Category Archives: kenyamoneyinthepast

AA of Kenya restructures for the future

The Automobile Association of Kenya (AAK) is over a century old and a member of the  International Automobile Federation (FIA). It is known for roadside assistance, its driving schools, setting mileage rates, Autonews magazine, car valuations for banks and vehicle inspections. It is also the go-to place for the issuance of international driving licenses, and carnets which are passports for cars to travel across borders e.g to Tanzania, Uganda or for other trips like this bike ride to South Africa.

Before you go on one of these trips, make it easy for yourself and get the following:
Carnet de Passage for each vehicle (get this via AA)
COMESA insurance (get via your insurance company, or buy at the border)
International driver’s license (get via AA)

The AAK had 2019 revenue of Kshs 722 million, expenses of Kshs 643 million and profit of Kshs 79 million. In Covid-affected 2020, revenue dipped to Kshs 472 million, and its net profit was 11 million. It had 100,000 members and net assets of Kshs 252 million.

While other automobile associations around the world do things like operate hotels & petrol stations and do helicopter rescues, the AAK plans its future revenue diversification ventures to include:

  • Establishing service centres in Nairobi, Mombasa, Kisumu, Eldoret and Nakuru.
  • Establish a learning centre called the Africa School of Mobility.
  • Be a leader in innovating mobility products and lead in green technology research.
  • Expand to all 47 counties and later to Rwanda and Ethiopia.

The envisioned projects all take capital so, at a special meeting in October 2021, AAK members voted to demutualise from being an association under the Societies Act and convert to a public limited company (PLC). They overwhelmingly passed proposals, with support ranging from 88% to 99%, including 93% for the AAK to do the demutualization and capital raising project.

The process will see the transfer of assets and investments to Automobile Association PLC, a holding company which will raise capital through a restricted public offer that is open to a new class of “full members.” The company will have an insurance brokerage as a subsidiary and an AA institute as an affiliate.

Currently, AAK members enjoy discounts on petrol (at Total stations), batteries, tyres, shock absorbers, and other services from partner organizations. But in future, “full members” will get shares, voting rights, more discounts on products and services that the AAK will continue to offer, in addition to dividends in future as shareholders. The AAK has also joined the Nairobi Securities Exchange (NSE) Ibuka accelerator program.

One can now enroll for full membership by paying a one-off fee of Kshs. 50,000 through card, M-pesa or deposit at the Cooperative Bank before December 31, 2021. This has been discounted to Kshs 40,000 for anyone who was an ordinary member of the AAK before the meeting date of 19 October. AAK transaction advisors are Standard Investment Bank, MMC Asafo and Tim Sky Media.

Kenya’s Money in the Past: Kenneth Matiba

“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.

Excerpts:

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.

Making Transitions

  • 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.

Corporate Life

  • 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.

Tourism Sector

  • 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.

Sports involvement

  • 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.

Giving Back.

  • 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.

Business Advice

  • 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.

KBA documenting the History of Kenyan Banking

This month, the Kenya Banker’s Association (KBA), the umbrella and advocacy group for the banking industry is celebrating its 59th anniversary. One of its recent projects has been to document the history of banking in the country. This stretches back to 1896 when the National Bank of India, which later evolved into KCB, opened a branch at Mombasa.

The KBA’s Banking History website and documentary project has a timeline of different banking eras. Key moments over the last 125 years include the banking growth that followed the Uganda railway, developing local regulation after Kenya’s independence, the Africanisation and the indigenous banks push in the 1970s. Others are surviving bank collapses in the ’80s and ’90s, interest rate controls and recent banking responses to Covid-19.

Key throughout has been the embrace of technology from the late 1960s, on through computerization and on to the mobile phone era of the 2010s. Along with tracing banking trends like increasing financial inclusion and developing products for informal and small businesses, the KBA timeline also highlights how banks are anticipating, building skills and preparing for the next age of banking. This is expected to revolve around competition with global fintechs, digitization of all customer processes, and embracing financial sustainability principles.

KCB 1923 AGM: Optimism amid political disturbances

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.

More:

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

Bank Clerk in the Kenya Colony

In April 1923, the East African Standard, ran an anonymous blog-like column by a bank clerk in the Kenya Colony. He narrates how he wakes up slowly, is brought tea by his servant Juma (which means Friday), then is brought his bath, of which there are two types, before he goes to work.

Excerpts:

“… and then on to the business of the day. Monotonous life? don’t you believe it! I doubt whether a bank clerk’s life is ever really monotonous as some make it.

In Kenya, it certainly is not as our customers are so varied. One minute, a newly-retired colonel of the Indian army, moustache and all. Next, a retired lieutenant commander from the Navy who perhaps goes one further and sports a beaver. Then one of the boys – Navy, Army or Air force for the duration, now farming. Then a lady farmer, charming, even wearing breeches. Government officials and visitors.

In they come, day after day. Monotonous? Never. All as different as chalk from cheese except in two respects; they are all jolly good sorts and they all want overdrafts.

It’s all very well to be light-hearted about it but I am afraid that we often miss the gleam of bitter sadness which lies behind it all. Kenya is a young colony and fortunes cannot be made in a day. There are as many who failed to grasp this. They come out here with family and little else. The wife is still here, the family perhaps has increased but an ominous overdraft and a mortgage form have taken the place of the little ones.”

The day ends with sundowner drinks and an early night, to be repeated all over again.