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Premier League title race intensies with nine rounds of play remaining, .54
McIlroy wins US PGA championship after epic battle, Pg.51
Timothy Otieno (left) of Gor Mahia
challenges Akimana Emedi, the At-
letico goalkeeper during their Ce-
cafa Kagame Cup 2014 match at
Nyamirambo Stadium yesterday.
[PHOTO: PIC CENTRE]
GORED
AGAIN
Gor lose second match to
Burundian side Atletico in
Kagame club championship
Gor Mahia hopes of sailing through to the
quarter-finals of the Cecafa Kagame Cup hangs by
the thread after a second loss of 1-0 against Atletico
of Burundi at the Nyamirambo Stadium in Kigali.
Atleticos Alexis Hakizimana silenced the sizeable
Gor Mahia fans when he beat the offside trap to
score past a charging Jerim Onyango in the 73rd
minute to secure the win and boost their chance of a
last eight slot.
Gor Mahia now must win their last
two group games against APR of
Rwanda on Friday and Telecom of
Burundi on Sunday if they are to
sail through to the last eight.
It will be Dan Sserunkuma,
however, who will bear the
burden of the loss should Gor
Mahia depart the tournament
earlier as he wasted two clear
chances in the first half to get
By CHRIS MUSUMBA in KIGALI
CONTINUED ON PAGE 55
EXPORT MARKET:
Fresh produce
farmers, frms
banned from EU
PAGE 12
New entrants into the
telecoms sector that
rakes in billions of
shillings may see CEOs
sit unpretty
PAGES 89
Tuesday, August 12, 2014/The Standard
Missed
opportunities
in Kenya-US
relations
T
he priceless goodwill,
fortune and political
clout that Kenya has
lost with the Western World in
recent years, especially during
its frosty relations with
Washington and President
Barack Obamas administra-
tion, could be running into
billions of dollars when
measured in terms of lost
business opportunities.
The pending cases against
President Uhuru Kenyatta and
his deputy William Samoei
Ruto, at the International
Criminal Court (ICC), have in
the past forced the Obama
administration to keep
dealings with Nairobi at an
arms length, leading to cold
relations between former
allies.
A captivating picture of
President Kenyatta with his
hosts President Obama and
wife Michelle, at the Blue
Room in the White House last
Tuesday, was splashed across
the world. But, whether this
posturing will turn the tide in
relations between Nairobi and
Washington remains to be
seen.
The frosty relations
has cost the country
billions of shillings in
unrealised business
Game
of high
stakes
TURN TO PAGE 4
y B JACKSON OKOTH AND
NICHOLAS WAITATHU
>> CORPORATE FOCUS
The trouble with the rat race is that
even if you win youre still a rat.
LilyTomlin
The use of cash as a payment mode is gradually
being overtaken by online solutions. Despite
its popularity in developed economies, online
payment uptake is still low in East Africa. KWEMOI
KAPCHANGA spoke to 3G Direct Pay Ltd Managing
Director Eran Feinstein, a leading online payments
processor, about the sector. Below are the excerpts:
What has been 3G Direct Pays main focus
since its entry in the region eight years ago?
The rm strongly believes in the freedom to shop,
pay, sell and get paid online. The 3G Direct Pay lls
the online gap between providers and consumers.
Since 2006, 3G Direct Pay has been providing an
open credit card processing platform, where the end
customer can shop online with any provider. At the
same time, the said customer can pay in real-time,
using any payment options available. Importantly,
the providers use the same online payment platform
to sell their products or services and safely collect
any form of payment.
What are the payment options ofered by 3G
Direct Pay?
This online payment platform is connected to all
leading credit cards such as Visa, MasterCard,
American Express and JCB. But our credit card
processing service is not the only option; PayPal
transfers can be executed directly from our payment
pages. Furthermore, we provide real-time mobile
money payments and cross-border mobile payments
using M-Pesa, Airtel Money, Ezy-Pesa, Zoona,
Vodacom, Tigo and MTN. The end customer can also
choose to pay using bank transfer via our banks in
Europe, USA and in East Africa.
Which markets does 3G Direct Pay serve in
the region?
We provide payment solution services to hundreds
of travel-related businesses in East and Southern
Africa. Our presence is conspicuous in Kenya,
Zambia, Tanzania, Uganda, Rwanda and Zanzibar.
We accept all major credit cards, mobile money and
e-wallets. Our online payments system is a leader in
technology, usability and security.
Are there plans to expand beyond these
countries?
For now, we want to solidify our operations in these
markets rst. We will continue being the leader
in online payment as we further exploit the huge
market potential.
How are you going to do this?
We have clear agenda and focus. We are just
doing one activity, and that makes us ofer the
best to our customers. 3G Direct Pay, being the
rst company in the region to be given the PCI DSS
is testimony that we will be ofering cutting-edge
online payment solutions to our clients.
What is PCI DSS and of what importance is it
to your rm?
It stands for the Payment Card Industry Data
Security Standard. It is simply a proprietary
information security standard for organisations that
handle cardholder information for the major debit,
credit, prepaid, e-purse, ATM and POS cards. This
certications mean our controls around cardholder
are robust and therefore reduce credit card fraud via
its exposure.
Does this mean that your online payment
solution is fraud-proof?
Absolutely! This has been achieved by not only by
the certication but also the 3G Direct Pay Fraud
Prevention Strategy, combined with real-time
monitoring features, automated business rules
and back of ce procedures. We usually scan each
transaction on real-time, looking for fraud patterns.
If we notice any fraudulent transaction, we block
it and mark for further action. Our system also
includes a blacklists module, where all threats are
logged and blocked. Indeed, it is crucial to mention
that 3G Direct Pay holds the highest security level of
the credit card industry PCI level 1.
What are the main challenges facing 3G
Direct Pays operations in the continent?
Like any other business, penetrating this market
has not been a walk in the park. The current
insecurity witnessed in East Africa has signicantly
depressed our operations. As we were starting
back in 2006, no one seemed to believe in us.
The uptake for the online payment service was
uncommon then. So we started with airlines.
Has this trend changed?
It is changing gradually as technology advances.
In the last three years, we have recorded massive
growth as more people are now using credit cards.
But the market needs to move and develop itself.
We have taken the initiative of creating awareness
and educating the masses on the use of cards.
Hopefully, this will see our operations going beyond
airlines to hotels and supermarkets.
Where do you see 3G Direct Pay in the next
ve years?
We would like to see the company being the leader
on online payment services across Africa.
When not working, what do you do?
I spend my free time reading and sporting. My
favourite sport is athletics.
Having spent some time in Kenya now, what
would you say is preferred meal?
I am a big fan of good steak.
What is it that you like about Kenya and
Africa in general?
Its people and their rich culture
Published by: The Standard Group Ltd; Group Managing Editor Print: Kipkoech Tanui; Deputy Managing Editor Daily Editions: Peter Okongo; Production Editor: Richard Kerama; Business Editor: Hussein Mohamed; Weekend
Business Editor: Jevans Nyabiage; Supplements Editor: Julius Mokaya; Revise Editor: Julie Masiga; Senior Sub-Editor: Kagure Gacheche; Sub-Editors: Andrew Watila, John Oyuke; Writers: Jevans Nyabiage, Emmanuel Were, James
Anyanzwa, Lillian Kiarie, Macharia Kamau, Jackson Okoth, Nicholas Waitathu, Winsley Masese; Manager Print Creative: Dan Weloba; Creative Designer: Alex Ireri; Photography: Business Beat Team; Facebook: Biz Beat; E-mail: bizbeat@
standardmedia.co.ke; Website: http://www.standardmedia.co.ke/business All correspondence to Business Beat is assumed to be intended for publication. Business Beat accepts no responsibility for unsolicited manuscripts,
artworks or photographs. All rights on publication remain with the publisher.
CorporateInterview
3G Direct Pay Ltd Managing Director Eran Feinstein.
Last week, more than 40
African leaders, and their
motorcades, descended on
Washington DC, to attend a
three-day summit with US
President Barack Obama.
They discussed US-Africa
relations, investment avenues
and raised concerns over
increased terrorism in the
region as well as the resurgence
of the deadly Ebola virus.
The event dubbed 2014
US-African Leaders Summit was
the rst ever event of this
magnitude.
Mobile surveys company,
mSurvey, talked to 80 respon-
dents on this unprecedented
event and we have highlighted
some of there ndings here.
Tell us what you think and
email bizbeat@standardmedia.
co.ke with any survey ideas
youd want to see here.
-Data courtesy of www.
msurvey.co.ke
SurveyoftheWeek
Data courtesy of mSurvey.co.ke
bizbeat@standardmedia.co.ke
Do you know about the African Leaders Summit in the US? Which countrys relationship is the most benecial to Kenya?
Who do you think earns the least amount of salary?
Gender information
Yes US
Japan
No UK
China
Uganda
78.75%
40.00%
3.75%
48.75%
3.75%
3.75%
21.25%
Business Beat
2
Tuesday, August 12, 2014 / The Standard
:ENERGY<<
Multinationalscould be feeling the
heat. The market is too competitive
and that is one of the reasons why
they are up in arms, Linus Gitonga
GROWTH:
Battle to control gas now
sucks in energy regulator
Turf wars: While big players claim small operators are illegal,
ERC argues that turf wars arise from increased competition in the
sector that has seen major suppliers lose out to small holders
told Business Beat last week.
They (multinationals) need to
change their marketing strategy
to fit the consumers of today.
They need to take the gas to the
people and not wait for people to
go to them. Consumers of today
will want the gas to be delivered
at their door steps.
ERC also questioned the data
on the LPG malpractice issued by
the oil marketers, saying such
data is skewed and does not tell
the whole story. The data they
are using is ours but it is a
skewed. This data is based on
only 96 suspects in Nairobi of
which 70 per cent of them were
found to be sourcing LPG from
unlicensed people.
OIL MARKETERS
However, they want to
interpret that data to meet their
own agenda. We dont want to get
into that discussion, said
Gitonga. Last week, large oil
marketers blamed ERC, claiming
that the regulator is reluctant to
control the malpractice in the
LPG business. The big players
argued that seven out of 10
cylinders in the market are
sourced from illegal fillers.
The operators also claimed
they would not take responsibili-
ty for the integrity of most LPG
cylinders in the local market. We
at PIEA cannot take responsibili-
ty for the integrity of the LPG
cylinders and the content that is
stocked in majority of supermar-
kets and estate retail outlets as
these have not been filled or
supplied by brand owners, said
PIEA Chairman Polycarp Igathe.
consumers. If there are issues
with the current system, we
should address them. According
to the Energy regulator, shifting
consumer preferences has also
dealt blow to the multinationals
with consumers preferring
dealers who deliver the gas at
their doorsteps. ERC says it is
ironical that multinationals are
complaining about illegal gas
refilling and adulteration of fuels
while they are the ones supplying
the market with the same
commodities.
Of course multinationals are
supplying them (small and
medium-sized LPG dealers) with
gas. The large operators are the
people who import gas in the
country but whom they sell to is
the issue, says Gitonga, adding
that there are only two entry
routes for LPG in the country,
which are Mombasa and
Tanzania- Namanga route.
But even as the large oil
marketers voice their concerns
over what they term as the
growing wave of malpractice in
LPG business, ERC reads malice
in the issue. Only licensed
people are mandated to import
gas in the country unless you are
saying there is illegal gas coming
in. I think multinationals are not
honest in this fight. Some of
these people dont want to go
closer to the people in the estates
to sell their products, Gitonga
y B JAMES ANYANZWA
y B BUSINESS BEAT REPORTER
T
he battle to control the
Liquefied Petroleum Gas
(LPG) industry appears
to be spiraling out of control, due
to changing consumer prefer-
ences. This has seen increased
accusations and counter
accusations between large
operators and small and medium
sized oil companies in the sector.
The turf wars come amid
revelations that large oil
marketers mostly multina-
tionals have resorted to
what is being seen as
unorthodox means to
reclaim their market
share from small and
medium-sized LPG
dealers.
The majors now
claim that the small
operators are illegal and
should be shut down.
They at the same time
accuse the energy industry
regulator of being lenient in
punishing what they term as
rogue players. Large operators,
through their lobby, the Petro-
leum Institute of East Africa
(PIEA) last week claimed that 80
per cent of the LPG market s
illegal. They said they have
forwarded a list of the said illegal
operators and their bases to the
Energy Regulatory Commission
(ERC) for action.
MARKET GRIP
Though ERC concedes that a
proportion of the market is
illegal, it notes that saying 80
per cent of the market is illegal is
an exaggeration. Instead, the
regulator notes that the large
players have over time lost their
grip on the market and now
want to reclaim the share by
having their competitors shut
down.
Director of petroleum at ERC
Linus Gitonga said increasing
competition in the LPG industry
has seen licensed players grow
from six in 2009 to the current 23
thus sending shivers among the
oil majors. They (multination-
als) could be feeling the heat.
The market is too competitive
and that is one of the reasons
why they are up in arms, said
Gitonga. Illegal refilling is there.
We are not denying that but we
are fighting it and we will
continue fighting it. That is our
mandate, but it should not be
used as an excuse to punish
Energy regulator says shifting consumer preferences
has dealt blow to the multinationals, with consumers
preferring dealers who deliver the gas at their door-
steps. [PHOTO: FILE/STANDARD]
Some of the Equity Group Foundation (EGF) beneciaries. EGF Chairman
James Mwangi says the programme is geared towards bridging the academic
gap for local and international students. [PHOTO: COURTESY]
Gifted students enrolled in the
Equity Group Foundation (EGF)
administered Equity African
Leaders Programme (EALP) have
got scholarship to join some of the
worlds prestigious universities
this year. The 40 students, sat for
their Kenya Certicate of Secondary
Education (KCSE) examinations in
various local Secondary schools last
year. The record admission of 40
Kenyan students at one go to the
EALP programme will push the total
number of students undertaking
such studies abroad under this
programme to 190 scholars.
EGF Chairman James Mwangi
said the EALP Programme is one
of the banks social investment
programmes, geared at bridging
the academic gap for local and
international students. He observed
that the programme provides
access to world class academic
opportunities for the best girl and
boy in the KCSE, from each county;
where Equity Bank operates.
Rolled out in 1998, the EALP is a
rigorous internship-based leadership
development programme that aims
to create a community of talented
leaders who are capable of solving
the worlds most pressing challenges.
Leading Universities that have
ofered scholarships this year
include Yale University, University
of Toronto, Harvard University,
Stanford University, the University of
Cambridge and Columbia University.
Others are London School of
Economics, Massachusetts Institute
of Technology, University of Cape
Town, University of Manchester,
University of Pennsylvania among
others. We are proud to witness
another group of students being
airlifted to leading world universities
after a years mentorship among
other gifted scholars admitted to this
years EALP, he noted.The dividend
that we are waiting for is nothing
else other than your success. And
your success is our greatest pride,
he added.
EALP provides beneting scholars
with paid internship opportunities
and a college savings scheme to
help nance their studies. The
programme trains scholars through
programming activities in academic
vitality, professional development,
entrepreneurship and innovation.
This is aimed at developing a
generation of servant leaders who
will think globally and are inspired
to ght poverty and embrace
sustainable development.
WINGS TO FLY
EALP has beneted about 2000
scholars who have studied or are
studying in both local and foreign
universities. The scholars intern at
Equity Bank branches before joining
their respective universities and
also during universities holidays.
103 Wings To Fly scholars from the
inaugural class were among the 410
top 2013 KCSE performers in their
sub-counties that joined EALP earlier
this year.
More than 50 EALP scholars
participating in the 2014 Global
Scholars Internship Program
returned to Kenya from universities
abroad during their summer holidays
to undertake internships at Equity
Bank and its subsidiaries.
EGF Managing Director Dr Helen
Gichohi urged the scholars to adopt a
global mindset.
Equity sees 40
students join
global varsities
COMPETITION:
Business Beat
3
Tuesday, August 12, 2014 / The Standard
GLOBAL RELATIONS:
>>INVESTMENT
It is the US that bought 66 per cent of the Kenya
Eurobonds and has proven that it has the capacity and
the will to put skin in the game with an estimated 50
per cent of inward remittances into Kenya coming
fromNorth America. -AlyKahnSatchu, Analyst
P
resident Obamas
second and final term
comes to a close in
January 2017, meaning the
window of opportunity for both
USA companies and Kenya
firms to form gainful partner-
ships and do business, is fast
closing.
While the Chinese have been
gobbling all the big ticket
infrastructure projects, includ-
ing the eight-lane Nairobi-Thika
superhighway, construction of a
new terminal at the Jomo
Kenyatta International Airport
(JKIA), it is their entry into the
Sh2 trillion Lamu Port, South
Sudan Ethiopia Transport
(Lapset) corridor, which must
have caught the attention of the
West.
A report by Bloomberg
Intelligence titled Africa Rising
2014 indicates that multination-
als have been increasing their
investment in Africa to take
advantage of the rising middle
class. During the 2003-13, GDP
per capita rose 131 per cent in
Kenya, ahead of 82 per cent in
South Africa.
While telecoms firms are
expanding in Africa, this reports
states that replicating Safar-
icoms success elsewhere could
be the game changer for Africas
wireless carriers.
WASTED OPPORTUNITIES
Kenya is also revising its
Gross Domestic Product (GDP)
figures, a step that could see its
economy expand by 20 per
cent, says the Bloomberg
report.
Business Beat conducted
interviews across business
circles, from independent
analysts, academicians, policy
think tanks and bureaucrats on
whether or not Kenya has
wasted its opportunities to
engage more with the worlds
largest economy.
It is still debatable whether
Kenya has been able to use the
Obama linkage to its advantage
in building business and
political links with the biggest
economy in the world. Kenya is
being treated like any other
country that trades with the
USA and therefore its trade and
political links with the US must
be able to compete with other
interests elsewhere. Further, if
President Obama had visited
Kenya in his first term, this
could have had negative
consequences on his re-election
bid, said Dr Geoffrey Mwau,
Economic Secretary, National
Treasury.
UPSETING CHINA
Kenyas nascent oil and gas
industry will require a lot of
investment and equipment in
the coming years, an opportu-
nity that US companies like
General Electric could exploit.
However, there is a feeling in
official circles that the US still
has a long way to go before it
can upset the Chinese.
Latest figures indicate that
Chinas trading with Africa has
surpassed the US, having
conducted a partnership trade
worth $200 billion (Sh17.4
trillion) in Africa compared to
$80 billion (6.96 trillion) by the
USA in 2012.
In Kenya, China is funding a
mega railway project at a cost of
Sh327 billion and also con-
structing three first three berths
at the yet to be constructed
Lamu port, at a cost of Sh42
billion. The fact that US cars
are left handed, not made for
Africa and the fact that Ameri-
can goods are more expensive
than that of the Chinese, makes
it difficult for the USA to upset
China in Africa any time soon,
said Dr Mwau.
At the centre of the cold
relations between Nairobi and
Washington have been the
ongoing cases against President
Kenyatta and his deputy Ruto at
the International Criminal
Court (ICC) at the Hague.
HUMANE APPROACH
The USA has a clear foreign
policy and this is the reason
there has been bad blood with
the Jubilee administration,
whose top leadership is under
investigations at the ICC. We,
however, need to energise on
the recent visit to the US by
President Kenyatta.
For instance, we can use the
American muscle in the oil and
gas sector instead of relying on
the Chinese who are mostly
profit-driven and less transpar-
ent. Americans are more human
in their approach, something
that we should put into
Dalliance: President Obamas nal
term comes to a close in 2017,
meaning the window of opportuni-
ty for US and Kenyan rms to seal
big business deals is fast closing
Lost opportunities for Kenya as Obama
consideration, said Dr Samwel
Nyandemo, a senior economist
at the University of Nairobi.
President Obama has less
than three years before leaving
the Oval office. Has Kenya done
enough to take advantage of the
heritage and relationship with
Obama and the USA to further
expand its economic and
political clout in East Africa?
The US Kenya relationship
is a singularly important one
from the perspective of our
national interest, said Aly Khan
Satchu, an independent analyst
based in Nairobi.
It is the US that bought 66
per cent of our Eurobond and
has proven that it has the
capacity and the will to put skin
in the game. It is also an
estimated 50 per cent of Inward
remittances into Kenya that
come from North America, he
noted.
The US is a key counter
terrorism partner and I think
our relationship had become
seriously sub optimal. The US
Africa Summit marked the reset
of Kenya- USA relations, said
Satchu. There are many areas
that the US corporate sector has
been sending a loud demand
signal to the Commander in
Chief. I think we are on the cusp
of an economic surge by the US
in Africa, said Satchu.
He added that the power
principle applies in politics
hence the need now to follow
through on the Washington
event and seriously delete and
17
Chinas trading with Africa
has surpassed the US,
with a partnership trade
worth $200 billion (Sh17.4
trillion) compared to USs
$80 billion (6.96 trillion)
expunge some of the unneces-
sary and seriously provincial
language and behaviour,
mentioning that Nairobi has
had a really poor etiquette.
Inter-Governmental Authority on Development leaders led by President Uhuru
Kenyatta, Yoweri Museveni (Uganda), Djibouti President Ismail Omar Guelleh and
Ethiopian Prime Minister Haile Mariam Desalegn in a press conference with the
US Secretary of State John Kerry in Washington DC after deliberating on peace
initiatives in the East African region. It is still debatable as to whether Kenya has
been able to use the Obama linkage to its advantage in building business and
political links with the biggest economy in the world. [PHOTO: PSCU]
trillion
From Page 1
Business Beat
4
Tuesday, August 12, 2014 / The Standard
I
n February this year,
representatives of large
business organisations
from the USA were in Kenya to
scout for business and invest-
ment opportunities. The trade
mission to East Africa com-
prised leading business
companies largely from USA
and its allies.
Under the umbrella body of
Corporate Council on Africa
(CCA), a non-profit organisa-
tion, the US investors were
seeking to promote the
commercial opportunities
available in the region and
foster partnership between
African and American compa-
nies. The visit by the investors
came at a time when Kenya
government was aggressively
seeking investors from the East
mainly China, India, Japan,
Asian Tigers countries and Latin
American region.
In the past, beginning with
the entry of the Kibaki adminis-
tration, there has been stiff
competition for government
deals between countries from
the East and the industrialised
US and European Union
nations.
Katrin Kuhlman, a senior
advisor to the CCA president in
a past interview said American
companies are prompted to
extend their investment in
Kenya based on the latter
relationship with the super
power. Katrin explained Kenya
is endowed with hospitable
population and is located
strategically in the East Africa
region.
FOSTERING PARTNERSHIPS
Further she added, Kenya is
the economic leader and host
most of the global institutions.
We are interested to extend our
investments in Kenya with the
view to promoting the commer-
cial opportunities available in
the region and foster partner-
ship between African and
American companies, said
Katrin.
The list of US firms that have
been seeking for opportunities
in Kenya include Acro Bridegs,
Bizsolutions 360 Inc, Oxford
business group, General
Electric, Axum Energy Ventures,
Cross Boundary LLC, Fayus Inc,
and Seafarer International
among others.
American investors are
eyeing a piece of Kenyas
agricultural sector, especially
value addition of crops such as
coffee, tea, pyrethrum, sugar,
livestock and sugar.
Kenyas textile industry is
picking up momentum after
failing to satisfy the Agoa
market for some time now. We
need to have a trickle-down
effect of this trade instrument,
including not only creating jobs
but also moving down stream to
the ginneries and farmers who
can in future supply cotton
directly to the export processing
zones, said Anthony Muriithi,
reign enters homestretch
While the cold war has come to an end, it has actually
changed face to commercial competition with recent
discoveries of oil, gas and coal in parts of Eastern Africa has
changed relations between USA and Africa, -GerrishonIkiara
>> TRADE
acting chief executive, Cotton
Development Corporation
(CDC).
Kenya is hoping to ride on
the Agoa protocol to increase
its penetration of the American
market. While the cold war has
come to an end, it has actually
changed face to commercial
competition with recent discov-
eries of oil, gas and coal in
parts of Eastern Africa has
changed relations between USA
and Africa, said Gerrishon
Ikiara, University of Nairobi
economics lecturer.
Figures from US Trade
representative, paint a gloomy
picture of the US-Kenya
relationship, complete with
wasted opportunities. Kenya is
ranked the USs 96th largest
goods trading partner with $1.1
billion (Sh88 billion) in total
(two way) goods trade during
2013.
Exports totalled $651 million
(Sh57 billion) while imports
totaled $451 million (Sh40
billion). The US goods trade
surplus with Kenya was $201
million (Sh 19 billion) last year.
The super powers goods
exports to Kenya in 2013 were
valued at $651 million
(Sh56.637 billion), up 14.5 per
cent ($83 million -Sh7.221
billion) from 2012, and up 232
per cent from 2003. The top
export categories for 2013 were
aircraft ($217 million), machin-
ery ($104 million), optic and
medical instruments ($45
million), electrical machinery
($37 million), and cereals
(grains and sorghum) ($26
million).
US exports of agricultural
products to Kenya totaled $81
million in 2013. Leading
categories were coarse grains
($22 million) and vegetable oil
(excluding soybeans) ($15
million). Kenya was the United
States 92nd largest supplier of
goods imports in 2013. US
goods imports from Kenya
totalled $451 million in 2013, a
15.7 per cent increase ($61
million) from 2012, and up
81per cent from 2003.
The five largest import
categories in 2013 were knit
Apparel ($160 million), woven
apparel ($148 million), spices,
coffee, tea and coffee ($39
million), edible fruit and nuts
(macadamia nuts) ($29
million), and electrical
machinery ($22 million).
US imports of agricultural
products from Kenya totalled
$90 million in 2013. Leading
categories include coffee
(unroasted) ($33 million), and
tree nuts ($30 million). The US
goods trade surplus with Kenya
was $201 million in 2013, a 11.9
per cent increase ($21 million)
over 2012.
While trade has been up
been Kenya and the USA, it is
figures on US foreign direct
investment into Kenya that
gives a different narrative. For
instance, US foreign direct
investment into Kenya was
$259 million (Sh23 billion) in
2012, down 33.6 per cent from
2011.
VIRGIN OPPORTUNITIES
The Jubilee administration
has named Kenyas top three
infrastructure priorities to
include doubling the countrys
road network, expanding its
rail sector and completing a
President Uhuru Kenyatta in
a group Photo with other
African heads of State and
the United States President
Barrack Obama during the
US-Africa Summit. Inset is
Kenyatta with Obama and
Mrs Obama at the White
House. [PHOTO: PSCU]
second container terminal at
the Indian Ocean port of
Mombasa - the biggest in east
Africa and the regions trade
gateway.
There is the second port in
Lamu, north of Mombasa - part
of a $25.5 billion (2.218 trillion)
regional infrastructure project
aiming to link landlocked east
African nations to the sea - as
well as a new passenger airline
terminal in Nairobi.
Kenyas
textile
industry is
picking up
momentum
after failing to
satisfy the
Agoa market
for some time
now. We need
to have a trick-
le-down efect
of this trade
instrument,
including not
only creating
jobs but also
moving down
stream to the
ginneries and
farmers who
can in future
supply cotton
directly to the
export
processing
zones.
From Page 4
Business Beat
5
Tuesday, August 12, 2014 / The Standard
Many of these great entrepreneurs
may die without writing wills
because they dont trust their children
with their wealth. NgangaGicumbi
Dishonesty seems to define
our age. Who has never been a
victim of dishonesty - from
underweight meat from
butchers to people who promise
what they cannot deliver. How
often are we sold fakes includ-
ing medication? How many
young have been promised jobs
they never got?
How many broken hearts
litter this nation courtesy of
dishonesty? It might not be an
exaggeration to suggest that the
level of honesty differentiates
developed from developing
countries. Cases of dishonesty
are becoming too common and
institutionalised. We have
simply learnt to be dishonest
even when it is not necessary.
At work places, employees
have no qualms being dishonest
- from telling lies to faking
sickness. Employers are not
innocent too; how many have
failed to honour their deal on
promotion or salary raises?
Even among the unemployed,
dishonesty thrives. How often
have you funded idlers after
their sweet lies touch your
heart? How many beggars on
the streets actually own the kids
they carry on their backs?
conceal evidence
In schools, cheating in
exams has become a big
problem. In one university, a
lecturer caught a student with
micro-notes called mwakenya
but the student simply swal-
lowed the notes to conceal
evidence. Even in churches,
dishonesty has found a place
too. I once walked past an
open-air church service and
stopped out of respect as they
were praying. The next thing I
heard was if you have any
money, raise it up we pray for
it. The next thing after that was
God loves cheerful givers and a
few people starting walking
around collecting our money.
Kenya has a thriving industry
based on dishonesty, ranging
from falsifying documents to
outright fraud. Dishonesty has
found home in our homes too.
The foundation of any nation is
strong families. When there is
dishonesty in families, the
national foundation becomes
shaky. Noted the numerous
cases of dishonesty in homes,
ranging from cheating to
domestic violence. Dishonesty
seems to cut across classes,
education levels and gender
(though women tend to be
more honest on average).
Apart from our failure to love
work, dishonesty has been
another big drain on our
economy. Dishonesty is called
by fancy names such as
corruption while economists
prefer to call it rent seeking.
Dishonesty may not be easy to
model in economics but its
damage both long term and
short term is there for all to see.
People are dissuaded from
working hard when dishonest
people become heroes. This
reduces national productivity
and economic growth. When it
becomes more profitable to be
dishonest than honesty, most
people will avoid work or just
do enough to keep their jobs.
Yet economies grow faster when
citizens go beyond the call of
duty.
Dishonesty goes beyond
lowering productivity. It kills
entrepreneurship. You may have
noted that most firms are set up
by two or more people from
Microsoft to PwC. They expand
because the founders and
employees are honest. In Kenya,
it has become hard to start
enterprises with fellow Kenyans
including relatives. As soon as
profits starts coming, dishones-
ty sets in.
The economic landscape is
littered with sad men who have
been disinherited their invest-
ment by dishonesty.Instead of
the business expanding, the
founders spend more time
fighting among themselves. The
disputes can even be inter-gen-
erational. How do children feel
when their parents were conned
off a business by another
family? There are several
suggestions on why we are
dishonest. First, parenting has
failed. I recall when I was
growing up I came across a
shilling on the way home from
school and took it home. My
mother told me to return it
where I found it. Today?
inculcating the virtue
May be we do not live by
example and kids learn from us.
If we are taught early to be
honest, we are likely to remain
so most of our lives. Read the
Bible. Proverbs 22:6 says Direct
your children onto the right
path, and when they are older,
they will not leave it. Our other
institutions have not been
honest in inculcating the virtue
of honesty. I have asked why
missionaries were so successful
in running our schools than the
current school heads. Why has
Carey Francis of Alliance and
Geoffrey Griffins of Starehe not
got equivalents 50 years after
uhuru (AU)? The difference is
honesty.
The same pattern of
dishonesty is noted in other
public institutions ; from
hospitals to government offices.
Needless to say, dishonesty pays
to the individual but the nation
loses. In fact, we have noted
with great sadness that many
people who aspire to be leaders
do so with one intention - to get
freedom to be dishonest.
What can we do about
dishonesty?
In parenting, we must return
to the roots. Some jobs like
parenting are better done in
the old-fashioned way. Think
loudly; why are Asians so
successful in bringing up their
kids? Seen any Asian street kid?
Our institutions must start by
getting leaders who are honest.
If chapter six of the 2010
constitution can be imple-
mented, we could see
honesty and integrity
becoming national virtues.
We must give people
incentives for being
honest not just punish-
ment for being dishon-
est.
Incidentally,
honesty has huge
economic dividends.
Honest people are
more productive, and
enterprising-because
they have better
perception of
reality.
They
are
more
likely to
get jobs
any-
where in
the coun- try and
world. I have heard from
conventional wisdom that
many Kenyan employers
irrespective of their own ethic
background like employing
Kambas, because they are
perceived to be honest.
Interestingly, you need less
effort to be honest than to be
dishonest! The call to have
foreigners conduct our
elections, and hold other senior
positions is driven by our
perception that they are more
Burden the rich face in nding heir to their empire
them smell the cofee. But because
these women were products of a bad
culture that denigrated females, they
have remained largely unknown.
But will this club of the few ever
reveal the real secrets behind their
nancial prowess? Your guess is as
good as mine. There could be some
dark pages theyd rather the public
doesnt read. But there is a crisis of
mammoth proportions in the land.
Many of these great entrepreneurs may
die without writing wills because they
dont trust their children with their
wealth. This could open ugly succession
battles that would deplete their money
and bring about deleterious efects on
economies of many households.
Sadly, in many cases, their worries
are not baseless. These potential heirs
not only lack their elders discipline
and vision, but also lack viable
alternative visions that would grow
enterprises. They appear to be driven
by a consumerist ideology that would
see them drain entire businesses.
Where the parents instinctively
avoid pitfalls that would gnaw at their
savings, the children are busy looking
for new avenues on which to waste
their parents prosperity. Where the
parents actively seek anonymity, the
children are itching to have everyone
know who they are. Where the parents
eek a modest life to protect their vast
wealth, the children exhibit a
disturbing deciency in practical
wisdom and are unwilling to listen to
the voice of reason. With good reason,
these wealthy parents fear endlessly
for the future.
But they could learn to do what Mr
Samson Nduhiu did, as narrated to me
by his son, Moses. Moses had just
completed his masters at a top
university in Britain when he called his
father and asked to be given a job at
his rm, which is based at the airport.
We shall see when you get home,
was the reply he got from his
no-nonsense father. Moses was itching
to be appointed to the vacant
operations manager position and
eventually take over from his ageing
People
are
dissuaded
from
working
hard when
dishonest
people
become
heroes.
Have an opinion to share on business issues?
Email bizbeat@standardmedia.co.ke
Welcome to the age of dishonesty...
ECONOMICINSIGHT
with XNIRAKI
NGANGA Gicumbi
The post-independence generation of
successful African entrepreneurs is
being phased out by the natural law of
attrition. These men (and they were
mainly men) seemed to have been
favoured by a conuence of history,
opportunity and luck. They saw things
that others couldnt and took risks that
seemed crazy to the majority. Compared
to the average person, they were quite
disciplined in matters food, alcohol and
fun (in all its dimensions). They stuck to
their vision.
Unfortunately they give the false
impression that they made it on their
own. But their wives, many of them
housewives, ensured they stayed
focused, disciplined and greedy for
more. In a real sense, their women made
father. But Mr Nduhiu was not one to
play with money. Money has life, he
would tell young entrepreneurs who
sought his advice. You nurture it and it
grows you, you starve it and it starves
you to death!
When Moses nally got home, he
was shocked speechless when his father
gave him a job as a toilet cleaner under
a supervisor. Moses swallowed his pride
and got down to business. He eventual-
ly won the heart of his supervisor, who
approached Nduhiu and requested him
to promote his son. A year after his
death, the board of directors appointed
Moses to the vacant position of
operations manager. He now appreci-
ates the journey his father put him on.
The writer is a researcher in
mental health. bizbeat@
standardmedia.co.ke
>> OPINIONS
honest. Yet honesty can be built
with time. Honest people tend
to be happier, what we all aspire
to be. Let us collectively bring to
an end the age of dishonesty. I
hope soon huge banner will
adorn our airports written,
Welcome to Kenya the land of
honest people.
Business Beat
6
Tuesday, August 12, 2014 / The Standard
Page 7 Tuesday, August 12, 2014 / The Standard
A comedy sitcom mocking the
political antics of the newly
elected governor. During the
campaign, he made several
promises he cannot keep.
Tuesdays at 7.30pm
S
afaricom has in the past
been confident, at times
even cocky, about
competition. Memorable are
the many times its former chief
executive Michael Joseph talked
of the numerous times compe-
tition have had an opportunity
to eat our lunch unsuccessfully.
But the tide seems to be
changing and the telco appears
shaken by emerging competi-
tion. The telling was the
admission by its Chief Executive
Bob Collymore that the
telecoms giant is trying to get its
house in order so that it is ready
to ward off emerging competi-
tion.
In particular, he mentioned
the Vietnamese operator Viettel,
which has bid to buy a stake in
Telkom Kenya (Orange) from
French operator Orange. Other
firms including Nigerias
Megatech and South Africas
MTN are also interested in
Telkom Kenya. Collymore last
week told Bloomberg during the
US-Africa Summit that a
successful bid by the Vietnam-
ese could be a game changer.
The Vietnamese are fiercely
competitive and very low-cost,
he told Bloomberg. When we
look at what they did in
Mozambique, they changed the
game. Were all going to have to
knuckle down and deal with
that. And it does not stop at
Viettels planned entry into
Kenya.
MOBILE OPERATORS
The Communications
Authority of Kenya in April
licensed three Mobile Virtual
Network Operators (MVNO),
who will use infrastructure put
up by existing mobile operators
on a commercial basis to
launch services similar to those
offered by mobile telephony
firms.
The MVNOs licensed earlier
this year were Equity Banks
subsidiary Finserve, Tangaza
and Zioncell. Last week
Thursday, national carrier,
Kenya Airways, announced that
it had approached the regulator
for a licence to operate an
MVNO. While the MVNOs are at
different stages of rollout, it is
Equity Bank that may be giving
Safaricom the chills.
Equity Bank, which is
already testing its MVNO and
expects to launch soon, is in
plans to convert its nearly nine
million banking customers into
mobile customers. This will be
by offering them all the services
they are currently getting from
mobile operators voice, data,
mobile money and other value
added services. Being a bank, its
stronger proposition is a
seamless interaction between
the customers bank account
and their mobile money
account, adding that this will be
at a lower cost.
Peter Wanyonyi, a telecoms
analyst said Viettel could be a
threat to Safaricoms dominance
in Kenya, going by the opera-
tors experiences in Mozam-
bique as well as coming from
Vietnam, a country whose
development parameters
compares well with those of
Kenya.
He notes that if it gains entry
into the Kenyan market, the
firm might be able to succeed
where Orange of France and
Essar of India have failed as it
has the understanding of poor
markets. Viettel can be a
significant threat to the
established order in Kenyan
telecoms, he said.
Our current telecoms
market space is characterised
by a stasis of sorts Safaricom
leads in both innovation and
revenues, while everyone else
tries to copy what Safaricom
offers, in the hopes of getting
some crumbs off the Safaricom
cake.
LOCAL EXPERIENCE
Viettel is different. The
Telecoms investment climate in
Africa has generally been one in
which a highly-developed
countrys telecoms giant - like
Vodafone, or France Telecom -
invests in a poor African
country. It is largely a top-down
approach to telecoms, one
which lacks the poor-country
experiences that are common-
place in Africa.
Viettel has operations in
Laos, Cambodia, East Timor,
Mozambique, Cameroon, Haiti
and Peru. It has recently
announced plans to invest in
the Democratic Republic of
Congo and Tanzania. Vietnam
is a poor country, one whose
GDP per capita is roughly the
same as Nigerias and just above
Kenyas. Viettel is therefore
expected to better understand
market dynamics in Kenya as
compared even to Safaricom
- whose major decisions, as well
as chief executive officers, are
seconded by Vodafone after
experience in developed
markets.
Battle royale: Telecoms sector
faces stif competition with the entry
of Vietinamese rmViettel, after
Equity Bank and KQ joined the ght
for a piece of the sectors billions
STRATEGIC MOVES:
Safaricom in rare panic mode as bluechip rms go after telecoms billions
>> TELECOMS TELECOMS <<
InViettels case, the low-cost strategy is actually working.
However, one needs tobear inmindthat markets differ
andthe level of price sensitivity may differ,
DobekPater, managingdirector, AfricaAnalysis.
KQs success will dependonthe ultimate
offering, for instance what roamingofferings
it will have or what will be the total value
package, will acustomer receive airtime credit
for every air ticket purchase, DobekPeter
The fear
therefore is
that Viettel will
be more in tune
with the requirements
of poor countries - it
might content with very
thin margins, as compared
to the relatively high profit
margins imposed on Safaricom
by the demands of Vodafone
shareholders. Safaricom is right
to be worried about Viettel - es-
pecially since Viettel showed in
Mozambique that it goes into
all sectors, from wireless to
fixed line operations.
Wanyonyi notes that the
MVNOs are looking areas that
have been neglected by
Safaricom and to an extension
other operators. While some of
these neglected areas might be
niche markets, they still have
potential to earn the new
entrants good money, like the
roaming segment that attracts
generally moneyed people but
remains poorly served.
The MVNOs proliferating
are answering pent-up demand
in niche markets that Safaricom
has not bothered to address.
Equity Bank and Tangaza are
looking to service the neglected
cross-platform mobile money-
transfer market. Kenya Airways
is likely looking at the woefully-
undeserved roaming market,
and looking to make money
from it, he said.
Roaming outside East
Africa is still a painful and
expensive process, and if KQ
can make partnerships with
overseas operators that then
pass cost savings to East African
travellers, they will have found
He added that there are few
MVNOs in Africa, citing Virgin
Mobile in South Africa as the
only one operational, adding
that they are not likely to have a
huge impact on the operations
of the conventional operators.
Whilst the MVNOs, if success-
ful, will take some market share
away from (probably) all of the
operators in the market,
however, my view is that they
will remain relatively small, he
said.
KQs success will depend on
the ultimate offering, for
instance what roaming offer-
ings it will have or what will be
the total value package, will a
customer receive airtime credit
for every air ticket purchase,
said Peter. It is obviously
a niche
to make
money from.
Mobile telephony, however,
is very sensitive to quality of
service and the sort of customer
service provided. KQ is
notoriously poor at customer
service, and has hardly
distinguished itself in the
quality of its services. KQ will
have to significantly improve
on its customer service
offerings to make money from
this.
YUMOBILE
Dobek Pater, managing
director, Africa Analysis an
ICT sector consultancy firm
noted that Viettels strategy of
low rates which yuMobile and
Airtel have tried in Kenya has
worked in Mozambique.
He however notes that this
could go either way should the
firm gain entry into Kenya,
be at a lower level in Kenya than
they were in Mozambique at the
time of Viettels entry into that
market.
Moreover, when Viettel
entered the Mozambique
market, population penetration
stood at less than 40 per cent,
which meant there was quite a
bit of greenfield opportunity for
an operator that willing to
aggressively compete on price.
GREENFIELD OPPORTUNITY
Population penetration in
Kenya stands at over 70 per
cent, which means the green-
field opportunity is a lot lower,
and it is more difficult and
expensive to churn customers
away from existing service
providers.
given
that the call
rates are already low in
Kenya and that mobile penetra-
tion is high in the country.
I think, Safaricoms concern
is that Viettel has been aggres-
sive and also successful in
Mozambique. Within a space of
two years, it has captured
almost 25 per cent of the
market (its market share) and
has also begun to deploy fibre.
Safaricom may have also been
wary of Airtels entrance into
the Kenyan market, but quickly
realised that Airtels strategy
was not working as antici-
pated, he said.
In Viettels case, the
low-cost strategy is actually
working. However, one needs to
bear in mind that markets differ
and the level of price sensitivity
may differ, he said . The
Kenyan consumers may be on
average less price sensitive than
their Mozambican counter-
parts, and prices may already
targeting the top end of the
market (those who can afford to
fly and travel) and if successful,
could churn some high-end
subscribers from Safaricom a
few but worth a lot in relative
terms.
Pater notes that M-Pesa is
the one edge that Safaricom has
that might still keep it in the
game even with increased
competition. One strong factor
that Safaricom has in its favour
is M-Pesa, which generates a lot
of stickiness for the operator.
M-PESA USERS
By now, with over 20 million
users, and an extensive
ecosystem built up around it, it
is very difficult for existing
M-Pesa users to change
networks, which do not offer
the same extent of mobile
financial transactions to a large
community, he said.
Safaricom has recently
opened up its M-Pesa agency
180b
The estimated total earnings
for the telecoms sector in the
last nancial year.
Both Kenya
Airways and
Equity Bank
have joined the
telecom sector,
via mobile virtual
networks. Inset is
KQ chief Executive
Titus Naikuni and
Equity Bank boss
James Mwangi.
It is the game
of numbers as
telecoms ght
for piece of the
lucrative sector.
[PHOTOS FILE/
STANDARD]
y B MACHARIA KAMAU AND
WANJALA WERE
network to competitors, relaxing
the exclusivity that was a
requirement for many agents.
Safaricoms army of agents, who
were instrumental in the growth
of the mobile money service and
numbering at over 81,000, can
now sell products offered by
Safaricoms competitors.
Losing control of its agents at
a time when competition is
expected to go several notches
up might see the operator lose
an edge that it has always had
and could prove to be a chal-
lenge in the firms quest to retain
keep the distance that has
always existed between itself and
the number two.
Business Beat
8
Tuesday, August 12, 2014 / The Standard
Business Beat
9
Tuesday, August 12, 2014 / The Standard
The Raila factor in yuMobile exit
On a warm September
morning last year, Madhur
Taneja, Essar Telecom Kenya
chief executive made a call to
his Safaricom counterpart Bob
Collymore. This was a call not
out of its place; chief executive
officers in any one industry talk
to each other all the time,
contrary to public perception
that their business rivalry also
spills over into personal
matters.
However, this particular call
was unique. Mr Taneja had two
peculiar requests to Mr
Collymore, according to sources
privy to the discussions. The
first; would Mr Collymore be
interested in traveling to the
Essar Headquarters in October
2013? Why? Mr Collymore
responded.
Mr Collymores response led
to the second request which
would ultimately throw the
entire mobile telephony
industry in the country into a
spin. yuMobile is up for sale,
said Mr Taneja. Would
Safaricom be interested?
Essar, yuMobiles, parent
company, knew there is only
one way to go in the Kenya
telecoms market. That is out.
And having shopped around for
an exit route, selling their
operations to Safaricom was
one of the best and safest way
to go. But what is more intrigu-
ing about Essar was the fact that
it had all the intention of
staying in the Kenyan market.
presidential seat
This can now be revealed by
Business Beat. As the country
approached the General
Election of March 2013, Essars
top brass crossed fingers firmly
that top contender, Raila
Odinga, would clinch the
presidential seat.
Most opinion polls had put
Raila ahead going into the
elections. According to our
source, aware of the intrigues at
Essar Kenyan operations, the
plan was for the Indian
company to invest Sh7 billion in
their oil and telecommunica-
tions operations provided that
Raila won the elections.
With Raila in Government,
Essar was hoping the favourable
and friendly understanding in
the event Raila forms the next
Government.
But all Essars plans fell apart
when Uhuru was declared the
winner of the March 2013
elections. Therefore, Essar had
no other options but to start
scaling back from the Kenyan
Exit strategy: Essar Telecoms
continued stay in the market
hinged on the 2013 poll results
MERGERS & ACQUISITIONS:
operations.
Railas Press Secretary,
Dennis Onyango, did not
respond to the questions when
asked by Business Beat. Essars
officials also declined to
comment on the matter. With
the initial plane falling apart,
Essar was therefore forced to
turn to Safaricom to sell its
mobile phone services opera-
tion, yuMobile.
In October last year,
Collymore flew to Indias
Mumbai City, in Maharashtra
State where, Essar is headquar-
tered. He dined and wined with
the top brass of Essar.
Asked about the negotiation
process, especially the initial
courting by Taneja and his
bosses in India, Mr Collymore
brushed off that as immaterial.
I think that the subject of our
discussions with Essar and
Airtel has been pretty public
and the details of when and
where they took place not of
any material relevance as there
have been many bilateral and
multilateral meetings between
the parties, said Collymore in
an email response to Business
Beat.
TECHNICAL SECTORS
Few companies have had the
misfortunes that Essar Telecom
has had in the Kenyan market.
yuMobile could easily be said to
be the Achilles Heel for Essar
that has had major success not
just in the telecommunications
business in many markets but
also other equally capital
intensive and highly technical
sectors. To give perspective to
this, Essar of India has divested
from the mobile telephony
business, even in its home
market of India but still retains
its Kenyan operation. This was
perhaps out of the feeling that it
could not get a fair return on its
investment due to the dismal
performance of the Kenyan
arm.
yuMobiles management has
in the past said it has invested
Sh43 billion since 2009 and the
operator has returned cumula-
tive losses of Sh25 billion over
the four years. While the firm is
ranked number three ahead of
Telkom Kenya in terms of
subscriber numbers, it has
found it extremely difficult to
monetise its customer base,
whose attraction to stick with
the operator is because of the
rock bottom tariffs it offers for
its services.
Essar in 2012 explored ways
of raising capital to finance its
local mobile operations and
even contracted French banking
major, BNP Paribas, but nothing
>> TELECOMS
Mr Taneja made what could
probably be the most difficult
phone call during his outing in
Kenya
much came of the process.
It has now emerged that the
firm was in early 2013 on the
verge of sealing a sale deal with
South Africas telecommunica-
tion giant MTN but the deal fell
through in its last moments.
The firm was in plans to sell
the South African giant MTN
and even made advance
negotiations. According to a
senior official at the operator,
the planned sale to MTN was at
an advanced stage to a point
that yuMobile had started
warming to a rebrand and in
fact adopted MTNs colour
yellow. This is in addition to its
red and green.
The deal was put on ice after
MTN scrutinised yuMobiles
books and found some major
disconnect between what the
firm was saying and the reality.
Other than the basics that the
firm has not turned a profit
since it started out in Kenya
largely due to the fluid nature of
clientele that quits at the
slightest hint of price changes,
the firm does not have a strong
loyalty programme.
yuMobile management,
however, said this never
happened. Taneja said the firm
has not had any negotiations
with MTN. In an interview with
Business Beat, he said the
incorporation of the colour
yellow was done before the firm
had even considered selling
yuMobile. According to our
source, when MTN was no
longer interested in yuMobile,
the firm had limited options,
one of which was to let the
company run its course, which
would have most likely been a
difficult path given the domi-
nance of the sector by Safar-
icom.
HIGHLY PROFITABLE
When he weighed the
options at hand, Taneja started
actively seeking buyers for the
Essars only mobile unit, with
the Indian giant having sold all
its other mobile businesses,
including the highly profitable
operation in its home country
that it run as a joint venture
with Vodafone.
And that is when Mr Taneja
decided to make what could
probably be one of the most
difficult phone calls he had to
make during his outing in
Kenya. He made a call to
Safaricom boss Bob Collymore,
asking him to make a bid for
the yuMobile.
yuMobile might not seem a
threat to Safaricom when one
looks at the numbers, but there
were reports that Equity Bank
was eyeing the firms network,
with plans to partner with
yuMobile to roll out its mobile
virtual network operator. A
distraction for Equity that was
in its final stages of rolling out a
mobile operator was one more
reason for Safaricom to buy
yuMobile.
Other than playing spoiler
for Equity Bank, yuMobiles
focus on the youth market and
a level of acceptance within
that clientele made some kind
of distant threat for Safaricom.
Kenyas youth market is a force
that anyone selling anything in
this market would find hard to
ignore.
Thus a probable fear within
Safaricom was that this
youthful customer base could
eventually turnout to be a big
threat in the future.
y B MACHARIA KAMAU, WANJALA
WERE AND JEVANS NYABIAGE
yuMobile Managing Director Madhur
Taneja. Essar has divested from the
mobile telephony business, even in its
home market of India but still retains
its Kenyan operation.Inset is Kenya
Petroleum Reneries Ltd where Essar,
which has a huge stake is also exiting.
Business Beat
10
Tuesday, August 12, 2014 / The Standard
:HUSTLERS<<
Engineer who has
built matatu empire
A
s a young boy growing
up in Kiteta area,
Makueni County,
Stephen Mbolonzis dream was
to venture into successful
business. However, at the time,
he wasnt sure about what
venture will do for him. After
completing engineering
training at then Mbagathi
Training College, Mbolonzi was
employed by then Kenya Posts
and Telecommunications
Corporation (KPTC), as senior
engineer. The organisation was
in 1999 split into Telkom Kenya,
Postal Corporation of Kenya
and Communications Commis-
sion of Kenya.
All along, however, he was
pretty uneasy with a salaried
job. l hated employment
because of earning a fixed
salary. It could only be adjusted
at the mercy of your employer.
But in business, there was no
fixed income and one could
earn a lot of money depending
on his or her hard work and
strategy, he explains.
It was lack of initial capital
that had forced him into
employment. He was to work
hard and save enough start up
capital. It was after working for
several years that Mbolonzi
Against odds: Stephen Mbolonzi started
with three vehicles but now, the Sacco boasts
of a eet of 71 matatus and buses
Traffic fines are costly if you break the
law, and can ground your business,
-Stephen Mbolonzi
ENTREPRENEURSHIP <<
Unlike his colleagues who during their
nal year at the Jomo Kenyatta University of
Agriculture and Technology (JKUAT) looked
forward to formal employment, Jamleck
Mugane longed to start his own business
empire. Today, the JKUAT Information
Technology graduate has achieved big in
a eld he never had in mind - carpentry.
Mugane who runs Gikomba Workshop in
Embu town and Licky Furnitures in Nairobi
had tried his hands on business while a
student, which nourished his passion for
self-employment. Without any formal
training in the eld of carpentry, Muganes
entrepreneurial spirit saw him start his rst
business with Sh1,500 as start up capital.
Today, the IT graduate has built a mulch-
million fast growing furniture empire,
whose products occupy acres of spaces at
supermarkets. His resilience, innovation
and risk-taking are the characters which he
With Sh1,500 seed capital, IT graduate earns big from furniture
INVESTMENT:
eventually started matatu
business, motivated by high
daily returns. Once the matatu
hits the road, youre sure of
some cash, he explains.
Apart from Matatu business,
Mbolonzi, a father of three also
deals with general supplies of
stationery. He started the
Matatu business with Sh510,000
as capital, of which Sh170,000
came from Postas Mawasiliano
Sacco. He combined it with
another loan of Sh340,000 from
a Hindu named Shah, based at
Uganda House.
LUCRATIVE ROUTE
Mbolonzi, nicknamed
Wamasaa, started with three
Nissan matatus which plied the
Nairobi-Athi River route. The
route was lucrative because by
then, there were no direct
matatus from Nairobi to Athi
River. Athi River residents had
to board Machakos bound
public service vehicles (PSVs)
and alight along the road.
He saw the opportunity and
capitalised on it. It was a
fortuitous bet that gave him
instant fruits. My matatus
could not rest because of the
many people traveling to Athi
River and its environs, he
explains. This saw him repay
Shahs loan at Sh3,500 weekly.
Increased demand saw four
friends - Joseph Munyao, Daniel
Mbolonzi, Charles Kioko and
Alex Mumo, join him, with each
contributing a Nissan matatu,
increasing the PSVs to seven.
Mbolonzi finally quit his job
of 22 years in 2010, to concen-
trate on matatu business. It was
during this time that govern-
ment introduced law to have
matatus operate under Savings
and Credit Cooperative
Societies (Saccos). He changed
his company into Wamasaa
Travellers Ltd, becoming its
Chairman. The Sacco has since
attracted other transport
operators and currently has 74
public service vehicles-Nissan
matatu and minibuses. Of
these, 11 vehicles-two minibus-
es and nine Nissan matatus are
his. The matatus, which ply
Machakos, Makueni, Mulolongo
and Athi River routes, have 91
employees.
To Wamasaa it wasnt easy
starting the business. Immedi-
ately he hinted at starting
matatu business, many people
discouraged him, saying it was
not a good idea, but he defied
the odds to venture into the
murky waters. Today, he smiles
all the way to the bank.
Mbolonzi says the matatu
industry is profitable, as long as
one adheres to traffic rules.
Traffic fines are costly if you
break the law, and can ground
your business, observes
Mbolonzi, who attended
y B JOSEPH MUCHIRI
y B JOSEPH MUCHIRI
believes have enabled him to take the path
least taken by many youthful graduates.
When he left university in 2006, Mugane
got a job an Embu college as tutor but he
got little satisfaction from the job due to
meager pay. He then ventured into hardware
business, starting Licky Hardware in Embu
town, to supplement his income.
DAIRY FARMING
The business experienced turbulent
moments in its infancy. Consequently,
he decided to take a loan to expand the
business, whose stock at one time was only
a few tins of paint and some other material.
But due to lack of collateral, commercial
banks declined to loan him cash and he
took Sh1.5 million loan from a micro-nance
institution. Before he could expand his
hardware business, he got the idea to use the
loan money to venture into dairy.
He quit college job and bought six dairy
cows at Sh150,000 each, totaling Sh900,000.
He used the remaining cash to buy a lorry
and built dairy structures with the rest of
the money. The business soon became a
burden as the returns were little and could
not suf ciently service my loan repayments
of Sh63,000 every month, says Mugane.
An outbreak of foot and mouth disease
in 2010 wiped all the six cows with only a
bull and a heifer remaining to remind him
of the torturous, collapsed venture. The
bull is still alive and whenever I see it, I no
longer feel bitter but it reminds me that it is
important to consult experts before starting
any business, says Mugane.
IMPULSE INVESTING
The dairy venture taught him the
importance of insuring his business and the
dangers of impulse investing. As he was still
mourning the crippling loss and wondering
on his next move, a whif of luck struck his
hardware business. A customer ordered
paint worth Sh40,000 to collect it in a few
days time. Mugane visited his supplier and
begged them to sell the paint on credit and
he would pay them the following day. He then
sold the paint to the customer and true to his
promise, he paid the suppliers the following
day, making a good prot. From the prot I
made, I was able to pay rent for six months
and restocked my hardware with more items,
he recalls.
As the stock increased, the returns from
his hardware shop improved and he resumed
paying the micro-nance loan, though he
admits he was struggling. He also qualied
for Sh980,000 and ventured into the matatu
business which turned out less lucrative yet
he was to service his loan with a Sh26,000
monthly repayment plus meet other costs in
the matatu industry.
He used part of the new loan to revive his
hardware business. In one of his disillusioned
trips to Nairobi, he went to buy hardware
materials with the only Sh10,000 that he had
but unfortunately did not nd the materials
Wamasaa Travellers Sacco Chairman Stephen
Mbolonzi at his Nairobi of ce, displays an award
given to his company by former Thika Mayor
Patrick Makau for being the most disciplined
Sacco early last year, in Thika. Inset are Wamasaa
Travellers Sacco employees in Nairobi. [PHOTOS:
NANJINIA WAMUSWA]
Kasuswi Primary School and later
Makueni Boys High school.
In a month, he rakes in gross
income of at least Sh240,000 and
Sh75,000 after subtracting expens-
es that include salaries and
services or repairs. Last year, the
Sacco was awarded the most
disciplined in Athi River by former
mayor, Patrick Makau, beating
seven others. He opines that the
numerous levies introduced by
county governments are hurting
transport industry, adding that
stakeholders ought to have been
consulted first before introducing
them, or introduced in phases.
He also wants government not
punish entire Saccos but individu-
als who break the law. He is
inspired by Matatu Owners
Association led by Simon Kimutai,
because of its good management,
and how it has expanded fast. He
plans to increase the fleet and
introduce long distance buses .
he wanted. Depressed by the nancial
turmoil he was undergoing, he decided
to spend the night in his matatu in Thika
town. Before he left, he saw traders
selling oranges and in a moment of
indecisiveness, he bought one bag of
oranges and went to sell it outside a
supermarket in Embu town.
The supermarket liked the oranges
and bought the whole bag at Sh5000;
something Mugane says made him to try
orange business. That season, I was able
to supply oranges to supermarkets and
traders in Embu and by the end of the
four months of the orange season, I had
made a prot of over Sh1.5 million, he
recalls. Mugane who reveals he makes
between Sh150,000 and Sh200,000
prot monthly and has employed seven
carpenters and three salespeople.
His supervises carpenters and ensures
orders are executed properly and
promptly.
Business Beat
11
Tuesday, August 12, 2014 / The Standard
REWARDING FARMING:
legal reasons. The State
agencies handling the case
include Horticultural Crops
Development Authority
(HCDA), Kenya Plant Health
Inspectorate Service
(Kephis), Pest Control
Products Board
(PCPB) and
Kenya Agricul-
tural Research
Institute (KariI).
HCAS chairman
James Onsando, who is
also Kephis managing
director says this is
happening after the EU
changed its legislation
requiring exporting compa-
nies to comply with new
regulations. We have been
notified by the EU of various
companies that have been
exporting
produce that
has high
levels of
MRLs and
equally,
farmers are
not
adhering to
the global
agricultural
Fresh produce farmers, rms banned from EU
Acting tough: The 5,000 farmers
and 11 horticulture rms will no
longer export to Europe due to
high pesticide levels and harmful
organisms in their produce
More than 5,000 horticulture
farmers and 11 horticulture
firms have been banned from
exporting fresh produce to the
European Union (EU) market.
The withdrawal of licences
arises from the high levels of
pesticides and other harmful
organisms in their produce.
The move comes one and
half months before the set
deadline by the EU for Kenya to
have fully contained the
problem, after local producers
and exporters were accused of
consistently shipping produce
that has high leaves of maxi-
mum residuals limits (MRLs) to
the EU. This is contrary to new
trading requirements by the EU,
developed out of consumer
preferences in EU.
Under the Horticulture Com-
petent Authority Structure
(HCAS), Kenyan State agencies
responsible for enhancing
compliance say the 11 compa-
nies have had their licences
suspended for a month to have
their production system
audited, but the companies
could not be disclosed due to
practices, said Dr Onsando.
The new requirements
demand that farmers desist
from using chemicals suspected
to cause further consequences
such as diseases to consumers.
He says the moment a company
is intercepted at the point of
entry into any of the EU
countries due to the high
chemical content, the Govern-
ment is notified and the
exporting entities are not
allowed back into fresh produce
trade until they comply with
the set regulations. He observed
that some of the companies
suspended from trading with
EU have been intercepted more
than five times. Onsando,
however, noted that some
owners
of
the said companies still remain
in the business after registering
new entities to continue access-
ing the EU market.
The violation of the
requirement is complicating
our relations with the EU, he
added. Government will
gazette new regulations to
assist in destruction of produce
seized having not complied
with the set EU requirements.
To enforce compliance, the
Government has prepared
legal amendments to
gazette for the restriction
to using dimethoate,
omethoate and chlorpy-
riphos and destruction
of non-compliant
produce, he added.
Agriculture, Livestock
and Fisheries Cabinet
Secretary Felix Koskei
questioned the
competency of the
State agencies
charged with inspect-
ing fresh produce
before it is shipped.
He said the high chemical
content in farm produce could
see Kenya losing the opportuni-
ty to benefit from the high-end
EU market. We have been
given a deadline of September
30, this year to fully comply
with the MRL rules, otherwise,
we will be locked out of the
market, which would be a huge
loss to the entire economy, said
Koskei. Blocking local produc-
ers from the market will
endanger six million Kenyan
jobs directly and indirectly. Up
to 150,000 farmers export fresh
produce to the EU, which is 10
per cent of all horticulture
farmers.
EU in 2012 made changes in
its legislation that has made it
difficult for the exported beans
and peas in pods to meet the
requirements of pesticide
MRLs. In January 2013, the EU
decided to sample these exports
at a frequency of 10 per cent to
verify compliance.
However, 90 per cent of the
beans and peas in pods still
enters the market without being
subject to the testing. Of the
100 per cent fresh produce
exported to the EU market from
Kenya, it is only three per cent
that does not meet the required
standards. Every other time, we
are receiving information from
the EU on companies having
seized exporting produce with
harmful organism, said Dr
Onsando.
Fresh Produce Exporters
Association of Kenya Chief
Executive Stephen Mbithi said
inspection of the companies
exporting fresh produce is
gradual and not done at once.
We are working with the
Government to ensure sound
compliance, said Dr Mbithi.
Last years competition attracted more than
20,000 applicants across the country. It featured
categories such as small-scale farms gearing
to commercialisation, small-scale farms fully
commercialised, large-scale fully commercialised
and large-scale agro-input dealers whose value are
greater than Sh5 million. Panda Flowers, Nini Ltd
and plant propagator Stokman Rozen came rst,
second and third respectively in the large-scale fully
commercialised farms group. The other winners of
the inaugural awards were Kalia Farm from Machakos
County, in the Smallholder Fully Commercialised Farms
category, followed by Kyanda Farm in Makueni for the
same league.
Harrison Muriuki of Ruiri Farmers Centre in Meru
County, emerged the winner in the Small Scale agro-
dealers category, followed by Blue Agri Supply Services
from Nyeri County, and Shamba Input from Njoro,
Nakuru County, respectively. In the Small-scale Farms
Gearing to Commercialisation category, Bishop George
Mbaya of Meru County was the winner. In the Large-
scale Agro-dealers category, number one and two were
awarded to DK Jolly from Nyeri County and Packsons
Enterprises Ltd from Kericho County respectively.
The recognition gave my venture a head-start. It
has grown considerably and daily, farmers come over
to learn new techniques, Muriuki said told Business
Beat in an interview. This years race, sponsored by
Thabiti Fertilisers to the tune of Sh5 million has two
new categories- Women in Agriculture and Youth in
Agriculture. This was a deliberate efort to attract our
youth and women into agriculture as a commercial
venture, not a side job, said Mr Kantaria.
Mr Kantaria observes that agriculture has a
potential of absorbing about 70 per cent of the
countrys new job seekers. Increased focus on
agriculture could enhance productivity, reduce food
prices, increase incomes and create employment.
Youth and women involvement in this process is
therefore imperative, he said. Nyeri and other
counties have approached us to have county-specic
farmers awards. Perhaps this is the way we should go
as we endeavour to bolster food production in Kenya,
said the Elgon Kenya Director.
This years entry close on August 31. This will see
ministry of cials to visit shortlisted farms to judge
and select winners. Top winners will receive trophies
and certicates at the Nairobi International Fair, from
President Uhuru Kenyatta as per the tradition. It
does not end with the recognition of the winners. We
do carry out follow-ups on past winners by ofering
extension services. This has been aided by our eforts
to post more than 30 of cers across the country,
whose task is specically to assist farmers, said Mr
Kantaria.
Farmers awards seek to make agriculture a protable venture
The new requirements demand that farmers
desist from using chemicals suspected to cause
further consequences such as diseases to
consumers. -HCASchairmanJames Onsando
y B NICHOLAS WAITATHU
y B KWEMOI KAPCHANGA
Most youth usually have second thoughts
about agriculture as key job creator. Even with the
increased demand for food, they perceive farming
as an economic activity for the poor, old and
underachievers. Not even government subsidies for
farm inputs has changed their mind-set. This notion
is likely to change in the coming years as experts
launch strategies to redeem the glory of - agriculture
- Kenyas key sector and the engine of the economy.
If it is fully exploited, it can help reduce poverty in
the country, said Bimal Kantaria, Director, Elgon
Kenya Ltd.
Kantaria says increased accessibility to inputs by
the farmers, besides ofering fertiliser, seeds and
chemicals to consumers at afordable prices, in a
timely way, improves productivity. The World Bank
estimates that African agriculture and agribusiness
could be worth Sh87.7 trillion by 2030. For this to
be realised, there must be improvements in power
supplies and irrigation, coupled with smart business
and trade policies.
Mr Kantaria also wants the private sector to work
closely with government to add value to agriculture
and enhance competition in the sector. What the
Government needs to do is to support its producers
to gain access to markets. This may include investing
in a chain of activities that add value to agricultural
products, providing necessary infrastructure to
stem urban migration and empowering women and
youths, said Mr Kantaria.
Such a partnership is currently being witnessed
between Elgon Kenya Ltd and the Ministry of
Agriculture, Livestock and Fisheries. Hatched in 2012,
the co-operation has seen the launch of the National
Farmers Awards that seeks to transform agriculture
into lucrative business. We started the awards after
we realised that farmers, despite their huge efort
in feeding the nation, were not being appreciated
accordingly, Catherine Riungu, one of the pioneers of
the award scheme, told Business Beat.
Dr James Onsando,
Kenya Plant Health
Inspectorate Ser-
vice (Kephis) MD
>> AGRI-BUSINESS
Bimal Kantaria, Director, Elgon Kenya Ltd.
Business Beat
12
Tuesday, August 12, 2014 / The Standard
Car-pooling website
saves travellers costs
USBs critically awed after bug discovery - research
Innovation: The application helps users nd and
join carpools in their neighbourhoods - saving costs
and reducing pollution by having fewer cars on roads
T
he World War II saw
virtually all countries
introduce a rationing
programme for major items,
after the cost of the war upped
inflation to levels never seen
before. Petrol topped the
scarcity list and to save up on
the precious commodity,
Americans devised a system
where several individuals living
in the same neighbourhood
would share each others car in
turns when going to work.
This was the origin of
carpooling. Today, four out of
six people are in the world
carpools and about $1.1billion
(Sh87 billion) is saved each year
worldwide through carpooling.
In Kenya, carpooling is a
relatively new concept, slowly
gaining popularity. It mostly
happens during matatu strikes,
when public service vehicles
ground the citys transport
system to a near halt.
Kenyans are more reluctant
to share something as personal
as a car with strangers. At the
same time, security concerns
and ceding ones quiet and
personal space each morning
and evening does not appeal to
GADGETS:
BBC
Cyber-security experts have
dramatically called into question the
safety and security of using USB to
connect devices to computers. Berlin-
based researchers Karsten Nohl and
Jakob Lell demonstrated how any
USB device could be used to infect a
computer without the users knowledge.
The duo said there is no practical
way to defend against the vulnerability.
The body responsible for the USB
standard said manufacturers could
build in extra security. But Mr Nohl
and Mr Lell said the technology was
critically awed. It is not uncommon
for USB sticks to be used as a way of
getting viruses and other malicious
code onto target computers.
You can never trust anything
anymore after plugging in a USB stick
says Karsten Nohl of Security Research
Labs. Most famously, the Stuxnet
attack on Iranian nuclear centrifuges
was believed to have been caused by
an infected USB stick. However, this
latest research demonstrated a new
level of threat - where a USB device
that appears completely empty can still
contain malware, even when formatted.
The vulnerability can be used to hide
attacks in any kind of USB-connected
device - such as a smartphone. It may
not be the end of the world today, Mr
Nohl told journalists, but it will afect
us, a little bit, every day, for the next 10
years. Basically, you can never trust
anything anymore after plugging in a
USB stick.
Chip exploited. USB - which stands for
Universal Serial Bus - has become the
standard method of connecting devices
to computers due to its small size,
speed and ability to charge devices.
USB memory sticks quickly replaced
oppy disks as a simple way to share
large les between two computers.
The connector is popular due to the
fact that it makes it easy to plug in and
install a wide variety of devices. Devices
that use USB contain a small chip that
tells the computer exactly what it is,
be it a phone, tablet or any other piece
of hardware.
Karsten Nohl: You can never trust
anything anymore after plugging in
a USB stick It is this function that
has been exposed by the threatIn
one demo, shown of at the Black Hat
tricked the machine into thinking a
keyboard had been plugged in. After
just a few moments, the keyboard
began typing in commands - and
instructed the computer to download
a malicious program from the
internet.
Another demo, shown in detail
to the BBC, involved a Samsung
smartphone. When plugged in to
charge, the phone would trick the
computer into thinking it was in fact
a network card. It meant when the
user accessed the internet, their
browsing was secretly hijacked. Mr
Nohl demonstrated to the BBC how
they were able to create a fake copy
of PayPals website, and steal user
log-in details as a result. -BBC
The
vulnera-
bility can
be used to
hide
attacks in
any kind
of
USB-con-
nected
device
- such as a
smart-
phone. .
many. However, things are
slowly changing. Data from the
Kenya National Bureau of
Statistics indicates that the
number of registered motor
vehicles increased by 28 per
cent, from 173,044 in 2012 to
222,178 by last year.
The number of young more
liberal car owners is also
increasing. With high cost of
living, surging fuel prices and
chaotic matatu industry, more
car owners are finding more
reasons to warm up to carpool-
ing.
Edwin Ongola has now
developed a web application
that helps users find and join
carpools in their neighbour-
hoods, after seeing a business
opportunity in the venture.
Carpooling not only provides
you with the convenience of
saving up on costs but is also
good for the environment
because fewer cars on the road
means less carbon dioxide
emissions, he states.
Carpooling.co.ke, which is
one of the biggest carpooling
websites in the world, has
partnered with The United
Nations Environmental
Programme to promote
carpooling as an effective tool
for greening up the world.
Ongolas web application is
dubbed Carrambee a word that
nearly rhymes with Swahili
word Harambee, which
basically means to pool resourc-
es together. Using carrambee.
com, passengers can identify
neighbours who live in their
area and are interested in
carpooling, then contact them
and set up a meeting, he
explains.
Ongola, who is the sole
administrator of the website
says the service is free to users
and he only provides a platform
for the two to meet. He has also
detached himself from interac-
tions between the users. Once
you sign in to Carrambee.com,
you are able to see a list of
people in your specific neigh-
bourhood who are open to
carpooling. You can then
contact them and the two or
three or four of you can then
negotiate on the terms of the
carpool. Ogola argues that
since the car owners and
passengers could be neigh-
bours, having them discuss the
terms of the carpooling without
any intermediary helps build
trust which is key for a success-
ful carpool. Carpooling apps
and websites are hugely
successful in countries like
India where overpopulation and
a continuously grid-locked
traffic network forces many to
find ingenious methods to get
around.
Carrambee.com has further
added a service to allow users
carpool for long distance
traveling. If you are traveling to
Kisumu or Mombasa for
example, and you would like to
carpool, you simply put in the
date and time of your travel.
The application will then
cross-reference your entry with
available cars and slots in the
site and you will be matched up
with a crew,explains Mr
Ongola. Ongola only hopes to
gain enough traction and get
advertisers to buy space on his
site since the website is free to
users, and he does not handle
the money that changes hands
between carpooling members.
y B FRANKLINE SUNDAY
:HUSTLERS<<
It is not uncommon for USB sticks to be
used as a way of getting viruses and other
malicious code onto target computers.
KarstenNohl andJakobLell
TECH-SPHERE <<
Residents of Umoja estate Nairobi struggle to get into a matatu. Using the app
can ease the scramble if people share cars as well as other vehicles when travel-
ing to work, among other places. [PHOTO: JEF OCHIENG/STANDARD]
hackers conference in Las Vegas, a
standard USB drive was inserted into a
normal computer. Any business should
always have policies in place regarding
USB devices and drivers, said Mike
McLaughlin of First Base Technologies.
Malicious code implanted on the stick
Business Beat
13
Tuesday, August 12, 2014 / The Standard
My tip for entrepreneurs is to just dive
in nished always beats perfect. Expect to
learn new things as you go, but if you dont
start, you wont put yourself in a situation
that requires learning. I was employed for
about eight months before I realised I hate
having to listen to bosses. I grew up poor,
so I embraced the hustle when young. All
through campus, I sold whatever I could
get my hands on to earn my pocket money.
After school, I got a job to prove to my
mother that her sacrices were not in vain.
But I hated every day of it.
Maybe because of my past it was easier
to turn my back on the security of a salary
every month. But immediately I did, I felt
such relief, such freedom that I didnt care
that I didnt know how Id pay rent or buy
food. But
somehow, I
did. And my
only regret is that
I wasted eight
months sweating
for another man
to make money.
I know
it sounds
rather
harsh and
I should
probably
be grateful
for the
experience, but I learnt
little because my mind was constantly
thinking about new business
ideas. When I nally got
into entrepreneurship
fully, I began to learn,
and boy, were there
many lessons I
needed to grasp.
But heres what
I tell my
friends
struggling
to decide
whether
to start
their own
thing or keep working
until the time is right: The time will
never be right.
Just dive in and what you dont know,
you will learn. This mentality has worked
more often than it has failed though
there has been failure, but again, in it was
a valuable lesson. For instance, I tried to
get into car hire at a time when I had cash,
but not enough to get what I really wanted.
So I decided to use the money to buy a car
I could hire out and grow my money to the
level I needed it to be. But within two weeks,
the car required repairs worth Sh90,000; I
had earned Sh16,000 from it. I learnt about
putting limits on where my car would go.
Take that rst step, youll be wiser for it.
-By John N.
-Email your 300-word tips for young
entrepreneurs to bizbeat@standardmedia.
co.ke
Vetiver: Rare grass that ghts poverty
It has been described by
some agribusiness experts as a
wonder grass because of its
diverse uses. And if you ask Paul
Kombo, a Voi farmer, what he
thinks about vetiver grass, he
will agree with that description.
To Mr Kombo money grows on
grass, particularly vetiver.
The farmer is reputed to
have the largest vetiver grass
nursery in Taita Taveta County
at 15 acres, and because of this
innovative agribusiness venture,
he now travels across the
country teaching farmers how
to grow it. He is currently
working on a Sh3 million slope
stabilisation project in Kilifi
County.
Because Im the only
certified farmer of vetiver grass
in Kenya, Im drawing a
separate fee for the seedlings,
for offering my expertise, and
for consulting on the Kilifi
project, says Kombo.
But what exactly is vetiver
grass? Vetiver is a rare grass
that grows well in both wet and
arid areas. It has numerous uses
in addition to slope stabilisa-
tion, such as landscaping,
purification of waste water,
thatching, mulching, making
fodder and reclamation of
dumpsites.
The grass also has medici-
nal value as its roots produce
medicine for purification of
blood and removal of cholester-
ol from blood vessels, Kombo
says.
Windfall: Vetiver matures quickly and
requires low-maintenance because
once planted, it requires no expenses
INVESTMENT IDEAS:
He sells a slip of vetiver grass
at Sh10, and says that on the
Kilifi project, he is using about
250,000 slips of vetiver for
landscaping around cottages
being put up by an investor.
He also sets up vetiver
plantations on a smaller scale.
If a farmer contacts me to grow
the grass, I charge them a
Sh15,000 daily consultancy fee
to set up the plantation and
train local labourers . One can
either have Kombo set up an
entire plantation, or hire him
for a day and then continue
with the labourers he trains.
TRAINED LABOURERS
Since I am the only Kenyan
certified in vetiver system
technology by Vetiver Network
International, farmers are
advised to set up their planta-
tions using my services, and
once Ive trained labourers from
the area, they can continue with
them.
According to Kombo, an acre
of land can hold 14,000 slips of
vetiver, with a spacing of 30 by
60 cm, adding that inter-crop-
ping is also possible as the grass
does not hinder the growth of
other crops. Within three
months, the grass roots have
been established adequately
enough to conserve soil.
Vetiver matures quickly. It is
also low-maintenance as once
you plant it, you do not incur
additional expenses. It is not
liked by pests, so you dont need
to spend cash on pesticides, he
BUSINESSTIPS:
Send an email
to bizbeat@
standardmedia.
co.ke for contacts
or information
on the companies
proled in this
pullout.
>> WEALTH CREATION
Vetiver is not liked by pests, so
you dont need to spend cash on
pesticides, Paul Kombo.
says. His passion for vetiver
cultivation, which he got into in
2001, has seen him nominated
for several international and
local awards. I founded the
Mseto Environmental Agency to
increase the uptake of vetiver
technology. Through it, I have
trained and set up nurseries for
more than 200 farmers and
casual labourers. In fact,
through my work with Mseto, I
was declared an environmental
hero during events to mark
Mashujaa Day in Voi in 2012.
So what are the opportuni-
ties to make money?
Vetiver can be used for
thatching - we are currently
encouraging hotels in the area
to consider using this grass for
their buildings as it lasts longer
than other varieties. We are also
talking to road contractors and
designers to use the grass for
road stabilisation to prevent the
infrastructure being destroyed
by land slides.
Vetiver is also used in
weaving to make products like
mats and baskets, it is added to
herbs and is a good source of
feed - it adds fats to milk. There-
fore, armers can sell their grass
to several different institutions
and individuals.
SOIL EROSION
According to Kombo, a
90-kilogramme bag of vetiver
hay retails at about Sh1,500. The
grass can be fed to livestock raw
or mixed with other nutrients.
But for him, the most important
use of the grass is for soil
conservation.
The food production status
in our country has gone down
drastically, and one of the
reasons for this is loss of soil
fertility due to soil erosion. For
Kenya to be in a position to feed
its people, there is a need to
adopt innovative soil conserva-
tion methods such as the use of
vetiver, says the farmer.
His plans for the future? My
plans are to have the largest
vetiver grass nursery in East and
Central Africa.
For more information, email
bizbeat@standardmedia.co.ke
y B PASCAL MWANDAMBO
Paul Kombo gestures at his vetiver grass crop in Voi.[PHOTO: PASCAL MWANDAMBO/
STANDARD]
Business Beat
14
Tuesday, August 12, 2014 / The Standard
:HUSTLERS<<
South Sudans debt rises as oil ebbs
S
eeking to keep their
cash-strapped govern-
ment afloat, South
Sudan officials huddled in June
in Juba with Chinese, Malaysian
and Indian oil executives to
propose an emergency loan of
$200 million, according to
participants in the meeting.
As they made the appeal,
officials shared some other
unwelcome news: South Sudan
couldnt pay back the $1.6
billion it had already borrowed
from these companies. We
cant afford to service our debts
at the moment, Finance
Minister Aggrey Tisa Sabuni
said to the group, according to a
South Sudanese official who
attended the meeting. Unfor-
tunately this is a situation we
cannot get out easily without
more advance payments.
As government officials
made presentations, executives
exchanged handwritten notes.
Over the past three years,
Chinas National Petroleum
Corp. Malaysias Petronas, and
ONGC Videsh Ltd. of India had
extended advance payments on
We have expressed our concerns about
further payments.
RajendraNigam, thecountrymanager for ONGCVidesh
a percentage they would give
the government for every barrel
of crude exported from South
Sudan. But exports had slowed
amid armed conflict. The
executives said they no longer
wanted to offer hundreds of
millions of dollars in advances
with dim prospects of returns.
South Sudanese stormed out of
the meeting, according to a
person with direct knowledge of
the matter.
Conflict in South Sudan
We have expressed our
concerns about further
payments, said Rajendra
Nigam, the country manager for
ONGC Videsh, the overseas
investment arm of Oil & Natural
Gas Corp. 500312.BY +0.79 per
cent , who attended the
meeting. We still cant do any
meaningful operations. CNPC
and Petronas declined to
comment.
When South Sudan broke
away from Sudan in 2011, after
a two-decade civil war, its new
leaders tied the nations
fortunes to peace and a steady
flow of crude exports. The
country hasnt had much of
either, straining ties between
the government and the foreign
oil companies who have
propped up the worlds
youngest nation.
Following South Sudans
independence, Asian compa-
nies that had concessions with
rival Sudan negotiated fresh
deals with the new government
in Juba. Western companies
such as Frances Total SA and
Exxon Mobil Corp. XOM -0.58
per cent returned to claim
dormant concessions. Three
years down the road, oil output
is sputtering160,000 barrels-
a-day from 350,000 barrels-a-
day at the time of independence
in 2011.
The richest oil fields in South
Sudans Unity and Upper Nile
states remain mired in conflict.
MANAGING REVENUE:
And because of the insecurity
caused by armed cattle
rustlers and militias allegedly
backed by Sudanthere has
been little headway in exploring
another high-potential oil block
in Jonglei state.
Deprived of oil revenue,
which accounts for 95 per cent
of the Governments total, South
Sudan has struggled to remain
solvent. In recent weeks,
hundreds of troops have
deserted the frontlines, accord-
ing to the United Nations and
other humanitarian officials,
after not being paid. The
government has also frozen
travel allowances and overtime
payment of civil servants,
crippling government-run
hospitals and schools. There are
fears of possible mutiny among
the remaining soldiers loyal to
President Kiir. We are having
challenges raising money to pay
some soldiers because we are
not producing enough oil, said
Ateny Wek Ateny, the spokes-
man for the presidency.
Wallstreet Journal
AFRICA NEWS <<
Business Beat
15
Tuesday, August 12, 2014 / The Standard
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AUGUST ISSUE
NOW AVAILABLE
>> NSE COMMENTARY
NSE 20 Share Index 1.24% Dow Jones +185.66(+1.13%) Nasdaq +35.93 (+0.83%) S&P 500 +22.02 (+1.15%) Oil +0.20% US$ 1.13%
5003.78 16,553.93 4,370.90 1,931.59 $97.85 1 EUR = $ 1.3387
Sources: SIB, NSE
Foreign investors were net buyers actively purchasing
EABL, Safaricom and KCB. Foreign participation rose
to 50.5pc compared to 41.2pc previously. SIB
Stock Price % week on week % year to date
KCB 54.00 -0.9% 14.3%
Safaricom 12.80 2.8% 18.0%
EABL 297.00 -0.7% 2.4%
Equity Bank 46.00 0.5% 49.6%
Stock Price % week on week % year to date
Home Afrika 4.05 22.7% -31.4%
CIC Insurance 9.20 15.7% 54.6%
Kenya Power 14.40 11.2% 1.8%
Marshalls (E.A.) 9.80 8.9% -18.3%
Stock Price % week on week % year to date
Sameer Africa 6.30 -19.2% 20.0%
Umeme 18.00 -10.0% 38.5%
Car & General 42.00 -6.7% 40.0%
Trans-Century 22.75 -6.2% -20.9%
With 27 counters in the green, the NASI and the NSE
20 index closed the week 0.9 per cent week to week
and 1.2 per cent higher respectively. Turnover jumped
97.3 per cent to record $ 49.7 million (Sh4.5 billion)
compared to $25.2 million (Sh2.2 billion) previously.
Foreign investors were net buyers actively purchasing
EABL, Safaricom and KCB. Consequently, foreign
participation rose to 50.5 per cent compared to 41.2
per cent previously. For the second consecutive week,
KCB had the highest net inows of $14 million. KCB
touched a new 52 week high of Sh60 on foreign buying,
retreating later in the week to Sh54 on the back of
prot taking from local investors. Kenya Airways had
the highest foreign net outows of $0.5m (Sh48.5
million) despite announcing a partnership with Airtel
to launch a product based on a mobile virtual network
operator license.
Despite trading ex-bonus CIC Insurance was
one of the leading gainers having notched 15.7 per
cent higher. We think the stock is getting slightly
overvalued. Britam inched 6.4 per cent higher after it
partnered with its associate, Acorn Group, to announce
plans for a $455 million (Sh40 billion) real estate
project. Down 19.2 per cent, Sameer Africa topped the
losers list with investors showing disappointment in
the rst quarter of 2014 performance where the tyre
manufacturer recorded a 73.3 per cent decline in EPS
to 0.29 and issued a prot warning for the nancial
year 2012. EABL was trading lower towards the close
of the week after an initial rally ahead of nancial year
2014 results. The brewer ended just 0.7 per cent lower.
CFC Stanbic Bank announced quarter one results with
a 52.24 per cent jump in net prots after the close
of trading. Barclays and Kenya Re will be releasing
their Q1 gures tomorrow and on Friday respectively.
-Standard Investment Bank Research.
Top Gainers
Top Movers
Top Losers
NSE All Share Index 155.53
Market capitalisation Sh4.32 trillion
Shares traded 157,000,000
Equity turnover Sh856,000,000
Statistics as at August 8, 2014
EABL
was trading
lower
towards the
close of the
week after
an initial
rally ahead
of nancial
year 2014
results.
The brewer
ended just
0.7 per cent
lower.
Business Beat
16
Tuesday, August 12, 2014 / The Standard
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