OTIENO | NATION MEDIA GROUP 

By MOSES ODHIAMBO
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Untapped gold. That is how one would describe the idle Kisumu port. The facility, which ought to be the gateway to the East Africa community member states, is now in a sorry state.

The port’s operations have been choked by the ubiquitous hyacinth weed and heavy siltation. Then there are the bottlenecks associated with legislations touching on the agencies charged with its management.

There is little activity at the port and in the inland container depot set up to facilitate trade through the railway. The facility that could earn the country millions of dollars in freight levies has been converted into a site for local tourists who pay a paltry Sh20 per head as gate entry fee.

The port, rated by shippers as the best in East Africa owing to its strategic location, only receives at most three vessels in a week. Yet if well maintained and utilised, the port would serve Jinja, Mwanza in Tanzania, Entebbe in Uganda and Muhoma Bay in Rwanda.

The port can also provide a shorter and cheaper export route for nations in the Great Lakes region through Lake Victoria.

However, the old railway built in 1901 by the colonial British Government connecting Mombasa port to Kisumu has been neglected. This has adversely affected the lakeside port.

One of the largest ships, Mv Uhuru, that transported cargo between Kisumu, Mwanza, Port Bell and Jinja has not operated since 2006 yet is in good working condition.

The ship cannot be put to use because the port is in a bad condition. The 1,800-tonne ship is currently occupying the dry dock at the port, obstructing operations.

The port’s cargo handling facilities built by the British colonialists are now being eaten up by rust and vandals have run completely down some of them.

Furthermore, debris that find their way into the lake have caused heavy siltation at the port and making it difficult for large vessels to access it.

Mr Edward Ted Odero, a maritime consultant, attributes the poor state of the port to neglect by the national government.

He says the government, through the office of the Attorney General, has not ratified an amendment to the law to allow the Kenya Ports Authority to manage inland waters.

“The Kisumu port is the best so far compared to the ever busy Mwanza port or Jinja. Ours is a case of neglect by the government that has protected hauliers who have invested heavily on road delivery systems regardless of the damage they do to our highways,” Mr Odero said at the port recently.

“At the moment, KPA is busy maintaining facilities in deep seas because of the challenges in the interpretation of the Kenya Railways Amendment Act.

The sad part is that someone is sleeping on the job at the AG’s chambers.”

Another challenge the Kisumu port faces is that Lake Victoria does not have updated navigation maps.

“We have hydrographic maps that were designed in 1957. These don’t consider the fact that the waters have receded a great deal making the lake unsafe for vessels,” Odero said.

Captain Samuel Wabwaya of Mbita Ferries said navigation aids built by the British colonialists have been vandalised.

“You cannot risk having a ship steered by novices on this part of the lake. Beacons that marked danger points have since been vandalised,” Mr Wabwaya said.

Mr Odero said the gulf is also becoming shallower yet the Lake Victoria Basin Commission, formed to instil safety measures on the East African waters following the Bukoba boat tragedy, “is always busy with meetings and conferences”.

In 1996, the steamer, MV Bukoba, sank on Lake Victoria near Bukoba in Tanzania with 600 people on board. About 400 died in the tragedy.

“We want the LVBC to come out of boardrooms and perform its role” he said.

Mr Odero also took issue with the way licensing of traders is done at the port.

“The licensing process is shrouded in mystery and poses unfair competition to investors banking on large vessels. How can we trade fairly when unprofessional users get licensed to operate at par with large ship owners?” Mr Odero posed.

“At that rate, you cannot convince ship owners to work here when they will not make any profits.”

The port’s woes have also been blamed on the concession that led to the railways being handed over to a private investor – the Rift Valley Railways (RVR). Kisumu Port manager Michael Disi said the facility became idle when RVR stopped operating on the route in 2011.

“The situation of the port, railway station and its rotting facilities cannot be blamed on the corporation,” Mr Disi said.

He said RVR, which entered into a concession agreement with the Kenya Railways, ought to take care of the entire facility.

Kisumu port management is banking on the planned modern rail to shore up its fortunes.

“We are expecting the standard gauge railway line here in Kisumu as well. It will be built in the second phase of the works after completion of the Mombasa-Nairobi-Malaba line,” said Mr Ndisi.

“Kenya, Uganda and Rwanda cannot definitely do without Kisumu. The port will actualise its full potential when the railway line is refurbished.”

Dr Ally-Said Matano, LVBC programmes officer for projects development and partnerships, agrees that siltation not only affects transport but also the biodiversity of the lake.

He said sediment in the lake is the result of poor land use practices such as deforestation, poor farming methods, riverine deforestation, roadside erosion, monoculture and destruction of wetlands.

“This phenomenon is similar within the basin and not unique to Kenya. For instance all the cultivated areas in the basin districts of Tanzania, especially in Kwimba, Magu, Misungwi, Musoma and part of Sengerema districts, which lack vegetation cover, have been exposed to different levels of soil erosion risks,” Dr Matano said.

Transport in the lake is also affected a great deal by the proliferation of aquatic weeds such as water hyacinth.

Dr Matano exonerated the commission from blame over sedimentation saying its mandate is to help Lake Victoria Environmental Programme (Lvemp) implement programmes aimed at solving the problem.

On outdated maps, the LVBC said a consultancy formed in 2008 to undertake survey on access routes of the ports in Mwanza, Port Bell and Kisumu did not complete the work due to lack of funds.

SMOOTH SAILING

“This (survey) was supported through a partnership fund. Nonetheless this was not enough and therefore through the Lake Victoria Environmental Management Programmes, the commission intends to map the entire lake. Once this is completed, it will facilitate smooth sailing. Furthermore, under this initiative, aids to navigation equipment will also be installed,” Dr Matano said in an interview with Smart Company.

He, however, added that the dynamics of the lake have not changed significantly to render the existing maps totally useless.

“It is worth noting that most of the reported deaths (about 5,000 people yearly) in the lake are due to bad weather, overloading and mainly involve small vessels that would not otherwise use the navigation charts,” he said.

Furthermore, the commission said it was negotiating with the African Development Bank to fund an investment plan for maritime communication, safety and transport in Lake Victoria.

According to the Kisumu county government, Lake Victoria has the potential to offer mass transport for goods and passengers across the region and beyond. The county is currently negotiating with investors to set up ferry and boat services, construct a shipyard and supporting rail system.

Governor Jack Ranguma said there are also plans to develop a dry dock port in Kisumu city.

“The features of the proposed dry dock will include storage and clearing facilities, as well as offices, banking halls, hotels and restaurants,” he said.

Mr Ranguma said the county has entered into an agreement with the Kenya Ports Authority (KPA) to revamp port facilities in Lake Victoria to ease docking of cargo and passenger ships.

“We have signed an agreement with KPA and the national government through the Kenya Railways to allow KPA to have the mandate of reactivating port facilities in Lake Victoria for enhanced transport,” said Mr Ranguma.

REDUCED WATER LEVELS

The agreement took into account issues such as overall management of lake port systems. The deal would also lead to the acquisition of vessels that can dock up to one metre deep.

“There has been a continuous challenge of reduced water levels making it difficult for ships to dock. Kisumu County is considering buying sea buses that can land at any point on the lakeshore to pick passengers and cargo.”

Mr Ranguma said the county is working on budgetary allocations for building facilities required to handle cargo.

“We are working on a budget that will help us upgrade existing piers and build new ones in collaboration with KPA,” said Mr Ranguma.

Siaya governor Cornel Rasanga said the lake should be handed over to an authority that can marshal the required human resource to manage fishing, transport and overall maintenance.

Mr Rasanga said road transport increases the costs of doing business.

“Think of a situation where someone wants to travel to Migori from Busia. They can take a ship at Sio Port and disembark at Muhuru Bay in fewer minutes than when they use the road,” said Mr Rasanga.

Mr Israel Agina, the chairman of the business community in Kisumu, said the port lost business because of the dilapidated railway and the fact that most hauliers prefer the Nakuru-Eldoret-Malaba highway.

“We are losing millions of shillings in revenue. The situation is no longer the same as it was six years ago when we had an active train transport system,” Mr Agina said.

Agina’s sentiments were echoed by Mr Amin Vipul, a freight consultant, who said a lot of jobs have been lost following the closure of the railway.

“There are many people who were engaged in offloading and loading cargo but now lack meaningful work. The few who have stayed put can go for days without having any cargo to load or offload as a result of the low business through the port of Kisumu,” Mr Vipul said.

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Tuesday, November 25, 2014

Local online stores have bright future if only they learn

Local online stores have bright future  if only they learn. FILE PHOTO |

Local online stores have bright future if only they learn. FILE PHOTO |   NATION MEDIA GROUP

By LUCY KIRUTHU
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I have made online purchases for the last 14 years. My first experience was at amazon.com.

At the time, it claimed to be “the world’s largest bookstore” and Barnes and Noble took them to court. I trust it possibly was because more than 80 per cent of my hard copy books and 100 per cent of my e-books are from amazon.com.

In the current issue of the Harvard Business Review Jeff Bezzo the Amazon.com CEO tops the list of best-performing CEOs.  In addition, the online store is number two on the 2014 Fortune list of most admired companies and has taken the lead for the last five years in the Customer Service Hall of Fame.

Online shopping though goes beyond Amazon.com. Just recently alibaba.com a company that plans to last at least 102years as stipulated it its vision has made headlines. Other online stores that have left a mark are ebay.com and zappos.com. Many have come and gone and others are being set up today.

Closer home is Mamamikes with its trademark Mbuzi delivery. Currently, there is prolific growth of online stores in Kenya and leading supermarkets are also opening up online stores.

As I reviewed the numerous online stores in the past few weeks, I wondered if I could trust all of them as much as I trust Amazon.com.

Would you shop from a local online store? A few years ago many would have been hesitant.  However, today I believe Kenyans are willing to give it a trial.

HOW TO SURVIVE

As the numbers continue to grow there is no doubt that only those that build a reputation of a great shopping experience will survive.

According to the 2014 Customer Service Hall of Fame survey results, amazon.com not only received by far the highest percentage of “excellent” responses but also received the smallest number of negative ratings compared to all sorts of businesses. The online store has keenly focused on the customer experience. Is there something that our local online stores can learn from Amazon.com?

Most of the local online stores I have visited indicate opening hours as 8am to 5pm Monday to Friday and on Saturday 8am to 1pm. An online store is open 24hours and so should be its support services such as telephone, email and chat services.

In one of the stores, I made a call back request and five days after I have not been contacted. I also sent an online request to several and I was impressed that Jumia and Rupu track customer queries and respond; a few others are yet to respond. 

What also caught my attention were the five-seven days return policies with strict conditions such as the item must be in a saleable condition.

One store responded to my query saying item returned must go through a quality check before an exchange is made. 

Most successful stores have kept their return and refund policies simple and clear.

Leading online stores are also reliable in their deliveries, know their customers by keeping track of their purchase history, keep them informed and provide them with product reviews.  In addition, they provide payment options and secure their customers’ information. 

I believe that online stores in Kenya have a bright future if they put the customer experience at the centre of their existence, build trust and create loyal customers.

Lucy Kiruthu is a management consultant. Get in touch with her on: [email protected]; twitter @kiruthulucy

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Tuesday, November 25, 2014

Agency and Hong Kong firm tussle over aviation licence

The Kenya Civil Aviation Authority headquarters at the Kenyatta International Airport. FILE PHOTO | NATION MEDIA GROUP

The Kenya Civil Aviation Authority headquarters at the Kenyatta International Airport. FILE PHOTO | NATION MEDIA GROUP 

By RAMENYA GIBENDI
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The stand-off between Frontier Services Group FSG, a Hong Kong listed company, and Kenya Civil Aviation Authority (KCAA), over an aviation licence is set for the courts.

At the centre of the row between KCAA and the investment firm is an application for the renewal of Kijipwa Aviation’s licence that was declined by the authority.

The investment firm argues that KCAA has on many occasions failed to provide valid reasons for its refusal to renew the licence for the Mombasa-based aviation firm in which it bought a 49 per cent stake.

“We have written seven letters to KCAA requesting for a valid reason but none has been responded to. The option therefore is to proceed to court to have the matter resolved,” FSG chief operating officer Peter Philips said in an interview.

The authority said earlier that its decision had been informed by the uncertainty regarding the ownership of Kijipwa and non-compliance with Kenyan laws that limit foreign ownership of aviation firms to 49 per cent.

“There are shareholding questions about the company,” KCAA acting director-general Joseph Kiptoo said in an October 26 interview.

But FSG says its purchase of stake in Kijipwa strictly complied with the requirement that locals hold a 51 per cent stake in an aviation firm.

“Our lawyers are currently finalizing on the paperwork and soon we shall move to court to initiate a process that will obviously take longer than we anticipated,” said Mr Philips.

HEAVY BLOW

The decision by KCAA, the aviation industry regulator, dealt a heavy blow to the investment firm which had outlined ambitious plans of setting up an aviation training centre for both pilots and certified aeronautical engineers at the coast.

Currently, professional Private Pilot Licence and Commercial Pilot Licence holders have to go overseas, mostly US and Britain, for training. FSG wanted to set up such a facility in Kenya to serve East Africa.

“We had set up a very ambitious business programme but the licensing headwinds have stalled the whole process,” Philips said.

Kijipwa was part of the investments firm’s wider strategy of cashing in on the region’s and country’s nascent extractive industry as well as logistics services.

FSG, whose board chairman is former US Navy Seal Erik Prince, already has a 49 per cent shareholding in Phoenix Aviation, a Kenyan company.

In May, KCAA expanded Phoenix Aviation’s licence allowing it to operate chartered flights to Asia. This gave FSG room to target Chinese mining firms with operations in Africa as major clients for its logistics services.

FSG was formerly known as DVN Holdings Ltd but it changed its name to Frontier Services Group Ltd in March 2014 through regulatory filings to the Hong Kong bourse.

FSG is eyeing a slice of the oil and mineral wealth in Kenya and Africa through provision of passenger and freight services to oil and mining companies transporting staff, machinery and spare parts to remote areas such as Lokichar and Lokichoggio in Turkana.

“Kijipwa was appealing to FSG due to its strategic position near the Port of Mombasa, and the legendary reputation of its founder, Mr Alan Herd,” FSG chief executive Gregg Smith said in a separate interview.

FSG had reportedly lined up 25 aircraft for Kijipwa’s airstrip located on the grounds of Bamburi Cement in Mombasa, to provide specialised aviation services and aerial survey of installations such as oil pipelines to players in the extractive industry.

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Tuesday, November 25, 2014

Some level of stress is good for work but too much of it is harmful

Many employees operate in an environment of constant high levels of stress, often leading to burnout.  FILE ILLUSTRATION | JOSEPH NGARI

Many employees operate in an environment of constant high levels of stress, often leading to burnout. FILE ILLUSTRATION | JOSEPH NGARI  DAILY NATION

By DAVID MUTURI
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The most common complaint in every workplace is about stress.

As a manager this can be a cause for worry. It is important for managers to be aware of the types and levels of stress among the people they lead.

Different forms of stress have different effects on people. Experts tell us of at least four kinds of stress. They talk of hypo stress, eustress, distress, or hyper stress.

Some level of stress is always necessary for work and good results. This is what experts call eustress. It is the stress that awakens you to what must be done. This might be a deadline that must be met, or   the acceptable standards for a particular task. If you do not have eustress, you are likely to take a lackadaisical attitude towards important assignments and tasks. Eustress is therefore good stress. It assists individuals to achieve optimum performance.

Like most things in life, different people handle stress differently. Accordingly, even eustress will receive different reactions from different people.

What is important is to understand that this form of stress is necessary for good results. When you have that understanding you will not panic the moment you hear the word “stress.” For, you know that good results hardly ever come in an environment devoid of stress.

UNABLE TO THRIVE

 Different environments have different levels of eustress. The critical thing is individual adjustment for self-built stability. It is also important for you to know yourself relative to your capacity to handle stress. Some people cannot thrive in some environments without being easily overwhelmed. Other people would not find any satisfaction if they were not working under some pressure.

 The other types of stress have negative consequences. Hypo stress is a very low level of stress. This form of stress may lead to complacency, or to disturbed quietness. This may occur due to a mismatch in job qualification and job placement.

As a manager you will have to consider whether it helps anybody to retain the individual who has too much time, and can only be a disruption to the other employees. It could lead to a situation where it matters little that a certain undertaking is done or not. This is common where people find it necessary to preoccupy themselves by doing things that are not related to work.

When you have little to or almost no work to do, you get disturbed even when your paycheck comes promptly at the end of the month.

Hyper stress is when a person feels completely overwhelmed. You see no end or hope in what is causing you stress. This can be, for example, when you are working with difficult people whom you have not learnt to handle appropriately. It can also arise when you engage in new responsibilities and tasks.

NEGATIVE THOUGHTS

You could also fuel the stress by your own negative thoughts and sense of inadequacy in what you are doing, choosing only to see your limitations and not your strengths. This can lead to a disruption in the flow of life, at times ending in inertia. This stress may become a hindrance to effective performance of given tasks. It could also be manifested in individuals with low stress tolerance levels.

Hyper stress needs professional intervention because it is dangerous and could lead to other bigger problems. It calls for the attention of the manager. People with low stress tolerance are as dangerous as people with hypo stress.

Mentally ill

When you get distressed you cease feeling overwhelmed, you actually become overwhelmed. This is when you have lost it. This is where you are likely to get mentally ill. You must avoid this at all costs.

You must never get into this stress level. If you are not suited for the environment, get out and look for your space elsewhere. The world is big enough for everyone.

Dr Muturi is the executive director, Kenya Institute of Management.

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Tuesday, November 25, 2014

Don’t make investment decision in haste

Before plunging into the waters of a new business, it is wise to carefully think through all possible risks.  No idea is perfect, so be on your guard and work hard at exposing the hidden problem areas.  FILE PHOTO | NATION MEDIA GROUP

Before plunging into the waters of a new business, it is wise to carefully think through all possible risks. No idea is perfect, so be on your guard and work hard at exposing the hidden problem areas. FILE PHOTO | NATION MEDIA GROUP 

By RICHARD BRANSON
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To do, or not to do - that is the question. Business leaders get paid big bucks to make smart, informed decisions about whether or not to take the plunge on a potential venture, yet there is no science or advice anyone can offer that will help new entrepreneurs to make similar choices.

Such decisions could never be programmed into a computer. It’s more like sitting on a jury: All reasonable doubt must be removed before you can pass a verdict one way or the other. (Thankfully, though, corporate decisions seldom involve matters of life and death!) That said, I have found that a few general rules often help me to arrive at a decision within the appropriate timeframe about whether to approve a project.

For me, first impressions always matter a great deal, but I don’t let that thought process influence my decision-making when it comes to business matters.

I’ve learned that even when an idea immediately strikes you as a really good one, you must push aside that first reaction and carefully and objectively weigh the potential new business’s pros and cons. If no significant cons come to mind when you first evaluate an idea, that doesn’t mean that they don’t exist.

UNFORSEEN PROBLEMS

Almost every startup encounters unforeseen problems, so be sure to devote a lot of time to figuring out what they are and assessing solutions before you move forward - if you learn of a major problem after the launch, you’ll be in a much worse position to deal with it.

This kind of caution becomes doubly important if everyone on your team is unanimously in favour of going ahead with a project. No idea is perfect, so be on your guard and work hard at exposing the hidden problem areas. Find and address them, and you’ll only build a better business.

Avoid making a decision in isolation about whether to launch a venture: You must also consider how the project will affect the overall functioning of your company. Every choice you make as an entrepreneur will impact, to some degree, your ability to explore future opportunities - this is what the experts call the “decision stream.”

You might feel that the venture you’re considering might be too good to pass up, but you have to keep in mind how it will affect your other projects down the road. If it appears that now is not be the best time to move forward, consider what risks, if any, there would be in putting the venture on hold for an agreed-upon length of time. In those situations where you cannot take on a project because another is waiting in the wings, think about why one should get the nod and the other not, and what that says about your priorities.

LIMIT EXPOSURE RISK

Finally, do everything you can to limit your exposure to risk - protect the downside. Wise investors go to great lengths to limit their potential losses when it comes to stock portfolios, and you should employ a similar strategy when setting up a new business.

For example, when I was starting up Virgin Atlantic, the only way I got my business partners at Virgin Records to begrudgingly accept the risks involved in running a new airline was by getting Boeing to agree to buy back our 747 airliner after a year if things didn’t work out as we’d hoped.

Ever since then, whenever we are looking into starting up a giant, capital-intensive venture like Virgin Galactic or our upcoming Virgin Cruises, our team always spends a lot of time finding inventive ways to protect the downside.

These are just a few tips that I have used to help me make smart business decisions, and I hope that they will help you too. A final hint: If you have the time to take an approach that involves orchestrated procrastination, then do so. Doing more homework on a project is seldom a bad thing - as long as you don’t let the opportunity pass you by!

(This column was adapted from Richard Branson’s latest book, “The Virgin Way.” For more information, go to virgin.com/richardbranson/books.)

This column is part of a weekly series by Richard Branson in which he responds to reader’s questions from around the world. Questions from readers will be answered in future columns. Send them to RichardBranson@nytimes.

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Tuesday, November 25, 2014

Brewer to release two new brands in bid to shore up earnings

East African Breweries Ltd is set to introduce two premium whisky brands next month in a bid to boost  revenue that has come under heavy assault from tax on its  products that target low-end market. FILE PHOTO |

East African Breweries Ltd is set to introduce two premium whisky brands next month in a bid to boost revenue that has come under heavy assault from tax on its products that target low-end market. FILE PHOTO |   NATION MEDIA GROUP

By RAMENYA GIBENDI
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East African Breweries Ltd is set to introduce two premium whisky brands next month in a bid to boost revenue that has come under heavy assault from tax on its products that target low-end market.

The beer maker will also be distributing Johnnie Walker Odyssey Triple Malt and Bulleit Bourbon Frontier Whisky in Kenya from December on behalf of Diageo, its anchor shareholder.

Johnnie Walker Odyssey Triple Malt is expected to become one of the most expensive alcohol brands, rivaling King George V, Scotch whisky that retails at over Sh100,000.

Speaking on the sidelines of the official launch of Talisker Storm, another premium whisky brand, last week, Diageo luxury brands ambassador Dougie Duncanson said they are targeting the growing appetite for high- end spirits in the country.

“This is being driven by the ever growing middle class as we have witnessed a growing demand for high-end whiskies, spirits and Vodkas,” said Mr Duncanson.

GROW BY 28 PER CENT

Euromonitor International’s data shows that Kenya’s social class is projected to grow by 28 per cent between 2011 and 2020. This is one of the highest forecasts in the world.

Johnnie Walker Odyssey Triple Malt is described as a new luxury blend with an alcohol content of 40 per cent.  It is housed in a swinging decanter to commemorate the 80th anniversary of Sir Alexander’s creation of a whisky vessel capable of staying upright in the sea.

While its retail price for the brand in the Kenya market has not been disclosed, the whisky retails at Sh333,355 (2,299 pounds) per 750ml bottle in the European markets.

Bulleit Bourbon Frontier Whisky on the other hand is distilled in Kentucky, US, from a mixture of corn, rye and malted barley. It retails at Sh3,190 in the Western markets. The local price has not been recommended.

EABL’s current premium whisky include Johnnie Walker Red Label, Smirnoff Vodka and Baileys. The brewer’s reserve products include Johnnie Walker Blue Label, and Don Julio Tequila.

The brewer recorded a double-digit growth in its spirits sales in the year ended June which contributed significantly to its earnings, helping it post a five per cent increase in full-year net profit to Sh6.85 billion from Sh6.52 billion the previous year.

SENATOR KEG

The brewer’s business was severely hit after the introduction of 50 per cent excise tax on Senator Keg beer which caused a 75 per cent drop in sales of the low-end brand.

It is perhaps based on this backdrop that the brewer is paying special attention to the high-end spirits which are currently performing better than the low-end products.

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