“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 well today.
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.
Last week, many of us have discovered that we have been apparently being registered as members of political parties without our knowledge. This comes courtesy of data uploaded to the national ecitizen registry by the Office of the Registrar of Political Parties (ORPP)
I have apparently of the Jubilee Party since 2017, the Party that produced the President and Deputy President and has a dysfunctional majority in Parliament. It has roped in ODM, the party that should be the minority, into a handshake agreement and this means there is no opposition party in Parliament.
The ORPP also administers the Political Parties Fund that draws funds from taxpayers, and for 2019/2020, it disbursed Kshs 872 million, with 564 million going to the Jubilee Party and 263 million to the Orange Democratic Movement (ODM).
What is the state of the different party finances? What is the best party to take over?
Here’s a peek into their financing.
- Jubilee Party. Income of KShs 862 million. Last year, the political parties registrar announced that Jubilee was eligible to receive Kshs 161 million from the political parties fund for the first quarter of2020/2021. The party has income of 103M from public contributions and staggering Kshs 758 million from other governments, gifts and in-kind services (up from 240M the year before). They spent a sizeable Kshs 87 million on rent, Kshs 166 million on staff and Kshs 271 million in general expenses – and now have an accumulated surplus of Kshs 257 million up from a deficit of Kshs 70 million the year before. (Read more)
- Orange Democratic Movement (ODM): Income of Kshs 1.5 billion income* in 2020. The party claims they are owed Kshs 7.5 billion by the political parties fund and “booked Kshs 1.2 billion of transfer owed” as income from 2018. The registrar of parties says ODM is eligible to receive Kshs 75M from the Political Parties Fund for the first quarter of 2020/2021. ODM was seeking a presidential candidate earlier this year for 2022, who is a committed, passionate disciplined and dependable party member who can mount a successful campaign. The fee was Kshs 1 million and with a reduced amount of Shs 500,000 for women, youth or persons with disabilities.
- FORD Kenya is Kshs income 9 million in 2020, with its MP’s contributing half of its income. It is a well-run party despite its leadership wrangles but has received no money from their parliamentary coalition partner (ODM), for three years now.
- Kenya African National Union (KANU) income of Kshs 5 million in 2020. KANU which ruled Kenya from 1963 to 2002, owes Kshs 176 million to creditors and has an accumulated deficit of Kshs 173 million. No results since 2013, it used Co-op Bank of as do most parties since the bank, and Equity, have branches outside Parliament.
- Wiper: Kshs 15M income in 2018 when it budgeted for, but did not get, 6 million from PPP funds. Edith Nyenze and Maluki Mwenda each paid 200,000 as nomination fees. Previously, Wiper got Kshs 130 million income in the 2017 election year with 46 million from members and 52 million from election fees.
- Amani National Congress: Revenue of Kshs 12.5 million (2019) from members contributions and donations. Already seeking aspirants for MP, MCA, women representative, governor and senator seats for the next scheduled election of 2022.
- Narc Kenya: Has income of Kshs 5M (2019) as both members and MP’s contribute to its activity and financing.
- Maendeleo Chap Chap had Kshs 38 million income in 2017. Their founder gave Kshs 36M million, and they spent 15M on recruitment, 5M on member cards, 4M on rent for HQ, 2.7M on branding, and 3.2M on office operations & postage.
Other less active parties with financial numbers include:
- Democratic Party: income of Kshs 3 million (2019)
- Green Congress: income of Kshs 3M (2018)
- PDP: Kshs 2M income (2018)
- Safina: Kshs 1.6M income (2018)
- PNU: Kshs 1M income (2018). The Party won the 2007 election for Mwai Kibaki and later earned Kshs 21 million in the 2017 election year.
- The New Democrats: Kshs 1M (2018), the Mombasa party’s year of formation.
- Social Democrats: Kshs 0.5M (2018)
- KADU Asili: Kshs 6M income (2017).
- Civic Renewal Party is a new party, has high rent (Kshs 4 million), but no officials.
- National Vision Party: No income in 2018. Their office is at Vision Plaza, and they claim to have 479,000 members.
- Other parties, with no numbers shared, are the Thirdway Alliance, Roots Party, Ukweli Party, New Democrats, Maziingira Party (previously the people patriotic party), Alliance Party of Kenya, Chama Mwangaza Daima, Independent Party (TIP – whose founder passed away a few weeks ago), Communist Party, Kenya Social Congress, Agano party, Conservative Party of Kenya, Grand National Union Party of Kenya, Muungano Party and Mwangaza Party.
- Last year the ORPP registered 21 parties. also rejected 176 others, most of which were because their names “lacks outright meaning)”. ORPP also refused to register several party names that play around the names of “Hustler” and “Building Bridges”. The given reasons are that Hustler is founded on one social grouping while BBI is an ongoing public agenda matter.
EDIT: The Political Parties Fund has paid the Jubilee Party (JP) Kshs 353.8 million and the Orange Democratic Party (ODM) Kshs 165.2 million for the 2nd, 3rd and 4th quarters of the financial year 2020/2021.
Last week, Money-Wise with Rina Hicks had a nice talk on “Safeguarding your Family after you’re gone: Wills and More”. Her guest was Leah Kiguatha, a family law expert who said that in the court processes encountered, only 10% of Kenyans of African descent have written wills.
Other excerpts of new stuff (from a male perspective!)
- Why write a will? Make a decision, as if you don’t decide, someone else, who is handling a hundred other disputes, who does not know the pain and peculiarities of a family, will make that decision for you. Whether you write a will or not, there will be a court process.
- Spousal Status Changes with Death: If a man has a secret wife and kids, he should mention and provide for them in the will. When he is alive, they may not be recognized, but once he dies, the law allows them to become wives and dependents for purpose of succession. (Laws made by a heavily-male parliament in the 1980s!)
- Register Land: As joint ownership or in common as this enables you to by-pass the will process. Register land with someone so they are not harassed when you die. Also if a wife dies, and she expects that her spouse will remarry, through in-common ownership, she can ensure that 50% of the matrimonial house passes to her children.
- Bank Access: Have your spouse or some older children to be signatories to a bank account and know your card PINs. If you are the only one who can access money, your family will be scrambling to feed mourners, pay school fees, and be disturbed by landlords – as it will be a year before they can access that money and after hiring a lawyer.
- Update Records: Check your will every 5 years. Also, update your insurance, SACCO and pension beneficiary details every few years. Insurance does not have to go through a court process if a beneficiary is nominated a beneficiary, but if different people show up to claim it, they will leave it to courts to settle. Sometimes, as a widow is mounting, a brother or mother of the deceased has rushed to the employer to claim they are the intended beneficiary.
- Reduce Unintended Beneficiaries: A will safeguards your family and minimizes disputes, and as dependent fight it out, assets and estates go to waste, or are exploited by opportunistic people. If you don’t have good records, squatters or a county government will benefit along with banks, insurance, and the Unclaimed Financial Assets Authority. It is estimated that over Kshs 200 billion deposited in banks belongs to families who are awaiting court grants to release the money to them.
- Oral wills: Are only valid for three months unless one is in the military. Also, they must be witnessed (heard) by two people, who are not beneficiaries.
The full hour is online, and you can watch it here.
The Central Bank of Kenya (CBK) has proposed radical new measures relating to credit reference bureaus operating in the country. It barred digital / mobile-based lenders from submitting information to credit reference bureaus, following public complaints.
It also proposed that people should be able to obtain their first clearance credit certificates at no charge, a move to benefit youth and graduates seeking employment. Other measures were that the minimum amount for which one can be reported is Kshs 1,000 (~$10) and savings & credit societies (SACCO’s) are now included as authorized subscribes of credit reference data.
As part of the Government’s response to Coronavirus, the CBK also suspended new listings to credit reference bureaus for loans that become delinquent between April 1 and September 30 to shield borrowers at a time when incomes and economies are disrupted.
In addition, Kenya’s Parliament will soon debate new clauses of credit reference regulations that include:
- A credit information provider shall not provide information relating to a customer to any bureau if the customer notifies the provider, by writing or verbally, that the information is inaccurate.
- A bureau shall carry out due diligence and suitability assessment of the third-party credit information provider – to learn about their ownership, management, legality status and accuracy of their records.
- Bureaus are only to share with the customer, the Central Bank, a requesting subscriber and a third party authorized by the banking act, Microfinance Act or Sacco Societies Act.
- Where a customer disagrees with the resolution of some disputed information, the customer may request the bureau to attach a statement of 100 words to the customer’s credit report, setting out the customer’s claim.
- The Central Bank shall be the owner of all information and data held by bureaus and regardless of how the information or data is processed. CBK shall retain the right of access to data even after revocation or expiry of any license issued.
- Every bureau shall prominently display on its premises and on its website, an up-to-date list of all third-party credit information providers that have been approved by the CBK to submit credit information it.
- Credit reference bureaus shall now have to conduct public education programs on how credit information sharing works, and how the public can access services that they can benefit from.
Last month, Kenya’s President announced proposals to cushion residents from impacts of the Coronavirus that has affected many industries and companies by disrupting supply chains and reducing consumer spending. He cited measures such as reduction of income taxes, and Value-Added Tax (VAT goes down from 16% to 14%), that have now taken root in April 2020.
But the details of the proposal are now clear with the publication of the tax laws amendments. They are contained in a 97-page bill that is to be tabled at and debated at a special session of Kenya’s National Assembly (Parliament) on Wednesday, April 8, for their approval.
KPMG East Africa has nicely summarized some of the proposals in the bill, picking through the details. Some notable items are:
- VAT: Items that were previously exempt including bread, milk cream, vaccines, and medicaments, move from the zero list to the VAT exempt list, and this may push up their costs.
- Items that previously did not incur VAT but which will now be charged 14% include agricultural pest control products, tourism park fees, LPG, helicopters, mosquito nets, equipment for solar & wind energy, museum exhibits & specimens, tractors, clean cookstoves, insurance services, and helicopter leasing which previously did not attract VAT.
- For investors: VAT is now charged on the transfer of a business as a going concern, as well as on assets transfers to real estate investment trusts (REIT’s) and asset-backed securities.
- Income tax: Is reduced across different bands with those earning below Kshs 24,000 per month exempted from paying income tax, while the tax rate for top earners goes down from 30% to 25%.
- Non-residents will pay 15% withholding tax on dividends they receive, an increase from the current 10%.
- Corporate tax: This reduces from 30% to 25%.
- Businesses earning between Kshs 500,000 to Kshs 50 million a year are to pay turnover tax, which will now be reduced from 3% to 1% of income, monthly. The previous upper limit was Kshs 5 million.
It is now mandatory for businesses to keep records of all their transaction for 5 years
- Anti-industry moves?: An electricity rebate for manufacturers has been ended, VAT has been introduced on goods used to build large industrial parks, and there will also be reductions of building investment allowances.
- Kenya Revenue Authority: When KRA appoints banks as revenue collection agents, they are to remit collections to the Central Bank of Kenya within two days.
- Removes a requirement that KRA publishes tax rulings in newspapers.
- KRA may pay rewards of up to Kshs 500,000 for people who give information leading to tax law enforcement (i.e whistleblowers).
The National Assembly will also consider regulations of a new Covid-19 Emergency Response Fund that the President announced on March 30. They will also dispense with appointments to the CDF board and the Teachers Service Commission, and consider any bills from the Senate.
So while Parliament debates this under the rush of emergency provisions, most of the clauses are financial items unrelated to Coronavirus.