Wednesday, May 27, 2015

Go online to file your tax returns

Tax payers queue outside the Kenya Revenue Authority offices to file their tax returns. One does not necessarily need to visit these centres if you have Internet access.  PHOTO | FILE

Tax payers queue outside the Kenya Revenue Authority offices to file their tax returns. One does not necessarily need to visit these centres if you have Internet access. PHOTO | FILE 

By MARYANNE GICOBI
More by this Author

You have until June 30 to file your tax returns.

And by completing the process online, you will save yourself from the last minute rush that usually results in long, winding queues at the Kenya Revenue Authority offices in Times Tower, Nairobi, every so often.

To ease the process, the taxman has come up with an online platform  — iTax — a robust system to help you file your tax returns at the comfort of your home or office.

To help taxpayers use the system, the authority has also come up with iTax support centres, which are small branches, located in different parts of the country, where you can seek assistance incase you have challenges or questions on filing your tax records.

In Nairobi, the iTax support centres are located in Railway Club, in Mombasa, the shop is at Customs House (Long Room), the Kisumu one is at Swan Centre.

For taxpayers in Nyeri, once can get help at  Premier Plaza while Eldoret iTax support centre is at Kiptangich House.

USER FRIENDLY WEBSITE

Kenya Revenue Authority domestic taxes department, medium and small tax payers commissioner Alice Owuor told Money that one does not necessarily need to visit these centres if you have Internet access.

However, before you log in to the KRA iTax portal, you need to have the following items ready:

If you are employed, get a Form P9A from your employer.

You also need your employer’s Personal Identification Number (PIN) if it’s not already indicated on the P9A. An employer’s PIN ascertains that your employer transacts with the Kenya Revenue Authority.

In case you are not employed, you need to have all your financial statements ready, for instance, business income, farming income or rent income.

For taxpayers with a salary, you need to enter all your income from the employment. Further, one should furnish the taxman with  details of other employment benefits such as car, house and pension income in case you are a pensioner.

When you finally log in into the KRA website www.kra.go.ke, select the link — File Tax Returns under online services.

The website is user friendly and provides a step-by-step filling procedure.

The commissioner says that the authority has reduced the number of forms, which people with employment income need to fill.

“We have made it simpler for those in employment, they make around 75 per cent of those who file returns, it will take them around five minutes to fill the form,” said Ms Owuor.

For taxpayers, who are employed but have other sources of money other than employment income, for instance, farming, rent, interest income, there are specific slots where they can provide these vital details to the taxman.

Once you complete filling the forms, click submit and then calculate.

A successful process would see you get a message informing you that your request has been processed successfully.

If you do not submit your tax returns by June 30, you risk being  penalised five per cent net tax every year, with the minimum penalty being Sh1,000.

LONG QUEUES

There is a group of filers called the nil filers, these are people, who have registered a company hoping to run a business but they have not started it yet. They will also be required to submit their tax returns online.

“No manual nil returns will be accepted in the KRA offices because for nil filers, their online process is the easiest and shortest,” said Ms Owuor.

The authority is urging taxpayers to file tax returns online since it takes a short time and energy compared to queuing at the taxman’s offices at Times Tower.

Ms Owour says the system has been upgraded to accommodate high traffic.

“We have invested in high capacity servers, we have done test runs on the website, and stress testing and we have found the system capable of handling large number of users,” said Ms Owuor.

The taxman is also coming up with more iTax support centres to reduce on the heavy traffic of people experienced at the KRA main offices.

New offices are coming up in Embu, Meru, Garissa counties as well as in Nairobi’s Eastleigh. KRA services can also be found at all Huduma Centres in Kenya.

*************

DECLARATION

what the law says on rent income

The Law

Rental income is taxable under Section 3(2) (a) (iii) of the Income Tax Act, Cap 470

Laws of Kenya. In addition, rent on non-residential buildings (Commercial) is also

taxable under Section 5 and 6 VAT Act Cap 476.

 

What is Taxable?

All rent, premium or any other consideration for use or occupation of property.

 

Rates of Taxation

Taxation rates are dependent on whether the taxable person is an individual or

corporate entity and whether they are resident or non resident.

1. For resident individuals, the annual tax rates (on total annual income including

net rent income) are as follows:

On the first Sh121,968 .....10pc

On the next Sh114,912 .... 15pc

On the next Sh114,912 .... 20pc

On the next Sh114,912......25pc

On all income over Sh466,704...30pc

Note: The above scales are referred to as “graduated”

 

Kenyans in the diaspora

Any Kenyan living out of the country but owns property in Kenya must pay tax in

Kenya on the rent earned. If non-resident (as defined in Section 2 of the Income

Tax Act Cap 470), such rent is subject to a withholding tax at 30 per cent of the gross

which is then a final tax. However, if resident the rate of tax shall be at graduated

scale on net rent income.

 

— Source: KRA

advertisement

Wednesday, May 27, 2015

My dream to run bookstore comes true

For Jayanti Bhanderi the best decision he has ever made in his life is to quit his job. And the leap of faith he took to start a bookshop after working for over 10 years in Eldoret is slowly turning his childhood dream of starting his own business empire into reality. PHOTO | FRANCIS MUREITHI

For Jayanti Bhanderi the best decision he has ever made in his life is to quit his job. And the leap of faith he took to start a bookshop after working for over 10 years in Eldoret is slowly turning his childhood dream of starting his own business empire into reality. PHOTO | FRANCIS MUREITHI 

By Francis Mureithi
More by this Author

For Jayanti Bhanderi the best decision he has ever made in his life is to quit his job.

And the leap of faith he took to start a bookshop after working for over 10 years in Eldoret is slowly turning his childhood dream of starting his own business empire into reality.

His outfit at the junction of the busy Mburu Gichua street and Maasai Avenue is a one-stop-shop dealing with a range of stationery, text books, school uniforms, laboratory and sports equipment as well as staff uniforms.

As the sun sets on the back to school shopping for the second term, the 8,000-square-feet Bookmart Supermarket has been a beehive of activities attracting students, parents, corporate customers and book-lovers due to its wide range of products.

“When I quit as a shop assistant in a bookshop in Eldoret, I came to Nakuru, found this building that was neglected and after surveying it, I decided this is the right place to set up my business,” the 31-year-old business graduate from Shardar Valbhi Patel University, in India, says.

Unlike many young entrepreneurs, who lose hope and focus in business soon after starting, Mr Jayanti says many young people venturing into business want to become rich overnight.

TRANSPARENT BUSINESS

“Patience is key. I waited for a decade to start my own enterprise and when I began the journey on July 2013, it was not a walk in the park as I was not able to pay my suppliers. I even struggled to pay rent and staff salaries,” Mr Jayanti told Money.

However, he turned to Diamond Trust Bank, which provided him with long-term financing plan that has seen the bookshop stock virtually all variety of text books.

“DTB Bank played a key role in stabilising my journey that was almost coming to an abrupt end,” he says.

Mr Jayanti believes that the best way to market such a venture is to provide quality service and treat every customer like a king.

Customer service

“Handling of customers with utmost care and offering the best service even when they are just window shopping is vital,” said the father of two.

Besides offering affordable prices and first class customer service, he says doing a transparent business with suppliers and your staff is crucial.

“The moment you are not transparent in your business deals, this will trickle down to the staff, who are your number one ambassadors and this will have a negative effect as the business will be known for all the wrong reasons,” he said

This business is regarded by many as seasonal and thrives during back-to-school seasons.

ALL SEASON OFFER

However, Mr Jayanti believes that it is an all-season business and has set up a strong sales team to go to schools, colleges and companies to market its products.

Is there money in this venture?

 “Yes, there is good money and the beauty of this industry is that there is an increasing number of pupils and students accessing primary and secondary education,” he adds.

“Unlike when I started, today I have no worries about paying my suppliers, rent, salaries and other levies and with proper planning and advertising, things can only get better,” he said.

He started with 18 staff but as the business expanded, he has employed 12 more people.

Like any other venture, the road to success has many hurdles.

“The main one being dead stock. Books that stay in the shelves for more than three months are a big risk because suppliers will always be on your neck demanding their payment,” he said.

advertisement

Wednesday, May 27, 2015

Give me waste fabric and I’ll make you nice sandals

Isaack Kamau displays the pairs of sandals he makes at his house in Flamingo Estate, Nakuru on May 9, 2015. PHOTO | SULEIMAN MBATIAH

Isaack Kamau displays the pairs of sandals he makes at his house in Flamingo Estate, Nakuru on May 9, 2015. PHOTO | SULEIMAN MBATIAH 

By MORAA OBIRIA
More by this Author

It all started with turning a pair of worn out shoes into sandals using a piece of cotton cloth.

Out came an outstanding footwear, which Mr Isaac Kamau’s brother wore to Kisumu while hunting for a job in the lakeside town. That was three years ago.

Well, people loved Mr Kamau’s work and some demanded to know where they could buy similar footwear.

But the 35-year-old could not immediately understand why people adored his work. Little did he know that he had just exhibited his talent and soon, it would start bringing him good tidings.

And so when his brother failed to get a job at the lakeside city, he returned to Mr Kamau’s house at Flamingo estate, in Nakuru, where he shared his experiences about his shoes.

“At first, I laughed because the shoes were oversize.” Mr Kamau told Money at his house from where he makes the now popular fashion of sandals.

“Later, he told me that I actually got the talent and the fact that a number of individuals had recognised the shoes meant that they were attractive,” said Mr Kamau, whose parents died while he was in class one forcing him to drop out of school.

POOR DECISION

Convinced on his ability, his brother invested Sh1,500 in buying him the tools of trade — waste fabric from second-hand clothes, a pair of scissors, craft knife, waterproof glue and a hammer.

The first six pairs of sandals, which he made in the first week, were bought by buyers immediately. But there was a problem. Mr Kamau did not understand the small matter of why pricing is a vital element in business. He let the buyers take control and as such, he made no profit.

“I sold some pairs at Sh200 and others at Sh300. I did not make any profit. My brother was very mad with me. I did not know what to do next since I did not have any other source of income,” he said.

The consequences of his poor decision hit him hard. And for six months, he turned to menial jobs with a view to raise capital to start afresh, but it was all in vain. Overwhelmed with distress, he begged his brother, a hairdresser, to finance him on agreement that he makes profit in order to sustain his business.

Now, when you order for any size of his sandals for an adult, be prepared to part with at least Sh700.

Give him worn out tyres, sheets of fabric from tents, denim, light or heavy leather; materials used for making couches and he will deliver sandals for your leisure or evening walk. He will make you the type that would soothe your feet during the sunny days of the year when closed shoes are an unbearable footwear.

As long as the materials are available, men, women and children can have their designs made since Mr Kamau can make up to six pairs of footwear per day.

And when he is not out in the market, you will find him doing the measurements, gluing the soles or shaping the shoes using a knife and a hammer.

He uses a standard sole to cut out the tyre, which serves as the outer sole.

He refers to the measurements to piece together a hard sheet, which is attached to the piece of tyre as the inner sole, before joining it with either leather, denim or fabric material. The shoe straps are also made from similar materials.

A pair of children sandals goes for a maximum of Sh300 while those for the adults retail at over Sh700.

EXHIBIT PRODUCTS

However, a major challenge in his venture is customer’s devaluation of his work. Some buyers, who perceive the venture as cheap, demand to buy the sandals at throw away prices.

“A customer would want to buy leather sandals at Sh200. Of course it is not in his interest to know the cost involved, but leather is expensive. A two-metre piece goes for Sh800, which can produce a maximum of 10 pairs of sandals,” he said.

He says as long as the buyer takes good care of the sandals, they can remain in good condition for up to three years.

Thanks to his creativity, traders from as far as Rwanda and Tanzania are making steady orders of up to 50 pairs a week. “These are customers, who saw someone wearing the sandals and directed them to me,” says Mr Kamau, who also makes door to door sales.

For the last one year, he has been a contestant in some competitions exhibiting his innovative range of products. The latest expo was held in Rwanda early this year but it passed him due to the huge financial requirements which he couldn’t meet at the time.

At the moment, Mr Kamau says he is saving in order to open a shoe workshop in Nakuru. And to augment his income, he has opened a boutique that is run by his wife.

Although, his dreams are big and he wishes to achieve them before he is 45, he is reluctant to take a bank loan fearing of losing his business should he fail to repay within the time limits.

advertisement

Wednesday, May 27, 2015

Buy Barclays but hold NBK stock

The Nairobi Securities Exchange. Old Mutual Securities notes that Barclays Bank is currently undervalued. “Our model suggests a fair value of Sh17.79 per share in comparison to the current low price of around Sh15 per share.” PHOTO | FILE

The Nairobi Securities Exchange. Old Mutual Securities notes that Barclays Bank is currently undervalued. “Our model suggests a fair value of Sh17.79 per share in comparison to the current low price of around Sh15 per share.” PHOTO | FILE  NATION MEDIA GROUP

By SIMON MBURU
More by this Author

BARCLAYS: A market report by Old Mutual has recommended this stock as an accumulate from a hold position with a rise target of Sh17.79 per share this year.

“This investment case is based on a recovering loan book and deposit growth that is driven by diversification into new areas of business, and strategic shift to small and medium enterprises,” says the report.

Over the past six years, Barclays has been losing market share in loans advanced in comparison to other large banks. “The bank is, however, witnessing a wind of change, from which we forecast a three-year growth in loan book to Sh171.07 billion, driven by a 10 per cent increase in customer deposits and a loan to deposit ratio of 78 per cent this year alone,” says the report.

Further, Old Mutual Securities notes that Barclays Bank is currently undervalued. “Our model suggests a fair value of Sh17.79 per share in comparison to the current low price of around Sh15 per share.”

The note adds that the stock has an upward potential of up to Sh19.23 apiece. “This should be driven by an over six per cent GDP potential, a stable currency and low inflation of below four per cent,” says Old Mutual.

In the same vein, the stock is seen as holding a base case price of Sh17.70 per share this year, fuelled by on-going diversification or revenue strategy and a shift to retail and SME.

NOTE TO INVESTORS

“The cost of management initiative adopted by the bank will result in higher profitability going forward.” Diversification into SME sector is expected to increase the bank’s loan book to Sh141.38 billion in 2015 from six per cent recorded by the bank in 2014. On the opposite extreme, the counter has bear case price of Sh16.41 per share for the year 2015 based on rising competition and possible changes in the regulatory environment.”

On Thursday, the share closed the day at Sh15.20 per share from a traded volume of 1.31 million shares, a 0.33 per cent drop. On Friday, the counter opened the day at Sh15.05 per share with an early intra-day trading high of Sh15.20 per share. The share has traded at a high of Sh18.45 and a low of Sh15 over the past one year. 

NBK: This counter is recommended as a hold. According to Old Mutual Securities, NBK is currently trading above its fair value of Sh19.84 per share at Sh21 per share.

For instance, on Thursday last week, the stock had closed at Sh21 from a low traded volume of 17,200 shares. On Friday, the counter opened at Sh21 per share.

Over the past one year, NBK has touched a high of Sh33 per share and a low of Sh19.75 per share. “Currently, the bank’s Capital Adequacy Ratios are under pressure and this constrains the bank from mobilising deposits and lending,” says Old Mutual.

For the bank to deliver higher growth rates, Old Mutual said, it will need to raise more capital. However, its Sh13 billion cash call has been iced by the markets regulator’s delays in granting NBK a rights issue approval.

The report cautions that while holding, investors should take note that the expected merge between NBK and Consolidated Bank could further harm its current loan book.

“The declining net interest margins remain a threat to the bank’s profitability growth,” notes the report. “Similarly, efforts by the government to strike a balance between economic growth and management of economic risks in the face of a falling exchange rate could possibly lead to contractionary monetary policies that lead to higher non-performing loans.”

In 2014, the bank’s bad loans stood at 10.6 per cent. This was much higher compared to the banking sector’s average of 5.1 per cent. NBK, which is the 12th largest bank in Kenya by asset size, will be majorly fuelled by regional expansion, organisational re-design, alternate banking channels, and the newly launched Chinese Businesses section, notes Old Mutual.

advertisement

Wednesday, May 27, 2015

Getting your business card noticed

A good business card should convey the overall image of your business You can’t expect your business card to tell the whole story about your company. PHOTO | COURTESY

A good business card should convey the overall image of your business You can’t expect your business card to tell the whole story about your company. PHOTO | COURTESY 

By ENTREPRENEUR

A good business card should convey the overall image of your business -- not easy, considering the card measures only 2 inches by 3.5 inches.

How can you possibly get a message across in such a small amount of space?

You can’t expect your business card to tell the whole story about your company. What you should expect it to do is present a professional image that people will remember.

The colour, wording and texture of a business card have a lot to do with its appeal and its ability to convey your company image. Use common sense when you are designing your business card.

If your business markets children’s toys and games, you might try using bright, primary colours and words written in child’s script.

COPY THE BEST

On the other hand, if you run a financial consulting service, then you want your business card to convey professionalism and reliability, so stick to traditional looks such as black printing on a grey, beige or white background.

Of course, professional designers claim entrepreneurs should not try to attempt designing a business card on their own, but many cash-strapped business owners have no other choice.

The best course of action: Look at all the business cards you receive, and emulate the cards that you like. You may have more leeway if you are in a creative business, such as party planning or retailing, but in general, keep the following tips in mind:

1. Use your logo as the basis. Make it the largest element on the card.

2. Keep it simple. Do not cram too much information on the card.

3. Include the essentials — your name, title, company name, address, phone and fax numbers, and email and website addresses.

4. Make sure the typeface is easily readable.

5. Stick to one or two colours.

 

Once you’ve got business cards, make the most of them:

1. Always give people more than one card (so they can give it to others).

2. Include your card in all correspondence.

3. Carry cards with you at all times, in a card case so they’re clean and neat.

 

Business cards don’t have to be boring. If your industry allows for a little creative flair, here are some ideas to try:

1. Use 4-inch-by-7-inch cards that fold over (like a mini brochure), cards made of plastic or cards with photos on them.

2. Although they are more standard than standard business cards, cards in nontraditional shapes get attention. Try a teddy bear shape for a day-care service, for example, or a birthday cake for a party planner.

3. Textured paper can add to a card’s interest, as can colored paper. In general, stay with lighter shades that enhance readability.

4. Thermography, a process that creates raised, shiny print, adds interest to a card. Embossing and foil stamping are two other printing processes that can give your card visual appeal.

advertisement

Wednesday, May 27, 2015

How to overcome failure in business

When you meet a successful business person, you are indeed meeting someone, who has learnt how to overcome failure. A person who does not get beaten and lose hope in being an entrepreneur. People who take failures as lessons and use the new knowledge to spring back. PHOTO | FILE

When you meet a successful business person, you are indeed meeting someone, who has learnt how to overcome failure. A person who does not get beaten and lose hope in being an entrepreneur. People who take failures as lessons and use the new knowledge to spring back. PHOTO | FILE 

By MUTHONI NGATIA
More by this Author

I remember my primary school days when we used to run cross country. Cross country is a tough sport in which people run on open-air courses over natural terrain in the fields or nearby roads.

I am the type that always tries to excel in every activity. I remember pushing myself hard, running breathless and my heart pounding hard.

All this while, some gifted runners made it look pretty easy. But once at the finish line, I would be exhausted yet happy to have finished the race.

We all get into business with a similar attitude – to excel and make good money. However, along the way, we give the business everything but still realise that some things are not working and the money is not as good as you hoped.

We find ourselves pushed to accept that the venture is about to fail or is indeed failing.

I have been in business for slightly over 10 years now and I have discovered that failure is part of the journey to success.

When you meet a successful business person, you are indeed meeting someone, who has learnt how to overcome failure.

A person who does not get beaten and lose hope in being an entrepreneur. People who take failures as lessons and use the new knowledge to spring back.

DIFFICULT TIME

Many of the renowned business people around the world have had difficult times to get to where they are today. Do you know one Akio Morita, the Japanese businessman, who began Sony? He did not have a rosy start.

Although we know Sony as an electronics giant that has recorded big success in making entertainment units ranging from TVs to playstations, its first product was a rice cooker, which sadly, burned the rice!

But Akio moved on coming up with bigger and better devices, which we all know Sony for today.

Do you know that the world’s richest man, Bill Gates, before building his Microsoft empire as we know it today failed in a venture called Traf-O-Data?

The outfit was meant to read raw data from road traffic counters and create reports for traffic engineers.

Gates and his partner had to get an engineering friend to help them build a computer on which they could run their software. After hard work and a visit from the county officer, it turned out that the product did not work.

Soon after, the State of Seattle in the US, where they lived, offered free traffic processing services to the cities making the effort of private contractors, among them Traf-O-Data, redundant.

This experience that was not entirely successful was the springboard of what we know as Microsoft today.

And with his business partner Paul Allen, Gates went on to create one of the most successful software companies in the world.

These are just two examples, we have many other success stories.

If you read the stories behind most of world billionaires, you will learn that success is indeed a journey, often fraught with failures.

EMBRACE FAILURE

But what do those who succeed have in common? One, they are always switched on to a positive mode.

They don’t fight failure, they embrace it and only then are they able to understand what an experience it was. Always take note on what you did right and what you did not. Reapply what you did right and get solutions for what you did wrong.

It is very important that you are aware of what to continue building on.

Second and most important, start again. For those who overcome failure, the mood is always simple — get up, brush off the dust from the fall and walk with your head high towards your next venture.

Otherwise, failure will knock you off the entrepreneurship road and you shall soon be back to where you were before your tried business.

Few entrepreneurs usually make it with the first jump, as such, be prepared for multiple attempts to reach your goals.

advertisement

Wednesday, May 20, 2015

The pain of a weakening shilling

When the Kenya shilling slid against the dollar early this year, the drop was perceived as a minor slip up, from which the local currency would recover fast. After all, the last time the shilling had been battered hard was in 2011. PHOTO | FILE

When the Kenya shilling slid against the dollar early this year, the drop was perceived as a minor slip up, from which the local currency would recover fast. After all, the last time the shilling had been battered hard was in 2011. PHOTO | FILE 

By SIMON MBURU
More by this Author

When the Kenya shilling slid against the dollar early this year, the drop was perceived as a minor slip up, from which the local currency would recover fast. After all, the last time the shilling had been battered hard was in 2011.

“Back then, the nose dive was attributed to increased borrowing, imports and high inflation,” says Benjamin Wasilwa, an importer. “Last year, it depreciated a bit, and we were hopeful that there would be some recovery this year. We did not expect the shilling to lose so much ground.”

Five months down the line, though, the shilling has hit levels last seen in 2011 before it touched a historic all-time low of Sh107 to the dollar on October 11. Back then, the Central Bank raised its key lending rate by 550 basis points to 16.5 per cent to stem volatility in the exchange rate and spiralling inflation.

Consequently, overnight rates shot up to 25.9 per cent, making funding of dollar positions costly while cutting demand.

Since January, though, the shilling has lost 6.3 per cent against the greenback. This has been more than the cumulative 4.3 per cent the shilling lost in 2014.

The magnitude of the drop came to the fore last week when the unit succumbed to a three-year low of Sh96.80/97 to the dollar.

Just a week ago, a market report by Commercial Bank of Africa warned that the shilling was likely to drop further.

“The shilling’s outlook remains poor. There’s a high likelihood that it may breach the Sh96 mark,” said the report.

WEAKENING MARKET

The survey was echoed by technical analysis of the 14-day and 50-day weighted moving averages that showed the short-term outlook of the shilling to be dim against the dollar.

According to National Treasury Cabinet Secretary Henry Rotich, weakening of the shilling is due to persistent poor performance of tourism and horticulture as well as insecurity.

The government is considering drawing from Sh64 billion borrowed from the International Monetary Fund (IMF) earlier in the year to shore up the shilling. “We’re keenly looking into the volatility of the shilling and what is fuelling it.

Once we find out, we shall be in a position to withdraw the IMF funds. This should be within a month or two,” said Mr Rotich recently.

Research analyst George Bodo says the shilling’s depreciation can be partly attributed to the “weakening in the foreign exchange earning capacity, the strengthening of the US dollar globally due to the improving domestic absorption rate in the US economy and seasonality in demand for foreign exchange.”

Financial analyst and Rich Management CEO Aly Khan Satchu says profit bookings by foreign investors is driving the shilling deeper into crisis.

“We’ve seen the market getting weaker by the day as foreign investors book their gains before the shilling weakens further,” says Mr Satchu.

The vacuum created at the Central Bank has resulted in a defensive mode against the weakening unit. “We see more nervous people unwilling to touch the shilling in fear and defence against further plummeting. This ends in a self-fulfilling prophesy,” adds Mr Satchu.

His sentiments are echoed by Nation economic affairs editor Jaindi Kisero, who notes that the CBK governor’s shoes must be filled to offer direction to the markets.

“Calm and confidence will only return once the markets understand the options that are available to the Central Bank. Failure to this, we must brace for games and tactics by dealers and Treasury managers.”

To cushion themselves from the effects of a weak shilling, some traders such as Mr Wasilwa have taken to operating their businesses using a dollar account. Take Nahashon Muema, an exporter of horticultural produce, for instance. “It is cheaper for me to operate from a dollar account than say to buy dollars at the current high rates,” says Mr Muema.

“The weaker the shilling gets, the more value I get from my produce. In any case, I’ll get good money once I convert my dollars into the local currency.”

LOW OIL PRICES

However, Mr Satchu notes that this plan could demolish the shilling further. “If people open dollar accounts as a hedge, the shilling will hit Sh100 against the dollar in no time,” says Mr Satchu.

Losing more

In given instances, local exporters will seem to be in for more gains as the shilling weakens further. This is due to the exchange gain they get once paid using dollars.

However, Mr Satchu dismisses such gains, noting that a weak shilling does not benefit the Kenyan economy. “The notion that a weak currency is beneficial is actually a fallacy. A weak currency is a double-edged sword to our economy, unless we were to be as big in exports as Germany. Currently, we are losing more because we are being forced to pay more,” he says.

Apparently, the import–export deficit relief that was to come from low oil prices in the global markets never came to fruition. “Where is this export that’s going to be the redeeming factor of the shilling? Are we selling more agricultural produce? No, we simply aren’t selling more,” observes Mr Satchu.

In 2013 and 2014, the shilling depreciated due to low tea prices. In February, the unit had firmed helped by dollar inflows from tea auctions and tight liquidity resulting from a bond sale.

Nevertheless, according to Mr Kisero, the shilling should stabilise in the medium-term. “Oil prices are expected to stay low, this coming at a time when we are seeing increased dollar demand. Similarly, we have seven billion dollars in foreign exchange reserves and an IMF cushion in case the volatility persists,” he says.

Mr Satchu adds that while the CBK needs to stem the slide, we have no deep pockets to firmly shore it up.

On Tuesday last week, the Central Bank sold dollars to the markets in a bid to float the sinking shilling. Effectively, the unit gained marginally to Sh96.50/96.60 range. On Friday, the Central Bank quoted the unit at Sh96.15 to the dollar.

In the long run, this trick of releasing dollars into the market hardly stops the downward trend of the shilling. “Aren’t we depleting our reserves when we do this? What is the end game to all this?” Asks Mr Kisero.

According to Mr Bodo, commercial banks should work out a kill switch that will stem speculation whenever the shilling depreciates by over one per cent intra-day in the interbank market.

“Commercial banks’ net open positions should be narrowed to five per cent of core capital from the current 10 per cent,” he adds. 

ANALYSIS

experts take on shilling

Releasing dollars into the market hardly stops the downward trend of the shilling: “Aren’t we depleting our reserves when we do this? What is the end game to all this?”

Nation economic affairs editor Jaindi Kisero

******* 

A weak shilling doesn’t benefit the Kenyan economy: “A weak currency is a double-edged sword to our economy, unless we’re to be as big in exports as Germany. Currently, we’re losing more because we’re being forced to pay more.” 

Economic analyst Aly Khan Satchu

advertisement

Wednesday, May 20, 2015

My dream job is transforming addicts

Mrs Elizabeth Koimet, the Serenity College director during the interview at the Gilgil Campus. She quit her job as a deputy director at Teachers Service Commission to start a rehabilitation centre. PHOTO | SULEIMAN MBATIAH

Mrs Elizabeth Koimet, the Serenity College director during the interview at the Gilgil Campus. She quit her job as a deputy director at Teachers Service Commission to start a rehabilitation centre. PHOTO | SULEIMAN MBATIAH 

By MAGDALENE WANJA
More by this Author

Elizabeth Koimet had seen a hard-working colleague lose job even as others languished in poverty after being sacked due to alcoholism.

Pushed by the unravelling disaster, she caught her colleagues and family off guard when she announced her plan to quit her high-paying job to start a rehabilitation centre.

“A big number of teachers were interdicted and eventually sacked due to addiction. No one seemed to offer help. Chasing them away gave them a better platform to drink themselves into a stupor leading to death,” said the former Teachers Service Commission deputy director, a place she had worked for over 10 years.

And in 2013, Ms Koimet turned her house in Nairobi into a rehab. She was embarking on a tough mission of tackling a scourge that continues to wreak havoc in many homes head on.

“I had a dream of transforming lives of drug addicts that cost jobs and lives and I’m happy I’m doing something to recover some of the condemned people,” she said.

AGGRESSIVE MARKETING

With her house turned into a rehab, Ms Koimet says she was not sure whether her husband would support her when she ushered in her first two clients, whom she counselled back into good life – single-handedly.

“At first, I was not sure how I would break the news to my husband. I started with two people, who stayed in my house in Nairobi, but I did not tell him at first as he was away on duty most of the times,” she told Money.

She says from her survey, the need for a rehab was so high, especially for professionals, who suffer silently since they are ashamed of disclosing their condition to anyone.

“My target group is professionals and I started off quietly with only a handful of contacts,” she adds.

When I finally told my husband that I wanted to resign from TSC to start a rehabilitation centre, I was shocked because he was in full support of the idea, she noted.

In 2013, Ms Koimet opened Serenity Rehabilitation Centre, in Lanet, Nakuru County, where she has employed a team of counsellors.

Ms Koimet pointed out that the most common form of drug addiction is alcohol and its enticing adverts on television and radio leave many with no choice but to seek the “joy of the imbibers.”

“Through research, I established that 90 per cent of the addicts started abusing drugs back in primary school and were introduced by friends or close family members,” she added.

At a fee of Sh2,000 per day, her rehab centres, Nairobi and Lanet, counsel alcohol addicts.

The process takes 90 days where one undergoes counselling and detoxification while users of hard drugs take up to six months. “Hard drugs such as cocaine and heroin take a long period to detoxify.”

FREE OF ADDICTIONS

In the course of rehabilitation, many addicts come out with skills since some of them either dropped out of college or secondary school.

“I introduced a system where we could equip them with skills such as hairdressing, making of food and beverages as well as computer skills,” she says.

At the moment, the centre has 29 patients, many of them youth from all over Kenya.

“We’ve also handled doctors, who suffer from drug addiction. This is basically the self-prescribed medicine while they are on duty,” she said.

Since the start of her rehab work, over 200 patients have successfully gone through the system and are now free from the various forms of addictions.

A recent survey by the National Authority for Campaign against Alcohol and Drug Abuse indicates that over 2.2 million Kenyans are addicted to alcohol and substance abuse. The survey suggests that substance abuse and addiction has a profound negative affect on the workplace.

This is in terms of decreased productivity and increased accidents, absenteeism, turnover, and medical costs.

This remains as major challenge as the number of alcohol and drug addicts rise with only four government rehabilitation centres in Kenya.

advertisement

Wednesday, May 20, 2015

Clinic where doctors access X-ray reports round-the-clock

Ms Nyokabi Kaguthi, the owner of Africa Telerad, a start-up that specialises in interpreting X-ray images.  PHOTO | JEFF ANGOTE

Ms Nyokabi Kaguthi, the owner of Africa Telerad, a start-up that specialises in interpreting X-ray images. PHOTO | JEFF ANGOTE 

By LILIAN OCHIENG
More by this Author

Ms Nyokabi Kaguthi runs her dream shop a field dominated by male medical practitioners. She is the founder and director of Africa Telerad, a startup that provides medical diagnostic reports.

Her mission began in 2011 with Sh2 million savings. The plan was to help provide affordable medical care in Kenya and then expand into East Africa.

“The start of the business was slow. Africa Telerad was geared towards lowering the cost of radiology services, improving access and maintaining a high quality of healthcare,” said Ms Nyokabi, a specialist in diagnostic imaging and radiation medicine.

The benefits and potential impact of her business model in the long run was easy to sell, especially to hospitals and health professionals. As a result, the number of business deals has been on the rise.

FAST RADIOLOGY

Before opening Africa Telerad, Ms Nyokabi had worked as a radiologist at the Nairobi Hospital for three years. Prior to that she was employed as a medical officer at the Aga Khan University Hospital. She was posted at New Nyanza Provincial General Hospital immediately after completing her medical degree.

She had the passion to venture into imaging field, with particular focus to web technology that was fairly new when she opened shop. Her focus was to help cut drastically the time used doing X-ray and other imaging services so as to save lives.

So, in 2011, she quit her job to launch her business, which is currently based in Kilimani, Nairobi. Among the strategies she used to get an edge in the field were providing fast radiology services and lowering the charges.

However, it took close to a year to stabilise and get good returns, “it was a tough one year but there was no turning back so together with my team, we stayed focused.”

The venture has since grown and currently covers 32 hospitals and diagnostic clinics in East Africa.

The firm’s core business is to interpret X-rays, Ultrasound scans, CT scans, and magnetic resonance imaging (MRIs) in order to help doctors treat patients. The process is web based. It starts when a technician in a hospital performs an examination. Details of the examination are then sent using a secure network to a team of radiologists at Africa Telerad, who interpret and send a report back to the hospital.

To get quality medical reports, Ms Nyokabi partnered with a team of radiologists. The team, which analyses the images send by doctors within an hour, usually works round-the-clock.

DIRECT IMPACT

In emergency cases, lives have been saved because of the short time taken to analyse images, she told Money.

“Our radiology services have had a direct impact to over a million people so far by improving access to quality and affordable services,” said the employer of three radiologists.

The centre produces about 60,000 medical reports per year. On average, one pays between Sh300 and Sh500 to get an imaging report. A patient pays the charge through cash or insurance as part of the hospital bill.

Many hospitals usually charge between Sh1,000 and Sh1,500 for similar reports.

Kenya has less than 150 radiologists with most of them based in big towns. This is one of the challenges that inspired Ms Nyokabi to open a one-stop stop, where hospitals could access imaging reports fast.

“The ratio of skilled medical professionals to patients currently stands at one doctor per 10,000 people, which is way below the World Health Organisation recommended ratio,” she said, adding, “the impact and benefits of technology in medicine has immediate positive impact on health.”

advertisement

Wednesday, May 20, 2015

How drought gave Mwea farmers new income stream

Rice farmers move hay from rice straws at Mwea irrigation scheme in Kirinyaga County on February7, 2015. Rice farmers in Mwea are making good returns from rice straws, which they used to burn previously thanks to livestock herders from arid areas, who came looking for animal feed three years ago in the area. PHOTO | JOSEPH KANYI

Rice farmers move hay from rice straws at Mwea irrigation scheme in Kirinyaga County on February7, 2015. Rice farmers in Mwea are making good returns from rice straws, which they used to burn previously thanks to livestock herders from arid areas, who came looking for animal feed three years ago in the area. PHOTO | JOSEPH KANYI 

By GEORGE MUNENE
More by this Author

Rice farmers in Mwea are making good returns from rice straws, which they used to burn previously.

Thanks to livestock herders from arid areas, who came looking for animal feed three years ago in the area, the farmers have established a new income stream.

Like desert locusts in search of food for life, herders from Isiolo, Garissa, Marsabit and Moyale invaded the rice farms in 2012, and pleaded with the farmers to let them take the straws or buy them in order to save their stock.

This served as an eye-opener for the locals, who started making hay and selling it at a profit.

Since then, usually busy Embu-Makutano road has been the meeting point for buyers and sellers.

MORE THAN RICE

Some farmers now say that the hay is even more profitable than rice. A bale goes for Sh200 earning a farmer Sh150 profit. In a good day, one can sell 50 bales, minting Sh7,500 profit.

“We hire machines and the owners charge us Sh50 to make one bale,” a farmer, Mr Peter Muthike, 38, said.

Mr Muthike said the new trade has helped him a lot in raising school fees. “As for me, it is double profit. After harvesting rice, I sell my produce. What remains are the rice straws, which I turn into hay for sale,” he added.

Ms Sophia Wambura said her regular customers come from Isiolo and Meru.

“To me, this is a good business and I’m not giving up any time soon. Customers queue to buy hay and my only task is to make as many bales as possible and receive cash.”

For Ms Wambui Gatimu, hay provides her with business all-year-round. She is now able to provide food, clothes and raise more money her children’s school fees.

“I’m in business all seasons because I stock enough rice straws, which I use to make hay. When I do not have straws, I buy them from my colleagues, who have many rice fields,” she said.

Agricultural researcher, Dr Raphael Wanjogu, said farmers can make a fortune out of rice straws.

“Rice straws make good hay for livestock and farmers are capitalising on them. Farmers have become enlightened and are doing good business in the scheme,” he said.

Dr Wanjogu, who is in charge of Mwea Irrigation Agricultural Development Centre, has urged the farmers to keep up the spirit.

advertisement

Wednesday, May 20, 2015

Six tips to boost your SME sales

We all plan to increase the our business revenues every day. Every business owner hopes that the sales will take an upward trajectory. PHOTO | FILE

We all plan to increase the our business revenues every day. Every business owner hopes that the sales will take an upward trajectory. PHOTO | FILE 

By MUTHONI NGATIA
More by this Author

We all plan to increase the our business revenues every day. Every business owner hopes that the sales will take an upward trajectory.

If your sales can go higher than the previous day each day, it would sooth you.

But, how can you make this happen? Here are some valuable tips:

One, add complimentary services to your existing products. A complementary good is one whose use is related to the use of an associated or paired one.

For example, assume that you lease out tents at events. It follows then that people who will attend the event will need chairs or even food. It would make sense to compliment your tent-leasing business with chair-leasing or outside catering enterprise.

Look at your business, how do people consume your product or service?

VALUE ADDITION

Where can you add value to derive more revenue?

Two, expand your market reach. Many SMEs tend to pay attention only to their immediate surrounding.

While it is good, you may have other ready customers just outside this zone. Take for example a business located in Nairobi, you may find quick customers in Thika or Machakos by just venturing a little outside your catchment zone.

Say you distribute paper in the city, you may find very many willing customers in the town just 20 kilometres from your central location.

Three, consider bundling products. Let’s say you sell suits for men and you are doing great at that.

Consider bundling offers where the suits with shirts, ties or shoes and offering the package at a reduced price compared to purchasing the products separately. This way, you get a higher profit margin.

When you sell products that naturally go together, or are used for the same task or at the same times, consider selling them as a package.

Four, offer special discounts and properly market the discounts. There are many ways to offer discounts.

For example, quantity discount is when a customer enjoys a price reprieve when two or more items are bought together. Bundle your discounts based on the bundling strategy we discussed above.

Seasonal discounts are offered say during back-to-school or Christmas periods. Stripped discounts, where something may have less features than the ordinary one.

Five, rev up your brochures, presentations, catalogues, flyers or banners to bolster sales. A vibrant, bright-coloured document complete with drawings and pictures draws attention and generates excitement.

Dull materials are typically trashed without a second thought. Review your sales materials, item by item, to see whether they convey the image and message you want to present to your customers.

POWERFUL INCENTIVES

Do they adequately portray the advantages of your products by linking features to benefits?

Do they convey a sense of urgency with easy instructions for purchase?

If your presentations, product data sheets, pictures, or website don’t simply and clearly present information, which will spur your prospects to take action, it’s time to redesign them.

Six, you can incentivise your sales force by rewarding the superior salespeople with higher commissions.

A compensation plan of this sort aligns the company’s and the salesman’s interest.

The promise of an even higher income as sales grow is a powerful incentive to make more sales.

For a temporary boost in revenues, create a sales contest where the salespeople compete for a cash prize, a luxurious trip, or some other desired perquisite if they reach a targeted level of sales or new accounts.

If successful, follow one contest after another with a different prize each time.

advertisement

Wednesday, May 20, 2015

Signs that you should quit your job

And while there are many reasons for staff to quit, it can sometimes be difficult to decide. There are vital warning signs that you should look out for. PHOTO | FILE  

And while there are many reasons for staff to quit, it can sometimes be difficult to decide. There are vital warning signs that you should look out for. PHOTO | FILE   

By ENTREPRENEUR

Quitting a job is a big decision for most individuals.

And while there are many reasons for staff to quit, it can sometimes be difficult to decide. Here are vital warning signs that you should look out for:  

Staff are no longer valued

One of the main “benefits” companies realise from a merger centres around the fuzzy corporate buzzword “synergy,” which is the antiseptic-sounding catchword for layoffs.

While reductions in force (RIF) are part of virtually every business, dignity and respect need to be a part of every RIF.

If they are not, consider looking elsewhere even if you are not laid off. 

Growing incompetence

All too often, organisational cuts go too deep, taking out linchpin individuals as well as unsung individual contributors, who do the job of multiple people.

When those superstars exit, the shortcomings of remaining underperformers become more pronounced.

Organisational upheaval tends to reveal organisational incompetence.

While it’s important to allow for a time of transition, if the incompetency increases after six months, a refresh of your resume might be in order. 

Your boss is clueless about the business

One of the most unfortunate aspects of a transition is when your incoming boss doesn’t understand the nature of the business, customer needs or your role.

The fortunate thing is that you can usually decipher this particular sign pretty quickly, which can help shape your ultimate decision to stay or go. 

Advancement opportunities are blocked

This is an unavoidable reality that occurs with mergers.

Typically, open opportunities at the acquired company are filled by individuals from the acquiring company, who need to be “protected” for some odd reason.

If your company gets acquired and vacancies within your organisation are artificially stuffed with folks from the acquiring firm, it’s a tell tale sign to seriously consider a proactive career change.

Your advancement options are limited if you stay. 

Development programmess are cut

Frequently, in the rush to realise cost reductions, early casualties are education benefits, career training or even long-term incentive plans.

Dismantling of those types of employee-focused programmes for the sake of costs is usually a bad long-term sign. 

More work, less reward

It’s an acquisition axiom that once the cuts have occurred at a company, the volume of work doesn’t decrease proportionately.

By definition, a synergy occurs when productivity improves at a lower cost. While that sounds great to the investment community, the actual implementation is very demanding on the remaining employees.

The employees who still have jobs usually get the added workload of excised personnel, without a commensurate increase in salary, title or influence.

Once you’re forced into that role, the outcome tends to be physical and emotional burnout.

To avoid that, it’s important to quickly recognise the unsustainability of that arrangement and quit.

These signals are not exhaustive nor unique. They can, and do, occur at organisations at anytime.

While one or two of these signals might be the post-recession “new normal” for your organisation, if you see a majority or all of them in place for several months a career assessment is probably in order.

advertisement

Wednesday, May 13, 2015

How to negotiate for higher salary in a job interview

According to Perminus Wainaina, the managing director of recruiting firm, Corporate Staffing, it is easy to come out as money-oriented rather than skills-oriented during salary negotiations. PHOTO | FILE

According to Perminus Wainaina, the managing director of recruiting firm, Corporate Staffing, it is easy to come out as money-oriented rather than skills-oriented during salary negotiations. PHOTO | FILE 

By SIMON MBURU
More by this Author

Peninah Mumbi had just secured a job interview at a Nairobi-based telecommunications company in March 2014.

The post, IT officer, would have been her second job after graduating with a diploma in Information Technology in 2009. And although the firm was offering Sh60,000 salary, Ms Mumbi, 34, was asking for a minimum of Sh80,000.

“I was convinced this was the salary I needed to accommodate my lifestyle in Nairobi,” she says. During the negotiations, she was asked why she needed a salary higher by Sh20,000. “I simply told the interviewer that it was what would be rightfully due to me. It was what I needed,” she confides.

Despite her former employer recommending her for the new post, she was not hired. “I was not asked to wait for a feedback. Instead, the potential employer termed my salary demand as greedy,” she says.

Granted, many job seekers often find themselves in similar circumstances. In any case, many interviewees do not know how to pitch their case for new and better pay, and those who do often find themselves walking in Ms Mumbi’s shoes.

According to Perminus Wainaina, the managing director of recruiting firm, Corporate Staffing, it is easy to come out as money-oriented rather than skills-oriented during salary negotiations. “If you ask for too much (salary), and remain adamant about it, your employer will be left wondering if you are coming in to deliver or to milk the company,” he says.

HOW TO NEGOTIATE

According to Mr Wainaina, framing your pitch starts long before you meet your potential employer.

“You must begin by understanding the industry, the size and position of the firm you’re engaging with. For instance, if you are an accountant, you cannot pitch for the same salary at an SME looking to hire an accountant as you would a multinational looking to hire an accountant,” he says.

Further, Forbes notes that you should not start to ask for higher pay once you get the actual offer. “When you get the actual offer, you’re in no emotional shape to negotiate. All that your mind has is the new offer, which you want to lock up.”

Although potential employees fear that their prospective employer will rescind the decision to hire them if they ask for a higher pay, Forbes adds that this doesn’t happen 99 per cent of the time.

“Ask for some time to settle without showing signs of withdrawal, doubt, disinterest or disrespect. Then use this time to research on how the company pays. This should help you come up with a more realistic figure as well as help you respond to questions on why your salary should be higher than someone else’s.” In the same vein, you will come across as better prepared.

Mr Wainaina agrees, adding that after grasping the scope of the firm, the key to unlocking a bigger pay will be in how you expound on your skills.

“You must prove that what you are going to bring the firm is value addition and nothing else. If you are an accountant and you’re well acquainted with Kenya Revenue Authority, you may consider elaborating on how you can bring your experience on board to align the firm’s books with KRA’s policy more smoothly and cost-effectively,” says Mr Wainaina. For instance, if you are a receptionist, you can show how you are able to market the company.

From experience, Mr Wainaina observes that an employer will hardly reject you just because you requested an additional Sh10,000 on your stated salary.

DELICATE BALANCE

Nevertheless, negotiating for a better pay is a delicate balancing act. “If the employer is offering Sh100,000 and you demand Sh120,000 without explanation on what you’re bringing to the table, your potential employer will most likely flee thinking you’re greedy!” cautions Mr Wainaina.

Quintessential Careers, an online job-seekers’ portal, echoes Mr Wainaina’s sentiments: “The most common error people make is focusing on need or greed rather than value. You’ll be seen as greedy or needy if you focus solely on what you feel you need or deserve rather than your value and the value you’re bringing.”

According to James Njenga, a financial coach based in Nairobi, you will do well to approach a pay negotiation using a competitive strategy.

“Generally, people who use a competitive strategy by identifying their goals early on and having the spine to try and push for them get significantly higher salaries than those who sit back and compromise on their pay plan.”

He adds that you shouldn’t be afraid of articulating your pay concerns during the negotiations. State them clearly and at once. Quintessential Careers notes that you should be careful not to reveal to your employer what you would accept.

“Some employers will ask for a salary history or salary requirement. Others will ask during a preliminary interview or on the job advert what salary you’ll be expecting. But realise that the earlier you divulge this information, the less room you’ll have to ask for a better pay when the actual offer is put on the table.”

This is the mistake that Lawrence Musyoka made. “My employer had advertised for a vacancy in the accounts department. He had stated that I needed to state my current pay and what I expected to earn. I stated my net pay of Sh45,000 and an expectation of Sh70,000 net pay,” he says, adding that his employer took him to task on why his pay ought to be nearly doubled.

“I had little space to negotiate and since I needed the job, I accepted the Sh48,000 he offered.”

CAREER PLAN

Alarmingly, the hardest hit in the search for better pay are the fresh university and college graduates. Previously, the Federation of Kenya Employers has lamented about a skills gap among college leavers seeking jobs.

Candidates seeking high pay at the entry level are likely to get raw deals, says Mr Wainaina. “College leavers have nothing to prove. They are just stepping into the market and will inevitably be viewed by the employer with a lot of scepticism,” he says. “Their only stronghold is in how they demonstrate their ability to adapt, learn and build a portfolio.”

Strikingly, there are some workers, who get raw deals after leaving previously high-paying jobs.

An employee will only receive a poor pay at another company if she or he does not have a career plan, notes Mr Wainaina.

“Many of our current professionals have no career plan. In many cases, this proves to be the weak link when moving from one company to another and subsequently when negotiating for a pay,” he observes. 

Negotiating for a better pay is  a delicate balancing act. However, whereas experienced workers have skills to prove, fresh graduates face an uphill task.

Job recruitment expert Perminus Wainaina says entry level candidates seeking a high pay are likely to get a raw deal.

“College leavers have nothing to prove. They are just stepping into the market and will inevitably be viewed by the employer with a lot of scepticism,” he says. “Their only stronghold is in how they demonstrate their ability to adapt, learn and build a portfolio.”        

advertisement

Wednesday, May 13, 2015

Hold KCB, sell KQ and buy Safaricom

An investor being at the Nairobi Securities Exchange. According to Genghis Capital, Safaricom stock is a buy. Last week, the telco posted record Sh32 billion profit for the financial year ended March.  PHOTO | FILE

An investor being at the Nairobi Securities Exchange. According to Genghis Capital, Safaricom stock is a buy. Last week, the telco posted record Sh32 billion profit for the financial year ended March. PHOTO | FILE 

By SIMON MBURU
More by this Author

HOLD

KCB: This stock is recommended as a hold with a target price of Sh65.22 per share.

According to ABC Capital, the stock has an 8 per cent upside potential.

“We remain optimistic about KCB given that the bank is a consolidation of its businesses in the region and is also leveraging on technology to offer banking services to the populous while minimising the unit cost of delivery,” said ABC in a market report.

This recommendation comes hot on heels of KCB’s first quarter results, which the bank posted a 12 per cent net profit increase to Sh4.3 billion.

The results saw the bank edge out Equity Bank in the profitability race. Equity Bank has posted a Sh4.2 billion net profit for the period under review. The bank’s net interest income shot upwards by 11 per cent to Sh9.3 billion from Sh8.3 billion.

According to ABC Capital, KCB continues to remain strong on all prudential ratios. “KCB is also gearing itself to deliver balance sheet growth and shareholder wealth in the short- to medium-term by leveraging on technology and partnerships with telecommunication companies to launch innovative products.”

The stock opened at Sh59 per share on Friday after closing at the same price on Thursday.

BUY

Safaricom: According to Genghis Capital, Safaricom stock is a buy. Last week, the telco posted record Sh32 billion profit for the financial year ended March.

The firm also revealed that the tenure of current CEO Bob Collymore had been extended by two years. According to Mr Kevin Tuitoek, a research analyst at Genghis Capital, this will work well for the telco.

“The extension is a positive indication of business continuity,” he says, adding that the stock has a strong upside potential due to Safaricom’s innovation in a bid to remain dynamic. This is going to be the key drive that will prop up Safaricom to strong position in the market.

“The company’s prospects of attracting higher revenues from data are high with the roll out of 4G network and expansion of its 3G network in rural Kenya,” says Mr Tuitoek.

The company expects to roll out 4G network by end of this year.

Safaricom shareholders are set to take home the biggest dividend payout in Kenya’s history amounting to Sh25.64 billion. Retail shareholders will pocket Sh0.64 dividend per share up from Sh0.47 they received in 2014.

On Thursday, when the results were released, Safaricom traded 19.809 million shares. The stock closed at Sh17.15 apiece. 

SELL

Kenya Airways: The stock opened at Sh7.10 on Friday, a Sh0.05 drop from Thursday’s closing price.

Over the past one year, KQ has touched a low of Sh6.70 apiece and a high of Sh13. According to Ndindi Nyoro, the head of Investax Capital Limited, the national carrier is expected to suffer a loss of between Sh14 billion and Sh20 billion for the financial 2014.

Genghis Capital advices investors to sell this stock. “Over the short-term, we project a sell. The company’s earnings are going to dip,” says Mr Tuitoek. He is nonetheless quick to note that the Dreamliners leasing deal is positive news for the ailing carrier.

“With the swapping of the Dreamliner purchases for a leasing programme, the financial restructuring programme is positive indication of good financial fundamentals,” he says.

“The deal should mitigate accelerated accumulation of debt, acting as a win-win whereby it allows the company to continue its expansion programme whilst easing balance sheet pressures.”

advertisement

Wednesday, May 13, 2015

Stimulating your staff productivity

The productivity and discipline of many staff is a big challenge to many business owners. It pains when you have a huge payroll bill but you are not getting value from this expense line. PHOTO | FILE

The productivity and discipline of many staff is a big challenge to many business owners. It pains when you have a huge payroll bill but you are not getting value from this expense line. PHOTO | FILE 

By MUTHONI NGATIA
More by this Author

We cannot do everything in our businesses alone. It is for this reason that we keep hiring staff.

How do you ensure that you are getting true value in terms of productivity from your staff?

I have seen a new employee culture especially with the younger generation of workers where people want to earn more, but do less.

Employees of SMEs want the benefits offered by the bug firms. The trouble with push is that few can actually defend their true value to the business.

Some of them are scheming everyday to see what loophole they can exploit in the business. Many people say Kenya has a great human resource base, that may be true.

However, the productivity and discipline of many staff is a big challenge to many business owners.

How are you dealing with these challenges? It pains when you have a huge payroll bill but you are not getting value from this expense line. The labour unions have argued that a worker’s productivity should not be tabled when discussing wage increments.

Then, by all means, they should consider discussing job losses when they raise the issue of wage increments.

ADOPT TECHNOLOGY

Businesses cannot afford to keep increasing wages without a matching increment in productivity and revenues. Salaries are earned, not given.

One of the things that is interfering with employee productivity is new technologies.

With almost everyone owning a smartphone and many offices enabled with wireless Internet, staff get a lot of distractions. From social media to WhatsApp, some workers spend more time on their handsets than on office computers.

As an employer, you need to set rules around this. People must respect working hours and spend that time doing what they are paid to do. If you can, turn off Facebook, Twitter, YouTube or even WhatsApp on your Internet router or server.

Otherwise, embrace the technologies for business use. For example, adopt social media marketing for your business and monitor it to get true value.

The truth, although it is good to respond fast to communications, if you are not careful with them, they can take away lots of valuable business time and negatively impact productivity.

As a business owner, you may also want to invest in surveillance cameras in your premises.

These prompt the workers to be more responsible and productive. When you know that the big brother is watching, there will be less idle chitchats. Surveillance can also prevent losses.

If someone knows that they can be seen slipping business assets into a bag, they will be try not to do it. If you notice a hostile reaction when you install a surveillance camera in the office, you can be sure that a lot has been going on behind your back.

This has happened to me! The knowledge that the employer is watching at all times can, in itself, inspire better performance and improve productivity without the need for unpleasant confrontations.

TEAM BUILDING

A happy staff is a productive one. However, this depends on the employee’s attitude, too.

Investing in compensation strategies such as pay rises, bonuses and enhanced benefits can be quite expensive and is a route that can backfire.

As an alternative, think through win-win strategies. Benefits that may not be expensive but may actually help in increasing the business profit margins.

You can also try our team building events to enhance bonding between the employees and performance-based benefits.

Give recognition, for example, for exceeded sales targets or cost-cutting ideas that bring returns.

You can also allow people to come up with new product or marketing ideas and provide a recognition even if it is not monetary.

Anything that would make the person feel valued.

However, be very careful not to create an entitlement culture in your business where employees begin to count chickens before they hatch.

Keep re-evaluating your strategies around employee productivity to ensure that you are dynamic enough for the benefit of your business.

advertisement

Wednesday, May 13, 2015

How I grow tidy sum of money on trees

Mr Roddrick Ambuka tending his seedlings at his nursery in Luanda, Vihiga county. PHOTO | DENNIS LUBANGA

Mr Roddrick Ambuka tending his seedlings at his nursery in Luanda, Vihiga county. PHOTO | DENNIS LUBANGA 

By STANLEY KIMUGE

Like many youth, who travel to Nairobi in search of jobs once they complete secondary school, Mr Rodrick Ambuka made his journey to the city in 1986 to seek employment.

Luck was on his side: “I got hired at an engineering firm, Burns and Blair, which exclusively dealt with agricultural implement.”

Hired as a sales person, Mr Ambuka started honing his skills. “I would go for lessons in accounting to learn how to run a business since I wanted to become an employee, who is conversant with the job.”

But five years into his job, he resigned and opened his entity, Roddy’s and Toro Company, a start-up that was set to compete with Burns and Blair.

“It was quite easy to run a business since I had a prior knowledge,” says the 50-year-old, who also runs other enterprises in hospitality and construction industries.

LOVING TREES

However, it was in Nairobi that he noticed one peculiarity about Kenya’s housing sector.

“I noticed that the wealthy lived in suburbs with a good environment, with plenty of trees, which is appealing unlike the areas where the low income earners resided. That is how I started loving trees,” said the proprietor of Roddy’s Eco Cover, a company which sells seedlings.

His passion for the environment drove him to start the project in 2011 with 1,000 seedlings.

“The demand peaks ahead of the rainy seasons from April where we sell an average of 50,000 seedlings in a good month making about Sh500,000.

“We have a client who bought 20,000 seedlings from the county of Kajiado and asked us to plant them on her land,” says Mr Ambuka, who has close to a million seedlings in his nursery at any given time.

His empire is now crossing borders. Already, he is processing an order to supply 6,000 seedlings to a customer in Uganda.

“I always believe that trees are wealth because if you plant one, which costs just Sh10, in the next 10 years, the least you can earn from it is Sh60,000,”

Buyers stream from the counties and devolution has proved to be a blessing for him. “We’ve sold our products to Bungoma, Busia and Kisumu counties. We’ve received a tender to supply 50,000 seedlings to the county government of Vihiga.”

To maintain quality, the entrepreneur buys certified seeds from Kenya Agricultural Forestry Research Institute (KEFRI) for both exotic and indigenous tree species such as Jacaranda, Elgon teak, Grevellia, Neem, and fruit trees, which he plants in black polythene bags.

“The locals used to trek as far as KEFRI/Kenya Forest Service offices at Maseno, about 10 kilometres from Luanda town, to buy seedlings because there were no nurseries around here and that is how we thought of starting our own in 2011.”

Mr Ambuka, who has employed 40 workers, says “indigenous trees are more expensive compared to exotic ones. Indigenous trees can fetch up to Sh200 because they take time to break seed dormancy.”

His vision is being the main player in the county like Kenya Forest Service is to the State in helping improve forest cover in western and Nyanza, where deforestation has hit large tracts of land.

HIRING PROFESSIONALS

“Last year, we sold about 500,000 trees, ornamental plants and fruit seedlings of about 20 different species to schools, churches, colleges, NGOs and county governments.” Mr Ambuka, who rides on the slogan; “trees are wealth”, also donates seedlings to schools so as to train pupils on the importance of conservation.

He attributes the success of his project to hiring of a team of professionals. For instance, he poached the farm manager, Mr Felix Ngome, from Kenya Forest Service.

Mr Ngome offers free counsel to customers on the kind of trees that can do well in specific regions.

The green enterprise, whose annual turnover is over Sh5 million, has caught the government’s attention through the ministry of Environment when it assessed its capacity and awarded it a tender to plant 25,000 trees in the depleted Buyangu hills forest.

As part of the project’s corporate social responsibility, the shrewd businessman uses his proceeds to educate five bright students mainly from needy families.

advertisement

Wednesday, May 13, 2015

Bold investor creates jobs in slums, turns waste into cash

Mr David Aurobach, the brains behind Sanergy Fresh, a firm that collects human waste in Mukuru Slums and turns it into organic fertiliser. PHOTO | COURTESY

Mr David Aurobach, the brains behind Sanergy Fresh, a firm that collects human waste in Mukuru Slums and turns it into organic fertiliser. PHOTO | COURTESY 

By EDWIN OKOTH
More by this Author

A short walk in Mukuru slums, in Nairobi, paints the picture of a people living in squalor.

However, new blue structures in the slum are now commonplace. They are part of the 680 Fresh Life Toilets by Sanergy, a venture that seeks to create jobs and mint millions of shillings from waste.

Sanergy co-founder David Auerbach says the project, which started three years ago, has employed 700 slum dwellers.

“We’ve a vision to grow several entrepreneurs, who can operate more Fresh toilets in the slums, earn decent money and create jobs. We design and build the urine diversion dry toilets and sell them to operators, who we train and sign  franchise agreements with to ensure that quality is not compromised. We hope to double our rate, which is currently 40 toilets per month,” Mr Auerbach told Money.

Entrepreneurs, who want to begin running the toilets invest Sh50,000. Sanergy has since come up with a credit option to support buyers who pay back in 24 months.

The toilets are designed with two catridges to collect human waste. No water is required to flush the toilet, instead, saw dust is used and suppliers of both saw dust and tissue paper are now a happy lot.

A sack of saw dust, which was previously burnt as waste, now goes for Sh150. The locals call it “toilet disinfectant”.

MARKET DYNAMICS

A team of collectors pick the cartridges every morning and replace them with clean ones. They wear a protective gear, are inoculated and have a health insurance. They cart away the waste to collection centres where it is transported in trucks for processing into organic fertiliser.

About 7.5 tonnes of waste is collected daily from the slum, Mr Auerbach, who is responsible for raising capital, business development and building partnerships says.

There are plans to engage mobile toilet dealers and the counties to harvest more waste for processing of fertiliser.

“People think they are carrying water, milk or juice because we have ensured that they are very clean. It is our environmental health commitment and they have been trained to keep it. We’ve some samples also taken to our labs for analysis so that we process them for maximum use as organic fertiliser,” he said.

Since the first toilet was installed on World Toilet day, in November 2011, the numbers have been rising. About 40 new units are set up per month. They are projected to hit 1,000 in total by end of this year.

Ms Esther Munyiva has been running one of the toilets. She says the toilets have transformed socio-economic lifestyles with “flying toilets” slowly becoming a thing of the past.

“This place was so bad with human waste in polythene bags thrown all over. You see, today there is no excuse to do that when we’ve this facility here. I get up to 100 users on a good day and people like the cleanliness and the mirror at the door. I was also forced to lower the charges from Sh5 to Sh3 following pleas from my customers,” Ms Munyiva said.

Sanergy recommends Sh5 but leaves the price setting to market dynamics. The firm now plans to venture into Mathare and other slums even as it woos schools, bars and lodges.

With about 60 per cent of Nairobi’s population living in slums, which occupy less than six per cent of the city’s residential land, sewerage systems, piped water and gabbage collection in the slums is stretched to the limits. Slum dwellers are forced to pay for services, which people in affluent areas of the city take for granted.

An Amnesty International survey on 130 women living in four slums in Nairobi, including Mukuru, in 2010, it was established that shortage of toilets and places to wash in the slums heighten the risk of gender-based violence against women.

Mr Auerbach says after graduating from Massachusetts Institute of Technology (MIT), Mr Ani Vallabhaneni, Mr Nathan Cookie, Ms Lindsay Stradley and himself proposed the idea and won a cash prize.

SAVING WATER

The team then raised about Sh50 million and carried out a research in the slums where they realised that the sanitation facilities were lacking yet locals were willing to pay to access even the available inferior options.

“We came up with a design that needed no water, was easy to use and easy to install. We also took the task of waste collection and trained our operators as well as ensured the standards including the provision of hand washing and tissue paper was enforced, the brand is now self-expanding,” he said.

Over 30,000 people in the slums use the toilets every day earning the dealers about Sh200,000 in revenue.

The organic fertiliser is supplied to farms. “We’ve just started in Nairobi where over two million live in informal settlements that means we can still scale up and we’ve a long way by the time we cover the eight million, who live in such settlements countrywide,” said the MBA holder from MIT.

The enterprise was nominated by SAP as proven business model with potential to scale and outlook for job growth and social impact.

Mr Auerbach will join CEOs from selected companies in East Africa, who will participate in a 100-day fellowship programme at Silicon Valley, in July.

advertisement

Wednesday, May 13, 2015

How to be the best consultant

It seems like a great career path. But consulting, as it turns out, isn’t sexy, glamorous, or easy. It’s harder than you might think. PHOTO | FILE

It seems like a great career path. But consulting, as it turns out, isn’t sexy, glamorous, or easy. It’s harder than you might think. PHOTO | FILE 

By ENTREPRENEUR

Thousands of professionals have dreamed about starting their own consulting business.

It seems like a great career path. But consulting, as it turns out, isn’t sexy, glamorous, or easy. It’s harder than you might think.

Here’s what you need to know: 

1. You’ll face cranky people

If you’re not ready to face unpleasant people, then consulting isn’t for you.

Consulting is a face-to-face business. You meet with people. You sit across tables. You talk to people. And some of those people you talk to are just plain mean.

You figure out pretty quickly who is worth working with and who’s not. As you figure it out, you might have to endure some relationships that eat away at you. 

2. You sell knowledge

A consultant is hired for his/her knowledge. A client selects you because you know something that they don’t.

This means that you tell them like it is, and don’t back down. Deliver the knowledge that they pay for. If they don’t like it, so be it.

Your deliverable is knowledge, and if you deliver it in a half-baked way, you’re losing the quality of your service. 

3. How to charge

Quite often, new consultants don’t charge enough for their service.

Maybe it’s guilt or they just don’t know how much they should charge. There is no magic formula for fee setting, but there is a general rule: charge more than you think you should.

Remember, the higher your rate, the better you look. If you saw two wristwatches, one for $10 and the other for $5,000, which one would you think was superior?

Obviously the more expensive watch is a better timepiece. The same goes for consultants! 

4. Marketing yourself

A consultant must market him or herself. There’s nothing sordid or dirty about this. This is the way the business is done. To successfully sell yourself, here’s what you need to be prepared to do:

• Dress to kill. You’ve got look as good as the services you provide.

• Put a big price tag on yourself. People associate higher cost with higher value.

• Be trustworthy. No one will hire you unless you’re trustworthy. And if they hire you, they won’t take your advice.

• Prove your worth. You can’t just look it; you’ve got to actually be it. Give what you promise, and give it well.

• Think of yourself as a brand. The higher-quality the brand, the better your marketing becomes. 

5. You aren’t your own boss

The myth of consulting is that you are your own boss. You’re not your own boss. As a consultant, your clients are in charge. They own your billable hours and they expect results. Being your own boss extends to your ability to say “no,” discipline yourself to work smart and hard and demand fair fees. Beyond that, you’ve got to work hard for other bosses. 

6. The challenges

Try starting any business, and you’ll have moments of absolute devastation, both personally and professionally.

Consulting can take an emotional toll. That’s a price that you have to pay, but it’s not one that you can accurately quantify or predict.

Regardless of how you respond in the face of challenge, one thing is true: You will face disappointment and failure. 

As awesome as it is, there’s nothing easy about consulting. Now you know the facts. So, roll up your sleeves, grit your teeth, keep your eye on the goal and be the best consultant you’re capable of being

advertisement

Monday, May 4, 2015

Deaf hawkers defy disability to turn profit

A group of deaf young men hawking smokies on the streets of Kakamega town to earn a living. Many physically handicapped persons have moved from being begging to enterprise to improve their livelihood. PHOTO | ISAAC WALE

A group of deaf young men hawking smokies on the streets of Kakamega town to earn a living. Many physically handicapped persons have moved from being begging to enterprise to improve their livelihood. PHOTO | ISAAC WALE 

By BENSON AMADALA
More by this Author

A group of five hawkers has refused to sit back and mourn what to others would have been considered a “misfortune in life.” 

Unable to communicate owing to their speech and hearing impairment, they have become enterprising. 

The group, led by Kevin Ongwalo,34, has turned to selling sausages and “smokies” to earn an income and support their families. 

They wake up early each morning to collect their trolleys at a Farmer’s Choice stockist in Kakamega Town to prepare for the tough and challenging day ahead.

According to Kevin, members of the group assemble outside the stockist’s shop along Sudi road at 6 am to start off preparations for the day. 

They clean their trolleys before getting the day’s supply of smokies before take their positions at their place of work. One cardinal rule the vendors observe is always to stay clean to attract customers. 

WARM AND FRIENDLY

The vendors have put stickers on their trolleys indicating the price for the products they sell to avoid misunderstandings with customers. 

Each day the hawkers sell smokies worth between Sh7,500 and Sh10,000. Their customers include university students, boda boda cyclists, traders and people walking by their place of work at the busy bus terminus near the Muliro grounds along the Kakamega-Kisumu road. 

From the amount, each of the vendors make a minimum of Sh500 daily and save part of the cash to invest in project they plan to run jointly in future.

The smokies are popular with people who want a quick bite of the fast selling snack as they go about their daily chores. Other members of the group are Victor Wawire age 23 years, Cornelius Juma 26 years and Edwin Ambani aged 28 years. 

Although deaf and dumb, the group has decided to put their disability behind them and open a new chapter in their lives. 

With the help of a sign language interpreter, Mr Ongwalo said the secret for the good sales they made each day was driven by their affability and astuteness when dealing with their customers. 

“Although we are unable to speak and hear, we have managed to attract customers by being warm to them and friendly as they approach us to buy the smokies,” said Mr Ongwalo. 

According to Mr James Mburu, the Farmer’s Choice Field Sales Manager in Western, Nyanza and Rift valley, smokies unlike ordinary sausages have a longer shelf life and can stay up to three days without going bad. 

He said the company sold more than 50 assorted products which included beef sausages, bacon, ham hot dogs but the smokies were popular with the public. 

He said the company was impressed with efforts made by the group of hawkers who had decided to put their disability behind them and were competing with their colleagues and earning a livelihood from the job. 

GOOD RELATIONSHIPS

The group has started saving part of their income and plans to secure a loan from a financial institution to expand the business. 

Mrs Lilian Muthoni, a shop owner and a stockist in Kakamega said at first she faced challenges when the group approached her to be allowed to sell the products. 

“The situation was complicated by the communication barrier but with time I came to learn some basic sign language and was able to communicate with them with ease,” said Mrs Muthoni. 

She said hade had not experienced any problems working with the group after developing a close working partnership with Mr Ongwelo and his colleagues who refer to her as Mama Baraka (blessings). 

Mr Ongwelo said he has managed to buy a cow to provide milk to his family and augment his income. He now plans to buy a bigger parcel of land for farming.

advertisement

Thursday, April 30, 2015

How much do loans via your phone cost you?

Lenders are offering varying interest rates for loans borrowed through mobile phone platforms. These services are registering a phenomenal growth. PHOTO | FILE

Lenders are offering varying interest rates for loans borrowed through mobile phone platforms. These services are registering a phenomenal growth. PHOTO | FILE 

By YVONE KAWIRA
More by this Author

Are you a little short on cash? Well, all you need is your handset and a good credit history.

With the introduction of mobile banking, Kenya’s banking industry is transforming and one can borrow as little as Sh50 via a mobile phone to pay bus fare.

The banks have moved with speed to launch mobile banking platforms in a bid to grow their customer base and increase revenue streams. But what’s in it for you the consumer?

A look at the mobile banking services shows just how fast the lenders intend to get new or existing customers take loans with ease.

Gone are the days when customers applied for loans, which would take a long time to process, in the banking halls.

“The fact that a person can now borrow Sh50 to pay bus fare to work or Sh1,000 to pay for electricity without reaching out to friends is in itself liberating,” Kenya Commercial Bank CEO said recently.

VIRTUAL ACCOUNT

According to Co-operative Bank’s retail banking director, Mr Maurice Matumo, mobile banking loan application is fully automated. They are applied for, appraised and disbursed via the phone, he told Money.

“Time span between applications to disbursement is no more than one minute,” Mr Matumo told Money.

For instance, Co-op Bank’s MCo-op Cash give a customer a virtual account with no monthly charges. A customer can operate it without visiting any branch.

In March, KCB launched a mobile phone-based loan product where customers can repay loans at a fixed interest rate of between four and 12 per cent.

These products by Co-op Bank and KCB rival Commercial Bank of Africa’s M-Shwari, which was launched two years ago.

However, with growing appetite for quick, unsecured loans, one needs to know the costs and benefits associated with each micro-loan product in the market. Here are a few: 

M-Shwari (a partnership between Safaricom and CBA)

Launched two years ago, all Safaricom subscribers can access M-Shwari service. Subscribers can save between Sh1 and Sh100,000, and qualify for loans ranging between Sh100 and Sh20,000.

However, the loan depends on one’s previous loan repayment pattern and use of other Safaricom services such as voice, data and M-Pesa.

To qualify for your maiden loan, however, you must deposit money in your M-Shwari savings account. The loan is payable within 30 days and attracts an interest rate of 7.5 per cent. Defaulters risks being blacklisted.

Data released by Commercial Bank of Africa last month shows that it is currently processing about 50,000 loan applications every day.

“Backed by a dynamic mobile phone-based credit scoring system, CBA has extended loans amounting to Sh29 billion, processing an average of 50,000 loans per day over the last two years without demanding security or the need for clients to visit a bank branch to apply for the loan,” CBA chief executive officer Isaac Awuondo said.

For savers, M-Swhari Lock Savings account comes in handy.

“This account allows M-Shwari customers to save for a defined purpose and for a specified amount of time. The funds saved on the M-Shwari Lock Savings account will be kept in the account until the maturity date,” Safaricom notes in its website.

The interest earned in M-Shwari Lock Savings account is varied. For instance, savings below Sh999 would earn you two per cent interest rate per annum while amounts over Sh50,000 attract six per cent interest rate per year.

KCB Mobiloan

Under this product, new customers are registered as part of account opening at branch or by opening M-benki account via handsets. Existing account holders register by completing an application form.

Customers can access a minimum of Sh100 and a maximum Sh20,000 loan. However, the bank says that it is reviewing the range to enhance the loan limit.

The loan attracts 7 per cent interest rate and has one-month repayment period.

KCB M-Pesa loan

The customers opt-in, that is; open KCB M-Pesa account by dialEdwin Dande, ling *844#.  The loan limits range between Sh50 and Sh1 million with interest rates ranging from four, three and two per cent for periods of one, three and six months respectively.

A borrower can opt to pay from the KCB M-Pesa loan on a self-initiated basis before maturity of the settlement period, or let the bank recover the money from the KCB M-Pesa account, upon maturity.

Both products have penalties of up to 10 per cent of the amount borrowed in case of defaults.

According to KCB chief executive officer Joshua Oigara, the loans disbursed since KCB M-Pesa launch in March stands at Sh710,227,883.

“Currently, a total of 1.3 accounts have been opened,” said Mr Oigara added.

Co-operative bank’s MCo-op Cash

Registration can be done at a branch, agent location or by self by dialling *667#.

MCo-op Cash is an independent wallet where customers can borrow a minimum of Sh100 and a maximum of Sh200,000. The loans are applied for, appraised and disbursed via the phone.

One pays between 7 and 10 per cent interest rate depending on the loan type with a one-month repayment period. A borrower can pay off the loan before expiry of term at their own convenience with no extra charge.

“Late payment attracts a fee of six per cent per annum and eventual customer listing on credit reference bureau in case they do not repay,” said Mr Matumo, adding that being a one-month loan, each deal is treated as a separate deal therefore, no top ups.

Equity Bank’s Eazzy 247

To subscribe for the service, a customer dials *247# or accesses it by downloading an application form from the Internet. One then links his/her existing account to Eazzy 247 after which one can use his/her handset to transact.

Equity Bank customers can access these services only when they subscribe to equitel service and get an equitel line.

Eazzy Loan interest rate is two per cent per month of the loan amount on a flat rate with a six per cent per annum late payment fee.

Customers can borrow between Sh500 and Sh20,000. Failure to repay the loan will see a customer blacklisted. 

advertisement

Thursday, April 30, 2015

Tax on beer hit my firm, I’m scouting for new markets

Ruth Kinoti (centre) with award sponsors from Netherlands. The teacher-turned-social entrepreneur, who Shalem Investments together with her husband. PHOTO | COURTESY

Ruth Kinoti (centre) with award sponsors from the Netherlands. The teacher-turned-social entrepreneur, who Shalem Investments together with her husband. PHOTO | COURTESY 

By EDWIN OKOTH
More by this Author

Shalem Investments, a Meru-based entity that brings together 7,000 sorghum farmers bore the brunt. The group had found a ready market for the crop at the East African Breweries Limited (EABL).

Shalem Investments partner Ruth Kinoti, who recently won the European Marketing Research Cooperation-Rabobank Project Incubator Award in Kinshasa, says the government did little to weigh the effects the tax would have on the thousands of sorghum farmers.

Money met the teacher-turned-social entrepreneur, who runs Shalem Investments together with her husband.

“I started by supplying maize and beans to schools when I was a teacher using my salary as the seed capital. The demand grew and when I finally resigned and registered Shalem Investments in 1998, the plight of many farmers touched me. I organised them into groups, bought their sorghum, which EABL bought in big volumes,” said Ms Kinoti.

MUTED SALES

With support from her husband, the mother of two says the business was booming.

Farmers trusted her due to the assured market she provided thanks to the brewer until the government hit low-cost beer business with tax in 2013. The value chain was disrupted and the brewer failed to continue buying sorghum in huge volumes starting January, last year.

“We were stuck with about 3,755 tonnes in the second season of 2014. This was the hardest moment for the farmers,” she said.

EABL had been making Senator Keg beer since 2004 as a drink for consumers wanting to shift from use of home-made alcohol.

The cheap drink was enjoying a tax break until 2013 when the government imposed excise duty hoping to generate Sh6.2 billion.

As a result, the price of Senator Keg rose from Sh20 to between Sh45 and Sh50 per 300ml glass bringing down sales by 80 per cent according to EABL.

The government’s plan to encourage production of low-cost beer made Senator Keg the second-most popular beer in Kenya with a market share of 15.3 per cent. But with the new tax, farmers’ stores began swelling with sorghum.

“If only Deputy President William Ruto, who I have known to be an ardent defender of farmers, knew of the full impact the taxation caused on thousands of farmers, who had invested in sorghum. What is the benefit of cheap fertiliser when there is no market for the harvest?’’ she said.

In many parts of semi-arid Igembe North, Meru County, farmers had embraced sorghum in droves. And with the coming of a ban on miraa (khat) in European markets, Ms Kinoti believes sorghum will be the best alternative.

“There was total transformation in lifestyles. We wrote many cheques to secondary schools. Youths were employed in spraying, harvesting and they had even formed groups through which they saved, and women groups leased land to farmers, transforming many lives.

If there is an initiative of meeting all the Millenium Development Goals in totality, it is in agribusiness,” she added.

At the moment, the enterprise has over 2,000 tonnes of sorghum in its stores.  Muted sales have affected over 20 per cent of the firm’s annual turnover.

WALK THE JOURNEY

However, encouraged by last month’s social agribusiness award, which includes a cash prize of $15,000 (about Sh1.4 million), the former teacher says there is no giving up yet. She plans to mobilise at least 15,000 farmers in 1,500 groups in the next five years.

The pain of a reversed breakthrough in sorghum farming has made her to start thinking beyond the market chain that has since been interrupted.

She has turned to food and feed millers across the country including Unga limited as the main market for her group of farmers.

To augment their earnings, she is urging them to diversify into sunflower farming with oil maker BIDCO providing the market. She is also encouraging farmers to venture into bee keeping.

Asked about the money she won. “I want to set up a small fund to help farmer groups access input loans and depending on how it goes, I will woo more investors to grow the fund bigger. I feel for the poor farmers, who did not even know what the sorghum was being used for but all they knew is that life was being transformed. We have to complete the journey.”

In a deal with 2 SCALE, an agribusiness incubator in Africa, Shalem Investments trains farmers on the best farming practices. This is achieved in cooperation with the ministry of Agriculture and the European Cooperative for Rural Development.

Under Shalem Investments, the annual income for the farmers had hit over Sh400 million. There are plans to raise it to Sh1 billion in the next five years.

The highest earning farmer now makes Sh750,000 per year.

EYE ON THE MONEY

Ms Kinoti says the main motivation for farming is money and not food.

A ready market is therefore as crucial just as the resources dedicated in research for other aspects of good production.

“Policies have to be well thought out. Before looking at any policy, the government ought to look at the entire value chain. Farmers need cheap loans and a reliable market. Every farmer will tell you how much they intend to make, not how much food they expect,” she notes.

She has plans to explore new markets  in China and Dubai for sorghum, green grams and other grains.

The International Crops Research Institute for the Semi-Arid Tropics says sorghum is widely grown as a food crop in sub-Saharan Africa, but commercialisation has proved difficult as growers prioritise household food security.

advertisement

Thursday, April 30, 2015

We’re betting big on taxi culture to grow start-up

The user interface where customers use to get in touch with Maramoja Transport taxis. PHOTO | FILE

The user interface where customers use to get in touch with Maramoja Transport taxis. PHOTO | FILE 

By YVONE KAWIRA
More by this Author

When Jason Eisen toured Nairobi in 2010 and then again in 2013, he faced a common problem — transport woes within Kenya’s capital.

Transport challenges frustrated the Washington DC-based consultant prompting him to start sharing his experience with his acquaintances.

“As I discussed these challenges with scores of Nairobians, I quickly began to understand that I was not alone lamenting them. I remember flying back to Washington, DC, after a particularly difficult transport experience here, and on the day I landed, using something like nine different modes of transport, all powered by technology,” recalls Mr Eisen.

At that moment, he began to reflect on how technology could be applied to alleviate some of Nairobi’s transport woes.

Mr Eisen quit his job three months later and returned to Kenya to explore the transport business idea.

“A unique picture began to emerge, of a taxi culture not a taxi market, built around trust rather than anonymity, relationships rather than proximity. A view of taxis as individuals rather than just a function,” said Mr Eisen.

BACKGROUND CHECKS

Mr Eisen then joined efforts with Mr Steve Kimani to establish Maramoja Transport. Maramoja was launched at iHub’s five-year tech anniversary, which brought together several technology companies on March 7, this year.

The company, however, had been running for a while before then.

The socially powered transport start-up operates through an app on smartphones, where potential customers view all taxi drivers within their vicinity through GPS before requesting services from one.

The taxi drivers are, however, sourced through referrals from customers, who have used their services before or from fellow taxi drivers.

“Users can quickly request a trusted taxi from their smartphone, seeing exactly where all available drivers are via GPS tracking, and review the driver’s credentials before accepting him,” says Mr Eisen.

According to Mr Eisen, Maramoja has built a network of 150 taxis and private hire drivers around Nairobi and is still adding new drivers every day.

However, Maramoja conducts thorough background checks before adding any new driver to its platform.

“We respect the local taxi culture of trust and referrals and don’t want to force some other country’s taxi habits on Kenya. Instead, we seek to bring technology driven tools that reinforce this culture and make it easier, faster, and safer to move about Nairobi,” Mr Eisen says.

“Any driver that can pass our credentials verification and screening can work with us as a driver partner,” Mr Eisen adds.

The drivers have fixed charges regardless of the time of the day or weather under which they are working. For instance, the drivers charge Sh350 to Kilimani from the CBD and Sh700 for customers heading to Nairobi West from the city centre.

EXPANSION PLANS

The company is also offering other services to augment its earnings. “We have also integrated emergency response services from a leading private security company to provide an extra level of security,” Mr Eisen adds.

These achievements, however, have not been achieved through a smooth ride.

“Our biggest challenges so far have been around creating awareness that such a service exists and persuading drivers to try it out since many taxi drivers are fiercely independent, accustomed to working informally, and setting their own charges,” Mr Eisen says.

He is, however, quick to note that it has now reached a point where drivers are actively seeking to join the network.

Maramoja is now competing against two other taxi apps Uber and EasyTaxi, for customers in Nairobi. It plans to roll out to other parts of the country later this year.

“As soon as we’ve stabilised our growth here in Nairobi, we’ll be looking to expand to other Kenyan cities as well as other African capitals. Nakuru is looking particularly intriguing with their city-wide WiFi,” Mr Eisen says.

advertisement

Thursday, April 30, 2015

How to create avenues for passive income

A businessman traveller relaxes in airport lounge. There no greater feeling than that of living in abundance. Where the work of our hands has turned in such great result that we are not afraid of even an economic slowdown. PHOTO | FILE

A businessman traveller relaxes in airport lounge. There no greater feeling than that of living in abundance. Where the work of our hands has turned in such great result that we are not afraid of even an economic slowdown. PHOTO | FILE 

By MUTHONI NGATIA
More by this Author

We all have different appetites for success. Different people define success differently.

What is your definition of success? Owning a fleet of top German machines or SUVs?

Having your workforce running into hundreds or even thousands? Fat bank balances that make everyone in your banking hall say hello and give you special service?

Taking holidays whenever and to wherever you like? Living in a top rated suburb? Taking your children to the most expensive schools?

Waking up at noon because you know your assets are working for you and money is being made whether you are asleep or awake?

To be honest, different people perceive success differently and that is okay.

Whatever your vision of a rich life is, we need to bring it to the basics of how the business or businesses you are in make money.

WELL CALCULATED EFFORT

There no greater feeling than that of living in abundance. Where the work of our hands has turned in such great result that we are not afraid of even an economic slowdown.

But what kind of business would you be in to have this opportunity?

There is no doubt that passive income is what we are looking at here. Income that flows in, not because of your day-to-day direct effort, but a permanent inflow effect from the work you have been doing.

Think for example of those real estate moguls, who don’t have to report to work everyday while their tenants, whether residential or commercial, have to break their backs everyday so that they can pay rent. Isn’t that a good thing to have?

I know some of them may have loans but there is a huge chunk of established landlords that are enjoying the good fruits of their labour.

I know of a restaurant in town that is famed to be the tea joint for Nairobi landlords. They meet there, enjoy tea, a good laugh and review newspapers.

I think it is good to always do business and in the process, generate a system that can keep bringing you income.

Getting passive income requires a great effort in terms of time and money. Good incomes are not made from get-rich-quick schemes but a well calculated effort.

For example, I have seen that many people, who run hardwares always begin a side project for rentals.

This is a smart move. These businesspeople know where to source materials and use that as a cost advantage while putting up construction themselves.

Depending on your area of business, try and think of what products or ways you can offer customers without the need to work every hour. Try and think through income streams that will make your business less dependent on one income line.

Here is how to do this. Think of ways to add value to what you are providing. This will help you create different kinds of products and services. If you run an auto yard, for example, there are many ways you can make complementary lines of income.

TRUE SUCCESS

If I buy a vehicle from you, offer me the option to buy what you have right there or import services to get a car that I can identify online. Every car requires an insurance, act as my insurance agent.

I may also need to add a few accessories, be on standby with those that are must have such as car identity and an entertainment system.

When you have multiple streams of income, be keen to identity those that can keep the income flowing without your direct participation.

Look out for those income strategies, which can make your recurrent revenue stream growing.

From affiliate programmes that are related to your line of business, you are into value addition for your line of products.

Along the way, the hope is that you return the volumes of income that will bring you the true meaning of success.

Business success is not all about money. Many people view success from a monetary perspective.

In my opinion the true meaning of success is the positive impact of your business to you, those you love, those you service and the society at large.

advertisement

Thursday, April 30, 2015

Habits that could hurt your success

In addition to data, use informed intuition, insights and wise judgment. Be willing to let solutions evolve as you learn more. When you move swiftly, you can adjust your strategy as new information emerges. PHOTO | FILE

In addition to data, use informed intuition, insights and wise judgment. Be willing to let solutions evolve as you learn more. When you move swiftly, you can adjust your strategy as new information emerges. PHOTO | FILE 

As an entrepreneur, you work in a high-stakes environment, you receive all the glory when your company flies high and all the blame when it hits a patch of turbulence.

This pressure to perform can lead you to develop habits that end up hurting your chances for success.

And the habits most likely to cause problems often are the very ones often associated with strong leadership.

Here, three of these deceiving habits and how you can nix them for good. 

1. You know everything

When you need to make decisions in uncertain times, the pressure to have all the answers might lead you to rely too much on history and not realise that you need a new game plan. You think you already know everything.

This tendency toward self-reliance undermines your team. When you know everything, there’s no reason to engage others in conversation. Your team members become bystanders, and that makes it harder for them to share essential information and input, much less rally around your goals.

With a know-it-all approach, you also lack the humility to change course when you’re off track.

When Ron Johnson left Apple and became CEO of JCPenney, he went in with a bold and dramatic change in strategy, exactly what the company needed.

However, his strategy was largely based on what had worked in another industry with a very different customer profile.

The changes didn’t resonate with JCPenney customers, and Johnson left after less than 17 months as CEO. Today, JCPenney is rebounding. Had Johnson listened to more input, he might have been successful in his turnaround attempt.

2. You overvalue data in decision-making

You can track and measure nearly everything today, so it’s tempting to want to collect every data point and to address every uncertainty before you act. But too much data can be paralysing.

And waiting until you have the perfect answer might mean missing the chance to stay ahead of a changing market.

A classic example is Blockbuster, which waited too long to address the threat of streaming video. By the time the company decided to act, it was too late. Blockbuster went from being an industry leader to a has-been, and it couldn’t recover.

Data should act as a guide, not your only input. In addition to data, use informed intuition, insights and wise judgment. Be willing to let solutions evolve as you learn more.

When you move swiftly, you can adjust your strategy as new information emerges. 

3. You focus on ‘wowing’ more than collaboration

The most compelling presentations capitalise on the power of human interaction and involve the audience.

Scrap the idea of a “perfect” presentation, and don’t try to perform an act. Instead, speak with your audience and promote discussion. By doing this, you’ll reap the benefits of collaboration and allow others to see how they can contribute to meaningful change.

When starting out, you might feel the urge to know all the answers, rely too heavily on data to make decisions and communicate your vision flawlessly. But these habits can lead to costly setbacks.

The best entrepreneurs approach every situation with a learning mindset.

Be an incrementalist and listen. Forget the search for the perfect answer, and be comfortable with collaboration.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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!

advertisement

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.  

advertisement

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
More by this Author

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.

advertisement

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.

advertisement

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
More by this Author

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.  

advertisement

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.”

advertisement

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.

advertisement

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  
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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. 

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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. 

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement

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
More by this Author

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.

advertisement