Wednesday, February 25, 2015

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

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

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

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

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

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

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

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

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

OPPORTUNITY MEETS PREPAREDNESS

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

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

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

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

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

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

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

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

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

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

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

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

HOLISTIC APPROACH

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HOW TO PREPARE YOUR BUSINESS FOR THE LONG-TERM

 

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

 

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

 

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

 

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

 

5. Partner with other organisations to broaden your reach.

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Wednesday, February 25, 2015

How I earn millions cutting deals in counties

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

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

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

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

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

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

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

WIDER NET

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

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

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

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

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

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

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

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

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

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

MENTORSHIP

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

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

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

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

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

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Wednesday, February 25, 2015

Why succession plan is healthy for your firm

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

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

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

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

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

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

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

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

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

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

IDENTIFY POTENTIAL

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

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

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

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

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

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

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

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

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

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

SENSE OF ENTITLEMENT

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

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

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

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

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

Do you have a will?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HARSH CLIMATE

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

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

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

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

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

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

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

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

MAXIMUM ATTENTION

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

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

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

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

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

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

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

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

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

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Tuesday, February 17, 2015

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

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

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

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

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

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

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

SCIENTIFIC APPROACH

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

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

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

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

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

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

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

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

GROWING MIDDLE CLASS

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

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

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

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

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

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

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

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Tuesday, February 17, 2015

State could pay creditors of grounded Nyayo Bus millions

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

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

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

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

The order could see government pay millions.

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

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

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

GENESIS OF DISPUTE

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

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

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

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

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

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

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

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

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

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

BRIGHT FUTURE

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

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

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

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

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

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

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

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Tuesday, February 17, 2015

Work on Sh9bn Nyali bridge to start 2016

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

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

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

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

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

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

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

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

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

PRIVATE INVESTOR

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

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

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

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

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

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

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

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

ALTERNATIVE LINK

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

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

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

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

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

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Tuesday, February 17, 2015

Canadian oil firm seeks Sh11bn for exploration in Turkana

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

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

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

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

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

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

FALLING PRICES

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

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

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

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

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

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

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

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

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Tuesday, February 17, 2015

Obi Mobiles enters Kenya, launches new eight devices

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

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

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

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

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

NEW VENTURE

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

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

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

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

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

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

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

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Thursday, January 29, 2015

Kenya IT firms to benefit from Sh100m fund

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

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

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

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

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

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

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

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

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Saturday, December 27, 2014

Roasting smokies pays my bills

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

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

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

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

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

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

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

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

BASIC CULINARY SKILLS

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

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

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

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

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

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

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

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

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

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

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

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

LUCRATIVE VENTURE

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

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

“I want to add chapatis,” he says.

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

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

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

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

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

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

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

This can be used as utility

The challenges they face:

1.       Bad debts from defaulting customers.

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

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

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Tuesday, December 23, 2014

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

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

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

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

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

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

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

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

THANKSGIVING PARTY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CLOSING THE GAP

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

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

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

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

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

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

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

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

QUALITY BREWED

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

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

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Tuesday, December 23, 2014

Passion for art helps sculptor carve out a bright future

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

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

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

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

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

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

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

PLENTY OF WORK

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

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

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

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

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

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

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

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

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

PREPARE FOR LOSS

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

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

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

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

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

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

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

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Tuesday, December 23, 2014

Turn your passive shoppers into active buyers

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

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

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

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

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

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

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

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

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

WEIGHING OPTIONS

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

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

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

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

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

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

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

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

DEFERRED DECISION

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

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

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

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

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

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

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

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Tuesday, December 23, 2014

Big plan that brought my village back to life

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

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

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

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

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

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

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

APPRECIATING VALUE

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

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

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

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

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

Mr Waititu had done his homework well.

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

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

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

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

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

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

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

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

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

PLINTH OF HONOUR

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

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

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

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

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

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

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Tuesday, December 23, 2014

Buy KPLC, Centum stocks this season

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

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

By ABC CAPITAL

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

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

Centum Investments Ltd

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

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

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

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

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

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

KPLC

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

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

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

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

Uchumi Supermarkets

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

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

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

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

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

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

 

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

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Thursday, December 18, 2014

Cereals board ordered to buy maize against regulator rules

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

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

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

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

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

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

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

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

MARKET RATES

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

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

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

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

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

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

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

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

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Thursday, December 18, 2014

Mall terror attack group wipes tears with award

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

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

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

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

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

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

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

ECONOMIC TRANSFORMATION

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

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

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

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

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

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

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

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

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

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

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Friday, December 12, 2014

Ministry proposes tough rules for commercial vehicles

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

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

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

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

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

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

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

HEAVY FINES

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

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

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

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

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

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

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Friday, December 5, 2014

Sh10bn to set up markets in two counties

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

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

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

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

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

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

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

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

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

EMBRACE TECHNOLOGY

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

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

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

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

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

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

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

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

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

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Friday, December 5, 2014

Thousands of farm machines to be imported soon

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

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

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

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

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

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

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

The ministry is also developing  livestock and crop insurance schemes.

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

He also addressed problems raised by some of the 400 farmers present, that included packing of farm produce in sacks exceeding 50kg weight in spite of the Crop Act banning the practice. 

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Friday, December 5, 2014

Watchdog gets nod to effect market studies

All recommendations made by the Competition Authority to streamline agriculture products markets must be implemented immediately, the President said Thursday. PHOTO | BILLY MUTAI | FILE

All recommendations made by the Competition Authority to streamline agriculture products markets must be implemented immediately, the President said Thursday. PHOTO | BILLY MUTAI | FILE  NATION MEDIA GROUP

By MWANIKI WAHOME
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All recommendations made by the Competition Authority to streamline agriculture products markets must be implemented immediately, the President said Thursday.

Addressing delegates at the World Competition Day celebration, President Uhuru Kenyatta said this would boost wealth creation by farmers.  

He told the Competition Authority to work closely with other government agencies in implementing the recommendations of market studies in tea, artificial insemination, seeds and sugar.

“Eradication of marketing distortions may reduce our poverty levels by a further 1.5 per cent. This is our key agenda and we have to achieve it,” he said in a speech read on his behalf by National Treasury Cabinet Secretary Henry Koskei.

FINANCIAL INCLUSION

The function was at Safari Park Hotel, Nairobi.

The President also told the Competition Authority to expedite the Product Market Regulatory Indicative Study, which it is conducting and have the findings discussed with stakeholders in February.

This will aid in modernising regulatory aspects and help in realisation of Vision 2030, he said.

The study covers telecommunications, transport, investment policy, retailing, banking, insurance and energy.

The President said the government had increased the authority’s budget to enable it conclude cases such as abuse of market dominance in telecommunications.

“These cases will go a long way in deepening financial inclusion, through easing access to mobile money transfer and also lead to consumer savings,  as a result of increased competition,” he said.

He told county governments not to introduce regulations and restrictive conditions in issueing licences that could impede the proper functioning of demand and supply of products.

 

ACTION PLAN

The progress made so far 

  • Competition Authority: We dealt with 88 merger applications by June, compared with 65 the previous year, says Director-General Wang’ombe Kariuki.

  •  Also finalised 23 cases of restrictive trade practices, compared with 16; and 15 consumer cases compared with six in 2013.

  •  World Bank: An impact assessment supported by the global lender shows that the retailing trade restrictive case resulted in consumers saving about $1 million (Sh90 million), while money transfer rates fell by 67pc.

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Wednesday, December 3, 2014

Equity bank in online bid to support youth

Equity Group Chairman Peter Munga (left) and chief executive officer James Mwangi during the firm's Extra-Ordinary General Meeting held at the KICC in Nairobi on November 24, 2014. Equity Bank Kenya has launched an online campaign to provide support to young entrepreneurs. PHOTO | SALATON NJAU

Equity Group Chairman Peter Munga (left) and chief executive officer James Mwangi during the firm's Extra-Ordinary General Meeting held at the KICC in Nairobi on November 24, 2014. Equity Bank Kenya has launched an online campaign to provide support to young entrepreneurs. PHOTO | SALATON NJAU 

By NATION CORRESPONDENT
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Equity Bank Kenya has launched an online campaign to provide support to young entrepreneurs.

The campaign will target youth between the ages of 18 and 30 years.

Within the Vijana na Equity scope, the first campaign seeks to support fledgling fashion designers to attain their dreams while enjoying commercial returns.

Speaking when he confirmed the launch of the online initiative, Equity Bank Group CEO and MD James Mwangi said the programme will be actively pushed through social media channels as part of attempts to reach out to a wider youthful audience.

 

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Tuesday, December 2, 2014

When to hire a smart accountant

A good reason for hiring an accountant however is to create a business plan, form a company, apply for loan, during tax audit or simply in order to delegate some duties. PHOTO | FILE

A good reason for hiring an accountant however is to create a business plan, form a company, apply for loan, during tax audit or simply in order to delegate some duties. PHOTO | FILE  

By Dorcas Muthoni
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Accountants help out in the growth of your business. They handle more than just tax and payroll.

This question has become all too familiar. “When should I consider hiring an accountant?” It depends on your immediate needs.

Out of your needs, you will either get a full-time accountant, part-time one or contract one.

A good reason for hiring an accountant however is to create a business plan, form a company, apply for loan, during tax audit or simply in order to delegate some duties. However, since we have a number of rogue ones out there, recruit your accountant carefully.

Here are some moments when an accountant would be a smart hire. Say you need to write down some financial projections, a business plan or the usual business finance management and reporting. An accountant can help you use an accounting software to generate reports.

MONITORING THE PULSE

The earlier you hire one, the better. This way, you benefit from sound financial knowledge. It saves you a lot of money and helps you mitigate risks associated with poor financial management.

An accountant can also advise you on the best legal structure for your business.

For example, it is a fact that you will have business liabilities.

When you operate as a sole trader, you could be held personally liable for business deals whereas in a limited liability company, the burden of the enterprise is limited to its assets.

SME accounting can easily become complex when you do it yourself, and can get overwhelming since you are stretched across many control points.

An accountant can help you fix your cashflow by computing key business metrics that help you ensure that the outfit is on track.

Say ratio of salaries and other employee payments to total revenue, cashflow analysis, your gross margins and net margins. These are reports that help you understand your business’ financial standing at a glance.

It is even better if you are using an accounting software that is online as this can allow even an external accountant to review your financial records for regular reporting.

These kind of reports help you monitor the pulse of your business.

With the reports, an accountant is able to offer input on how to improve your business model, pricing or even inventory.

Generally, you need an accountant to prepare and file tax returns. Although we have software that simplifies this, it is always safe to get a seasoned hand to deal with the taxman.

RECRUIT WISELY

A good accountant should help you complete and file all legal and compliance company returns, prepare regular annual statements of accounts, handle your payroll, ensure all individual taxes and payments are recorded and bank reconciliation is done monthly.

A good accountant will help you meet tax obligations. If external auditors are coming, your accountant should ensure that all necessary reports are ready.

You might need an accountant when applying for a loan, overdraft or securing a fresh investment.

An accountant will help you develop the financial statements your bank will need.

Your accountant can help you know if the loan interest, terms and conditions are favourable.

Overall, at some point, you will need to hire an accountant, recruit wisely.

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Tuesday, December 2, 2014

We have built a profitable portfolio of stocks

An investor can ask their stock broker or investment banker to buy or sell shares at the best price or to trade only when the stock has attained a certain price or better. PHOTO | FILE

An investor can ask their stock broker or investment banker to buy or sell shares at the best price or to trade only when the stock has attained a certain price or better. PHOTO | FILE 

By JOSHUA MASINDE
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Nairobi-based marketer, Kennedy Waweru, 21, began investing in shares in 2008.

He was still at the university then but was inspired by the countless stories of how investors such as Warren Buffet made wealth from stocks.

While in school, Mr Waweru used to see his mother and grandmother earn dividend from the shares they held in a number of companies.

“I started investing in the stock market out of curiosity and interest of how other people made money,” he told Money.

While pursuing his degree, he researched about stock brokers as well as how to invest in shares. And in 2008, he settled on a stock broker, with whom he deposited Sh1,000 every month.

He would make an order on the stocks he wanted to buy after every two months. His first bet was Equity Bank where he bought shares soon after the lender’s initial public offering (IPO) in 2008. Each share, then, was going for about Sh10.

He later invested in Sameer Africa, Express Kenya, Safaricom, Barclays Bank, Co-operative Bank, Mumias, Britam, KenGen and Liberty Kenya Holdings.

THINK LONG-TERM

He purchased Safaricom shares in the post-IPO period when it was trading at about Sh3.

The stock is currently trading at over Sh13.9 apiece, having appreciated by more than 300 per cent from the time he bought his shares. Since buying Equity’s stock at about Sh10, the share price has gained 400 per cent to Sh50 apiece as of Thursday last week.

He bought Britam’s stock at Sh9 during IPO. The stock has since appreciated by over 180 per cent to Sh25.5 as at the end of trading on Thursday, last week.

Although he has since sold some of the stocks to focus on a few firms, his portfolio is currently at about Sh220,000.

One of the first things that a stock market investor is told is to think long-term. This is what Joe Nyagah, a 26-year-old marketer bears in mind. He quit his banking job after two years to focus on sales and marketing and venture into both stock market and real estate industries.

He says the salary he received as a banker was not impressive. The job also lacked flexibility that would allow him take financial classes as well as research on available investment opportunities.

Each month, he saves 60 per cent of his salary for investment. His bank has a stock brokerage arm, making it easy for him to wire his savings for purposes of investing in stocks.

“What I learned about stocks is that you take risks for long-term gain. When you invest in the stock market, you are simply making your money work for you,” he said.

Early this year, he bought about 2,000 Equity Bank shares which were going for about Sh44 apiece, valuing his portfolio at over Sh88,000 then. The bank’s stock as at close of trading on Thursday, last week, was going for Sh50 each valuing his stake at Sh100,000, a 13 per cent capital gain.

On Thursday, last week, he bought 5,000 Safaricom shares, each of which was trading at Sh13.9 by the close of trading. He believes Safaricom’s share is still way below its value and will appreciate significantly in the next two years.

“I am looking to diversify my portfolio. Safaricom and Equity are getting into competition. I, however, see a lot of potential in Safaricom, which I think is undervalued,” Mr Nyagah told Money.

According to the Capital Markets Authority, the first step one should take when buying shares is to establish which companies are experiencing a robust performance.

POINTS TO PONDER

While a lot of investors invest in the stock market to get capital gains through appreciation of share price in the long-run, others do so to get investment income in the form of dividend.

“An investor who invests for this purpose (investment income) should invest in firms with a concrete dividend declaration policy or history,” the markets watchdog  notes.

Some of the things an investor can also bear in mind before buying shares include evaluating the target company’s management.

Are the board of directors and key management personnel people of repute? Are they reliable? Can they be trusted to run the company?

Are the company products or services vulnerable to vagaries of weather or are they likely to be subject to international trade restrictions?

Is the firm a monopoly or an oligopoly? Is the company’s future clear or imprecise?

Stock brokers and investment bankers are the authorised agents which investors approach when they intend to invest in the stock market.

An investor can ask their stock broker or investment banker to buy or sell shares at the best price or to trade only when the stock has attained a certain price or better. An investor can also ask the broker to sell his/her shares when the price falls below a certain level.

Mr Geoffrey Injeni, an accounting and finance lecturer at Strathmore Business School says that an investor in the stock market must invest for the long-term if they are to realise full potential gains.

“You must then have a strong heart to withstand the bad times, for instance, when the share prices go down. Don’t buy shares today in the hope to sell in a week when there is a slight increase in prices. Generally, share prices go up, but in the long run,” Mr Injeni told Money.

He also says that there is no formula that guides an investor’s entry or exit from the bourse. This will depend on an individual investor’s situation, especially with regard to risks and returns.

A look at the specific fundamentals — the industry and overall economy — may also give an investor the insights into the direction of a company’s share and the stock market.

“Unfortunately, there is some speculation or gambling. If you suspect there will be an upward trend in share prices, then buy and hold. If you suspect there will be a downward trend in the share prices, then sell or exit,” Mr Injeni said.

EXIT COUNTERS

A lot of retail investors have often exited some counters at the earliest sign of poor performance. A number of retail investors, who did not want to go on record, said they burned their fingers after putting their money in Mumias and Eveready counters, which have sharply depreciated.

Since its opening in 1954, the Nairobi Securities Exchange (NSE) has churned out millionaires and also eroded investors’ wealth in equal measure. Total investor wealth at the NSE has nearly doubled within two years to Sh2.3 trillion as at the end of last week compared to Sh1.2 trillion as at the end of November 2012.

Apart from Mumias and Eveready, Home Afrika is among companies that have performed poorly.

Home Afrika listed 405 million shares on the Growth Enterprise Market Segment in July 2013 at Sh12 apiece. Its share price shot up by 108 per cent to Sh25 apiece on the listing day valuing the firm at Sh10 billion.

The stock however traded at Sh4.1 at the end of trading on Thursday, last week.

Mumias on the other hand did a secondary IPO in 2006. Its shares were going for Sh49.5 apiece.

The stock traded at Sh2 at the end of trading on Thursday. Eveready, which listed on the NSE in August 2006 at Sh9.5 per share, traded at Sh3.7 each at the end of Thursday, last week. Some of the best performing stocks are in the banking, investment, insurance and manufacturing sectors. Investors are now required to pay a capital gains tax of five per cent on their shares.

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Tuesday, December 2, 2014

Carry out survey on cybercafé

The first thing you need to do is to plan and carry out research on the cybercafé business in your target area. Formulate an idea of how you would like to run your cybercafé and write it down. PHOTO | NATION

The first thing you need to do is to plan and carry out research on the cybercafé business in your target area. Formulate an idea of how you would like to run your cybercafé and write it down. PHOTO | NATION 

Starting a business is exciting and will probably be one of the biggest decisions of your life.

However, it can be a daunting task particularly if you have not done it before. Therefore, before embarking on the road to being a successful trader, you should check how deep the waters are before you lower your anchor.

The first thing you need to do is to plan and carry out research on the cybercafé business in your target area. Formulate an idea of how you would like to run your cybercafé and write it down, the different amenities and services you intend to offer and your target market.

Research the feasibility of the business idea. Investigate the demand for the services as well as your potential competitors in the area and estimate how much money you will require to launch the outfit.

SEED CAPITAL

Put down every detail, from computers that you need to purchase to the type of environment you intend to create, and all the operating costs involved.  Once you have done research and planning, write your business plan.

This is important because, you could use your business plan to source for funds by pitching your idea to potential investors and lenders.

It is always advisable to minimise the amount of debt you incur until your business’ cash flow and customer base is well established. Take note, that if you default in repaying the loan, you may lose the collateral you had pledged for the credit.

You could consider if the business is registered as a limited company, and sell shares in the outfit to like-minded individuals with a view raise long-term capital.

Alternatively, you could borrow money from friends and family; however, bear in mind that whenever you take money through a relationship that involves either friendship or blood ties, it may get very complicated in case you default.

You could also borrow from your Sacco, if you are a member of one, or join an investment group or chama where you pool resources together with like-minded peers.

Many investment groups or chamas allow members to borrow from their accumulated contributions and investments and pay back at an agreed rate of interest.

Also, many Saccos are likely to give you a loan, say three times the amount of savings you have accumulated with them.

To stay afloat when one arm is not doing so well, you need to apply some unique features that differentiate your business from others.

SUITABLE LOCATION

For instance, you may offer related services such as selling and servicing computers, design websites, offer search engine optimisation services, networking, computer and software installation, selling of security systems, colour printing and photo copying, hosting computer game competitions or other services such as selling snacks and drinks.

You need to find a suitable location for your venture. Hire and train your employees who are technology-savvy, friendly and easy to work with.

Also try to promote your cybercafé in the neighbourhood using fliers, posters, word of mouth, and other channels.

Finally, you need to listen and incorporate feedback from your customers and take the necessary action.

Internet café business is indeed very interesting and equally challenging. The business plan should be prepared with an eye for detail. When in operation as a means of differentiating yourself, remember to always go the extra mile for your customers. The customer should be your first priority and be sure that they are satisfied.

Finally, continue to evaluate your performance as a business and keep track of what works and what does not.

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Tuesday, December 2, 2014

How to get a slice of Sh205bn tender pie

President Uhuru Kenyatta with Treasury Cabinet Secretary Henry Rotich and  Deputy President William Ruto at KICC on 13th of August,2014  during the launch IFMIS e-procurement system. Government says at least Sh205 billion worth of contact are up for grabs, but decry the lack interest and awareness from the youth  PHOTO | EVANS HABIL

President Uhuru Kenyatta with Treasury Cabinet Secretary Henry Rotich and Deputy President William Ruto at KICC on 13th of August,2014 during the launch IFMIS e-procurement system. Government says at least Sh205 billion worth of contact are up for grabs, but decry the lack interest and awareness from the youth PHOTO | EVANS HABIL 

By JOSHUA MASINDE
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When former president Mwai Kibaki announced in 2012 that 10 per cent of the value of all government contracts should be allocated to the youth, Francis Mureithi, a Nairobi-based businessman moved with speed to exploit the opportunity.

The policy directive of Mr Kibaki’s government was aimed at tackling spiralling levels of youth unemployment in Kenya.

In a company he had formed with a friend, Mr Mureithi applied for a tender to supply attire to be used by government officials at a national event. The deal earned himself over Sh300,000.

Later, last year, President Uhuru Kenyatta directed that procurement rules should be amended to apportion 30 per cent of government contracts to the youth, women and persons with disabilities (PWDs) without competition from international firms.

TRAINING THE YOUTH

Government says at least Sh205 billion worth of contact are up for grabs, but decry the lack interest and awareness from the youth for the disappointing no show in tendering for the contracts.

A spot check by Money, however, shows that many young people are not taking advantage of the opportunities created by the new government directive largely because of inadequate information and lack of patience to walk through the tendering red tape.

Mr Mureithi partly puts the blame to the poor documentation and quotation by youth-run enterprises when applying for the contracts. He says that a lot of youth do not stick within stipulated price guides of specific contracts. They either over-price or grossly undercharge the government. This makes them ineligible.

This has, however, changed with the new government imitative to conduct tendering through online platforms.

This allows everyone to get access of government tenders irrespective of their location in the country.

The government’s financial platform, Integrated Financial Management Information System, (IFMIS) has made this process easy.

And with implementation of electronic procurement program, the IFMIS has made it possible for the applicant to apply tender online and track the process, a strategy that is injecting transparency.

IFMIS has thus become a source of information to the suppliers and the public in general on matters relating to public procurement.

“What we have decided now is to offer training to the youth to enable them to be entrepreneurs,” National Association of Youth Enterprises chairman, Mr Brian Randieh said.

The Public Procurement Directorate, which is under the National Treasury, administers the Access to Government Procurement Opportunities (AGPO).

TARGET GROUP

In order to access government procurement opportunities, the youth, must register a business enterprise as a sole proprietorship, partnership, a limited company or a co-operative.

At least 70 per cent of the membership of the registered entities must comprise of the youth and the outfits’ leadership must be 100 per cent youth, women and PWDS.

A PIN and tax compliance or tax exemption certificate from the Kenya Revenue Authority is also required.

The target group should also acquire requisite certifications from professional bodies and authorities such as the National Construction Authority, Insurance Regulatory Authority, Institute of Certified Public Accountants of Kenya, the Law Society of Kenya, the National Council for Persons with Disability, the National Environmental Management Authority, the Energy Regulatory Commission and all other authorised bodies.

Finally, the target beneficiaries can access the website www.agpo.go.ke and register online or visit the county government headquarters to register their entities.

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Tuesday, December 2, 2014

Couple beats all odds to earn big from tobacco

Mr Joseph Imeli, 42, and his wife, Catherine Amoit, 34, who are large-scale tobacco farmers in Teso North. From their six-acre farm, they produce an average of 10 tonnes of the cash crop. PHOTO | RAPHAEL WANJALA

Mr Joseph Imeli, 42, and his wife, Catherine Amoit, 34, who are large-scale tobacco farmers in Teso North. From their six-acre farm, they produce an average of 10 tonnes of the cash crop. PHOTO | RAPHAEL WANJALA 

By RAPHAEL WANJALA
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Tobacco farming has for long been viewed as a fruitless venture in Western Kenya by many farmers.

There are various myths about the business that see people steer clear of it. First, is a notion that the farmers end up poor as a result of growing the crop since they do not have any money left for themselves at the end of the season when tobacco processors deduct cost of farm inputs advanced to the growers.

Second, there is word that tobacco farmers are a hungry lot. They dedicate all their land to the cash crop leaving little or no room for subsistence farming.

However, a couple in Changara, Teso North sub-county, are changing the business. Mr Joseph Imeli, 42, and his wife Catherine Amoit, 34, are large-scale tobacco farmers.

JOURNEY TO PROFIT

The two have registered a remarkable journey in tobacco business and they help fellow farmers to reap better yields from the crop.

The couple has been farming tobacco since 1998, a year after Mr Imeli was retrenched. They started small, on an acre of land, which they were given by their parents.

They started off using hand hoes to cultivate and prepare the farm. Their first harvest earned them Sh25,000, part of which they bought a bull to help them ease tilling the land. The impressive returns season after season encouraged them to proceed with the business and by 2000, they had bought four dairy cows to augment their earnings as well as more bulls.

The returns enabled them to buy a two-and-a-half-acre piece of land in 2008 valued at Sh250,000 where they have set up their home.

Today, their tobacco farm is covers six acres. Part of it has been leased from their neighbours.

At the moment, Mr Imeli says, they produce an average of 10 tonnes of dry tobacco leaves every year earning them Sh1.5 million annually. This, he says, is their pay after the contracted company deducts its input costs.

Farmers prefer getting inputs from companies because tobacco is very specific on the type of inputs needed to get the best yields, he notes.

Further, the companies knows where to source the right inputs and they are able to supply them at a lower cost as opposed to the farmers buying them in the market.

“Many farmers start a project without a goal. If one has proper planning and goals, they will surely succeed,” said Mr Imeli.

READY MARKET

The couple noted that tobacco growing as a cash crop is beneficial than other crops since there is ready market for the produce at the end of the season. Once contracted by a company, farmers are assured of a market devoid of middlemen.

The prices for tobacco leaves are set and agreed upon at the start of the planting season.

“The price of tobacco is fixed. Once it has been agreed upon by all stakeholders, it can only be changed after a meeting,” said Mrs Amoit. Last season, each kilo fetched the Imelis Sh163.

The ready market and prices gives the couple an upper hand against other crops grown in the area such as sugarcane and at maize.

Mr Imeli’s only plants maize for subsistence. So far, the only challenge in growing tobacco has only been erratic weather, especially hailstones that destroy the leaves before harvesting. Their counsel to other farmers is to be transparent with their earnings and also be focused on what they want to achieve.

“We are always transparent with our finances. We plan ahead what we want to do with the cash we have received,” said Mrs Amoit. So far, tobacco has seen them educate their eight children and the future looks bright.

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Tuesday, December 2, 2014

Matatu sacco fights licence suspension in stripping case

A bus belonging to Nazigi Sacco on Thika Road. The sacco has cried foul over the suspension of licences for all its 243 vehicles. PHOTO | JENNIFER MUIRURI

A bus belonging to Nazigi Sacco on Thika Road. The sacco has cried foul over the suspension of licences for all its 243 vehicles. PHOTO | JENNIFER MUIRURI 

By BRIAN WASUNA
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The public transport firm whose licence was suspended after two of its employees were accused of stripping and sexually assaulting a woman passenger has moved to court to appeal against the decision.

Nazigi Sacco wants the High Court to withdraw its 14-day licence suspension, arguing that the decision was made before it was given a hearing, contrary to the rules of natural justice.

The sacco has cried foul over the suspension of licences for all its 243 vehicles, arguing that the collective punishment of its members by the National Transport and Safety Authority (NTSA) was draconian and unfair to its members who were not involved in the alleged crime.

“The NTSA has violated the Constitution in meting out collective punishment to Nazigi Sacco’s members in order to solve a social malaise and is discriminatory of the said members, innocent of committing the said crime,” said the Sacco.

It has further claimed that the government was using it as a scapegoat in reaction to the recent cases of stripping of women in public that have caused a storm in the past two weeks.

“No such action has been taken in the police force against police officers on account of a police officer who stripped a woman,” added the sacco society.

The action was taken on Friday after a bus driver and conductor operating a vehicle under the Sacco were arrested and charged with sexually assaulting a woman.

The two were accused of being part of a group of men who launched a sexual attack on the female passenger.

Devolution and Planning secretary Ann Waiguru last week announced new rules that will see other saccos suffer a similar fate in the event that other sexual assault incidents are reported to have occurred in their vehicles.

The move is aimed at curbing the vice, after several incidents of women being stripped by men suspected to be matatu crew were reported.

The article first appeared in The Business Daily.

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Sunday, November 30, 2014

Sh350 million plan to assist dairy farmers in Murang’a

Murang’a Governor Mwangi wa Iria. FILE PHOTO | NATION MEDIA GROUP

Murang’a Governor Mwangi wa Iria. FILE PHOTO | NATION MEDIA GROUP 

By NATION CORRESPONDENT

Dairy farmers in Murang’a County will benefit from a Sh350 million programme meant to raise productivity and boost cooperative groups in the region.

The county government will buy high-yielding dairy cows that will be sold to farmers at subsidised prices to improve milk production and marketing.

Governor Mwangi wa Iria, who presided over the launch of the programme, said the move is meant to position the dairy sector as one of the industries that will unlock Murang’a’s investment potential.
County officials said they had released the first batch of over 200 dairy cows to various farmers affiliated to cooperatives.

The county chief officer in charge of agriculture and livestock, Mr Joseph Ndung’u, said an additional 340 farmers from various parts of the county had been registered to benefit in later phases.

“The programme is meant to ensure that farmers acquire quality breeds that will lead to increased milk production,” Mr Ndung’u said in a statement.

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Saturday, November 29, 2014

Taxman backs down after boycott threats over seized Ugandan cargo

Cargo at the Mombasa port. Top imports in the region remained motor vehicles and industrial products including steel.  FILE PHOTO |

Cargo at the Mombasa port. The level of trade and investment between Kenya and Slovakia has not reached its potential. FILE PHOTO |   NATION MEDIA GROUP

By MWAKERA MWAJEFA
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The Kenya Revenue Authority Saturday started releasing Uganda-bound goods that were being held at the port of Mombasa after a pre-pay tax dispute between the authority and traders.

Responding to questions by the Sunday Nation, revenue authority marketing and communication southern region manager Fatma Yusuf said the issue was resolved in Bujumbura, Burundi, when it came up at a meeting.

She said the commissioners of Customs of Kenya, Uganda and Rwanda met in Bujumbura on Friday and reached an agreement.

The Kenya Revenue Authority response was prompted by a boycott threat of the port of Mombasa by traders who had given the authority two weeks to unconditionally release the Uganda-bound cargo.

Business people under Kampala City Traders Association had given the ultimatum following after the Kenyan taxman told traders to pre-pay tax for all goods that dock at the port when making orders. Previously, traders have paid port fees and handling charges when collecting, reported Uganda’s The Monitor.

ARBITRARY TAXES

According to Kampala traders’ chairman Everest Kayondo, by Wednesday, about 4,000 containers were being held at the port because of arbitrary taxes that the authority had introduced. This, he added, was not only against the spirit of the East African Community integration, but also hurting Ugandan traders and the country’s economy.

“And for that, we are giving them two weeks (effective Thursday) to release all cargo bound for Uganda, for which all port charges and other logistical fees have been cleared, or else we relocate to the Dar es Salaam port,” he said.

In addition, the traders had also resolved that should their conditions not be met, they would put pressure on their government to block Kenyan products from entering the Uganda market.

The association’s spokesperson, Isa Ssekitto, also said they will write a formal letter to the governments of Uganda and Kenya to communicate the traders’ resolutions, as well as remind Kenya government to pay Ugandan traders Sh1.3 billion that they lost during the post-election violence of 2007/2008.

REJECTED TAX PAYMENT

Meanwhile, local and regional importers have rejected the payment of taxes using the Single Window Territory Customs Document on transit goods before they (goods) are released for the port of Mombasa.

A port user, Peter Mambembe, noted that the Single Window has no backing in law.

He argues that the Simba System of collecting revenue online was also introduced without any regulations, and it is therefore illegal to interface it with other online systems of the East African Community states.

Mr Mambembe, who is also the chairman of importers, warns that this unlawful practice is frustrating trade in the regional market and has made the port of Mombasa expensive, making it to lose business to other ports.

He cited the transfer of a motor vehicle unit from the port to a private Container Freight Station which costs an importer Sh2,500 while a 20 and 40-feet containers cost Sh15,000 and Sh20,000 respectively.

“But when an importer clears goods directly through the port, he or she pays nothing,” he said.

“In fact, it is impossible to lodge claim with the Kenya Ports Authority because the private entities are not regulated by the National Assembly.”

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Saturday, November 29, 2014

Pressure rises to lift biotech cotton ban

Women pick cotton at a farm in Ahero, Nyando district. In the face of declining cotton yields that threaten to disrupt Kenya’s textile industry, pressure is on to lift ban on biotechnology.  PHOTO | JACOB OWITI | NATION MEDIA GROUP

Women pick cotton at a farm in Ahero, Nyando district. In the face of declining cotton yields that threaten to disrupt Kenya’s textile industry, pressure is on to lift ban on biotechnology. PHOTO | JACOB OWITI | NATION MEDIA GROUP 

By MWANIKI WAHOME
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In the face of declining cotton yields that threaten to disrupt Kenya’s textile industry, pressure is on to lift ban on biotechnology.

This is because countries like Burkina Faso, Sudan and India have used biotechnology to increase their cotton production.

“Average production of cotton in Kenya is between 200 to 300 kilos compared to 800 to 1,000 kilos an acre in these countries,” said Mr Patrick Muriuki, managing director of Icoseed, a non-governmental organisation in Kirinyaga.

The organisation was contracted by World Bank in 2005 to study cotton production.

Attempts to increase production using non-biotech seeds have been been poor so that even if the prices were to rise, farmers would get little.

MAJOR DECLINE

“There has been a major decline in cotton production in the country and ginneries are now importing from neighbouring countries,” Mwea Cotton Ginnery director Mugo Makanga said.

Kenya produced 22,000 bales of cotton in 2013, against a demand of 200,000.

“The extension of the African Agoa (Growth and Opportunities Act) will be of no value to farmers if cotton production does not grow. This is the time to embrace biotechnology so farmers can earn more and restore Kenya’s textile industry,” Mr Makanga said.

Kenya, with other African states, has petitioned the United States to allow cotton products from sub-Saharan Africa to access the US market tax-and quota-free.

Textile industries established in export processing zones are major consumers of the cotton lint and yarn, but have to import the bulk of the raw materials. By 2008, the national demand for lint was about 111,000 tonnes of seed cotton against a supply of about 24,975 tonnes, according to a report prepared by a task force on the textile industry.

According to sources, the Kenya Agriculture Research Institute is holding final trials for biotechnology seeds.

“The ban on biotechnology should be lifted to increase production of crops in the country. It is not enough to declare that non-food items can use the new technology,” said senior assistant director of research at the ministry of Education, Science and Technology Roy Mugiira.

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Wednesday, November 26, 2014

Bookpoint shuts down after family dispute

Pedestrians walk past Bookpoint on Nairobi's Moi Avenue on June 25 2013. Bookpoint, one of Nairobi’s oldest bookstores, shuts down after more than seven decades in operation.

Pedestrians walk past Bookpoint on Nairobi's Moi Avenue on June 25 2013. Bookpoint, one of Nairobi’s oldest bookstores, shuts down after more than seven decades in operation. FILE PHOTO | PHOEBE OKALL 

By SIMON CIURI
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One of Nairobi’s oldest bookstores, Bookpoint, has shut down after more than seven decades in operation over what a manager of the shop attributed to a family dispute.

Bookpoint, which is located on the busy Moi Avenue, closed earlier this month.

A former manager of the iconic bookstore, Ashwin Shah, said in an interview Thursday that the shop has been closed indefinitely with no plans to reopen it.

“We have decided to close due to family-related issues that are not important to discuss for now,’’ said Mr Shah, declining to discuss the matter further.

He, however, said that two of his uncles who inherited the stores from their father had relocated from Kenya to seek medical treatment abroad, affecting operations of the business.

CLEARANCE SALE

“My two uncles were the ones who were mainly involved in the running of the business,” said Mr Shah, adding that there were disagreements “on certain issues”.

He said that there are plans to have a clearance sale, but a date has not been set.

The Bookpoint heirs are also said to be the owners of Loan House, which hosted the bookshop, and the adjacent Guilders Centre, which houses K-Rep Bank on the ground floor of Moi Avenue.

Bookpoint is said to have been started way back in 1938 by businessman Jethalal Shah, who opened the shop under the name Hemraj Hirji and Bros, according to an earlier story in The EastAfrican newspaper published in August last year.

He began by selling nuts and fruit juice to movie-goers.

Later, he diversified into Indian magazines and newspapers in Gujarati, Hindi, Punjabi and Urdu.

By 1948, Mr Shah was selling English syllabus books, stationery and greeting cards in Ngara to students close by at the town’s government Indian schools, today’s City Primary and Jamhuri High schools.

His descendants Dipak and Sudhir Shah continued the tradition that later led to the creation of the now collapsed Bookpoint.

The article first appeared in The Business Daily.

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Tuesday, November 25, 2014

Why Internet may soon be the domain for big firms

A mobile phone user browsing the Internet. A debate playing out largely in the United States and Europe could change the way consumers access internet.  FILE PHOTO |  NATION MEDIA GROUP

A mobile phone user browsing the Internet. President Uhuru Kenyatta has directed government institutions to shift from advertising using the traditional media to digital platforms. FILE PHOTO | NATION MEDIA GROUP 

By CHARLES WOKABI
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A debate playing out largely in the United States and Europe could change the way consumers access the Internet.

The big question is whether an Internet user in a cybercafé or on a mobile phone should be treated equally with big firms ready to pay more to have priority in sending their information.

The debate, which has been going on for the past ten years, is now gaining momentum as multinationals spend billions laying high-speed Internet connection.

As more and more processes get automated, speed of delivery of data is increasingly becoming the biggest differentiator for companies.

Thus, the pressure to stay ahead of the competition is threatening to auction the broadband megabytes to the highest bidder. 

“We have held this discussion at the International Telecommunication Union (ITU) but the issues are still fluid.

"As a country we have not taken a stand on the issue but we recognize access to the Internet as a human right. It is an important issue that we are following keenly and studying as a country,” Communications Authority of Kenya Director-General Francis Wangusi told Smart Company in a phone interview.

However, at the ITU level, Mr Wangusi said most of the discussions are driven by political interests.

“But we must not let those interests mature into frustrations for consumers. The Internet is borderless and a necessary tool for development,” Mr Wangusi said.

In the US, the debate on net neutrality — the principle that all traffic on the Internet should be treated equally — has pitted Republicans against Democrats.

TIGHTER REGULATIONS

In the past few days after President Barack Obama called for tighter regulations to safeguard the principle of net neutrality, the Republican-controlled Congress and American telecommunication service providers such as Vodafone, AT&T and Verizon, which are championing for an “open Internet”, hit back, saying it is another instance of Obama championing his "socialist" agenda.

The US service providers, who are backed by Republicans, have held that the whole issue is a free-enterprise question that should be guided by the market forces on the basis of willing buyer willing seller.

Their argument is that because Internet connectivity is a service they provide, they should be able to decide how to deliver it and how to charge customers.

But the net neutrality camp, mainly composed of such giant content providers as Google and Facebook, have termed attempts to introduce open Internet as one of the most blatant web injustices in the history of the Internet.

In Europe, the debate is also heated, with service providers like Vodafone and Orange, the parent companies of Safaricom and Telkom Kenya, respectively, calling for constructive dialogue on the issue. They say resolving the issue amicably could encourage innovation and new business models.

Basically, what the service providers in the West are fighting for is the authority to determine who gets faster Internet access as opposed to the current situation in which all web content is, ideally, treated equally. There is no discrimination on the basis of type, destination, origin or any other criteria.

The conclusion of this debate is likely to determine whether, in future, a consumer could be forced to pay a premium for their content to receive top priority from service providers, such as Safaricom, Airtel, or Orange, or cable providers such as Liquid Telecom. It means that your email or tweet could be delivered faster if you can pay a fee.

CATEGORIES

Big corporates would be well-placed to have faster access to their websites and the content they generate thanks to their financial muscles.

Ultimately, the debate could lead to the splitting of Internet into two categories. On one hand, there would be the high-speed network with smooth connectivity for those with deep pockets. On the other hand, there would be the slow connectivity for those who cannot afford the fast lane.

Locally, demand for pay-for-access could be driven by financial institutions as competition on mobile and online banking takes root. Already more than 50 per cent of Kenyans are accessing mobile financial services, forcing banks to deploy mobile banking riding on Internet connectivity.

Companies that require big Internet bandwidth like Netflix, the American movie streaming service, or Google’s YouTube, would most likely be forced to pay more for faster access. Google is opposed to this.

Safaricom corporate affairs director Nzioka Waita said the same debate should start in the country with a focus on future regulation.

“It needs to be happening everywhere, including here, particularly regarding future regulation approach. Regulation needs to move from just being telecoms-centric to neutral, to include all other providers of connectivity,” Mr Waita said.

“What we are saying is infrastructure developers such as Safaricom need to continue investing in the same and so the content providers need to pay for the same.”

PAY FOR SERVICE

Service providers feel that because of their big investments in telecommunication infrastructure used to carry content to the end users, content providers should begin paying for the service. Currently, the cost is largely borne by the consumer.

Safaricom for example is spending Sh5 billion to deploy 4G, the next-generation Internet connectivity. It is also using Sh10 billion in the first phase of laying fibre-optic cable around the country.

To recoup the investment, Safaricom would be happy to let big firms send and receive their data faster than the non-paying customers. The government has spent over Sh12 billion to connect the 47 counties to high-speed Internet.

The Kenya’s National Optic Fibre Broadband Infrastructure (NOFBI) is being funded by the Exim Bank of China on a concessional loan. NOFBI is currently managed by Telkom Kenya.

Mr Michuki Mwangi, the senior development manager for Africa at the Internet Society — a global organisation that lobbies for proper public policies for the Internet — said the country should take interest in the debate but from the perspective of ensuring open access for the end user.

“Net neutrality is covering a lot of issues ranging from the technical perspective, the business perspective as well as the end user rights. For Kenya, we should mainly concern ourselves with ensuring that consumers have access to the Internet and encourage competition to stir innovation,” Mr Mwangi said.

He said the focus of the country on the debate should be different from that of the US because the two countries are at different levels of development with respect to the Internet.

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Tuesday, November 25, 2014

Neglect, hyacinth ground trade at the Kisumu Port

Fishermen struggle to break through a blanket of water hyacinth at Bala Beach in West Nyakach in Kisumu County on April 10, 2014. FILE PHOTO | TOM OTIENO | NATION MEDIA GROUP

Fishermen struggle to break through a blanket of water hyacinth at Bala Beach in West Nyakach in Kisumu County on April 10, 2014. FILE PHOTO | TOM OTIENO | NATION MEDIA GROUP 

By MOSES ODHIAMBO
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Untapped gold. That is how one would describe the idle Kisumu port. The facility, which ought to be the gateway to the East Africa community member states, is now in a sorry state.

The port’s operations have been choked by the ubiquitous hyacinth weed and heavy siltation. Then there are the bottlenecks associated with legislations touching on the agencies charged with its management.

There is little activity at the port and in the inland container depot set up to facilitate trade through the railway. The facility that could earn the country millions of dollars in freight levies has been converted into a site for local tourists who pay a paltry Sh20 per head as gate entry fee.

The port, rated by shippers as the best in East Africa owing to its strategic location, only receives at most three vessels in a week. Yet if well maintained and utilised, the port would serve Jinja, Mwanza in Tanzania, Entebbe in Uganda and Muhoma Bay in Rwanda.

The port can also provide a shorter and cheaper export route for nations in the Great Lakes region through Lake Victoria.

However, the old railway built in 1901 by the colonial British Government connecting Mombasa port to Kisumu has been neglected. This has adversely affected the lakeside port.

One of the largest ships, Mv Uhuru, that transported cargo between Kisumu, Mwanza, Port Bell and Jinja has not operated since 2006 yet is in good working condition.

The ship cannot be put to use because the port is in a bad condition. The 1,800-tonne ship is currently occupying the dry dock at the port, obstructing operations.

The port’s cargo handling facilities built by the British colonialists are now being eaten up by rust and vandals have run completely down some of them.

Furthermore, debris that find their way into the lake have caused heavy siltation at the port and making it difficult for large vessels to access it.

Mr Edward Ted Odero, a maritime consultant, attributes the poor state of the port to neglect by the national government.

He says the government, through the office of the Attorney General, has not ratified an amendment to the law to allow the Kenya Ports Authority to manage inland waters.

“The Kisumu port is the best so far compared to the ever busy Mwanza port or Jinja. Ours is a case of neglect by the government that has protected hauliers who have invested heavily on road delivery systems regardless of the damage they do to our highways,” Mr Odero said at the port recently.

“At the moment, KPA is busy maintaining facilities in deep seas because of the challenges in the interpretation of the Kenya Railways Amendment Act.

The sad part is that someone is sleeping on the job at the AG’s chambers.”

Another challenge the Kisumu port faces is that Lake Victoria does not have updated navigation maps.

“We have hydrographic maps that were designed in 1957. These don’t consider the fact that the waters have receded a great deal making the lake unsafe for vessels,” Odero said.

Captain Samuel Wabwaya of Mbita Ferries said navigation aids built by the British colonialists have been vandalised.

“You cannot risk having a ship steered by novices on this part of the lake. Beacons that marked danger points have since been vandalised,” Mr Wabwaya said.

Mr Odero said the gulf is also becoming shallower yet the Lake Victoria Basin Commission, formed to instil safety measures on the East African waters following the Bukoba boat tragedy, “is always busy with meetings and conferences”.

In 1996, the steamer, MV Bukoba, sank on Lake Victoria near Bukoba in Tanzania with 600 people on board. About 400 died in the tragedy.

“We want the LVBC to come out of boardrooms and perform its role” he said.

Mr Odero also took issue with the way licensing of traders is done at the port.

“The licensing process is shrouded in mystery and poses unfair competition to investors banking on large vessels. How can we trade fairly when unprofessional users get licensed to operate at par with large ship owners?” Mr Odero posed.

“At that rate, you cannot convince ship owners to work here when they will not make any profits.”

The port’s woes have also been blamed on the concession that led to the railways being handed over to a private investor – the Rift Valley Railways (RVR). Kisumu Port manager Michael Disi said the facility became idle when RVR stopped operating on the route in 2011.

“The situation of the port, railway station and its rotting facilities cannot be blamed on the corporation,” Mr Disi said.

He said RVR, which entered into a concession agreement with the Kenya Railways, ought to take care of the entire facility.

Kisumu port management is banking on the planned modern rail to shore up its fortunes.

“We are expecting the standard gauge railway line here in Kisumu as well. It will be built in the second phase of the works after completion of the Mombasa-Nairobi-Malaba line,” said Mr Ndisi.

“Kenya, Uganda and Rwanda cannot definitely do without Kisumu. The port will actualise its full potential when the railway line is refurbished.”

Dr Ally-Said Matano, LVBC programmes officer for projects development and partnerships, agrees that siltation not only affects transport but also the biodiversity of the lake.

He said sediment in the lake is the result of poor land use practices such as deforestation, poor farming methods, riverine deforestation, roadside erosion, monoculture and destruction of wetlands.

“This phenomenon is similar within the basin and not unique to Kenya. For instance all the cultivated areas in the basin districts of Tanzania, especially in Kwimba, Magu, Misungwi, Musoma and part of Sengerema districts, which lack vegetation cover, have been exposed to different levels of soil erosion risks,” Dr Matano said.

Transport in the lake is also affected a great deal by the proliferation of aquatic weeds such as water hyacinth.

Dr Matano exonerated the commission from blame over sedimentation saying its mandate is to help Lake Victoria Environmental Programme (Lvemp) implement programmes aimed at solving the problem.

On outdated maps, the LVBC said a consultancy formed in 2008 to undertake survey on access routes of the ports in Mwanza, Port Bell and Kisumu did not complete the work due to lack of funds.

SMOOTH SAILING

“This (survey) was supported through a partnership fund. Nonetheless this was not enough and therefore through the Lake Victoria Environmental Management Programmes, the commission intends to map the entire lake. Once this is completed, it will facilitate smooth sailing. Furthermore, under this initiative, aids to navigation equipment will also be installed,” Dr Matano said in an interview with Smart Company.

He, however, added that the dynamics of the lake have not changed significantly to render the existing maps totally useless.

“It is worth noting that most of the reported deaths (about 5,000 people yearly) in the lake are due to bad weather, overloading and mainly involve small vessels that would not otherwise use the navigation charts,” he said.

Furthermore, the commission said it was negotiating with the African Development Bank to fund an investment plan for maritime communication, safety and transport in Lake Victoria.

According to the Kisumu county government, Lake Victoria has the potential to offer mass transport for goods and passengers across the region and beyond. The county is currently negotiating with investors to set up ferry and boat services, construct a shipyard and supporting rail system.

Governor Jack Ranguma said there are also plans to develop a dry dock port in Kisumu city.

“The features of the proposed dry dock will include storage and clearing facilities, as well as offices, banking halls, hotels and restaurants,” he said.

Mr Ranguma said the county has entered into an agreement with the Kenya Ports Authority (KPA) to revamp port facilities in Lake Victoria to ease docking of cargo and passenger ships.

“We have signed an agreement with KPA and the national government through the Kenya Railways to allow KPA to have the mandate of reactivating port facilities in Lake Victoria for enhanced transport,” said Mr Ranguma.

REDUCED WATER LEVELS

The agreement took into account issues such as overall management of lake port systems. The deal would also lead to the acquisition of vessels that can dock up to one metre deep.

“There has been a continuous challenge of reduced water levels making it difficult for ships to dock. Kisumu County is considering buying sea buses that can land at any point on the lakeshore to pick passengers and cargo.”

Mr Ranguma said the county is working on budgetary allocations for building facilities required to handle cargo.

“We are working on a budget that will help us upgrade existing piers and build new ones in collaboration with KPA,” said Mr Ranguma.

Siaya governor Cornel Rasanga said the lake should be handed over to an authority that can marshal the required human resource to manage fishing, transport and overall maintenance.

Mr Rasanga said road transport increases the costs of doing business.

“Think of a situation where someone wants to travel to Migori from Busia. They can take a ship at Sio Port and disembark at Muhuru Bay in fewer minutes than when they use the road,” said Mr Rasanga.

Mr Israel Agina, the chairman of the business community in Kisumu, said the port lost business because of the dilapidated railway and the fact that most hauliers prefer the Nakuru-Eldoret-Malaba highway.

“We are losing millions of shillings in revenue. The situation is no longer the same as it was six years ago when we had an active train transport system,” Mr Agina said.

Agina’s sentiments were echoed by Mr Amin Vipul, a freight consultant, who said a lot of jobs have been lost following the closure of the railway.

“There are many people who were engaged in offloading and loading cargo but now lack meaningful work. The few who have stayed put can go for days without having any cargo to load or offload as a result of the low business through the port of Kisumu,” Mr Vipul said.

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Tuesday, November 25, 2014

Local online stores have bright future if only they learn

Local online stores have bright future  if only they learn. FILE PHOTO |

Local online stores have bright future if only they learn. FILE PHOTO |   NATION MEDIA GROUP

By LUCY KIRUTHU
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I have made online purchases for the last 14 years. My first experience was at amazon.com.

At the time, it claimed to be “the world’s largest bookstore” and Barnes and Noble took them to court. I trust it possibly was because more than 80 per cent of my hard copy books and 100 per cent of my e-books are from amazon.com.

In the current issue of the Harvard Business Review Jeff Bezzo the Amazon.com CEO tops the list of best-performing CEOs.  In addition, the online store is number two on the 2014 Fortune list of most admired companies and has taken the lead for the last five years in the Customer Service Hall of Fame.

Online shopping though goes beyond Amazon.com. Just recently alibaba.com a company that plans to last at least 102years as stipulated it its vision has made headlines. Other online stores that have left a mark are ebay.com and zappos.com. Many have come and gone and others are being set up today.

Closer home is Mamamikes with its trademark Mbuzi delivery. Currently, there is prolific growth of online stores in Kenya and leading supermarkets are also opening up online stores.

As I reviewed the numerous online stores in the past few weeks, I wondered if I could trust all of them as much as I trust Amazon.com.

Would you shop from a local online store? A few years ago many would have been hesitant.  However, today I believe Kenyans are willing to give it a trial.

HOW TO SURVIVE

As the numbers continue to grow there is no doubt that only those that build a reputation of a great shopping experience will survive.

According to the 2014 Customer Service Hall of Fame survey results, amazon.com not only received by far the highest percentage of “excellent” responses but also received the smallest number of negative ratings compared to all sorts of businesses. The online store has keenly focused on the customer experience. Is there something that our local online stores can learn from Amazon.com?

Most of the local online stores I have visited indicate opening hours as 8am to 5pm Monday to Friday and on Saturday 8am to 1pm. An online store is open 24hours and so should be its support services such as telephone, email and chat services.

In one of the stores, I made a call back request and five days after I have not been contacted. I also sent an online request to several and I was impressed that Jumia and Rupu track customer queries and respond; a few others are yet to respond. 

What also caught my attention were the five-seven days return policies with strict conditions such as the item must be in a saleable condition.

One store responded to my query saying item returned must go through a quality check before an exchange is made. 

Most successful stores have kept their return and refund policies simple and clear.

Leading online stores are also reliable in their deliveries, know their customers by keeping track of their purchase history, keep them informed and provide them with product reviews.  In addition, they provide payment options and secure their customers’ information. 

I believe that online stores in Kenya have a bright future if they put the customer experience at the centre of their existence, build trust and create loyal customers.

Lucy Kiruthu is a management consultant. Get in touch with her on: [email protected]; twitter @kiruthulucy

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Tuesday, November 25, 2014

Agency and Hong Kong firm tussle over aviation licence

The Kenya Civil Aviation Authority headquarters at the Kenyatta International Airport. FILE PHOTO | NATION MEDIA GROUP

The Kenya Civil Aviation Authority headquarters at the Kenyatta International Airport. FILE PHOTO | NATION MEDIA GROUP 

By RAMENYA GIBENDI
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The stand-off between Frontier Services Group FSG, a Hong Kong listed company, and Kenya Civil Aviation Authority (KCAA), over an aviation licence is set for the courts.

At the centre of the row between KCAA and the investment firm is an application for the renewal of Kijipwa Aviation’s licence that was declined by the authority.

The investment firm argues that KCAA has on many occasions failed to provide valid reasons for its refusal to renew the licence for the Mombasa-based aviation firm in which it bought a 49 per cent stake.

“We have written seven letters to KCAA requesting for a valid reason but none has been responded to. The option therefore is to proceed to court to have the matter resolved,” FSG chief operating officer Peter Philips said in an interview.

The authority said earlier that its decision had been informed by the uncertainty regarding the ownership of Kijipwa and non-compliance with Kenyan laws that limit foreign ownership of aviation firms to 49 per cent.

“There are shareholding questions about the company,” KCAA acting director-general Joseph Kiptoo said in an October 26 interview.

But FSG says its purchase of stake in Kijipwa strictly complied with the requirement that locals hold a 51 per cent stake in an aviation firm.

“Our lawyers are currently finalizing on the paperwork and soon we shall move to court to initiate a process that will obviously take longer than we anticipated,” said Mr Philips.

HEAVY BLOW

The decision by KCAA, the aviation industry regulator, dealt a heavy blow to the investment firm which had outlined ambitious plans of setting up an aviation training centre for both pilots and certified aeronautical engineers at the coast.

Currently, professional Private Pilot Licence and Commercial Pilot Licence holders have to go overseas, mostly US and Britain, for training. FSG wanted to set up such a facility in Kenya to serve East Africa.

“We had set up a very ambitious business programme but the licensing headwinds have stalled the whole process,” Philips said.

Kijipwa was part of the investments firm’s wider strategy of cashing in on the region’s and country’s nascent extractive industry as well as logistics services.

FSG, whose board chairman is former US Navy Seal Erik Prince, already has a 49 per cent shareholding in Phoenix Aviation, a Kenyan company.

In May, KCAA expanded Phoenix Aviation’s licence allowing it to operate chartered flights to Asia. This gave FSG room to target Chinese mining firms with operations in Africa as major clients for its logistics services.

FSG was formerly known as DVN Holdings Ltd but it changed its name to Frontier Services Group Ltd in March 2014 through regulatory filings to the Hong Kong bourse.

FSG is eyeing a slice of the oil and mineral wealth in Kenya and Africa through provision of passenger and freight services to oil and mining companies transporting staff, machinery and spare parts to remote areas such as Lokichar and Lokichoggio in Turkana.

“Kijipwa was appealing to FSG due to its strategic position near the Port of Mombasa, and the legendary reputation of its founder, Mr Alan Herd,” FSG chief executive Gregg Smith said in a separate interview.

FSG had reportedly lined up 25 aircraft for Kijipwa’s airstrip located on the grounds of Bamburi Cement in Mombasa, to provide specialised aviation services and aerial survey of installations such as oil pipelines to players in the extractive industry.

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Tuesday, November 25, 2014

Some level of stress is good for work but too much of it is harmful

Many employees operate in an environment of constant high levels of stress, often leading to burnout.  FILE ILLUSTRATION | JOSEPH NGARI

Many employees operate in an environment of constant high levels of stress, often leading to burnout. FILE ILLUSTRATION | JOSEPH NGARI  DAILY NATION

By DAVID MUTURI
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The most common complaint in every workplace is about stress.

As a manager this can be a cause for worry. It is important for managers to be aware of the types and levels of stress among the people they lead.

Different forms of stress have different effects on people. Experts tell us of at least four kinds of stress. They talk of hypo stress, eustress, distress, or hyper stress.

Some level of stress is always necessary for work and good results. This is what experts call eustress. It is the stress that awakens you to what must be done. This might be a deadline that must be met, or   the acceptable standards for a particular task. If you do not have eustress, you are likely to take a lackadaisical attitude towards important assignments and tasks. Eustress is therefore good stress. It assists individuals to achieve optimum performance.

Like most things in life, different people handle stress differently. Accordingly, even eustress will receive different reactions from different people.

What is important is to understand that this form of stress is necessary for good results. When you have that understanding you will not panic the moment you hear the word “stress.” For, you know that good results hardly ever come in an environment devoid of stress.

UNABLE TO THRIVE

 Different environments have different levels of eustress. The critical thing is individual adjustment for self-built stability. It is also important for you to know yourself relative to your capacity to handle stress. Some people cannot thrive in some environments without being easily overwhelmed. Other people would not find any satisfaction if they were not working under some pressure.

 The other types of stress have negative consequences. Hypo stress is a very low level of stress. This form of stress may lead to complacency, or to disturbed quietness. This may occur due to a mismatch in job qualification and job placement.

As a manager you will have to consider whether it helps anybody to retain the individual who has too much time, and can only be a disruption to the other employees. It could lead to a situation where it matters little that a certain undertaking is done or not. This is common where people find it necessary to preoccupy themselves by doing things that are not related to work.

When you have little to or almost no work to do, you get disturbed even when your paycheck comes promptly at the end of the month.

Hyper stress is when a person feels completely overwhelmed. You see no end or hope in what is causing you stress. This can be, for example, when you are working with difficult people whom you have not learnt to handle appropriately. It can also arise when you engage in new responsibilities and tasks.

NEGATIVE THOUGHTS

You could also fuel the stress by your own negative thoughts and sense of inadequacy in what you are doing, choosing only to see your limitations and not your strengths. This can lead to a disruption in the flow of life, at times ending in inertia. This stress may become a hindrance to effective performance of given tasks. It could also be manifested in individuals with low stress tolerance levels.

Hyper stress needs professional intervention because it is dangerous and could lead to other bigger problems. It calls for the attention of the manager. People with low stress tolerance are as dangerous as people with hypo stress.

Mentally ill

When you get distressed you cease feeling overwhelmed, you actually become overwhelmed. This is when you have lost it. This is where you are likely to get mentally ill. You must avoid this at all costs.

You must never get into this stress level. If you are not suited for the environment, get out and look for your space elsewhere. The world is big enough for everyone.

Dr Muturi is the executive director, Kenya Institute of Management.

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Tuesday, November 25, 2014

Don’t make investment decision in haste

Before plunging into the waters of a new business, it is wise to carefully think through all possible risks.  No idea is perfect, so be on your guard and work hard at exposing the hidden problem areas.  FILE PHOTO | NATION MEDIA GROUP

Before plunging into the waters of a new business, it is wise to carefully think through all possible risks. No idea is perfect, so be on your guard and work hard at exposing the hidden problem areas. FILE PHOTO | NATION MEDIA GROUP 

By RICHARD BRANSON
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To do, or not to do - that is the question. Business leaders get paid big bucks to make smart, informed decisions about whether or not to take the plunge on a potential venture, yet there is no science or advice anyone can offer that will help new entrepreneurs to make similar choices.

Such decisions could never be programmed into a computer. It’s more like sitting on a jury: All reasonable doubt must be removed before you can pass a verdict one way or the other. (Thankfully, though, corporate decisions seldom involve matters of life and death!) That said, I have found that a few general rules often help me to arrive at a decision within the appropriate timeframe about whether to approve a project.

For me, first impressions always matter a great deal, but I don’t let that thought process influence my decision-making when it comes to business matters.

I’ve learned that even when an idea immediately strikes you as a really good one, you must push aside that first reaction and carefully and objectively weigh the potential new business’s pros and cons. If no significant cons come to mind when you first evaluate an idea, that doesn’t mean that they don’t exist.

UNFORSEEN PROBLEMS

Almost every startup encounters unforeseen problems, so be sure to devote a lot of time to figuring out what they are and assessing solutions before you move forward - if you learn of a major problem after the launch, you’ll be in a much worse position to deal with it.

This kind of caution becomes doubly important if everyone on your team is unanimously in favour of going ahead with a project. No idea is perfect, so be on your guard and work hard at exposing the hidden problem areas. Find and address them, and you’ll only build a better business.

Avoid making a decision in isolation about whether to launch a venture: You must also consider how the project will affect the overall functioning of your company. Every choice you make as an entrepreneur will impact, to some degree, your ability to explore future opportunities - this is what the experts call the “decision stream.”

You might feel that the venture you’re considering might be too good to pass up, but you have to keep in mind how it will affect your other projects down the road. If it appears that now is not be the best time to move forward, consider what risks, if any, there would be in putting the venture on hold for an agreed-upon length of time. In those situations where you cannot take on a project because another is waiting in the wings, think about why one should get the nod and the other not, and what that says about your priorities.

LIMIT EXPOSURE RISK

Finally, do everything you can to limit your exposure to risk - protect the downside. Wise investors go to great lengths to limit their potential losses when it comes to stock portfolios, and you should employ a similar strategy when setting up a new business.

For example, when I was starting up Virgin Atlantic, the only way I got my business partners at Virgin Records to begrudgingly accept the risks involved in running a new airline was by getting Boeing to agree to buy back our 747 airliner after a year if things didn’t work out as we’d hoped.

Ever since then, whenever we are looking into starting up a giant, capital-intensive venture like Virgin Galactic or our upcoming Virgin Cruises, our team always spends a lot of time finding inventive ways to protect the downside.

These are just a few tips that I have used to help me make smart business decisions, and I hope that they will help you too. A final hint: If you have the time to take an approach that involves orchestrated procrastination, then do so. Doing more homework on a project is seldom a bad thing - as long as you don’t let the opportunity pass you by!

(This column was adapted from Richard Branson’s latest book, “The Virgin Way.” For more information, go to virgin.com/richardbranson/books.)

This column is part of a weekly series by Richard Branson in which he responds to reader’s questions from around the world. Questions from readers will be answered in future columns. Send them to RichardBranson@nytimes.

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Tuesday, November 25, 2014

Brewer to release two new brands in bid to shore up earnings

East African Breweries Ltd is set to introduce two premium whisky brands next month in a bid to boost  revenue that has come under heavy assault from tax on its  products that target low-end market. FILE PHOTO |

East African Breweries Ltd is set to introduce two premium whisky brands next month in a bid to boost revenue that has come under heavy assault from tax on its products that target low-end market. FILE PHOTO |   NATION MEDIA GROUP

By RAMENYA GIBENDI
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East African Breweries Ltd is set to introduce two premium whisky brands next month in a bid to boost revenue that has come under heavy assault from tax on its products that target low-end market.

The beer maker will also be distributing Johnnie Walker Odyssey Triple Malt and Bulleit Bourbon Frontier Whisky in Kenya from December on behalf of Diageo, its anchor shareholder.

Johnnie Walker Odyssey Triple Malt is expected to become one of the most expensive alcohol brands, rivaling King George V, Scotch whisky that retails at over Sh100,000.

Speaking on the sidelines of the official launch of Talisker Storm, another premium whisky brand, last week, Diageo luxury brands ambassador Dougie Duncanson said they are targeting the growing appetite for high- end spirits in the country.

“This is being driven by the ever growing middle class as we have witnessed a growing demand for high-end whiskies, spirits and Vodkas,” said Mr Duncanson.

GROW BY 28 PER CENT

Euromonitor International’s data shows that Kenya’s social class is projected to grow by 28 per cent between 2011 and 2020. This is one of the highest forecasts in the world.

Johnnie Walker Odyssey Triple Malt is described as a new luxury blend with an alcohol content of 40 per cent.  It is housed in a swinging decanter to commemorate the 80th anniversary of Sir Alexander’s creation of a whisky vessel capable of staying upright in the sea.

While its retail price for the brand in the Kenya market has not been disclosed, the whisky retails at Sh333,355 (2,299 pounds) per 750ml bottle in the European markets.

Bulleit Bourbon Frontier Whisky on the other hand is distilled in Kentucky, US, from a mixture of corn, rye and malted barley. It retails at Sh3,190 in the Western markets. The local price has not been recommended.

EABL’s current premium whisky include Johnnie Walker Red Label, Smirnoff Vodka and Baileys. The brewer’s reserve products include Johnnie Walker Blue Label, and Don Julio Tequila.

The brewer recorded a double-digit growth in its spirits sales in the year ended June which contributed significantly to its earnings, helping it post a five per cent increase in full-year net profit to Sh6.85 billion from Sh6.52 billion the previous year.

SENATOR KEG

The brewer’s business was severely hit after the introduction of 50 per cent excise tax on Senator Keg beer which caused a 75 per cent drop in sales of the low-end brand.

It is perhaps based on this backdrop that the brewer is paying special attention to the high-end spirits which are currently performing better than the low-end products.

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Tuesday, November 25, 2014

Equity model shows the poor have a lot to offer

The Sim card in contention is paper-thin and is embedded with a chip. Users overlay it on their primary Sim card and can subsequently receive services from two mobile telecom providers simultaneously. PHOTO | PHOEBE OKALL | FILE

The Sim card in contention is paper-thin and is embedded with a chip. Users overlay it on their primary Sim card and can subsequently receive services from two mobile telecom providers simultaneously. PHOTO | PHOEBE OKALL | FILE  NATION MEDIA GROUP

By James Shikwati
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Accessibility and affordability are terms that are expanding horizons of markets.

Systems that enhance access to financial and communication services have transformed the way low income populations are perceived in Africa.

The retail, beverage, mobile telephony and banking industries in Kenya are raking in billions of shillings in profits by turning their attention to the “bottom billion”.

In his book The Bottom Billion Paul Collier raises the alarm about countries and populations at the bottom of the global economic system that are likely to form a “ghetto of misery and discontent” thereby breeding instability. 

Trapped in conflict over natural resources, landlocked with bad neighbours and bad governance, Collier says the bottom billion, 70 per cent of whom are in Africa, are a potential threat to the secure world at the top of global economic system. It is a line that is shared widely by political and policy leaders.

Industry players have a different take on this – they see opportunity in the bottom billion.

One of Kenya’s leading indigenous banks has dived deep at the “bottom” and is raking in profits.  Equity Bank’s model that targets low income market, the unbanked and under-banked populations, demonstrate that the bottom billion are not always full of threats.

The bank opened up its retail and micro-loans of as little as Sh500 to a customer base that other banks were running away from. For the last 14 years its pre-tax profit has been growing at a rate of 65 per cent. The bank has grown to be among Kenya’s pioneering multinational companies with branches in Uganda, Tanzania, Rwanda and South Sudan.

Equity Bank’s model illustrates that the poor are not necessarily beggars. Access and affordability of financial services have upheld the dignity of the low income groups and propel them to be productive. Financial inclusivity model acts as a multiplier force that enables rural communities to increase their productivity and set up enterprises.

THIN SIM CARD

Equity Bank’s entry into mobile banking with a keen eye for low income earners reinforces the view that the bottom billion have a lot to offer innovators.

The thin Sim card technology that the bank is rolling out will scale up numbers that access financial services by riding on the existing mobile phone platforms.

Competition with Safaricom, an old player in the mobile money sector, is likely to benefit low income populations with falling prices of financial services and better customer service.

As innovators turn to the bottom billion for profits, government regulators must keep pace as well. Governments should not focus only on the tax that such innovations generate for the economy but ensure that citizens are not shortchanged through poor services.

With Equity Bank’s move to break Safaricom’s monopoly, the government’s role as a “referee” is going to be keenly scrutinised. Consumers expect the government to play its proper role to foster fair competition.

Equity Bank’s success story should encourage more Kenyans and by extension Africans to venture into business to serve the people.

The bank’s success story is not pegged only to its focus on low income groups, but also its strategy to partner with successful ventures to deliver quality services to its clients.

For Kenya and Africa to succeed, they too have to learn how to manage and navigate strategic partnerships as opposed to the attitude of shunning the rest of the world. The country’s challenges offer opportunities for innovators to step in and reap rewards.

The bottom billion are not a curse or a threat to society, they offer opportunities for innovators to make profits.

Equity Bank has demonstrated that innovations and technology can get rid of “poverty traps” that hold back low income people from connectivity to the global economic system. Instead of fearing the bottom billion, the world should reconfigure and open up restrictions that suffocate low income populations. Market horizons are not cast in stone so as not to be grown!

Mr Shikwati is the founder director, Inter Region Economic Network.

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Wednesday, November 19, 2014

Contact Safaricom to register your M-Pesa agency business

Keep us posted on the progress of your application for a permit. PHOTO | FILE

Keep us posted on the progress of your application for a permit. PHOTO | FILE |  NATION MEDIA GROUP

By YVONE KAWIRA
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My name is Nancy and I have been an M-Pesa sub-agent for over three years now.

An M-Pesa sub-agent means that, I earn less 20 per cent of the total revenue (commissions) on my till.

The 20 per cent is usually pocketed by my agent whose tills I am using to transact with.

On average, I transact credit business worth Sh12 million and debits worth Sh4 million per month.

I have presented my application for agency to Safaricom, Kenya Cinema Office, and every time, I am informed that the telecom is not taking in fresh agency applications.

I would like to earn 100 per cent on my work.

At the moment, some of the expenses incurred are bank charges which add to Sh20,000 per month because one has to exchange float for cash.

For every Sh100,000 float, the charge is Sh100. I transact on average withdrawals (credit) of Sh600,000 daily. This translates to bank charges of Sh600 per day.

However, I end up with little commission because I still have to part with 20 per cent.

Please assist me get an agency permit because I have the all documentation required.

Thank you in advance.

Hello Nancy,

Thank you for trusting that we are in a position to help you bring your suffering to an end.

We have been in communication with Safaricom regarding how it can help you register your M-Pesa agency business.

In its response, the telcom company instructed you to use the documents we attached in the email we sent to you to apply for M-Pesa agency permit.

Safaricom has noted that its team is looking at updating some of its existing and good performing agents. The firm has also asked you to get in touch with it if you need support on the same.

We hope you will soon be in a position to reap the maximum profits from your business. Keep us posted on how your application goes on.

Dear Yvonne,

My name is Jeremiah Mburu and I have a salary account with Family Bank, Sonalux branch Nairobi.

Through your column on Thursday, October 30, 2014, I came across a case that bears similarities to a problem that I have been facing.

On Friday, October 24, at around 6pm, I visited a KCB ATM in Voi town, hoping to withdraw some cash.

After going through the withdrawal prompts, the ATM returned my card, advising that it was under maintenance, and therefore I should seek services at the bank’s nearest ATM. Neither cent was dispensed, and nor print of confirmation was issued either.

Since my card was Kenswitch- and Visa-enabled, I decided to try the withdrawal at a Kenswitch ATM, but to my utter surprise, there wasn’t enough money in my account, the machine informed me.

Curiously, I returned to the KCB ATM and checked my account balance which indicated that it was less than Sh100.

However, knowing very well that I had close to Sh10,800 savings, I suspected that the ATM had considered the first transaction a success.

The banking hall was closed, and there was no guard on sight. Out of frustration, I knocked the door lightly to get attention of the guard on duty, who asked me to wait for 10 minutes before trying the transaction afresh. I did as instructed twice but it was still unsuccessful.

Later when I got in touch with Family Bank, I was told that there was a problem with KCB ATM withdrawals. I was also informed that the hitch would take 24 hours but at the meantime, the transaction would be reversed.

As I write this email to you, the amount has never been wired back. When I visited the bank recently, its answer was not convincing either.

On contacting Family Bank again, it asked me to be patient but when I came across Dishon’s case in your column, I sensed that something was amiss.

Dishon’s suffering in KCB’s ATM happened in July. I fear that I might have to wait for an uncertain period of time.

I need your help to find out the following: are the answers Family Bank is giving me true considering the long wait Dishon endured?

How long does one have to wait for his hard-earned cash, however little, in case of such a frustration?

Who is responsible for this mess between Family Bank and KCB? Will I ever have my money back?

Can I sue whoever is responsible or can the bank be sued for all the stress, tussle, loss, frustrations, which customers suffer for their errors?

Thank you, Jeremiah, for reaching us in search for answers.

We have been in touch with Family Bank on the matter you have raised here and we thank the lender for responding to our queries promptly.

In its response, the bank confirmed that indeed you experienced an erroneous transaction on October 24, 2014 for Sh10,630 at a KCB ATM in Voi town.

However, Family Bank has noted that your money was refunded on November 4.

Further, your bank acknowledged that its customers have been experiencing challenges using KCB ATMs.

This has seen some customers’ accounts debited without the machine dispensing cash.

The bank has therefore noted that these issues have been brought to the attention of the relevant persons and settlement for such disputes usually takes at least seven days.

We hope you are now able to access your money. Kindly get in touch with us if you need further assistance.

Looking for answers?

Send your queries and daytime telephone numbers to Yvonne Kawira:

E-mail: [email protected]

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Wednesday, November 19, 2014

Coffee farming offers retiree rich pickings

“Every week, I receive at least 20 farmers coming to learn best practices in coffee farming,” says coffee farmer Peter Kamunu. PHOTO | CORRESPONDENT

“Every week, I receive at least 20 farmers coming to learn best practices in coffee farming,” says coffee farmer Peter Kamunu. PHOTO | CORRESPONDENT |  NATION MEDIA GROUP

By LILIAN OCHIENG
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It is only in his retirement that coffee farmer Samuel Kamunu has enjoyed the sweat of his hard work.

At 66, Mr Kamunu, smiles with awe at the sight of his expansive coffee farm; the business that has drawn him a life full of peace even as it helped him meet his household needs.

The father-of-five spent his youthful days working at Kenya Bus Service as an oil cleaner. He was later promoted to a decorator before retiring in 2004 as a supervisor.

The highest salary the man from Tetu, Nyeri County, ever earned was Sh18,000. The pay was barely enough for his family upkeep. But as a coffee farmer, he now earns over Sh200,000 an amount he never dreamt of.

NEGLECTED CROP

“Coffee farming just thrills me, during the World Coffee Day celebrations on September 29, I felt part of a wider community that knew the worth of a once neglected crop,” he told Money.

Back in his village, Mr Kamunu’s 4.3-acre farm was used for subsistence farming. The farm, with 200 coffee trees, was neglected.

The coffee was not doing well, small-scale farmers were losing interest due to low-income, coffee berry disease and poor yields.

“Coffee farming was an old man’s job then, but this has since changed as more youth learn the worth of the crop,” he said.

On retiring, Mr Kamunu was rewarded with a Sh152,000 — a package which he invested in his farm to revive the ailing crop.

“My wife used to earn Sh1,500 per year from the 200 trees by then. We weeded, sprayed and pruned,” he noted.

At the end of 2005, they harvested over 700 kilogrammes of coffee.

However, beverage company Nestlé’s intervention in 2011 brought forth better knowledge on coffee farming to Mr Kamunu.

Nestlé partnered with Coffee Management Services to support coffee farmers through co-operatives in the area.

“They employed an agronomist who held training sessions helping us discover how we could maximise our returns,” he said.

They were taught how to prune, manage soil, pests and control diseases as well as fertilisation.

“I would get back home every day to practice the skills and review my notes,” said Mr Kamunu.

By the end of 2011, his yields had increased to 2,300 kilogrammes, an average of 11.5 kilogrammes per tree.

The rewards of his hard work were showing fast, and in 2013, Nestlé featured him in its annual Nescafé Plan report for producing over 3,000 kilogrammes of grade A coffee.

DIVERSIFY

“I have made it at my retirement. Last year, I made over Sh200,000 which I never even dreamt about in my professional life,” he said adding that he regrets why he left the village for Nairobi.

His earnings have helped him diversify his income sources; he now has a dairy cow which produces over 15 litres of milk per day, earning him an extra Sh500 daily.

“I am now in the process of putting electricity in my house,” he told Money.

Mr Kamunu now believes that he would be a lot richer had he not abandoned his land.

“I feel sad for youth who are moving from the village to work as touts or push mkokoteni (carts) in the city,” he said.

“Every week, I receive at least 20 farmers coming to learn best practices in coffee farming, I got the knowledge free of charge and I am happy to pass it over to other farmers,” said Mr Kamunu.

He has plans of adopting high yield coffee varieties being offered by Nestlé and Coffee Management Services; an initiative which he believes will take his farming to greater heights.

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Wednesday, November 19, 2014

Artisan weaves tidy sum from reeds

Mr Tom Omondi who makes sofa sets using papyrus reeds. PHOTO | JARED NYATAYA

Mr Tom Omondi who makes sofa sets using papyrus reeds. PHOTO | JARED NYATAYA |  NATION MEDIA GROUP

By STANLEY KIMUGE
More by this Author

Along the busy Uganda Road in Eldoret is Westy, a popular marketplace in the town.

It is Friday and the centre is abuzz with business. People from all walks of life are coming to buy household items or second-hand clothes.

About 100 metres from the market, Mr Tom Omondi, is weaving a sofa set using strings of papyrus reed, a plant that grows in swampy areas.

“Many people consider them (reeds) useless but they are important to me. Our products, as you can see, are distinct. They are blend of modern furniture with African finesse,” Mr Omondi said.

Soon, a lorry parks by the roadside, just a few meters from his workshop and the driver dashes out. “I want a pouf stool, how much does it cost?”

Our interview is interrupted. Mr Omondi tells him it costs Sh2,000, a price which the driver says is a lot. Bargaining ensues before the buyer parts with Sh1,500.

“Kenyans love to bargain, it seems as if it is ingrained in our DNA,” Mr Omondi says as he reluctantly gives the buyer a nod to take the stool.

His business location seems ideal. But he thinks otherwise.

“I have sold goods to hundreds of drivers plying this route and other customers. But the biggest challenge has been getting customers from all walks of life since some feel ashamed standing by the roadside.”

The entrepreneur makes seats, shoe rugs, beds, mats, baskets and TV stands, all from reeds. The dried reeds, bought and transported from Busia town, are bundled into rolls which cost him Sh2,000 per each. Once the items are woven, he cushions them with leather or cloth.

To make them more durable, he reinforces them with metal frames. He also varnishes them to ensure they are water and dust proof.

“We make wooden products which are bit cheaper compared to those made of metal frames. For example, a seven-seater leather sofa set goes for Sh40,000.”

He attributes the growth in his business to the rise in real estate in Eldoret and its environs, which is opening windows of opportunity to traders in the informal sector.

“New buildings are set up daily within and around the town. This implies new tenants. Our work is to furnish them with quality and modern furniture.”

So how did he venture into reed weaving business?

“I used to see an old man making furniture and how university students, his main customers, bought all of his products. So, I thought, why don’t I give it a try?” Mr Omondi who is the proprietor of Sahara Homes Expo says.

On interacting with the old man, he got handy tips on what it takes to create good furniture. At first, he made some stools for his house.

BETTER PRODUCTS

And as the golden rule of business dictates, learn the flaws of your competitor and capitalise on it to win his/her customers.

“I realised that though the customers used to stream to his workshop, the furniture was of low quality. I decided to come up with better products,” Mr Omondi told Money.

“From the venture, we make about Sh200,000 in a month when the business is booming,” says the 34-year-old.

His customers come as far as Nairobi, Busia and Kisumu besides Eldoret and its environs.

University students, who form his main market, like trendy items which they can afford, “so I always try hard to match their expectations,” he notes.

Already, his work has generated a lot of interest.

In September, he was invited by organisers of Eldoret Trade Fair to showcase his wares.

The event brought together stakeholders in the housing sector such as cement makers and multi-national companies.

And the artisan is proud to be an employer. “At the moment, I have four permanent workers aged between 20 and 29 years but I occasionally contract welders to design metal frames.”

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Wednesday, November 12, 2014

Plan how you’ll run the salon daily, even in your absence

The success of any business depends on the time you allocate to it as well as your commitment. FILE PHOTO

The success of any business depends on the time you allocate to it as well as your commitment. FILE PHOTO |  NATION MEDIA GROUP

I’m an avid reader of your column.

I want to start a salon and a barber shop using Sh300,000 loan from my Sacco.

From my job, I earn a net salary of Sh25,000.

I don’t have any experience in this type of business either.

However, my cousin is running a similar outfit but he seems to discourage me from joining the trade saying that if I am not going to be there full-time, my workers would pocket much of the income.

Kindly help me out because I am planning to employ a person to run it for me.

— Kenneth

Thank you for your encouraging comment, we are pleased to know that this column is of value to you.

The idea of starting a business that increases your income can be in itself thrilling.

However, it is normal to be careful if you do not have enough experience in the business and in addition the time to run it yourself.

The likelihood of the business being mismanaged, including embezzlement of cash by staff is real, and can be very disheartening especially if there is a loan to be paid.

This is why it is important to make up your mind.

Nonetheless, in all instances when venturing into business, a good starting point is to have a business plan.

This will give you an understanding of your target customers, target revenue, expenses and estimates of how much profit you are likely to make.

It will also give you an estimate of the daily cash flow and enable you put in place checks to eliminate pilferage.

A key area of focus in the business plan is how you will run the shop every day to ensure sustainability, even in your absence.

Having tightened the bolts and nuts required for smooth running of the business, you will need to plan and allocate duties to your staff while retaining a supervisory role.

Although there are other ways of operating the business that can simplify these tasks for you, there are few substitutes to having a sound business plan and effective management skills.

They include acquiring a franchise where you pay to use somebody else’s established business name, systems, processes and structure.

The advantage is that you will be given support and guidelines since the franchise owner have standards on quality and importantly, a reputation to maintain.

You will also gain from their solid reputation and branding.

Another option is buying an established startup. This is tricky approach as you are unlikely to know much about the business until you run it.

The third option is entering into partnership with an established outfit such as your cousin’s where you inject fresh capital to facilitate expansion in order to generate more revenues and therefore earn more profits.

However, the success of the business will largely dependent on the time you allocate to it as well as commitment.

Whichever option you choose your worry of hiring and retaining dedicated staff will keep recurring.

The best way is to hire a manager who can handle the day to day issues on your behalf and report back to you daily.

Despite hiring a manager, you will still have to maintain a close touch with the business so as to know what is going on and understand your customers’ needs and expectations.

Consider taking seriously the following oversight duties yourself, ensuring customer service is your top priority, making financial decisions, checking your inventory, hiring new staff and assessing employee’s performance.

We wish you Godspeed.

NEXT WEEK'S QUESTION

I have been reading your articles religiously. My net salary is Sh35,000.

I have cleared all the debts I had accumulated when I was out of work since January and now I need to save after taking 10 per cent of my net as tithe.

After my bills, I would have Sh10,000 surplus.

I am planning to join a sacco in January 2015 to enable me buy a plot in two years time as I have a daughter who will be joining college next year.

How is this plan? What can I adjust? What should I look out for?

— Ann

Fancy Chepkwony, research analyst, Zimele Research. Write to: [email protected]

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Wednesday, November 12, 2014

How to eliminate the ‘out of stock’ answer for your customer orders

Mr Titus Ireri examines products at his shop at Sokoni Plaza in Nakuru on September 6, 2014. FILE PHOTO | SULEIMAN MBATIAH

Mr Titus Ireri examines products at his shop at Sokoni Plaza in Nakuru on September 6, 2014. FILE PHOTO | SULEIMAN MBATIAH |  NATION MEDIA GROUP

By MUTHONI NGATIA
More by this Author

For many SME retailers, wholesalers or distributors and manufacturers, the largest asset on the balance sheet is inventory.

Raw materials, goods in process, finished goods and merchandise stock all represent various forms of inventory encountered in a business.

Each type represents money tied up until the inventory leaves the business as a purchased product.

All these inventory contribute to profits only when their sale puts money into the cash register or the bank.

To succeed in business and continuously grow, you must properly manage your inventory.

Otherwise, you will loose money through theft, pay for undelivered good or even release goods that have not been paid for.

Stocks represent a big portion of the business investment and must be well managed in order to maximise profits.

This is one of the biggest pains of many SME owners for sure.

Many businesses have shutdown due to losses arising from poor inventory management.

If you do not control your inventory, you will be unaware of the true state of your business, suffer lots of inefficiencies and this can be very costly.

Many business owners believe keeping high inventory levels is the best way to do inventory control as they will not run our of stock.

However, high stock levels that stay in the shelves for long mean lots of money is held by the stocks.

The stocks provide only a constant profit even over time meaning that the yield will be lower the longer the stock lasts.

Indeed, many business end up suffering losses through clearance sales where they offer uncleared stock at low prices.

Some of the best practices in inventory management include maintaining a good assortment of products but again not too many.

Having an excessive variety may mean keeping very many products covered in dust and even forgetting some products exist.

OBSOLETE ITEMS

Increasing the inventory turnover but to a good profit level.

Some businesses are turning over millions of shillings and making very small profit margins meaning very high volumes are needed for reasonable profits to be realised.

Keep stocks low, but again not very low. Ensure that customers do not always hear the “out of stock” answer to their inquiries.

Consider making volume purchases to obtain lower buying prices. However, don’t over buy and end up over stocked holding lots of capital in stocks. Get rid of obsolete items.

Those items in your stock list that have not had movement in months or years and continue to hold up capital.

Try and balance out the costs of inventory with the benefits of inventory.

This involves analysing the true costs of carrying inventory from direct costs such as storage, insurance, taxes etc and indirect costs such as money tied up in the inventory.

Try reducing small amounts of inventory investment and you will be surprised by changes you can get in your business cash position.

For example, this can ease your cash position and ensure better cash flows without a line of credit.

Successful inventory management requires accurate and disciplined record keeping system. You need proper information to make sound inventory management decisions.

I know that many people use manual record keeping methods. This works wells for small operations.

However, as your number of items, supplies and general importance of inventory increases, it is good to consider the use of a computerised system for inventory control.

Whether you are using a manual or computerised inventory management system, the important thing to know is what and how much do you order, when to order and at what price, effective stock in and out controls, how to ensure that the inventory produces a profit not a loss.

The author is the CEO/Founder of Openworld Ltd

Email: [email protected]

@DorcasMuthoni

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Wednesday, November 12, 2014

Present your NHIF registration form without further delay

The entrance to the National Hospital Insurance Fund building.  FILE PHOTO | NATION MEDIA GROUP

The entrance to the National Hospital Insurance Fund building. FILE PHOTO | NATION MEDIA GROUP 

By YVONE KAWIRA
More by this Author

Dear Capital Letters,

I am a teacher at a secondary school in Kilifi County employed by the institution’s board of management.

Before I landed this job at the coast, I was working as a teacher in the same capacity at Chibwobi Secondary School, in Kisii County.

When I was employed in Kilifi, I was informed that about Sh200 will be deducted from my salary to pay for my National Health Insurance Fund (NHIF), which is an obligation for all new employees.

I then enquired how the employer intends to remit the money without first having to register me.

But I was informed that I will be registered in due time. I worked for one year from May 2012 to May 2013.

Why did my employer deduct money from my salary without registering me with the national health insurer first? Kindly, find out on my behalf.

— Abugake

Hello Abugake,

Thank that you for contacting us seeking to establish the correct position regarding your health cover contributions.

We, however, noted that you failed to provide your contacts and ID number to help us narrow down your case to specific details when contacting the national health insurer.

When we sent you an email requesting for these details, you did not respond.

That be as it may, we got in touch with the National Health Insurance Fund and we thank the organisation’s team for responding promptly.

The national insurer noted that it could not ascertain your contribution history due to lack of these crucial details.

It, however, shared some information that might turn out to be very useful to you.

In its response, the insurer noted that quite often, some new employees delay in filing the National Health Insurance Fund registration form after employment.

This can happen even while the monthly contributions are being deducted from their pay.

You have been informed that it is therefore your responsibility as an employee to submit the registration form.

This is because you are the only one who can ably declare your family members and any other personal details that might be very vital.

The fund also noted that the school was in order to deduct and submit your health insurance monthly contributions.

If you suspect that the school may not have remitted your contributions to the insurer, you can confirm with the organisation’s Kilifi office or contact it through its toll free number which we sent to your email.

We urge you to get in touch with us if you need further assistance in this or any other matter.

POSTBANK SAYS IT’S SOLVING YOUR CASE

Dear Yvonne,

I wish to bring to your attention that over six weeks ago, Sh10,000 was withdrawn from my PostBank account via an ATM transaction.

This happened at a time when I had my ATM card safely tucked in my pocket.

Since then, I have been following up the case with Post Bank Kenya and I have shared with you the copies of email and the formal letter that I posted to the bank tendering my complaint.

Further, I have decided to get the services of a lawyer in order to pursue this case to its logical conclusion although according to the bank, the amount seems insignificant.

It is my considered view that the bank has the responsibility of protecting a customer’s savings at all times.

Interestingly, when I requested the lender to share the report about its investigations as well as my statement since I opened the account, the lender went silent.

I would appreciate if you can come to my aid.

Regards,

Eric.

Thank you, Eric, for seeking our intervention in order to pursue your lost savings.

We sympathise with you for losing your money through such a dubious circumstance and the bank seemingly turning deaf ear to your pleas.

When we contacted PostBank Kenya, the financial institution noted that it has been in touch with you over this complaint with a view to sort it.

We can only hope that the matter has been amicably solved.

We would like you to update us on the conclusion and let us know if our efforts to help have been fruitful.

Feel free to get in touch with us in future.

Looking for answers?

Send your queries and daytime telephone numbers to Yvonne Kawira:

E-mail: [email protected]

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Wednesday, November 12, 2014

Here is how to get career switch right

A section of the large crowd of hopeful youth who turned up for recruitment by Qatar Airways wait to hand in their certificates and application letters at Hotel Intercontinental in Nairobi on April 20, 2014. The airline advertised vacancies for cabin crew personnel. PHOTO | BILLY MUTAI

A section of the large crowd of hopeful youth who turned up for recruitment by Qatar Airways wait to hand in their certificates and application letters at Hotel Intercontinental in Nairobi on April 20, 2014. PHOTO | BILLY MUTAI |  NATION MEDIA GROUP

By YVONE KAWIRA
More by this Author

Making a career switch takes more than just shutting one door and opening another.

How then do you ensure that you have at least sealed all the potential risks?

Money went on a search to establish some of the mistakes to avoid when changing your career.

Ms Kathy Caprino of The Huffington Post says that hanging your career to something more suited to your values, needs, skills and passion is absolutely doable, even in tough economic times.

“But to switch careers effectively and achieve a positive outcome, you need four things: clarity, confidence, courage and commitment. Without these, you’ll most likely struggle and fail,” she says.

Hate-driven decision

You want to change your career because you are struggling with what you currently do and you have hence grown to hate it, hate your colleagues, boss etc.

These are the wrong reasons for changing your career. Before you hang your boots, try and reclaim what drew you into choosing that particular career in the first place. Running away from the problem does not solve it.

Lack of plan

You will need to plan for your exit and make sure you have a sound financial plan that will cushion you from expected shocks as you transition from one career to the other.

If you do not have a financial plan, wait until you have saved enough for this.

Use the time to research on your next career and solicit for as much advice as you possibly can.

It is better to be safe and double sure than sorry. During this time, you will be in a position to know if your next career will present exactly what you are looking for.

Do you have what it takes?

Are you for instance trained in that line of work? If not, during your research, this would be the ideal time to take training sessions that will help you land on your feet in your next career.

Look for mentors and acquire skills.

It is also important to understand what types of challenges you are likely to face in your new career.

You do not want to find the same challenges that made you quit in your next job. It can be very frustrating.

Giving up too quickly

Just remember there is no one single job you will find that does not have its ups and downs.

How you handle challenges determines if you are cut for it or not. It also affects your success or failure.

So if you have moved and things seem to toughen every day, try a different approach.

Not believing in yourself

If you do not believe in yourself, it will be quite difficult for you to make someone else believe in you.

It is important to have a positive attitude towards your move.

This is of course after you have done thorough research and made an informed choice about your move.

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Wednesday, November 12, 2014

How to get the most out of your customers

 

By EDWIN OKOTH
More by this Author

“A customer is never wrong” so goes an all-time business saying.

Another one borrowed from the Germany “der Kunde ist König” which translates to “customer is king,” is quite popular.

However, the reality on the ground in the conventional business hangs this slogan between truth and a myth depending on who the customer is and the stage of the business transaction in question.

Where did you buy goods or seek services recently and feel like a king?

Recently, when Bungoma senator Moses Wetang’ula failed to produce his national ID at the airport, the flight was reportedly delayed as the stand-off ensued.

You may be wondering just why innocent passengers lost valuable time in what did not concern them.

Ask yourself, what would it have been if it were you who had failed to produce an ID? Were the other passengers handled like bosses?

Here are key areas that you can exploit to get the most out of your customers:

TRANSACTION VS RELATIONSHIP

Peter Macharia is the managing director of Trans Researchers Limited in Nairobi.

Mr Macharia notes that many businesses have chosen to transact and not relate with customers.

“Many of the businesses today are interested with closing a sale and not establishing a relationship with a customer. Relationship management has been left to the elite while the majority of spenders belonging to the bottom of the pyramid are left uncared for.

“What they forget is that more sales is anchored in the big numbers of these customers who spread the customer experiences they get from your businesses. What would happen if you open one morning and no one approaches your shop?” wonders the consultant.

The focus on profit and numbers have made successful businesses value their customers a lot.

However, some business owners are in many cases willing to go any extra mile before a deal is sealed but after the transaction is done, the hunter becomes the hunted.

Take Philip Odondi for instance who went through a rough experience after purchasing an electronic product in town.

“The shopkeepers were very good to me and even tested the gadget to my satisfaction. The warranty was comforting and I left the shop smiling.

“But when I noticed a malfunction three days later, the welcoming attendant who had talked so well three days ago became dumb. He had a frown on his face and I was made to feel like an obstruction to other customers.

“One of the shop attendants even started doubting my receipt,” Mr Odondi, a frustrated university student, told Money.

There is, however, a lot of truth in the old business slogan, customers are the oxygen that keeps your business alive, and the sooner your business adopts it, the better.

That simple man or woman passing by just to know the price of your goods needs your full attention and her ego must be fully massaged to get anything from her purse.

His/her satisfaction is your business continuity and success.

BRAND AMBASSADORS AND FREE MARKETING

In the era where customers are enlightened and business are engaged in cutthroat competition, customers change their trends, tastes and preferences depending on how different providers treat them.

Mr Macharia notes: “In some incidences, the customer may be in the wrong, but it takes intelligence to address the incidence making the customer feel a winner but yet the business meets compliance agenda of its policies and procedures.

“Good language spiced by a nice tone is good to have in such incidences and business must adopt this under any costs for survival purposes. It is called emotional intelligence. It is the same with what charismatic leaders apply.”

One business reality that is hard to ignore is that retaining the customers you have is easier than getting new ones.

Your delighted customers defend a brand in the market against all odds which protects the corporate image of your business.

This actually saves you the burden to market the business since the wow experience spreads fast and woos even more customers for you.

The old ones become repeat customers and your sales targets can never be hard to meet even in tough economic times.

Bad experiences to customers spread even faster and wider. The negative effects is disastrous and the damage is hard to repair.

LITTLE GESTURES MATTER

“A little euphemism goes a long way to create a therapeutic effect to the customer’s soul and is a good ingredient in any business enterprise. Words such as sorry, thank you and please pamper emotions of customers and make them more loyal,” advises Kenneth Amwayi, a banker, in Nairobi.

The father-of-one, who has been in the field scouting for customers for years, at one point in his career believes that businesses must keep the good image even when customers default.

He adds that acts of kindness such as calling the customer to get their feedback makes them feel important and valued.

“I once gave a customer a branded pen and a Christmas card; he not only brought in more people but also became a diehard of the bank. These little gestures work miracles,” says Mr Amwayi.

COMPLAINTS HANDLING

Customer complaints spread like wildfire. Depending on how you handle the situation, you may well be extinguishing fire with petrol.

Sheila Lubia has been a customer service officer for a busy enterprise at the Jomo Kenyatta International Airport.

And she has witnessed how simple complaints that have been poorly handled have caused big losses.

“With the advent of twitter and Facebook, customers can capture the bad experience and take it viral. The spread of bad news in the internet hurts the brand a lot.

“For instance, one customer was ignored by an officer who kept chatting on her phone; little did she know that she was being recorded. Well, the damage it caused the business cannot be compared to the fact that she lost her job,” says Ms Lubia cautiously.

It is most probable that you know the fact that the customer is your boss.

Ignoring your boss, talking harshly to the boss, delaying the boss and making the boss feel less important would only help drive you out of business.

Every focus the business makes must glide towards pleasing the customer and bringing more to the business.

Their perception about your business is the truth and the sooner you realise that, the more you have the chances to grow.

******

Good customer experience action points

  • Keep time. Traffic and loss of direction on the appointment date belong to the Stone Age. Time is money, and money is why you are in business.
  • Make reliable communication channels and please have them managed. Having a round-the-clock call centre is one thing and responding to the calls, emails and tweets is another.
  • Be in a position to rate your product quality. Invest in customer surveys and monitor your customer trends to know whether you are losing or adding customer base. Then act accordingly.
  • Communication is not only verbal. About 55 per cent or more is body language and it is not what you say to the customer but how you say it that matters most.
  • Keep your cool and admit when you are wrong. Apologise and reassure then act. They are your bosses, lest you forget.
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Wednesday, November 12, 2014

City jeans maker sews a new style of fashion success

Mr Andrew Kio at his Blacjack Jeans Company in Jericho Nairobi. PHOTO | PAULINE ONGAJI

Mr Andrew Kio at his Blacjack Jeans Company in Jericho Nairobi. PHOTO | PAULINE ONGAJI |  NATION MEDIA GROUP

By PAULINE ONGAJI
More by this Author

One thing that strikes you when you get into Jericho market, Nairobi, is the increasing number of jeans designers.

However, in the hustle and bustle that is gripping this zone, one shop stands out, Blacjack Jeans Company, a startup owned by entrepreneur Andrew Kio.

At 33, he has already established himself as a top jeans designer in the area using his seven-year-old company.

His products range from jeans trousers, skirts to handbags, with men’s trousers leading in terms of demand.

In a day, his team is able to make between 12 and 20 pieces of jean trousers, translating to a gross profit of about Sh10,000 a day.

His average net profits ranges from Sh40,000 a month, but this also hinges on the time of the year.

“In a good quarter, say between September and December, the demand is high meaning that the sales also increase thus pushing up the profits,” he says.

But in difficult times, especially at the start of the year, the returns can be disappointing.

It is at this moment that he is sometimes forced to dig deeper into his pockets to keep the business afloat.

But that has not deterred his quest to succeed considering that currently, he has employed five people on piecework basis, a model of job that ensures that everyone benefits.

“If I hire on permanent terms it means that I will suffer during the difficult times while they’ll lose a lot during the high seasons,” he notes.

According to him, this style of payment ensures that the employees work harder, with each earning Sh1,000 a day on average.

Just recently, he had been working on an order of 35 jeans trousers from one of the branches of fast food giant, KFC.

VIRTUAL MARKETING

At the moment, he relies on word of mouth, as well as the social media as his primary marketing platforms, a strategy that has seen him hire a skilled person to drive his virtual marketing arm.

Like any emerging company, Blacjack Jeans is facing its fair share of challenges, with Mr Kio’s main concern being the cost of production.

For instance, nearly all of the materials used are imported, meaning the market price becomes very high. It is a fact that pushes up the cost of production.

“For example, my cost of making a single piece can amount to Sh900. This forces me to raise my price, this makes it nearly impossible to compete, considering that one can get the same pair of jeans in Eastleigh for as little as my cost of production,” he notes.

In an attempt to face the challenge, he has invested in heavy load machines, apart from getting updates on new designs, as means of improving the quality of his products.

However, this again raises another issue given that the high cost of machines is proving to be quite a challenge.

“At the moment, I have managed to get some machines that are able to increase production, but I still need some latest ones which are too costly, with some ranging from Sh250,000,” he says.

Mr Kio’s dream began in 2007 where he ventured into the industry just as a hobby.

During the time, he says, the brand new jeans demand in the country wasn’t high compared to the second hand ones especially in terms of quality.

Also during that time, he says, he did not own even a single machine and had to rely mostly on friends for their equipment as well as storage of his wares.

But that now is in the past, as this father-of-one and a business manager by training, seeks to put his company’s name in the same league as other jeans manufacturing greats such as Levi Strauss.

“However, I have to be realistic in terms of storming the world market at the moment. The demand of these products in the country is very high, yet we have not been able to satisfy the consumer needs. We have to do that before thinking of going overseas,” he says.

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Wednesday, November 12, 2014

Spend wisely to achieve your financial goals

Patrick Wameyo, a financial literacy educator and coach. FILE PHOTO

Patrick Wameyo, a financial literacy educator and coach. FILE PHOTO |  NATION MEDIA GROUP

By PATRICK WAMEYO
More by this Author

A personal finance plan has several components, but some elements must be taken care of for the others to be realised.

A key part of the reason people go to work or invest to create income is to sustain a certain lifestyle.

Incidentally, the lifestyle is not static. It changes just as quickly as one’s mind, as the income increase.

At the heart of any financial plan is the allocation of income towards maintaining the family subsistence.

Simply put, this the equivalent of funds a family needs every month for food, clothing, medical and housing rent.

The six elements of financial goals are conjoined by the balance between income and the expenses being the only source of surplus required for growth by many households.

Out of the possible eight key elements of the financial plan, spending is the most critical to manage because it can potentially take away the funds needed for other elements of the financial plan if the budget controller is weak at taking hard decisions.

SUBSISTENCE BORROWING

Where the budget controller fails to control spending, borrowing for short-term consumer needs is the first to arrive at the scene.

A series of small subsistence borrowing usually taken to sustain a “false” family lifestyle takes root as income is eroded by gradual, unnoticed increases in key expenses such as rent.

As the family grows in head count and age, certain needs grow exponentially.

Upon arrival of the first baby, a family will almost always afford the needs of the baby comfortably. But the needs are increasing.

Children need new clothes which are more expensive, new bedding, new toys and totally different classes of food.

In the meantime, a house help becomes permanent expense. Let us not forget that we are living in an age where every service our parents used to do for themselves such as cooking, washing clothes, brushing shoes and so on are now procured from third parties for a fee.

To manage the family expenses account, the couple must take a long-term view of their life, agree on certain plans and implement.

This intentional position directs funds to the projects where they are needed most at the expense of regular consumption.

Financial planning is about self-discipline.

— Patrick Wameyo is a financial literacy educator and coach.

[email protected]

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Wednesday, November 12, 2014

Don’t buy Flame Tree yet, Uchumi, Kenya Orchards drop

Flame Tree Group’s George Theobald (left) rings the bell for the group’s listing on the Nairobi Securities Exchange as chief executive Heril Bangera and NSE chairman Eddy Njoroge (centre) witness its entry into the Growth and Enterprise Market Segment.

Flame Tree Group’s George Theobald (left) rings the bell for the group’s listing on the Nairobi Securities Exchange as chief executive Heril Bangera and NSE chairman Eddy Njoroge (centre) witness its entry into the Growth and Enterprise Market Segment. PHOTO | DIANA NGILA |  NATION MEDIA GROUP

By KINUTHIA MBURU
More by this Author

NSE 20 Share Index: In a bearish week, the 20 Share Index closed at 5,074.93 points on Friday.

This was 0.02 points down from Thursday’s closing stand of 5,075.93 points.

Flame Tree: On its debut at the bourse, Flame Tree shot to Sh14 per share from the listing price of Sh8 a piece.

The climb was attributed to strong demand from institutional investors.

By the end of trading, the counter had moved 497,500 shares.

The following day, though, Flame Tree began to drop, at some point becoming the biggest loser shedding 9.75 per cent to trade at Sh12.50.

Backed by five deals representing a volume of 200,700, the counter closed the day at Sh13.10 on average.

On Monday, Flame Tree opened at Sh12.05 before declining to Sh11.80 per share.

According to Silha Rasugu, a research analyst at Genghis Capital, Flame Tree is going through price discovery rather than a price correction.

“It is a new listing and the market is trying to give it its fair value. In addition, investors who had the stock before listing could also be trying to exit, further derailing any price surge,” he says.

Mr Rasugu advises prospective buyers to wait.

Uchumi: The supermarket was on Monday expected to launch its rights issue to raise at least Sh850 million.

However, in the past one-and-a-half weeks, Uchumi has seen its price swing between Sh9 and Sh8.

Among factors contributing to the wobble has been massive exits by foreign investors.

Says Mr Rasugu: “The price drop to below the Sh9 rights issue price has turned the cash call into premium. Uchumi’s is going to be a hard sell.”

However, that Uchumi has cross listed in other markets could be its silver lining in getting the rights issue rolling successfully.

Mr Rasugu advises investors eyeing Uchumi to be very cautious.

Kenya Orchards: A few weeks ago, analysts in this column advised you to stay away from Kenya Orchards.

This followed the stock’s rise from Sh3 to over Sh190 per share. Very low volumes changed hands during the over 4,000 per cent rise.

According to Eric Munywoki a research analyst at Old Mutual, the volumes and the price surge may have been facilitated by an investor who was trying to move shares from one account to another.

Mr Chambua Ogoti, a securities analyst says the stock had been overvalued that a correction was inevitable.

Well, we hope you heeded. Last week, the stock plummeted from Sh192 to a low of Sh138 per share.

On Monday, it opened at Sh140 per share.

[email protected]

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Wednesday, November 12, 2014

Arrowroots brings smile on farmer’s face

Joshua Otieno displays a giant arrrowroot in his farm in Ombeyi, Muhoroni. Arrowroot farming is gaining popularity because of better returns. PHOTO | TOM OTIENO

Joshua Otieno displays a giant arrrowroot in his farm in Ombeyi, Muhoroni. Arrowroot farming is gaining popularity because of better returns. PHOTO | TOM OTIENO |  NATION MEDIA GROUP

By EVERLINE OKEWO 
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Joshua Otieno used to harvest between eight and 15 bags of rice from his two-acre farm in Ahero, Kisumu County, until two years ago when the produce started contracting.

The huge losses suffered every season hit him hard. He would spend at least Sh40,000 ploughing and buying farm inputs but the income was always disappointing.

Since he did not have a store for his produce, it meant that he had to sell his harvest within a week to avoid wastage.

And it is at this point that rice cartels used take advantage of him. A 90-kilogramme bag of paddy rice which retailed at Sh4,500 at the conventional market would only attract Sh2,000 from the middlemen.

This prompted him to abandon the farm for some time as he considered other crops. “I did not want to continue growing rice because of high expenses and meagre returns,” says the 35-year-old.

ARE RESISTANT

After consulting with area agricultural officers, Mr Otieno turned to arrowroots in 2011, particularly the eddoe variety.

According to the farmer, eddoe is widely grown in the area because it can tolerate excess water.

“I started with 7,000 seedlings which I bought at Sh3 each. I bought them from small-scale farmers in the area,” he says.

Once transplanted, the tubers take about six months to mature but it is recommended to start harvesting in the 10th month.

The harvesting can take up to three consecutive months. Currently, a medium sized tuber retails at Sh250.

According to Kenya Agricultural Research Institute senior researcher Dr Philip Lelei, farmers should embrace arrowroots because they are resistant to drought and many diseases and pests unlike rice, which is highly susceptible to diseases.

“The market has been very promising and I am considering doing large-scale farming now,” says Mr Otieno.

In a half-an-acre of land, the farmer harvested eight bags of arrowroots with each bag fetching him Sh6,000 in the local market.

Mr Otieno says he used Sh4,000 for farm inputs and labour.

According to Mr Otieno, the crop consumes a lot of water hence the reason it can be grown in rice field regions. “As you can see the farm is usually moist,” he told Money at his farm.

He says arrowroots can also be grown along riverbeds and marshlands where the soil is moist. Mr Otieno says that when the crop is ready, the leaves start changing colour and then shrink.

The farmer currently has about 30,000 arrow root seedlings which he sells to local farmers at Sh5 each.

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Wednesday, November 12, 2014

You need to get a piece of Kenya’s creative economy

Musician Avril performs during national youth convention at Safaricom indoor arena, Kasarani on June 6, 2014. PHOTO |  JEFF ANGOTE

Musician Avril performs during national youth convention at Safaricom indoor arena, Kasarani on June 6, 2014. PHOTO | JEFF ANGOTE |  NATION MEDIA GROUP

By JAMES WAMBUA
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If you asked Avril Nyambura, 27, to introduce herself, undoubtedly, she would say, “I am a musician, an entrepreneur, a model and an actress”, while Ian Mbugua would say, “I am a thespian, a TV personality, an actor, a teacher et al”.

Both Avril and Ian represent the face of Kenyans who are earning a living from an industry once perceived as a preserve of “academic dwarfs”.

They are also part of a revolution that is awakening a sector well known as “creative economy”.

Creative economy encompasses films, TV, literature, advertising, art, crafts, design, fashion, music, performing arts, publishing and video games.

“Africa is rich in talent and creativity,” ICT Cabinet Secretary Fred Matiang’i said in Nairobi during the launch of M-Net Maisha Magic. His opinion is an affirmation that the sector’s potential is untapped.

In his LinkedIn profile, a member of creative industries task force Michael Otieno says that the government is committed to double the growth of creative industries.

In 2011, former Information PS Dr Bitange Ndemo established a creative industry task force to understand and define the sector in Kenya; whose end results will be to create 10 per cent of employment by 2017.

This year’s Kenya Economic Survey, reveals that arts, entertainment and recreation segments employed 67,000 Kenyans in 2013, up from 64,000 in 2012.

The study noted that the industry grew to Sh3.4 billion in 2013 from Sh2.9 billion in 2012.

COMMERCIALISE CREATIVE TALENT

It is under this trend that both private and public sector have joined hands to build infrastructure and capacity to commercialise creative talent and reap the vast fortunes.

Already, Multichoice Kenya has invested Sh3 billion in the film and content sub-sector.

“We are investing Sh1.5 billion in content production. Last year, we invested Sh1.5 billion in our new studios at Jamhuri Park,” said M-Net regional boss Michael Ndetei.

The bulk of the new investment will be spent in Kenya where 85 per cent of the content will be generated, as Multichoice builds capacity in Rwanda, Uganda and Tanzania.

In July, StarTimes Media pumped Sh6.9 billion into a project that will see it establish its Africa headquarters in Kenya by the end of 2015.

The firm acquired 20,000 square metres of land in Karen to build office blocks, a film and television dubbing centre, StarTimes broadcast station, Digital TV research and development centre as well as a training centre.

Commenting on the investment, Arts and Culture Cabinet Secretary Dr Hassan Wario said, “It is trend-setting seeing that the headquarters will not only house your Africa operations, but also include a production centre that will see the growth of local productions and talents. The government will continue to initiate efforts geared towards ensuring businesses flourish.”

AFRICA'S SHARE

Even as the private sector is investing heavily, a study by the United Nations Conference on Trade and Development in 2010 indicated that Africa’s share of the global creative economy is less than one per cent.

In its manifesto, the Jubilee Coalition recognises that the industry has long been overlooked.

“The associations between sport and the creative industry have long been overlooked. We believe they should be nurtured and supported.”

In support of the Jubilee manifesto, Dr Ndemo notes, “If you have watched the Kenya Schools Drama Festival, you will understand the unexploited potential that we have. Many of the pupils will dissipate into abject poverty or at best go to college to take careers their parents have chosen, only to tarmac later with concealed talent.”

He adds, “Our failure to develop the creative-economy value chain is hurting. Global content giants are taking advantage of our irrational behaviour, and have started to archive our own cultural material such that in the future we shall buy it from them. At the minimum, we should build digital libraries of our cultural heritage.”

On December 5, 2013, the Guardian published a story titled “Hollywood has blockbuster impact on US economy that tourism fails to match”:

“Creative industries led by Hollywood account for about $504 billion, or at least 3.2 per cent of US goods and services, the government said in its first official measure of how the arts and culture affect the economy.”

The creative economy is serious business. India’s Bollywood contributes over $21 billion to the economy.

Nigeria’s Nollywood, although not well diversified, is ranked third globally in gross earnings, its film industry generated over $800 million revenue in 2013.

“It is time we built the creative economy sector. It is the one that unites us, and has great potential for employment. It must be engaged with differently,” Dr Ndemo argues.

A plan is in the offing that will promote the performing arts by constructing an ultra-modern National Theatre with audio-visual live-links in Nairobi and consolidate the required licenses for artistes-cum-musicians to perform around the country on a single licence.

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Wednesday, November 5, 2014

Feuds threaten family ventures, says report

From left, PricewaterhouseCoopers South Africa private company services leader Andries Brink, country and regional senior partner Anne Eriksson and PwC partner Michael Mugasa during the release of the report in Nairobi on November 5, 2014.

From left, PricewaterhouseCoopers South Africa private company services leader Andries Brink, country and regional senior partner Anne Eriksson and PwC partner Michael Mugasa during the release of the report in Nairobi on November 5, 2014. PHOTO | JEFF ANGOTE |  NATION MEDIA GROUP

By IMMACULATE KARAMBU
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Nearly a third of Kenyan family businesses lack mechanisms to deal with conflicts, posing a threat to their existence, an auditing firm’s study shows.

The research by PricewaterhouseCoopers (PwC) also shows that although 55 per cent of these firms have succession plans for some senior roles, only 23 per cent have sufficient and documented plans.

“The finding was insightful because lack of a formal conflict resolution mechanism is a challenge that can destroy the value of the business,” PwC country and regional senior partner Anne Eriksson said.

The survey was conducted between April and July this year on 62 family businesses in Kenya with a sales turnover of between $5 million and $500 million.

It is the first time the auditing firm has carried out the survey in the country. Globally, PwC has been conducting similar studies every two years since 2002.

The respondents were from manufacturing, retail, transport, agriculture and hospitality sectors.

Nakumatt Holdings, Keroche Breweries, Bidco Oil Refineries and Mount Kenya University are among the institutions surveyed.

The report comes at a time when courts are dealing with conflicts emerging from family businesses which have resulted in the closure of some, and low productivity levels among others.

WITHDRAW INTENTION TO BUY

A recent case in which three brothers were involved in a battle for the control of Naivas Supermarkets was closed last Friday.

The family feud saw South African retail giant Massmart withdraw its intention of acquiring a 51 per cent stake in Naivas.

PwC estimates that family-owned businesses account for 70 per cent of the global gross domestic product.

According to the report, about 61 per cent of such ventures consider attracting and retaining employees in the next one year a major challenge due to competition from multinationals.

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Wednesday, November 5, 2014

Uhuru limits planned ban on 14-seater matatus

President Uhuru Kenyatta (left) and Safaricom CEO Bob Collymore aboard a matatu which took them from State House to KICC Wednesday to attend the launch of universal cashless payment system MY 1963 card. PHOTO | PSCU 

By BD TEAM
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President Uhuru Kenyatta has reined in his Government’s plans to ban the use of 14-seater vans in the country’s public transport sector.

The government will effect the ban in Nairobi and Mombasa, but exceptions will be made to matatus operating in long distance routes and in rural areas.

He also said he saw no reason to continue to prohibit the colourful artwork that once made public service vehicles icons of Kenyan creativity.

The Head of State intervened in the campaign to push the low-capacity vehicles out of the matatu (public taxi) business during the launch of a cashless payment system for public service vehicles in Nairobi on Wednesday.

CASHLESS SYSTEM

“After wide consultation and research involving my Government and stakeholders, it has become clear that a blanket ban on 14-seater PSV, especially for long distance and rural transport, may not be appropriate at this time," Mr Kenyatta said.

The announcement provides a lifeline for industry players who were bracing for changes that would first force the vehicles out of most urban centres and then see the vehicles phased out completely.

The President was speaking at the Matatu Owners Association National Delegates Council meeting. The event saw the launch of the MY 1963 pre-paid card, one of several cashless payment systems to be used on PSVs in the country.

He urged industry players to use the new cashless payment systems to provide better services and improve the lives of both their employees and their passengers.

“We’re going to digital payments so that we can have a regulated industry and create jobs through maximum collections,” Matatu Owners Association chairman Simon Kimutai said. He added that use of cash led to numerous losses and encouraged petty corruption when traffic police stopped matatus.

The president also questioned one of the changes introduced several years ago by then Transport minister John Michuki requiring matatus to have one colour only, marked with a yellow line across the middle.

“To be frank, why are we interfering with graffiti on matatus?” he asked, recalling the days when colourful vans were the norm. “Let us (support) our young people (if they wish to make a living doing such artwork).”

Matatu associations and savings and credit cooperatives have been pushing for the lifting of a freeze on new registration of 14-seaters, which the National Transport and Safety Authority began to enforce in December last year. They were also opposed to plans to force 14-seater matatus already registered as PSVs out of cities and towns, the most lucrative markets in the Sh200 billion public transport sector.

DECONGESTING CBD

Despite significant investment in larger mini-buses and buses in recent years, 14-seater vans account for a significant proportion of the private sector’s investment in a country with a weak public transport system.

The ban was proposed as a traffic decongestion measure following the failure of several unpopular attempts to bar low-capacity matatus from entering the Nairobi Central Business District.

The MY 1963 card, issued by the Matatu Owners Association, is developed by Fabre Space Limited and operated on a point-of-sale terminal installed in compliant vehicles. It can be topped up using Safaricom’s M-Pesa service.

Rival cashless systems include BebaPay (by Equity Bank and Google) and Abiria Pay (from Kenya Commercial Bank, MasterCard and Kenya Bus Services).

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Tuesday, November 4, 2014

Farmers in a tight corner as maize price hits Sh1300 a bag

A sample of yellow hybrid maize growing. As confusion reigns, farmers have been left at the mercy of middlemen, who are capitalising on the absence of NCPB and poor weather conditions to exploit growers. PHOTO | FILE | NATION MEDIA GROUP 

By GERALD ANDAE
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A planned meeting of the Strategic Grain Reserve (SGR) trustees failed to take place yesterday even as maize prices in the grain basket of the North Rift continued to slide for the fourth week in a row, eating away farmers’ profits.

Reports indicated that the price of a 90 kilogramme bag of maize had dropped to Sh1,300 in parts of North Rift from Sh1,500 two weeks ago and Sh2,800 in May as uncertainty remained over the government’s release of the Sh2.7 billion that had been set aside to buy grains for SGR in the current financial year.

Sources within Kilimo House, where the trustees were to meet, told the Business Daily that the meeting was postponed after the principal secretaries for Interior and the Treasury failed to show up. The two PSs (Interior and Treasury) together with their Devolution and Agriculture counterparts form the team of SGR trustees.

“The meeting has been pushed to Thursday as some of the trustees did not show up today,” said the source who requested anonymity.

This came even as the National Cereals and Produce Board (NCPB) faced logistical nightmares in its plan to move about 1.5 million bags of maize from the North Rift depots to create room for purchase of new grains from the current harvesting season.

The board requires up to Sh200 million to move the old stock from Eldoret, Moi’s Bridge and Kitale depots to deficit areas like Turkana and Eastern Kenya silos.

URGENCY TO SELL

As confusion reigns, farmers have been left at the mercy of middlemen, who are capitalising on the absence of NCPB and poor weather conditions to exploit growers.

Western Kenya is experiencing heavy rains that have hindered drying of grains, forcing growers to hurriedly sell their crop to avoid post-harvest losses.

That urgency to sell has opened the room for traders to offer low prices arguing that they incur additional cost in handling the grain with high moisture content.

NCPB accepts maize with a moisture content of up to 13.5 per cent and subjects any produce exceeding this limit to dryers at a cost of Sh28 per every drop of water content in a bag.

Kenya loses up to 30 per cent of the annual maize output to poor post-harvest handling of the crop because a lot of farmers lack proper storage facilities.

The government has indicated that it might not buy maize at Sh3,000 it paid for a 90 kilogramme bag in the past two years, noting that the cost of production fell significantly with the drop in fertilizer prices.

President Uhuru Kenyatta in April reduced the price of a 50 kilogramme bag of planting fertiliser from Sh2,500 to Sh2,000, offering much needed relief to growers.

Kenya Farmers Association has, however, warned the government against reducing the buying price below Sh3,000, arguing that the move would subject farmers to losses.

“Even with the reduction in the price of fertiliser, the cost of production remains high and it would be unwise for the government to buy maize from farmers at less than what has been spent growing it,” said Kipkorir Menjo, a KFA director.

Egerton University-based think tank-Tegemeo Institute, in one of its findings last year, said it would cost a farmer Sh1,741 to produce a bag of maize in Trans Nzoia, while a grower in Uasin Gishu spent Sh1,400 to produce a similar quantity of maize. A fortnight ago, farmers protested in Eldoret, asking the government to open NCPB and purchase maize at Sh3,800 per bag.

Last year, the government released Sh3 billion in September and by the third week of October NCPB had already commenced the buying exercise.

Harvesting in the North Rift, the country’s bread basket, started this month and traders reckon maize prices could fall further.

The falling maize prices have come as a reprieve to households that have been enjoying a drop in price of flour that has in the past three months dropped by Sh12, a move that helped in easing inflation last month to 6.6 from 8.36 in August.

The article first appeared in The Business Daily.

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Wednesday, October 29, 2014

Sharpen your ability to evaluate risk and reward

It is not your ability to speak or write eloquently. It is the business sense you bring out in the form of risk and return in the opportunity, and your abilities, thereby creating a strong ground for the other party to risk their money on you. PHOTO | FILE

It is not your ability to speak or write eloquently. It is the business sense you bring out in the form of risk and return in the opportunity, and your abilities, thereby creating a strong ground for the other party to risk their money on you. PHOTO | FILE 

By PATRICK WAMEYO
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IN “if you have a good deal, the money will find you,” we highlighted the need to know the difference between a good deal and hot air.

We particularly said that this is the capacity that the proposer of the business or investment opportunity must have in order to express an innovation to another party who is coming into contact with it for the first time in a manner that they drop their guns and give you cash.

It is not your ability to speak or write eloquently. It is the business sense you bring out in the form of risk and return in the opportunity, and your abilities, thereby creating a strong ground for the other party to risk their money on you.

Venture capitalist do not fund ideas. They fund their belief in the proposer of the idea to see it through.

LEARNING CURVE

In many cases, very successful people will not take a risk on you if you have never gone through psychological curve of losing a business or turning around a dying one back to life.

The general advice on how to acquire this intelligence is to start with small deals until you create sufficient pool of knowledge to handle big projects, whether you are starting directly in the investment quadrant or ending there through business.

The learning curve can be long or short depending on your relationships (teachers), and the nature of deals you handle in the earlier years. However, the lessons must be taken and there is no standard path to follow.

Some things cannot be learnt through a formal curriculum, but rather through a mix of intuition and facts, trial and sometimes costly errors.

It is an experiential learning that not only changes your ability to repeat the same thing but also permanently changes your perception of self, by revealing more of yourself to you. Business and investing acumen is one of them — a unique set of intelligence that cannot be described by a curriculum.

The seventh and the final basic rule of investing is to develop the ability to evaluate risk and reward.

In the words of my coach, “I believe after going through the seven basic rules of investing, you have realised how crucial financial intelligence is when it comes to investing.”

Fellow parents, investing intelligence school starts after school, father to son or daughter.

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Wednesday, October 29, 2014

Premium remittance by employers needs streamlining

A caring employer will encourage employees to the prudent habit of regular saving and protecting their families such as through life insurance. Indeed, this is the reason why most employers have facilitated check-offs for life insurance premiums. PHOTO | FILE

A caring employer will encourage employees to the prudent habit of regular saving and protecting their families such as through life insurance. Indeed, this is the reason why most employers have facilitated check-offs for life insurance premiums. PHOTO | FILE 

By ISAAC NG’ARU
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Upon taking insurance through the check-off system, normally employers are supposed to remit the deductions to insurers.

Now, a situation has arisen where an employer deducts premium in the pay slip but fails to remit the same to the insurer in time, resulting in arrears on the policy.

This raises disputes between the insured and insurer because the former takes this to mean that the insurance company is scheming to deny him/her rights.

As many policyholders face this dilemma, is there a law that can be applied to compel employers to remit premiums in time?
— Julius K. K., Eldama Ravine

This problem of delayed remittance by employers of the premiums deducted from their employee’s salaries exists in our industry. For civil servants who have life insurance particularly, it has become acute with devolution.

As you rightly point out, many policyholders get affected when insurers intimate possible lapse of cover because they have not received premiums in due time according to the terms of the policy.

I can understand the policyholders’ dilemma.

You see, there are two contracts in this circumstance: the policy itself and the check-off system. The latter facilitates, firstly, the deduction of premium from an employee/policyholder’s salary by the employer and, secondly, provides for the employer to remit the deductions to the respective insurance company.

In essence, the check-off system itself comprises two further contracts: one involving the employee/policyholders signing the salary deduction authorisation, and the second one between the insurance company and the employer for effecting the requisite deduction and remitting the money to the insurer.

LIFE INSURANCE

In the circumstances, the employee/policyholder has fulfilled his/her obligations under the contracts. But under the current situation, it is the employer who is failing to keep their side of the bargain.

Although it is true the employer and insurer have an agreement for co-operation, this is engendered by goodwill with employers facilitating check-off to enhance their employee’s social welfare.

A caring employer will encourage employees to the prudent habit of regular saving and protecting their families such as through life insurance.

Indeed, this is the reason why most employers have facilitated check-offs for life insurance premiums. The agreements with insurers are more for co-operation than confrontation. So, the thought that such agreements should end up in court is rather impalatable.

Arising problems can be resolved through follow-up and dialogue.
This is what is exactly happening. Both through the Association of Kenya Insurers and individual insurers directly engaging their check-off partners, discussions are in progress to resolve the matter.

In particular, concerning policyholders in civil service, the problem has been exacerbated by the on-going devolution where many payrolls are being decentralized.

It is such changes that have disrupted the system, not the employers deliberately failing to fulfill their obligations concerning remittance of premiums deducted to the respective insurers.

The prevailing situation also impacts life insurance operations adversely, of course.

The premium revenue stream has been disrupted for many life offices. In turn, this affects the investment activity.

Insurers do not cherish disputes with their policyholders in these circumstances and that’s why they are working towards resolving the problem.

But they have to alert affected policyholders so that the latter can, from their end, promote their employer to resolving the remittance issue expeditiously.

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Wednesday, October 29, 2014

What to ask before taking personal loan

In today’s hard financial times when money has become scarce and low in purchasing power, borrowing has certainly become inevitable. PHOTO | FILE

In today’s hard financial times when money has become scarce and low in purchasing power, borrowing has certainly become inevitable. PHOTO | FILE 

By EDWIN OKOTH
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In today’s hard financial times when money has become scarce and low in purchasing power, borrowing has certainly become inevitable.

A recent Ipsos poll showed that one in every four Kenyans has contemplated suicide due to the rising cost of living.

A previous report shocked many that 93 per cent of Kenyans earn less than Sh40,000 while almost half of them take home less than Sh10,000. 

These scenarios have not only pushed Kenyans down the pit of debt but also made them to diversify the reasons for borrowing from fulfilling long-term goals to fixing short-term emergencies or simply accessing credit for consumption or paying pressing debts.

“We live by debt, it is hard to balance income at the end of the month when you know very well that what you expect will all be swallowed in the debt,” says Caroline Achieng’ who works for a local supermarket in town. 

Borrowing from financial institutions is the fastest way to access a large amount of money that you cannot save over a period of time.

Many people also consider it more personal in a society where asking friends and relatives for money can turn out to be quite embarrassing.

The Kenyan financial market is also continuously opening borrowing channels with mobile money, credit cards and overdrafts becoming so easy to access that the temptation to borrow is just too high.

That be as it may, the pit of debt is definitely where you would not want to be found in.

It is worth considering certain realities before taking the jump to be a debtor. Here are some of them: 

What are the costs associated with the loan?

When applying for a loan, many people simply plan with the amount they are applying for in mind.

The urgency to get cash makes potential borrowers sign the loan forms without even knowing what the net take home will be.

Isabella Wambugu is a micro loan officer with a local bank in Nairobi, she says that borrowers simply say that they want a certain amount and ask for the monthly instalments.

“Customers will be seen in the banking hall after spending the loan to ask about the charges and the interest of the loan,” Ms Wambugu says. This group is just a few among the Kenyans who care to know after all. Others never even have an idea about what many call “the hidden charges.”

Every loan application has charges tagged on it.

Some banks may call it service charges or appraisal fees but the truth is that it ranges between three and nine per cent of the total amount of loan being applied for.

Some banks would deduct this amount in advance before disbursing the loan to you while others will load it over the principal borrowed and the interest in the repayment.

If you are applying for say Sh3 million loan, you may pay as much as Sh270,000 in processing fees alone.

Apart from the processing charges, banks normally insure the loans you take against death and or disability; again this one ranges from one financial institution to another.

“Banks have to keep safe and avoid the embarrassment of looking for relatives of the deceased to add salt to the wounds of people who have probably lost a bread winner,” notes Mr Richard Mwaniki, a private debt recovery consultant in Nairobi.

This fee is dependent on the period of the loan since it applies annually.

It is, however, charged at the processing stage, further reducing your take home or carefully loaded in the repayment structure but either way — you pay. That is the bottom line.

Loans are repaid with interest and since the figure is usually given in percentage per year, it rarely crosses the mind of the borrower how much he/she will return to the lender over and above the principal.

In 2011, when inflation went through the roof, many borrowers found their loans restructured because interest rates increased.

Many either did not understand it or just did not care to know why the repayment periods had become longer.

What is the timing of the loan? 

While planning to borrow, the purpose must guide your timing which will be crucial in determining how the money helps you anyway.

Loans in some circumstances may not be instant especially when collateral is used as security.

A title deed for example has many legal processes for its joint registration that may take between three weeks to one or even over a month to complete.

Banks will only lend you after the land is cleared as clean and safely registered under the borrower and the bank’s names.

If your purpose for the credit is time-fixed, you may end up getting the much needed cash when it is too late. As a consequence, you may end up misusing the money. 

The same applies when you rush to borrow before the time is ripe and as fate would have it, something unusual comes up to consume the money you intended to invest.

The next thing is that you may fall in repayment struggles and consequently lose an asset in the process.

A timing error will mean you never get value, for example, borrowing for a car or a machine whose value will depreciate by the time you complete repaying.

You will have simply gone through a borrowing and repayment process but the asset dies with the loan leaving you with no value in the end. 

Another aspect of time is tied on the repayment schedule. You must clearly know your income plans and relate it to the frequency of repayments, whether weekly, monthly or quarterly.

Agreeing to a deal that does not obey your income trend will land you in repayment hardship and make you look like a bad borrower who delays repayments.

Wait, one more thing... never rush to borrow when you are in a crisis. You will not only end up with the worst lender but also sign anything to get cash.

Net value versus alternative means

It is also worth asking yourself whether it is the best option available. Have you considered other ways of raising cash other than debt?

Is it a burden worth carrying? How much value will it add to you or your business?

These are crucial but mostly ignored issues that ought to cross your mind before you sign the dotted lines and commit to repay for a loan, sometimes for a period of even over 10 years.

 

Shopping for the best debt

  • Prepare yourself. Before lending you money, a bank or other group will want to see a business plan and current financial statements. They’ll also check your personal credit history, so be sure your credit score is excellent.

  • Shop for the best terms. If one bank wants to give you a loan, it’s likely another will, too and at a competitive rate. Just make sure to read contracts closely and ask the right questions to ensure you are being offered a better deal.

  • Borrow only what you can afford. Avoid the temptation to borrow more than the absolute minimum you need, no matter how much you are qualified for.

  • Debt isn’t evil, but it can be dangerous. Use it wisely, and it can give you a financial edge, providing the flexibility to seize opportunities you otherwise couldn’t afford and ones that could push your business to the next level.

  • Always remember: The best debt is one that has been repaid.

    — Entrepreneur.com

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Wednesday, October 29, 2014

Builder finds treasure trove in quarry

Ndegwa Muriithi displays tiles at his company, Stone Centre at Kiganjo, Nyeri County. PHOTO |JOSEPH KANYI

Ndegwa Muriithi displays tiles at his company, Stone Centre at Kiganjo, Nyeri County. PHOTO |JOSEPH KANYI 

By BONIFACE MWANGI
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Come next month, Ndegwa Muriithi will be adding three more machines to his workshop so that he can try to meet the rising demand for his products.

Mr Muriithi says he will be shipping in three Single Gang Stone Saw machines, the devices which he uses to cut different types of natural stones into various decor products for buildings.

Decor floor slabs, tiles for wall copings, decorated paving slabs, natural stone cobbles and inter-locking blocks are just some of the products which he makes at his Stone Cut Limited, located in Kiganjo, in Nyeri County.

With a single machine using wet-cut method, Mr Muriithi has been turning waste stones from the expansive quarries in Kiganjo into money.

According to the builder who is also a father-of-two, the idea came about five years ago when he was contracted to set up a four-storey block in Thika town.

RELIABLE MARKETS

“The owner wanted very smooth walls and we started looking for a machine that would cut the building stones to the desired texture,” he says.

This, he says, forced them to halt the construction until they got one that produced the desired finish.

From that day, the 50-year-old planned to buy one Single Gang Stone Saw from China at a cost of Sh1 million and put up a small plant that does not only recycle the quarry waste, but sees quarry workers earn more.

The steel blade of the machines is made of diamond. This means that Mr Muriithi has to cool the blade with water to reduce friction.

His products are made from  granite, slate, sandstone, marble, travernite and other stones. According to him, every product has its own price and this usually depends on the type of stone.

“I have been in production for the last three months and things are really looking good for me,” he says.

His products, he says, have zero carbon rating, are easy to clean and at the same time, they are beautiful.

The building blocks require little cement, he adds since they have been smoothed.

“One only requires painting his or her wall after completion of the building but even without that, the wall looks beautiful,” he notes.

“Professional designers prefer natural stone for both residential and commercial buildings. The beauty and elegant finish of natural stone are unequalled and it is a timeless sense of style and luxury and increases the overall worth of your home in the market,” says Stone Centre Limited manager, Ms Ann Wangui.

WATER - TIGHT

Currently, Mt Kenya Region and Nairobi provide him with a reliable market. However, he says, after buying three new machines, he will start exporting to China where he has been scouting new markets. If successful, he says, it will be a big win for both Nyeri County and himself.

As for wall and floor clubbing tiles, Ms Wangui says, they have long life and require minimal maintenance. The water-tight nature of precast eliminates moisture absorption.

“A sealed, exposed aggregate finish tends to be self-cleaning and has a very long service life,” she notes.

Until now, Mr Muriithi has pumped over Sh7 million in his business which only occupies three-and-a-quarter acres of land. He has employed five people already. However, with the additional machines, he intends to hire 48 people.

At the moment, his main competitors are products from China which he says they are made of ceramics.

According to him, it costs one $40 (Sh3,520) to ship in a square metre of natural stone and this he says has made many people to avoid using them since they are expensive.

And with his products now ready and locally available, he hopes many will use them as he says they make construction cheaper and easy to maintain.

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Wednesday, October 29, 2014

He is just 23 and skating his way to financial freedom

Mr Kelvin Mwangi in a skating lesson at Shah Lalji Nangpar Academy-Junior School in Nakuru on October 22, 2014. SULEIMAN MBATIAH

Mr Kelvin Mwangi in a skating lesson at Shah Lalji Nangpar Academy-Junior School in Nakuru on October 22, 2014. SULEIMAN MBATIAH 

By MAGDALENE WANJA
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He started skating by the roadside as a hobby immediately after high school. While at it, parents approached him to train their children.

The request saw Kelvin Mwangi buy three sets of skating kits from second hand shoe dealers to start coaching his skill in 2012.

Today, Mr Mwangi, 23, is an accomplished skating trainer in Nakuru and does not regret venturing into an area that is slowly becoming a popular sport among children, especially those from affluent families.

He usually charges Sh300 per session with each period lasting three hours in a day.

With the demand growing, Mr Mwangi incorporated his two friends into the booming business.

“My weekends are jammed and I have to attend church service early in the morning before venturing out to attend to many orders in various schools,” he said.

EVER BUSY

Schools keen on introducing skating as a sport have ensured that he is ever busy every evening and at weekends.

Earlier, Mr Mwangi, who is a trained chef, used to skate as a way of exercising but has slowly turned cooking into his hobby while skating is his full-time job which earns him Sh20,000 profit in a month.

“I charge Sh7,000 per student in the international schools and Sh4,500 per student in the local schools. The payments are paid per term,” he told Money.

So far, he has acquired 30 sets of skating kits which he uses to train both children and adults. Each set consists of a helmet, a pair of elbow-guards, palm-guards and knee-guards as well as a pair of skating shoes.

Flexible and swift

“I have mainly invested in children because I enjoy most when training them since they understand easily than adults. Their bodies are highly flexible and swift, too,” he added.

Apart from training children, skating has also seen him get marketing contracts with local companies to distribute flyers, booklets and posters.

“Skating helps in covering long distances while at the same time having fun. I have done it with NSSF, Orange Kenya and a number of mobile phone companies,” he said.

Like any other form of business, however, Mr Mwangi has faced challenges which include lack of training stadia.

“The county government should consider skating as an important sport that requires a specialised indoor facility for both adults and children. This will also help in creating more opportunities for the youth,” he added.

 

INCOME AVENUES

  • Parents part with Sh300 per three-hour session for their children.

  • International Schools keen on introducing skating as a sport pay Mr Mwangi Sh7,000 per pupil per term as local schools pay Sh4,500 for each learner.

  • Marketing contracts from local companies.

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Wednesday, October 29, 2014

Career auditor’s investment in data software pays off

Managing director Grande Afrique Consulting, Godfrey Mwika speaks to the Nation at his office in Nairobi on October 28, 2014. PHOTO | ANTHONY OMUYA

Managing director Grande Afrique Consulting, Godfrey Mwika speaks to the Nation at his office in Nairobi on October 28, 2014. PHOTO | ANTHONY OMUYA  

By RAMENYA GIBENDI
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Godffrey Mwika stepped out of a high flying corporate job after working for 10 years with various top brands to set up a consulting firm that leverages on technology to tackle challenges facing businesses in the modern world.

In 2012, the career accountant and auditor with certification in accountancy, auditing and information systems quit his job to set up Grand Afrique Consulting, an outfit whose core business is provision and use of cutting-edge technology to access, audit, investigate and manage data in organisations.

“Throughout my employment, I realised that one of the biggest challenges facing businesses today is data management, especially with the advent of technology and phenomenal growth in the size of transactions,” Mr Mwika told Money.

If a business cannot fully understand and control all its data, that is, how it is acquired, processed, stored, released and applied in making decisions, then it cannot adequately handle business risks such as fraud as well as wastage of resources, he added.

Data management, he said, is key to impartial audits, risk management, performance measures and fraud management by all institutions.

GOING IT ALONE

“There was a big gap in the market and I jumped onto it after realising the potential,” he narrates when asked why he opted for the business.

Since 2001, Mr Mwika has worked for several multi-national and blue chip firms including PricewaterCoopers as a senior associate auditor, a risk consulting manager at KPMG, head of audit and risk at Bata Shoe Company-Kenya, a senior manager in audit and risk at Mumias Sugar Company, an ICT divisional director at AH Consulting in Uganda as well as head of audit and risk at Sovereign group limited.

Throughout his career, Mr Mwika worked in risk management, ICT consulting, internal and external audit departments, business process reviews as well as fraud investigations all over Africa.

The experience he gathered over the period by handling different clients is what he says motivated him into going it alone.

“I realised there existed computer software to help institutions and businesses easily handle challenges related to these areas but no one seemed to exploit the area well,” he said.

Armed with about Sh1.5 million savings, Mr Mwika set up shop, carefully assessed the right software and approached several international program developers who later worked out dealerships and partnerships with his firm as the licensed regional business leader.

“Curently, we have established business partnerships with global leaders in specialised software including ACL Services Limited (Canada), CQS GRC Solutions (South Africa), Pentana Limited and Ideagen Plc in the United Kingdom, OMS Solutions in India and Imacert in Dubai,” he said.

His biggest clients, he says, are financial institutions, media houses, telecommunication companies and manufacturing firms seeking to manage losses through efficient data management systems.

Other clients are drawn from insurance, agriculture, real estate, hospitality and healthcare sectors in what Mr Mwika believes underlines how institutions have been battling challenges brought by inefficient data management.

“We have an aggressive marketing team but the bulk of the business we get is through client referral which means there was a huge need in the market,”  explains the employer of eight permanent staff.

Once purchased and installed, depending on the software, an institution is able to perform extensive data analysis in aspects such as sales, expenses, procurement and inventories among others.

SEALED LOOPHOLES

ACL software, for example, can access any type of data from any source or format and perform limitless analytics at very high speeds and with 100 per cent accuracy and completeness, he says.

A single user licence, one that can only be installed on one computer in an organisation, is sold at Sh170,000 which is renewed on annual basis at an agreed fee while the ACL audit exchange licence for continuous auditing costs Sh720,000.

“ACL Software Solutions alone has over 70 users in Kenya drawn from government institutions, private sector, NGOs across all industries. There are over 15,000 ACL users globally and 98 per cent of Fortune 500 companies globally use ACL. This is indeed a good company to be in,’’ Mr Mwika notes.

Through the analysis, the software easily records suspicious transactions and or entries thus providing room for faster intervention and easy detection of fraud.

“The clients we have offered these technological solutions have admitted to having sealed so many loopholes through which they were previously losing money from their system as well as piece together waterproof evidence for prosecution of criminals,” he notes.

The firm also does human resource consulting and offers specialised software to manage individual staff information about each employee in organisations.

The proprietor is currently working with various government agencies keen on leveraging on technology to seal loopholes exploited by rogue state officials to perpetrate graft as has been noted in public procurement fraud and ghost workers.

 At two years old now, the firm employs 8 permanent staff, all of whom were direcTly picked from university and taken through an induction procedure to align them with the unique needs of the company. It has also opened an office in Kampala, Uganda.

“Our next phase is targeting SMEs and medium enterprises with reasonably priced technological solutions in relation to the size of their business,” explains Mr. Mwika.

Grande Afrique Consulting has also see growth in its fraud investigations work, business restructuring, internal audit work, business process reviews, ICT consultancy and a number of other service lines in its management consulting arm.

‘He however is reserved on the firm’s monthly turnover but judging from the expensive address in Nairob’s Central Business District in which the firm’s offices are headquartered, Mr Mwika seems to have  got his business right.

ABOUTGRAND AFRIQUE CONSULTING

  • Owner: Godfrey Mwika

  • Year of established: 2012

  • Capital: Sh1.5m - personal savings.

  • Specialisation: Provision and use of cutting-edge  technology to access, audit, investigate and manage data flow in organisations.

  • Partnerships struck: ACL Services Limited (Canada), CQS GRC Solutions (South Africa), Pentana Limited and Ideagen Plc in the United Kingdom, OMS Solutions in India and Imacert in Dubai.

  • Clients: Financial institutions, media houses, telecommunication companies and manufacturing firms besides companies in insurance, agriculture, real estate, hospitality and healthcare industries.

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Wednesday, October 29, 2014

Student designers call for Kenyan fashion body

A model walks the runway at the Afrivazi fashion show at Egerton University, Njoro in Nakuru County, October 25, 2014. A one day university fashion gala attended by hundreds of students has supported pleas for the formation of a body bringing together all fashion colleges and linking them with the market. PHOTO | SULEIMAN MBATIAH

A model walks the runway at the Afrivazi fashion show at Egerton University, Njoro in Nakuru County, October 25, 2014. A one day university fashion gala attended by hundreds of students has supported pleas for the formation of a body bringing together all fashion colleges and linking them with the market. PHOTO | SULEIMAN MBATIAH 

By MAGDALENE WANJA
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A one day university fashion gala attended by hundreds of students has supported pleas for the formation of a body bringing together all fashion colleges and linking them with the market.

Speaking on the sidelines of the Egerton University fashion Gala, an organiser, Ms Vallary Achieng said that the response received from participating institutions and students showed Kenya was ripe for a body tasked with monitoring fashion trends.

The fourth year student pursuing Fashion and Design at Egerton University added that this will allow for interactions and exchanging ideas which will eventually lead to growth in the industry.

“The fashion industry has a high potential of not only creating employment among the youth but also contributing to the economy of the country,” she added.

Over 500 students participated in this year's Egerton University's fashion show where various designs were displayed by models.

INNOVATING IN FASHION

The show dubbed Afrivazi raises awareness on the role played by arts especially fashion design as an element of entrepreneurship so as to make more people embrace Kenyan and African made outfits.

The event also aimed at linking the arts and design students with the local and international fashion industry where 10 institutions of higher learning showcased various innovations on fashion.

This year’s show attracted hundreds of university students, lecturers, staff and the general public who attended the event.

The show also attracted the participation of 25 models all picked from different institutions of higher learning and upcoming models from Kisumu, Laikipia, Nairobi and Eldoret.

“It is our hope that the show will bring more people on board to help us achieve our objectives not only through the annual fashion and art showcase we hold but also the other events,” said Ms Achieng.

The various participants specialised in designing, jewellery, clothing and vintage from University of Nairobi, Kenyatta University, Ashleys and Vera Beauty College.

“Fashion is in the sky, in the street, fashion has to do with ideas, the way we live, what is happening” and it is up to us to use it to bring out the best in ourselves and in the human race,” she added.

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Tuesday, October 28, 2014

One in three Africans have entered middle class: study

More than one in three Africans have entered the middle class in the past decade, and their numbers are set to increase thanks to rapid economic growth, a study showed Monday. PHOTO | FILE

More than one in three Africans have entered the middle class in the past decade, and their numbers are set to increase thanks to rapid economic growth, a study showed Monday. PHOTO | FILE 

By AFP
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JOHANNESBURG,

More than one in three Africans have entered the middle class in the past decade, and their numbers are set to increase thanks to rapid economic growth, a study showed Monday.

At least 370 million Africans, or 34 percent of the continent's 1.1 billion people, are described as members of the middle class, according to a survey by the African Development Bank.

In turn, the bulging middle class will help drive further economic growth and development, the Tunis-based AfDB said.

By 2060 the group should represent 42 percent of the population, according to the study launched in Johannesburg nearly 20 years ago.

"There is a stable middle class and it is growing," said Mthuli Ncube, the AfDB's chief economist and a senior research fellow with Oxford University's Blavatnik School of Government.

DEFINITION OF CLASS

"It is a big driver for investment in Africa," he added at a news conference in Johannesburg.

The International Monetary Fund forecasts that Africa's economic growth, boosted by rising investment in natural resources and infrastructure, will reach 5.1 percent this year, up from 4.7 percent in 2013.

It should climb to 5.8 percent next year, the IMF predicts.

The study, which defined the middle class as having a purchasing power parity of between $2.20 and $20 (15 euros) a day, found that the middle class is strongest in countries with a robust and growing private sector.

North Africa leads the pack with at least 77 percent of its population counted among the middle class, surprisingly followed by the central African region at 36 percent of its people falling in that category — though many are considered to be vulnerable.

The southern African region, home to the continent's most developed economy, South Africa, is in third place, level with west Africa with around 34 percent of their people classified as middle class.

East African countries are at the bottom of the ranking, having just a quarter of their nationals in the middle class.

Consumption and ownership of items such as a television set, car and refrigerator, and the type of flooring in dwellings were among the yardsticks used to define the class.

Other measurements included access to electricity, sources of drinking water and types of toilets.

Based on a survey of 37 African countries, the study polled nearly 800,000 households and concluded that most of the countries saw a rise in the size of the middle class over the past decade.

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Tuesday, October 28, 2014

Regulator says only PhDs will lecture in varsity

Graduands at a past ceremony. Lecturers with master’s degrees have been reduced to tutorial or junior research fellows. PHOTO | FILE

Graduands at a past ceremony. Lecturers with master’s degrees have been reduced to tutorial or junior research fellows. PHOTO | FILE  

By GERALD ANDAE
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Only holders of PhDs will be allowed to lecture in universities following the introduction of fresh guidelines by the universities’ regulator.

The Commission for University Education (CUE) said the new guidelines would be adopted by all universities, including those owned by private investors, and implemented over five years.

Lecturers with master’s degrees have been reduced to tutorial or junior research fellows.

“It is now a basic requirement that for one to be a lecturer he/she has to be a holder of a doctoral degree,” said Prof David Some, secretary of the Commission for University Education (CUE).

This brings to an end the current criteria where each university had a different formula of promoting and appointing lecturers.

NEW GUIDELINES

For one to be promoted to professor, they would now have at least a minimum of 60 equivalent publication points from scholarly journals, up from the current 10 points.

The publication points are based on the number of books published and level targeted such as high school or university. For example, one university book is equivalent to four points while one tertiary level book has two points.

The new guidelines also require a professor to supervise five postgraduate students with two of them at doctoral level, unlike the current system where one can become a professor without having supervised PhD students.

The common regulation will curb the situation where lecturers have been moving to universities with lower grading points in order to earn higher titles.

“We have had cases where a lecturer would move to a university with lower grading requirements to earn titles. This has come to an end with the enforcing of the new standards,” he said.

On the other hand, associate professors will only earn the title after attaining a minimum of 48 publication points of scholarly journals and having supervised four students at postgraduate level.

Currently, one would get the title having accumulated eight publication points.

The new guidelines were approved on Monday at a stakeholders’ workshop in Nairobi. Education secretary Jacob Kaimenyi said the new criteria would create order and level the field for fair competition in local university system.

The article first appeared in The Business Daily.

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Tuesday, October 28, 2014

Zuqka speaks to Mandela Washington Fellows

From left, Suzanne Semenye, a director of The Grass Company for YALI Program and Mshila Sio, Director and founder of Agua Inc. PHOTO | CHARLES KAMAU

From left, Suzanne Semenye, a director of The Grass Company for YALI Program and Mshila Sio, Director and founder of Agua Inc. PHOTO | CHARLES KAMAU  

By NALIAKA WAFULA
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Suzanne Semenye, co-founder and director, at The Grass Company

 

Tell us a little about yourself

I am a wife and mother. I have been married for six years and  have a three-year-old son.

I studied at the University of Nairobi, with a focus on communication and sociology — something I never thought I would study.

That was mainly because I wanted to be a pilot, which never happened. But on the flip side, I ended up marrying one.

I was chuffed to find that I was nauseous flying in the cockpit so I guess it’s just as well that I didn’t end up flying.

How did you hear about the YALI fellowship?

I heard about the Mandela Washington Fellowship through a friend, who asked me to share the information with young people who work with our agency.

She encouraged me to apply as well, and I  actually qualified. The application was done online, and the shortlisting was done in Washington. 

What was your reaction on being selected?

When the embassy notified me that I was selected, I felt humbled, honoured, surprised and elated because there were more 50,000  applicants  and I was among those chosen.

The opportunity was in God’s timing as I was looking for the next frontier in my career and personal development.

You got to meet the US President among other important people…

Meeting President Obama, Secretary of State John Kerry and Michelle Obama were definitely the high points in the programme.

I sat at the very front row when Michelle Obama spoke to us about facilitating education for girls in Africa.

She is a warm person who clearly loves advocating for change. She was so genuine and relatable. To the chagrin of her security detail, she went around hugging the fellows; I received a motherly hug from her.

I was in awe that such a powerful woman could be so accessible. She is really unlike a lot of powerful figures you would meet.

What stood out most during your stay there?

Two things impressed me. First, the calibre of young leaders in Africa is astounding!

Young people are doing great things against all odds: rescuing girls from FGM, generating alternative sources of energy, changing the economy of a village.

The level of confidence and willingness to sacrifice to make a change was inspiring. The second thing that impressed me was the warm reception.

You are a co-partner at The Grass Company, tell us more about it?

A few months after getting married, a good friend approached me to partner with him in founding The Grass Company, a consumer collaboration agency based in Nairobi.

I was scared witless but with my husband’s blessing, I took the chance and jumped in. It was one of the best decisions I have ever made.

Being in business is not as glamorous as people imagine because the challenges are immense and often overwhelming.

The rewards are equally rewarding and now The Grass Company has been in this market for six years and we are only getting better!

What next?

In the next couple of months, I would like to engage with the young women (and men) in entrepreneurship to teach them what I  learnt during my fellowship and inspire them to achieve their goals.

I am creating an online mentorship platform to allow diverse linkages among women where they can share and learn from each other.

I will also leverage on my newly acquired African network of friends to expand my business within the continent.

One maxim I learnt is that your dreams should scare you – that way, even if you achieve 10 per cent, you have achieved a whole lot!

____________________ 

 

Mshila Sio, Director and founder of Agua Inc.

Zuqka: How did you hear about the Young African Leaders Initiative (now Mandela Washington) fellowship?

Mshila: A friend sent me an email. She thought I would be perfect for the programme, based on the work I do in the water sector. I simply sent in my application a few days before the deadline. I was determined to be involved and knew a few very qualified friends who were applying so I was very thorough.

Tell us what the fellowship is about?

It is the flagship programme of President Obama’s Young African Leaders Initiative, in which  a class of 500 was selected as a representation of the extraordinary promise of young people’s ideas and potential on the continent. They selected current and emerging young Africans in three areas, namely business and entrepreneurship, civil leadership and public management.

How did you feel when you were chosen as a fellow?

I was ecstatic, as you’ would expect since it provided an incredible opportunity for our organisation, Agua Inc., and for me as well although initially, I didn’t realise how incredibly competitive the selection was. I was very humbled when the state department told us that 50,000 Africans had applied for the programme.

What was your experience there?

The simplest way to put it is life transforming. I was with 25 other fellows representing 19 countries under the “business and entrepreneurship” track at Dartmouth College.  

Dartmouth is an Ivy League institute and they took the programme very seriously, meaning we spent all our time with the best of their faculty members going through an executive training schedule. It was an academic endurance race.

We had several opportunities to visit businesses in the region, learning and absorbing best practice and we got to participate in numerous community activities. It seemed like we never stopped. Even our leisure time was crazy, from hikes to camping to high-ropes courses.

How do you hope to apply what you learnt here?

I left thinking that every Kenyan should have an opportunity to go through what I had just experienced.

So, apart from applying those teachings in my business and daily life, I will also be working with the Global Peace Foundation in their Leap Hub programme to duplicate what we learnt and applying it in Kenyan high schools with the aim of mentoring the next generation of entrepreneurs.

I will be joining other Leap Hub champions such as Dr Manu Chandaria and Mr Heshan de Silva.  

You met the Obamas; tell us a bit about that experience?

It was out of this world. President Obama had a very candid discussion with us at the summit about Africa’s future and the roles Americans hope to play. We also had a say about how we want this relationship to move forward over the next few decades.

The summit in Washington DC was an exchange of ideas and goals from both sides.

It is time we started trading with them on an equal footing and we have to recognise our value for that to happen and approach the table in a different way; not through aid or as lesser nations.

I got to shake Obama’s hand, which was quite a privilege.

Two days later, we got to listen to Michelle Obama and she was beyond inspiring.

I was left standing in the hall for a few minutes just absorbing her energy after she left. She is the magic in that relationship.

Simply an outstanding and powerful woman and for me, she was the highlight of the summit.

What impressed you most about this particular experience?

The people. I can tell you about several people whom I would gladly follow into the jungle because they inspire the socks off me.

I was so impressed by what people are doing in the continent, and most with very little or no government support.

Our government has offered more  support to  young people  than other governments through youth funds and similar programmes, but it still has no idea what we are capable of and  can learn a few things from us.

Americans can learn a lot from Africans too, but the one thing I realised they do extremely well and gain from is the active support of young people’s ideas.

They provide a platform for young people to be heard and to be active in their development. In Africa, we play with 1/3 of the team on the field, with young people — who comprise the vast majority of the population — and women, sidelined to a large extent.

And that is letting us down. I will work with  other Kenyan fellows to change that.

Tell us a bit about your social and educational background?

I was born and raised in Nairobi. I grew up in Utalii, Ruaraka, where my dad was a lecturer. My mother taught Kiswahili at Msongari.

My parents later got into various businesses  and I would say it has been an interesting learning experience for all of us.

I studied at St Mary’s School, Nairobi, for most of my life. The school had a very active extra-curriculum programme and I got involved in everything, from rugby to musicals. 

What did you study in college and did you always know what you wanted to do?

I graduated with a Bachelor of Marketing degree from in Australia and later a Masters in professional accounting, but my career has taken a very different direction now. I didn’t always know what I wanted to do but I kept an open mind and was willing to take a risk when I came across something that roused a passion in me.

I left a comfortable set-up and country to start from zero and it has been my favourite adventure so far.

You co-founded  Agua Inc; tell us a bit about it?

Agua Inc. Kenya is a bio-technology company.

We offer innovative wastewater treatment and water purification technology and consulting.

Our technology offers world-leading results using no chemicals, little to no energy and at a significantly lower cost than conventional methods.

We use plant-based biotechnology to purify water from numerous sources, making our technology extremely viable for Kenya and Africa.

I founded the company with my partners who are based in Colorado, US, and Spain. We design, install and maintain advanced water purification and wastewater treatment systems.

You were also one of the lucky few to receive a $25,000 (Sh2.2 million) grant; tell us about that?

The grants  were only given to  36 people with the best ideas, so once again it was highly competitive.

They selected based on originality and potential impact on the continent and being in the water sector, we have can have incredible positive impact in the country.

On the day the winners were  announced,  emails were sent to everyone telling  them whether they had won or not.

But  hours after some had received the news, a few of us were still in the dark. We were in one of our leadership classes when someone suggested that we check our spam mail and there it was.

I was over the moon, to say the least. So along with nine other winners   from Dartmouth, we started  celebrating in class. Needless to say, that marked the end of the class.

What are your future plans?

Well, I have seen the light in terms of the potential for social change in our region and although I have several business ideas, my focus is primarily on Agua Inc. Water management is a huge challenge for us.  Not everyone has access to safe water and waste water is a burden for most people.

Current technologies are dependent on expensive chemicals  and/or high-energy consumption, but that is no longer  necessary.

We have a brilliant solution to these challenges that can be implemented now at low cost and very sustainably.

We are using the grant to implement a project with Kenyatta University that will begin later this year and will serve as a showcase for the whole of East Africa.

Once that is done, we will involve all stakeholders in the water sector because I believe we can revolutionise how water and waste water is managed in this country. We will keep learning, innovating and inspiring young people to develop their ideas because that is the key to economic prosperity, social change and growth for Kenya.

 

WHAT I LEARNT AT DARTMOUTH

I have always thought that young Africans have the most outstanding ideas and energy, and this programme was an affirmation of that. I was constantly inspired. I’ll break down our Dartmouth experience into three sections:

1. Design thinking: We spent two weeks at Thayer Engineering School, where we learnt a process that can be applied to almost any sector or industry to solve problems through designing  systems or products based on the problem. This was probably the most valuable section of the academic learning.

2. Ideas to success: We then spent four weeks at Tuck Business School learning how to transform an idea into a successful business and tool for social change.

3. Leadership: Throughout the six weeks we  trained in leadership, with visits by some of the best trainers the country had to offer.

Thursday, October 23, 2014

Subtle grudge as generation Y, X meet at work

“The so called generation gap is in large part the result of communication and misunderstanding, fuelled by common insecurities and the desire for clout.” PHOTO | FILE

“The so called generation gap is in large part the result of communication and misunderstanding, fuelled by common insecurities and the desire for clout.” PHOTO | FILE 

By Verah Okeyo
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Mark feels like he is under siege because of a reality in his life he cannot not alter: his age.

At 48 and a senior manager at an energy parastatal, Mark is finding it difficult to understand his younger colleagues. What he sometimes considers mundane and irrelevant mean the whole world to them. 

“I am often frowned upon for not showing up at the boardroom to smile at cameras as we sing happy birthday tunes to a 24-year-old in the department. It’s their birthday. Surely, why must I go there to sing with them...?”

Mark is experiencing a lot more. Every few minutes, there is an email popping up. Another twenty-something is urging everyone to check out the latest phone app. The correspondence therein is in a language Mark can hardly decipher.

“The app is dope. This time Apple killed it. We be ballin’.”

“It’s all confusing,” Mark says. He then recalls the day when, after interviewing a young job seeker, he gave the young man a chance to ask a question. Mark says he was dismayed when the candidate asked whether the company organised regular outings for the workers to “unwind and get to know each other”.

Well, as Mark endures his discomfort at some of the mannerisms of his much younger colleagues, they too feel the distance. In fact, they have given him names such as “uptight”, “the ancestor”, “fossil” and the like.

He learnt of this when a group email was mistakably sent to his inbox after he had made a decision that the twenty-somethings found unpopular.

On the flipside, Lucy Nyambura, 26, an IT executive at a Five Star hotel, swears she would never invite her boss for any activity in the office that is not work-related. “He is a snob. He always thinks that life is about work,” she says with a dismissive tone.

MILLENNIAL

Lucy is a typical millennial. Mark is the average Generation X. These two generations have met at the workplace. The resultant generational grudge is creating subtle challenges in the manner in which the differing attitudes interact.

Lucy’s boss, for instance, does not find her coming to work in rubber shoes the act of a disciplined employee. And during meetings, Lucy prefers to type her notes on her tablet. This bothers her boss, who imagines she is on to other things.

Eng Job Ndege, the managing director of Protocol Solutions, an ICT firm in East and Central Africa, says that there need not be hostilities between the three generations that occupy the workplace today.

The three generations he is talking about are the baby boomers, who were born after the Second World War to the mid-60s; generation X, born from mid-1960s to early 1980s; and the generation Y, born from early 80s to mid-90s.

While Ndege acknowledges that there exist certain stereotypes that define these generations, some of the bromides do not cast much of a shadow when held against the light of research.

“These generations just want the same things, such as recognition for their jobs, to feel part of a team, and respect. It’s the way of expression that is different,” he says.

His observation are conformed by a study that was conducted by senior research scientist at the Centre for Creative Leadership in San Diego, Jennifer Deal. The work revealed that the common generalisations about these generations are just a myth.

In her book, Retiring the Generation Gap, Ms Dealwrites: “The so called generation gap is in large part the result of communication and misunderstanding, fuelled by common insecurities and the desire for clout.”

Eng Ndege, who has worked in environments where these age differences are prominent, offers what he considers a simple solution to all the bickering: “Every worker must develop some basic supervisory skills to be able to recognise the patterns of behaviour and communication in their colleagues so as to get along. Human resource management should not be the job of a single department.”

The younger people, he argues, must understand that no technology can replace the real world experience and interpersonal skills that the older people have gained over the years.

The older people must also acknowledge that the world is changing and the use of smart phones by young people during a meeting may just mean multi-tasking and not disrespect.

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