Category Archives: Wananchi online

M&A Moment: March 2018

Various merger/acquisition (M&A) deals in the last few weeks and months in East Africa since the last update.

Banking and Finance: Finance, Law, & Insurance M&A

Centum Investments is selling its shareholding in GenAfrica Asset Managers to Kuramo Capital LLC, an independent investment management firm based in New York City with offices in Nairobi and Lagos, and registered as an investment advisor by the Securities and Exchange Commission (“SEC”).

Centum sold 25% of Platcorp Holdings to  Suzerian Investments a consortium of the Platcorp management team (platinum credit and premier credit) which provides emergency loans to individuals in  Kenya Uganda Tanzania while Premier offers working capital loans to companies – at a 31% return.

AfricInvest, a leading pan-African mid-cap-focused private equity firm invested in Britam Holdings Plc (Britam),  taking up a 14.3% stake. The investment was made in partnership with DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), The Dutch Development Bank FMO, and Proparco, a subsidiary of Agence Française de Développement (AFD), focused on private sector development.

Hamilton Harrison & Mathews Advocates (HH&M), one of Kenya’s oldest and largest law firm has entered into an agreement to combine with Dentons, the world’s largest law firm. Upon regulatory approval, HH&M will become part of Dentons, which is combining with seven elite firms in Africa, the Caribbean and South East Asia.

The Competition Authority of Kenya has authorized the proposed acquisition of control in AON Kenya Insurance Brokers by Extologix Proprietary through Heartland Holdings.

BitPesa, the first and largest blockchain payments platform for Africa and Europe, announced their acquisition of TransferZero, an international, online money transfer platform that specializes in sending money to consumers and companies in 200 countries using over 50 different currencies.

Mastercard has completed its acquisition of mobile payments technology company Oltio from Standard Bank Group. The acquisition builds on Mastercard’s longstanding relationship with Oltio’s technology enables consumers to authenticate Masterpass digital wallet purchases in South Africa using their bank PIN and mobile phone.

DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH, is investing EUR 4 million in M-BIRR, a cashless money transfer and payment service in Ethiopia to improved access to banking services in Ethiopia on a wide scale. Other investors include the European Investment Bank (EIB). The Finnish development finance company Finnfund has been a shareholder in M-BIRR since as early as 2012 which is inspired by the success story of the Kenyan provider M-PESA.

The Competition Authority authorized the proposed acquisition of 100% of the issued share capital of Youjay’s Insurance Brokers by I & M Insurance Agency.  I&M Bank, through its subsidiary, I&M Insurance Agency, has completed the acquisition of Youjays Insurance Brokers. Founded in 1987, Youjays deals in life and non-life products and has 400 customers and has an insurance premium portfolio of Kshs 400 million.

Customers of Chase Bank were given an update by the Central Bank (CBK) and the Kenya Deposit Insurance Corporation (KDIC) on the ongoing takeover of selected assets and liabilities of their  bank by State Bank of Mauritius (SBM).

 

Food & Beverage M&A

A South-African based private equity fund has invested Sh404 million ($4 million) to acquire an undisclosed stake in Kenyan fast food chain Big Square. Uqalo says its investment will expand its footprint from the current nine stores to 30 over the next four years. Uqalo, which targets investments located in Kenya, Ethiopia and Nigeria, is primarily funded by Hong Kong-based supply chain and logistics conglomerate Fung Group and its strategy is to acquire minority stakes by investing between Sh202m and Sh506m ($2m and $5m) in “mature businesses” through equity or convertible debt (via Business Daily).

The Competition Authority approved the proposed acquisition of 100% shareholding in Nairobi Java House limited by Star Foods Holding

Wow Beverages  has made an application to enter into exclusive import arrangements with specified international and local manufacturers and suppliers of ‘premium’ wines and spirits in Kenya – from Gallo Vineyards Inc. trading as E&J Gallow Winery Europe, Vina San Pedro Tarapasca S.A, Felix Solis Avantis S.A, Afrique Interlink (PTY), Interlink (PTY) Limited, Edrington Group Limited and Tradall S.A (Bacardi-Martini Group).

Seaboard has made a low offer to buy out other minority shareholders of Unga.

The Kenya Tea Development Agency (KTDA) Chebut factory is set to take over management of 260 acres of mature tea owned by the Nandi county government after the conclusion of ongoing negotiations.

Kenyan billionaire David Langat has acquired one of the largest tea farm in Tanzania in a deal that puts his company as one of the single largest tea producers in East Africa. Langat is thought to have paid a British firm, Rift Valley Corporation, close to Sh6 billion ($60 million) for a controlling stake, 99 per cent, in Mufindi Tea and Coffee Limited, Rift Valley Tea Solutions Limited and Kibena Tea Limited. The businessman owns Koisagat Tea Estate in Nandi and Kapchepet tea factory that processes CTC tea for export under his company D L Koisagat. He also runs Selenkei Investments Ltd, a company that generates electricity from solar energy plus the imposing Nyali Centre in Mombasa County as well as the Sunrise Resort in the same county.

Carnivore owner Tamarind acquires Kengeles: The Competition Authority has approved the deal with a notice that “The merger will not affect competition negatively; and the combined turnover of the parties for the preceding year, 2016, was Sh1,224,757,242. However, the target had a turnover of Sh94,067,983, which is less than Sh100 million, and therefore, the transaction meets the threshold for exclusion under the Merger Threshold Guidelines” (via the Business Daily).

Logistics, Engineering, & Agri-Biz M&A

Ascent Rift Valley Fund (ARVF), a leading SME Private Equity Fund investor will acquire a majority stake in Auto Springs East Africa, a Limuru-based factory that produces a wide range of products for the motor assembly and vehicle spare parts industry. It will be done in a partnership deal with SFC Finance.

Sendy, an app-based on-demand delivery services platform operating across Kenya, has completed a Series A investment round, led by DOB Equity. DOB Equity will invest alongside CFAO, member of the Toyota Group, and other private investors. DOB Equity says that the new funds will enable Sendy to increase their platforms’ service offering. This includes adding more delivery vehicles to their platform, increasing their coverage area, expanding the sales and technology team, and preparing for future expansion into neighboring countries in East Africa.

The owners of flower farm Karuturi Limited have secured an investor to inject fund into their business as they fight to save their priced asset from being auctioned by CfC Stanbic over Sh1.8 billion loan default. The firm in a statement said that it has reached an agreement with Phoenix Group for a ‘blend of debt and equity’ which will help it to meet its current debt obligations and restart its operations (Via Business Daily)

Ethiopia acquires 19% in Berbera Port becoming a strategic shareholder; UAE’s DP World has 51% while Somaliland gets 30% following the agreement being signed.

Trading on Express Kenya shares has resumed at the Nairobi Securities Exchange (NSE) after a three-month suspension following a takeover bid by the firm’s CEO Hector Diniz. Diniz Holdings, an investment firm, has bid to acquire the 38.36% stake held by other shareholders other than its affiliates for Sh5.50 a share. (Via Business Daily).

The Competition Authority authorized the proposed acquisition of the entire issued share capital of Trillvane Ltd by Kuehne+ Nagel limited.

The Competition Authority authorized the proposed acquisition of Carzan Flowers (Kenya) limited by Star Bright Holdings.

The Competition Authority authorized the proposed acquisition by Diamond (bc) b.v. of the Diversey Care division of Sealed Air corporation (“sealed air”) and of Sealed Air’s food hygiene and cleaning business within its food care division.

The Competition Authority authorizes the proposed acquisition of 51% shareholding in Mavuno Fertilizers Limited by Omya (Schweiz) Ag.

Trans Miller Limited carrying on the business of food processing, packaging and distribution and other related agri-business activities, situate at L.R. No. 4953/1185, Thika, have been sold and transferred by the transferor to Tahuna Limited, who will carry on the said business of manufacturing under the name and style of Tahuna Limited.

Funguo Investments Limited has acquired a majority – 51% stake in Feastfoods Processors Limited, a food processing company that has been set up to manufacture fruit juice puree and concentrates in Kwale County (via Business Today)

The Competition Authority of Kenya excludes the proposed acquisition of 51% of the issued share capital of Ess Equipment Kenya Limited by Vronbisman Limited from the provisions of Part IV of the Act due to the following reasons as the acquirer does not operate in Kenya and the targets turnover for the preceding year 2017 was KSh. 79,314,330 and therefore, meets the threshold for exclusion under the merger threshold guidelines.

Airline/ Oil/Energy/Mining M&A

Kenya Airways PLC, KLM Royal Dutch Airlines (KLM) and Societe Air France S.A (Air France) have made an application under section 25 (1) of the Act for the exemption of their proposed Agreement of Accession and Amendment to Joint Venture Agreement (proposed Amended JV) from the provisions of section• A of Part III of the Act. The application for exemption is for an indefinite period (as long as the amended N Agreement remains in force).1. The proposed Amended N agreement provides as follows —(a) the inclusion of Air France as a party to the Joint Venture Agreement (original JV agreement) between Kenya Airways and KU* and(b) that all references to KLM in the original JV be construed as a reference to both KLM and Air France.

There has been an ownership change at Safarilink as ALS Limited, one of the shareholders of the firm, sold its entire to Bridges Limited, a Ramco Group affiliate, and an existing shareholder. As a result of this private transaction, Captain Aslam Khan of ALS relinquished his position of chairman with Safarilink’s owners settling on Mr. Ngunze to steer the airline’s board (via Business Daily)

Ethiopian Airlines, the largest Aviation Group in Africa announced that it has finalized shareholders agreement with the Government of Zambia for the re-launch of Zambia Airways. The Government of Zambia will be the majority shareholder with 55% and Ethiopian will have 45% stakes in the airline – and this comes after another consolidation at Ethiopian.

Base Resources announced that it reached  agreement with World Titane Holdings whereby Base Resources will acquire an initial 85% interest in the wholly owned Mauritian subsidiaries of World Titane, which between them hold a 100% interest in the Toliara Sands Project in Madagascar. Base Resources will acquire the remaining 15% interest, with a further US$17 million payable on achievement of key milestones, as the project advances to mine development. The acquisition is to be funded by the A$100 million share offer currently underway, refer below for further details. Completion of the acquisition is expected to occur in late January 2018.

Investec Asset Management through its Africa Private Equity increased its investment in Mobisol with consortium partners the IFC and FMO. Mobisol, headquartered in Berlin deals with the energy demand from off-grid households and has operations in Kenya, Tanzania and Rwanda where it has sold 110,000 systems benefiting over 550,000 people.

Following Total SA’s commitment, the Government has consented to a proposed acquisition of the issued and to-be-issued share capital of Maersk Oil Exploration International (Mogas Kenya) in respect of Blocks 10BA, 10BB and 13T. Earlier, Total had acquired Maersk Oil for $7.45 billion in a share and debt transaction.

Africa Finance Corporation and Harith General Partners (Aldwych Holdings) have merged their electricity generation assets into a new company – Anergi Holdings (includes Lake Turkana Wind Farm and Rabai Heavy Fuel plant in Kenya.

The competition Authority approved the proposed acquisition of indirect control of Savannah Cement by Benson Sande Ndeta. 

The Competition Authority approved the proposed acquisition of Associated Vehicle Assemblers by Simba corporation. 

Real Estate & Supermarkets M&A

Actis has agreed to sell its 79.5% majority stake in Mentor Management Limited a Kenyan project management company, to Turner & Townsend, a global construction and management consultant. The management team of MML will retain its minority stake. Actis acquired a controlling stake in MML in 2011 (Via Business Daily).

Mr. Price franchised business carried on by Deacons (East Africa) PLC will be transferred on or after 1st April, 2018 to MIRP Retail Kenya Limited  which will carry on the business.

Nakumatt Holdings and Tusker Mattresses have made an application under section 25 of the Act for the exemption of their proposed management services and loan Agreement for a period of three years.1. The terms of the agreement are that: Tuskys shall provide management services to Nakumatt including procurement and inventory management; Tuskys shall advance a loan to Nakumatt to provide it with emergency funding which shall be used to pay some of the outstanding amounts to employees and landlords; Tuskys shall provide recurring payment guarantees to the suppliers of the target to ensure the suppliers supply stocks to the following Nakumatt’s outlets: Village Market, Galleria, tikay Center, Lavington, Prestige, Mega, Highridge, Karen Crossoads, Ridgeways, Lifestyle, Embakasi, Garden City.

After 40 years, Makini Schools are being old to Schole Ltd, who will acquire all shares of Makini, and who will work with ADvTECH to enhance the quality of education as Makini continues with the Kenyan curriculum.

Telecommunications, Media & Publishing M&A

Kwesé has acquired a significant stake in iflix Africa, which will now form part of Kwesé’s diverse broadcast offering, as the core vehicle to deliver seamless mobile experiences to millions of viewers in Africa. Having set up operations in Nigeria, Kenya, Ghana and South Africa, iflix offers users the region’s most extensive collection of highly acclaimed local African and international series and movies, including first-to-market exclusive programming. This, in partnership with Kwesé’s broadcast operations and footprint, will create an exceptional mobile offering for consumers on the continent.

TPG Growth, the middle market and growth equity investment platform of global alternative asset firm TPG, announced today that it has signed a definitive agreement to acquire a majority stake in TRACE, the market leader in afro-urban music and entertainment. The remaining stake will be owned by TRACE’s co-founder and management team. TPG Growth will invest alongside Evolution Media and Satya Capital. As part of the transaction, MTG, a leading international digital entertainment group that invested in TRACE in 2014, will sell its stake in the company.

International Paper and Board Supplies carrying on the business of trading in printing and packaging materials and consumables at L.R. No. 209/11066, will transfer all its business, stocks and assets to The Print Store who intends to carry on the business from the aforesaid premises.

The Competition Authority authorizes the proposed acquisition of the entire issued share capital of Alldean Networks limited, Simbanet com limited and Wananchi telecom limited by Synergy.

Pressmaster carrying on the business of trading in printing and packaging materials and consumables at L.R. No. 209/12156, will transfer all its business, stocks and assets to Pressmaster Africa Ltd.

The Competition Authority authorized the proposed acquisition of the assets and business of International Paper and Board Supplies Limited by the Print Stores Limited, on condition that the acquirer absorbs not less than 45 out of the current 78 employees in the target business.

The Competition Authority authorizes the proposed acquisition of the entire issued share capital of Pressmaster Africa Limited by Ramco Plexus.

Edit From Tanzania where businessman Ali Mufuruki is seeking to increase his stake in Wananchi Group,  incorporated in Tanzania from 1% to 51% by acquiring 50% of the company, according to this notice (PDF) to Tanzania’s Fair Competition Commission.

Edit American Tower Corporation (ATC) has reached an agreement to acquire 723 telecommunication towers held by Telkom Kenya for an undisclosed amount. The deal, which is expected to be completed in the first half of 2018, will give the multinational a presence in the country, nearly a decade after making its maiden foray into East Africa through similar acquisitions in neighbouring Uganda and Tanzania. Read more

Other M&A

The Competition Authority authorized the proposed acquisition of 40% of the ordinary shares in AAH (BVI) limited by Oman Trading International with certain veto rights.

EAVCA: East Africa Private Equity Snapshot

Ahead of the 3rd Annual Private Equity in East Africa Conference, (taking place on June 15 in Nairobi) the East Africa Private Equity & Venture Capital Association (EAVCA) and KPMG East Africa released their second private equity survey showing increased funding and activity, and with a lot more opportunity for deals to be done.

They estimated that of the $4.8 trillion raised between by P/E funds globally between 2007 and 2016, about $28 billion was raised by Africa-focused funds and $2.7 (including $1.1 billion in 2015-2016) had been earmarked for investment activity in East Africa.

This private equity had funded over 115 deals in the period that were included in the survey. Out of these  the 115 deals, 23 were agri-business, 20 were financial services, 13 manufacturing, and 12 FMGC representing 59% of deal volume. The average deal size had also grown to the $10-15 million range, while in the initial survey it was below $5 million.

East Africa Private Equity Survey

Of the 115 deals, Kenya had 72 deals (63% of the total), Tanzania 19, Ethiopia 8, Uganda 12, and Rwanda at 4. Some of the large deals in the survey, by country, include:

Rwanda: Cimerwa – PPC ($69M), Cogebanque ($41M), BPR-Atlas Mara ($20M), Pfunda Tea ($20M)
Uganda: topped by oil deals CNOOC and Total SA (both $1,467 million), Tullow $1,350M, Total $900M, CSquared-Mitsui $100M, Sadolin-Kansai $88M
Ethiopia: National Tobacco – Japan ($510M), Meta Abo-Johnnie Walker ($255M), Dashen-Duet ($90M), Bedele-Heineken ($85M) and Harar-Heineken ($78M), Tullow-Marathon ($50M)
Tanzania: Africa Barrick Gold ($4,781 million), Tanzania – Pavilion ($1,250M), Vodacom ($243M), Export Trading Co ($210M), Millicom-SREI ($86M), Zanzibar Telecom-Millicom ($74M)
Kenya: Safaricom-Vodacom ($2,600 million), Africa Oil-Maersk ($845M), I&M-City Trust ($335M), Ardan-Africa Oil ($329M), Kenya Breweries-EABL $224M, UAP-Old Mutual ($155M), ARM Cement-CDC ($140M), Wananchi ($130M), CMC-AlFuttaim ($127M), Essar ($120M)

P/E operations: There are about 72 funds operating/focused in East Africa (up from 36 in the first survey) with over 300 employees. 89% of the survey respondents have a local presence in East Africa.

Some of the fund companies that responded to the survey include Acumen, Abraaj, AfricInvest, AHL, Ascent, , Catalyst, Centum, CrossBoundary, Grofin, Emerging Capital Partners, Kuramo, Metier, Mkoba, NorFund, Novastar, Phatisa, Pearl Proparco, Swedfund, and TBL Mirror

Returns:  Of  the deals done, survey responders had an average IRR target was 22% while the actual IRR achieved was 19%.  There were 34 exits between 2007 and 2016, with increased recent activity; 2014 (had 7), 2015 (7) and 2016 (6). The preferred mode of exit is sale to a strategic investors (preferred by 78% while this mode accounts for 38% of exits) followed by share buy backs (32%), then sales to another P/E (21%).

Many of the funds in the region are still in early stages, and 54% have made nil returns to their investors. They surveyors estimate there are more opportunities for Africa private equity in health, education, retail, and manufacturing sectors.

Dstv Pricing in Kenya

This week saw satellite TV provide Multichoice Kenya increase the price of their DSTV satellite TV subscription service, with the top (premium) package now going to cost Ksh 9,400 (~$92) per month from October – an increase of almost 15%. This has since been debated on several fronts, one of which was a cost comparison with South Africa pricing where the company is based.

WGKantai dstv

 Another was done  in terms of what paying for TV means compared to other real life costs like paying for housemaids.

In an interview on the price change, Multichoice Africa CEO Tim Jacobs cited several factors behind the increase including Kenya’s shilling which has depreciated 15% this year against the US dollar in which they buy most of their programming such as the (extremely popular) English Premier League (EPL) who’s rights were hiked 70% in the new deal signed earlier this year.

The price increase also sparked a local consumer lobby to pursue a boycott and petition and in past years, a similar dstv cost increase was debated in Kenya’s parliament. Back in April 2010, one MP asked if Kenya’s national broadcaster – KBC, who own 40% of Multichoice Kenya would consider waiving their profit so that more Kenyans could afford to watch the 2010 World Cup .

dstv maid

This may be the most significant sports television moment in Kenya since  GTV went bust after a short period of outspending dstv in the race to televise top sports events.

The new dstv cost that has a figure close to five digits per month seems to be a tipping point with many subscribers now saying that the cost is simply too much and that they plan to downgrade their subscription to a cheaper one or switch to another company.

Rival, Zuku (of the Wananchi Group) has since responded to the dstv increase with an enhancement of their channel package and offering their viewers more programming, at no extra cost, by adding as many as 19 new channels such as Nat Geo Gold, Fox Sports 2, BET, Discovery Science, IConcerts, TLC, Fox News, FX , Bloomberg, E!, Sky News and Euronews.dstv multichoice

It’s not clear how many of the 100,000-160,000 dstv subscribers in Kenya are on the premium package, but it’s clear that many of those that do, subscribe to it for the sports packages (which are exclusive to the premium tier), and also that many of the same premium dstv subscribers do enjoy watching their favorite sports teams and players with their friends and fellow fans in sports pubs, and not at home where they are paying for the sports (and face many distractions!).

Growing a Tech company: 5 Lessons Learnt in Hiring

A guest post by @Wanjiku

Two months ago, Erik Hersman wrote a nice post on his blog about Kazi ya mkono. To the educated folks, “kazi ya mkono” is for those who didn’t go to school and were relegated to manual labour or just assisting and to the folks doing it, its a way of earning a living.

Over time, the term “kazi ya mkono” has evolved to mean the people who are not afraid to get their hands dirty and, given the proliferation of universities and colleges, having a degree doesn’t mean anything, and you still get to do kazi ya mkono.

But for the sake of this article, let us use the meaning as “digging the trenches, getting our hands dirty and just getting stuff done”. I am that person who always has a business going, whether selling biscuits and bread in high school or operating the corner milk shop in the neighbourhood – I am the side-hustle person.

Since Erik’s piece came out, I have been thinking about my mistakes and lessons in the process of growing a tech company. Staffing is probably the biggest challenge a growing company faces, along with capital. Investing in an area like tech infrastructure is challenging. You get the most skilled and the mediocre claiming ability to do the same job.

The lessons relate to bringing together a team, that will help achieve the dream.

1. Earning your credibility: One of the guys we hired in the early days, told me that he wanted to work for a company with directors. I wondered what he meant because the company is limited ergo, must have at least two directors.

What the guy meant was that he wanted to work for a big company with a name or a board of directors – I presume more than two. You guessed it right, a month later, the guy gave me a day’s notice when Wananchi Group came calling. (and that was of course after I had paid him his salary 🙂 )

That statement stuck with me over the years because the guy went to work on the same salary or maybe slightly higher, but he had chosen to go because Wananchi had the name. That I couldn’t argue with although I wanted to ask if Richard Bell would tuck him to bed in the evening, after his board meeting or serve him dinner. But I reserved my comments.

You can imagine the conversation a few months ago, when we discovered the guy was let go from Wananchi and was working at another company but with basic pay. I actually called him to say that we still have the same directors but could give him a job. Well, that was just talk.

People want to work for a credible or seemingly big organisation. That is why people get souped-up offices, with furniture that can massage behinds, directors buy big cars and provide this make-believe image in order to attract talent. People seem to buy into this perception big time.

2. Papers don’t always mean anything: Last month, I was very shocked by a smooth-talking guy who had tech certifications from here to Meru. He had everything but I was interested in the practical bit. I asked him like ten times whether he knew the stuff and if I sent him to a client he would be o.k. He answered yes, giving me examples of sites he had deployed and I was impressed by the young man.

Enter the practical bit. The technical lead greeted him with a router and the guy descended on his phone to search. Then he was told that the internet wasn’t needed. The guy sneaked out under the guise of pressing matters. The guy had Cisco certification but he couldn’t even log in.

I have several other cases of guys with certs who have done it but an equally high number that are self-taught or learnt on the job and are very good at it. My new strategy was to start with the practical, then chat about other stuff later.

The best, efficient people are not always the most educated.

3. No one likes to persevere, learn and earn later: This debate has been going on for a while. A person leaves university and immediately wants to earn some big money. They don’t look at it in terms of experience and what they can provide, its all about the big money.

Yes, our higher education teaches us that we can only be managers and bosses and not the people doing the actual stuff. I guess that is why very few people want to stick it out for a few years on minimal pay that rises normally;  we are all ready to drive within year one and how will you guarantee that loan?

I was recently eavesdropping on a conversation with two people in accounting. The old timers got their jobs when CPA (K) was the thing. Now, new graduates are coming with the papers and within the first year they wonder why their boss with minimal papers should be taking home that much.

I drew parallels with tech, where new graduates ask the same of a guy who has learnt through experience over the years. How do you answer that, while there is no substitute for experience?

I gave up on trying to show people what comes with patience. I started by working hard to show people that lack of higher education shouldn’t be a barrier to achieving dreams. People didn’t see that far and in the end, my colleague told me to quit “being all motherly”.

Now, I demand performance, if you can’t hack it, try another place where mediocrity is entertained and if you want to go stay at home, it is ok.

4. For the guys who put their head down and work: I know much has been said about salary negotiations and productivity. The last quarter we hired more people and of course we all have to keep the wage bill in check. The salaries are not the highest but we are good and make people comfortable.

But after a month or two, we realised that some of the guys were worth more than they negotiated. These guys had gone out of their way to deliver beyond expectations. The fact that they were on fair or comfortable salaries didn’t impact their productivity.

There are several circumstances that may make people not to get the best deal but once someone has proven their value, it is only fair that you make them feel appreciated. So, within the second month, the salaries were adjusted up, to reflect their (almost) true value.

I am still struggling with the guys who over promise and under deliver. How do you call guys and say, your salary is a scale lower? Yet they negotiated higher? That one I am still figuring out.

5. Rewarding loyal employees: In every company, I am sure there is that one person or people who can give you the history, from the time they all shared one desk. These are the people with institutional memory and probably know the organisation’s DNA.

Pay rises, continuous training and promotions are some of the strategies to retain the people but as companies grow, shareholding becomes a better option.

Conclusions: There no way of saying that these lessons apply to everyone but for Kenyan companies that are bootstrapping, you are likely to face these challenges.

At the same time, don’t think that your passion and drive as a founder can necessarily rub off the people working there. You need extra motivation and money does a great deal of motivation. If you have to go hungry to drive the company, you can do it with your co-founders, but not with the employees, otherwise they will start leaving.

The trick is to sell the dream to the team while at the same time working hard to make the conditions comfortable and making them feel it whenever there is an upturn in fortunes. If the profits get better, find a way to make it felt.

That is what I tell myself 🙂

Zuku Slashes Kenya Internet Prices


thanks K for the Breakfast invite

It’s been a big year for Zuku of the Wananchi Group – they got new funding and the fibre cable reached in Kenya – they are a shareholder in TEAMS which is operational (but not yet launched) and have also bought capacity on Seacom. Their CEO said the 50 gigabytes they have on TEAMS will serve the anticipated needs of their Kenyan customers for the next decade and they have the option to increase capacity on either cable.

Reduced internet prices: This morning (2/12/09), Zuku announced reduced internet prices of ~50% as follows for wimax package:
• Prosurf (256Kbps) 3,000 Kshs 1,500 (~$20)
• Supersurf (512 Kbps) 6,000 Kshs 2,500 (~$33)
• Megasurf (1 Mbps) 10,000 Kshs 4,500 (~$60)
The one time installation cost has also gone down from 5,800 to Kshs 3,000 lowering the entry barrier for homes

For small corporates and SME’s they have new Zuku Biz which is unlimited corporate broadband packages priced as follows:
• 10Mbps will cost Kshs 10,000 per month (~$133)
• 15 Mbps will cost Kshs 15,000 per month (~$200)
• 20 Mbps will cost Kshs 20,000 per month (~$266)
For these installation costs are Kshs 3,000, and equipment and VAT are included in the pricing, with security services offered at an additional cost (firewall, e-mail security, spam management)

Reaching out to property developers Zuku is currenlty available in Nairobi Nakuru Mombasa and Nyeri are already wired, and in Nairobi 40 buildings are fully wired with another 100+ having cabling up to their doorstep. By reaching out developers and property owners, Zuku hopes to convert planned, new, and existing buildings to be internet-ready properties that meet the modern demands of some of their prospective tenants for high quality affordable internet. Zuku have a dedicated team to liaise with property owners on right of way, and installation issues for buildings. (Here’s a list of Nairobi fibre- ready buildings)

New Nairobi Hotel: The Zuku breakfast took place at the new Ole Sereni Hotel on the edge of the Nairobi National Park, off Mombasa Road. The building previously housed the old US Embassy in Nairobi prior to its conversion to a 134 bed 5-star hotel. Like the adjacent Panari, Ole Sereni also lies close to Nairobi’s Jomo Kenyatta Airport, shielding their guests, and transiting airline passengers, from some of Nairobi’s (now) notorious traffic jams. Though not yet officially open, and with some facilities yet to be completed, management says the hotel rooms are already fully occupied. Wildlife in the park can sometimes be observed in the early morning, and should become a regular occurrence once a waterhole is completed (inside the park fence) to be observed from the hotel’s dining room and bars which have a (relatively) pocket friendly Tusker price of 195 ($2.6)