“Aiming High” is an autobiography of Kenneth Matiba that covers his life as a civil servant, businessman, farmer, corporate leader, member of parliament, cabinet minister, and presidential candidate.
It’s also a good business book that’s well written and detailed.
Scaling Farming Ventures
While exporting beans to Europe, he faced freight challenges. East African Airways (EAA) had no cargo and when BOAC planes landed in Nairobi from South Africa, they were always full. Cargo was doubled booked and often not loaded at Embakasi airport and later thrown away. He decided to start a cargo airline in 1967 and registered African international airways and invited John Michuki and Charles Njonjo to join. At the time EAA’s problem was that Uganda was not remitting revenue and it was serving uneconomic routes in Tanzania. He got the authority to operate a cargo charter flew an old Britannia plane that was on sale for £65,000 to Nairobi to inspect with Michuki and Njonjo. But unhappy EAA staff reported back and the Tanzania Standard had a headline about how Kenya was helping three capitalists to destroy EAA. Michuki and Matiba were PS’s and Njonjo was AG and they decided not to sign the purchase agreement and the plane was flown back to England.
Craziest venture: In 1975 during a potato shortage in England, tried to export 6,000 tons. Rounded up all potatoes in Meru and with 290 trucks got them to Mombasa. Managed to load one ship with 1,600 and later another with 1,700. The second broke down, and by the time it reached potato was rotten and the ship was diverted for special cleaning.
Only after he resigned from the government was he able to safeguard his independence through personal business dealings.
Radio announcements about cabinet reshuffles were a feature as far back as 1965. He heard he had been transferred from the Ministry of Home Affairs to the Ministry of Commerce, Industry and Cooperatives. There was no proper handover and he felt it was wrong to shuffle civil servants (PS) like happened with ministers.
In 1968 he planned to retire as PS and gave a one-year notice. He asked Geoffrey Kariithi to wait till President Kenyatta was in a good mood before telling him. When Kenyatta realized this he asked who authorized Matiba to leave the government and Kariithi reminded him it was he. Matiba later made up – he was arranging for his son Raymond and John Michuki’s two sons to be circumcised and Kenyatta asked that he also rope in his two sons, Uhuru and Muhoho.
After he left the government, he had five job offers and chose Kenya Breweries.
He refused to become the Chairman of Anglo Kenya investments without equity, so he was offered 26% and he paid for that.
Hoteling & Real Estate
Acquired Brunners hotel in 1974, a hotel in the middle of town, that was listed on the Nairobi Stock Exchange. The Brunner family had 65% and Marcel Brunner and his son Derek continued to run it and helped Matiba with Jadini later on. But they closed it in 1978. It had an old interior and its 120 beds could not support the needed renovations. They sold the building in June 1982 and Fedha Towers was later built on the site.
George Robinson bought 10 acres in Karen, improved and sold it to buy the Mackinnon Building opposite New Stanley for £50,000.
Matiba scouted Jadini Hotel in 1967 which was on sale in £54,000 and recommended Robinson buy it. They sold MacKinnon at a profit and bought Jadini and another 10 acres in Karen.
Bought Dacca Road houses in Nairobi West in 1969 and sold them in 1971.
They developed Golf Course housing estate but later gave up housing to concentrate on hotels and schools.
When Robinson died, Matiba negotiated to purchase his stake and took over Jadini. He had to rush to complete construction and open for tourists while facing down hostile old staff and management.
Michael Betrano, a new manager, rescued Jadini when it had 7.5% occupancy in March 1973 and put it on the world map. He later hired Christopher Mogidell who took it further.
In 1978, built Africana Sea Lodge in six months and in 1984 built, the 400-bed Safari Beach in 10 months that was opened in 1986.
Seasonal airlines: For KTDC, Matiba chaired the struggling Air Kenya which only did business from December to March and July to September when tourists visited. It was idle rest of the year and utilization was never above 50%.
Difficult Ministers: Tourism Minister Elijah Mwangale saw hotels as swindlers who did nothing but cheat Kenyans out of the foreign exchange. Matiba also held his tongue when Maina Wanjigi set a target of a million hotel beds which he correctly saw as unrealistic as the industry could not build 100,000 beds a year.
Matiba argued that tourism was the cheapest for Kenya to earn foreign exchange. To earn $100, you need to invest $40, and gets a net of $60 while to earn $100 from coffee, it costs $68.
Matiba decided to form Kenya Breweries Football Club in 1970 and have all staff stop playing for other teams. They entered the poorly-run Kenya Football Association league that had a lot of frustration. Matiba later formed the Kenya Football Federation to run a 12-team Kenya Football League exclusively as a company that the Sports Minister could not interfere with and invited other clubs to join and though KFA refused to recognize them. But after Gor Mahia agreed to join, other teams followed. All they wanted was to play soccer and entertain fans, not represent Kenya. They were not deterred by a suspension by the KFA and went ahead to draw a league for Nairobi Mombasa Nakuru Kisumu, book and pay for the stadiums on Saturday and Sunday for a year.
Clubs got more from gate takings, tickets were printed by security firms which club representatives checked at gates, and complimentary tickets were abolished. While prices went up, they got more fans to come after they eliminated stone-throwing. They ensured clubs showed up ahead of time for matches for inspection and eliminated match delays sometimes caused by witchdoctors and superstitions.
In his first year chairing KFF and KFL, Kenya won three East African cups.
Matiba was an avid sportsman who climbed Mount Everest when he was a Cabinet Minister.
Matiba worked with Bishop Sospeter Magua who wanted to make the church self-sustaining with permanent income through investments, and not be weak financially by staying dependent on unpredictable charity donations. They organized for three districts – Muranga, Kiambu and Nyeri – to contribute. President Moi chaired the first harambee in Muranga where Kshs 1 million was raised, Mwai Kibaki chaired the next one in Kiambu and Njonjo was invited for the third in Nyeri. They bought a 7-acre plot in Loresho and one acre on Kayahwe Road to build maisonettes. But Bishop Magua died in a road accident in 1982. Is Bishop Magua Centre, home of the first iHub, named after him?
Embori farm in Timau was put up for sale in 1977 for Kshs 34 million and Robert Wilson, the European farmer selling it, did not want it to go to a cooperative or large group, preferring it should go to individuals or a public company. Matiba persuaded him that it could remain intact and not be subdivided. The seller also wanted Kshs 20 million of the amount in foreign exchange and Matiba asked Kenyatta who authorized the Central Bank to release this sum which was, the largest amount of forex ever given to purchase a farm. Meanwhile. a cabinet minister who wanted the farm tried to scuttle the deal. Matiba did a prospectus for Kiharu residents that yielded Kshs 6 million from 10,000 shareholders. After taking over, they sold wheat to KFA and barley to Kenya Breweries to meet the interest on overdraft for seven years but the farm did not generate enough to pay back the bank loan and shareholders are not willing to pay more. So Matiba next pushed them to sell some land to local residents, with a bank offering 50% finance and keep the balance for the farm, but after a year, only a handful took the offer. The farm still runs welltoday.
Business and politics
After 3.5 years as MP, he was appointed a Minister of Culture and Social Services in September 1983. He was the Chairman of Kenya Breweries and he made a personal decision to resign and was succeeded by Bryan Hobson. At the time, Alliance had seven hotels and four schools.
Matiba resigned from the cabinet in December 1988. After he quit he has no passport and went about his businesses quietly, but Moi never forgot. When he got his passport back in 1989, he made a trip to Rwanda for the wedding of the daughter of President Habyarimana in July 1989. Then in February 1990, he was invited back to Rwanda to explain how that country could expand its tourism and he took five experts from the Alliance group with him. But as soon as he came back, special branch officers started looking for him for interrogation after the death of Minister Robert Ouko.
Concern about leadership. The Kenya majority has lost the concept of servanthood. Leaders aspire not to serve citizens but themselves. Many spend only two hours in their offices making personal telephone calls and the rest of their time on their business.
The biggest problem African businesses face is a lack of accounting.
Africans also treated businesses as hobbies and entrust them to ignorant family members.
Business people try to do too much – being butchers, curio sellers and textile dealers all at the same time instead of concentrating on one line.
Matiba was detained in July 1990. The book dwells on his medical treatment after he was poisoned in detention and his preparation to run for the Presidency in 1992 where he came second. It does not go into his later tribulations with banks and businesses that halted the corporate empire he had built. Kenneth Matiba died in April 2018.
KPMG East Africa has a summary of some tax proposals in the Finance Bill that will be used to plug the country’s ambitious Kshs 3.6 trillion 2021/22 budget.
Here are some excerpts
Depositories are to enhance the identity of investors i.e buyers and sellers of securities.
Creation of post-retirement medical funds in retirement benefits schemes.
Clarifies the definition of an infrastructure bond.
A capital markets tribunal shall deal with matters before it within 90 days.
Moving from 16% to exempt after July 1, 2021, are the transfer of assets into real estate investment trust (REIT’s) and asset-backed securities.
Opens up reinsurance to players other than Kenya Re to certify reinsurance contracts.
Opens the door to private electricity companies; no longer required to offer their supply to the national grid and they are eligible for investment deductions. Also, if government licenses them, they can compete with KPLC.
Tax cases will not stop where there is an ongoing criminal or civil case.
Abolishes the amnesty on rental income tax before 2013 (which had since expired).
Rewards for informing on tax dodgers; The Kenya Revenue Authority (KRA) can reward up to Kshs 500,000 (up from 100,000) for information and up to 5% or Kshs 5 million of taxes recovered.
Taxpayers are to keep records for 7 years and KRA can assess claims of up to 7 years from the date of a taxpayer’s last return.
Digital Taxes and market
PIN’s required for digital marketplace transactions.
Digital service tax is removed from residents (only applies to non-residents).
Non-resident businesses can maintain records in convertible currencies (not necessarily Kenya shillings).
To stop base erosion and profit shifting, multinationals / ultimate parent companies are required to file a report on their activities (revenue, profit, taxes paid, employees, assets, cash) in Kenya within 12 months of their financial year-end.
Ends group VAT registration for groups of companies; each entity will report its own VAT on transactions.
To encourage large investments, there is an exemption for import declaration fee (IDF) and railway development levy (RDL) for investments over Kshs 5 billion or with the approval of the Treasury Cabinet Secretary.
Value Added Tax
Introduces VAT on bread.
Several items move from 16% to exempt, which means the Treasury CS can exempt them on request. These include infants foods, medical ventilators, lab reagents, gas masks, x-ray equipment, anti-malaria kits and doses, and artificial body parts.
Also moving from 16% to exempt, are vehicles for oil & mining companies, and equipment for solar & wind generation.
A 20% betting tax returns after being briefly for a year.
Bank loan fees no longer incur excise duty.
Remove a requirement for VAT regulations to be approved ahead by Parliament; instead they will be shared with legislators under the statutory instruments Act.
Withholding tax in oil and mining sectors will be 10%
Removes the 10 year limit on carrying tax losses
Excise tax goes up on motorcycles and is introduced on jewellery and nicotine substitutes.
Reintroduces excise duty on locally-manufactured sugar confectionery and white chocolate that was removed in 2019.
This week marked the deadline for bids for two new Ethiopia telecommunication licenses on April 26. Two offers were received in Addis Ababa; one by MTN (Mauritius) and the other for a “Global Partnership for Ethiopia”, a consortium by Vodafone, Vodacom, Sumitomo and Safaricom.
This is part of an overdue privatization push by Ethiopia that has continued even as political tensions have flared up in different parts of the country. The licenses do not include mobile money, but that is something that currently monopoly, Ethio Telecom has been granted and hopes to launch soon. It is expected that others who did not bid for mobile licenses such as Orange may bid for the partial privatization of Ethio Telecom which has 50 million subscribers.
Can Safaricom grow in this market 110 million population strong-market? That has been a goal of Safaricom’s management for the last few years. But a January 2021 report by Citi Bank was negative on the “high risk, high return” venture which will impact Safaricom’s earnings in the short to medium term. This was due to the impact of Covid-19 on the risk profile of all potential investors in Ethiopia, but also as, by taking a controlling stake in the consortium, the Ethiopia operations will be consolidated in Safaricom’s financials. Citi expects that Safaricom would raise half a billion dollars of debt to contribute to the consortium which would put an end to special dividends paid by the firm.
After technical and financial evaluations of the two qualified bids, a decision is expected by mid-May 2021.
Also, see more about MTN, from their Nigeria listing.
EDIT May 24, 2021:
The Global Partnership for Ethiopia welcomed the award of a license to operate telecom services in Ethiopia. Safaricom is the lead partner in the consortium which will establish a new company in Ethiopia that aims to start providing telecommunications services from 2022. The country has 112 million people and is introducing competition as part of economic reforms supported by the International Finance Corporation.
EDIT May 25, 2021:
The consortium bid $850 million and will get a 15-year license, with the possibility of one extension of the same duration. Safaricom has incorporated an SPV, the Vodafone Ethiopia Holding Company in the UK, in which it owns 90% and Vodacom 10% – which will own a company in the Netherlands, that it intends to move to Kenya, and get shareholder approval at their upcoming AGM, to operate it as a subsidiary. The SPV will own 61.9% (Safaricom 55.7%, Vodacom 6.2%), and other shareholders will be Sumitomo (27.2%) and CDC (10.9%).
EDIT June 8, 2021:
Vodacom CEO Shameel Joosub said their group serves 180 million in Africa with 58 million accessing financial services on M-Pesa, Africa’s largest mobile money platform that processes $24.5 billion a month. It has now expanded to international money transfers, loans, savings and lifestyles ad lifestyle and could be used to enable small Ethiopian businesses to access e-commerce. Also, the launch of mobile money services in 2022 will ensure financial inclusion and close the gender gap.
Prime Minister Abiy Ahmed Ali said Ethiopia will next offer 40% of Ethio Telecom to a foreign investor with another 5% to the Ethiopian public. Also, they will adjust policy (mobile money) and re-tender the second national telco license as he called on all the telco players to coordinate to connect everyone.
EDIT July 5, 2021
Safaricom appointed a new Managing Director for Ethiopia, Anwar Soussa.
Safaricom released the notice for the AGM on July 30 where shareholders will be asked ratify the Ethiopia deals.
EDIT July 15: The Ethiopian Communications Authority (ECA) issued a fifteen-year telecommunications operator license to “Safaricom Ethiopia PLC,” a newly incorporated local company.
In May 1923, the East African Standard published a report from a bank AGM.
Mr. Robert Williamson, the deputy chairman of the National Bank of India addressing shareholders at the annual meeting yesterday, made a brief reference to the position in East Africa today and in the course of his remarks, suggested considerable improvement in the prospects for both trade and agriculture.
Mr. Williamson said the export trade of the country was more active and its products such as maize, coffee, and hides had found a ready market. The Uganda cotton crop, although it would not realize the original estimate of about 100,000 bales, would be fairly large and should assist in the off-take of imported goods through the buying power produced from its sale.
“The repeal of the Kenya income tax and revision of customs duty should also improve matters. There are,” he added, “certain political disturbances locally almost inseparable from the growth of a young country with a mixed population such as Kenya has, which we all trust are capable of adjustment. The outlook in this direction is promising as deputations from the districts are coming to London to interview the Secretary of State for the Colonies.”
A dividend for the six months ended December 31st, last at the rate of 20% per annum was agreed to.
The National Bank of India was the top bank in colonial Kenya. It is the oldest bank in the country and is today known as KCB.
Kenya will relax some of the restrictions that have been progressively building since the first case of Coronavirus was announced in the country in early March.
Speaking in Nairobi today, President Uhuru Kenyatta said the decision to re-open the country was a balance between a health crisis and an economic crisis. He mentioned that while the country was not quite ready, a “reasonable levels of preparedness” to reopen had been attained.
He called on citizens to be responsible and to engage in minimal contact and movements and to delay “non-essential up-country travel.” They should also avoid interacting with the elderly and the ill
Some of the changes will be:
The restriction of movement in and out of Nairobi, Mombasa and Mandera counties will end on July 7. The Government will then study patterns of infection over the next three weeks.
Local air travel resumes on 15 July.
International air travel resumes on August 1.
Churches can re-open with a maximum of 100 attendees and each ceremony will be not more than an hour. Also the ill, and no one under 13 years or over 58 years will be allowed to attend.
The evening curfew across the country, restrictions on wedding & funeral numbers, and a ban on political gatherings were all extended by another 30 days.
The President said it was not enough for the Government to pump resources into the economy using stimulus instruments, and that such efforts will go to waste if the people do not co-create solutions with the government.
He called on businesses to create new business models to find opportunities presented by the crisis. He cited the textile industry in Kenya, which had ramped up manufacturing, and emerged as a net exporter of PPEs (personal protective equipment) to the region and he called on other industries to emulate this.
EDIT: A day later, Prof George Magoha, Kenya’s Cabinet Secretary in the Ministry of Education, announced that the 2020 school calendar year will be considered lost due to COVID-19. He proclaimed that they had shelved a proposal to open for candidate classes in September. Instead, there will be two Form One class cohorts in the 2021 academic calendar, all learners in Grade 1 to 4; Standard 5 to 7; and Form 1 to 3 in 2020, will remainin their current classes in 2021 and there will be no KCPE and KCSE examinations in 2021.