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Hope Springs Eternal For The EU Of East Africa

At a time in life when many are in quiet retirement, canny businessman Manu Chandaria has taken up the sword in the fight for economic unity.

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Manu Chandaria is no spring chicken, but he has a spring in his step. The 82-year-old chairman of the Comcraft Group has been on the regional economic radar screen for 10 years through his unflinching support for the East African Community—a common market with a combined population of more than 130 million and a GDP of $75 billion. He

Manu Chandaria, Chairman of Comcraft Group

 

reasons—like free trade proponents—that pooling populations, skills, expertize and production can create the economies of scale and the huge markets that business craves. There’s even talk of the fledgling state, South Sudan, joining the EAC.

“Politics doesn’t put food on the table,” says Chandaria, touching the raw nerve that threatens the pace of EAC integration. Politics killed the first attempt in 1977, when Kenya’s then president, Jomo Kenyatta, fell out with his Tanzanian counterpart, Julius Nyerere, over whether to adopt capitalist or socialist policies. Chandaria has no such doubts.

“We need to help our people to better their lives. That can only be done if businesses have enough space to grow and expand. That’s how jobs are created, incomes improved and GDPs grown,” he says.

The business community views a robust regional economy as a trigger for productivity, economies of scale and competitiveness. It is a wonder why some Kenyan bureaucrats, legend has it, toasted the collapse of the idea with champagne more than 40 years ago.

The 21st century version of the EAC is fashioned along the lines of the European Union, which has monetary union of 27 member countries and one central bank. The EU is currently battling debt troubles among its key economies, like Greece, Italy and Spain, pushing analysts to speculate that EAC monetary union may mean more of the same trouble in Africa.

Richard Sezibera, the Rwanda-based secretary general of the EAC, says uncertainties created by the financial crisis in the EU—the biggest financier of the protocol in terms of funds and technical assistance—won’t affect the EAC.

“Although the East African Monetary Union (EAMU) has been patterned on the Euro Monetary Union, lessons drawn from the ongoing crisis and also the 2008 world financial crisis will ultimately shape it,” he says.

Chandaria, like Sezibera, is stubbornly optimistic, even if the dream of union remains about as elusive as democracy in some of the East African states.

“We are finding it very difficult,” he says with zeal. “Will it really work? That’s the question we were discussing at our regional forums. People are still Kenyan, Tanzanian or Ugandan. It can’t work like that. We need to get to a level where we are East African first, East African second, East African third and the rest can follow… You have to know your business and how to tackle the differences… Otherwise, you will be killed.”

There are plenty of flies in the ointment. Chandaria says Tanzania wants to be in the Southern Africa Development Community (SADC) and EAC at the same time, while Uganda is fiercely protective of its markets against bigger and ferocious business rivals from Kenya. Kenya and Uganda are in COMESA, from which Tanzania pulled out a few years ago. Not so good for a budding economic bloc.

“It is not working the way we wanted. We are just creating unnecessary jobs for so many people instead of building institutions and teaching the people to get the best out of it, so we can get better GDP,” says Chandaria.

The EAC aims to improve earnings for member countries, but every country differs—politically, legally and culturally—making it hard for companies to operate cross-border businesses.

Even the EAC secretariat acknowledges this. “Following the completion of the ratification of the protocol on the common market, the complex and long march towards transforming the EAC region into a common or single market begins with resolve and fervor,” said EAC secretary general Juma Mwapachu during the launch on July 1, 2010. “It is important to underline the words ‘complex and long march’.”

The process is complex in terms of what is required to be undertaken at the levels of the partner states and in certain respects, at the level of the EAC itself. All five countries have a common external tariff; an identical tax applied to imports from outside the bloc, and they allow duty-free regional trade with the exception of Kenya, the largest and most advanced economy of the five. The common market aims to build on this and enable the free movement of people, capital and services, and abolish import duties.

The EAC’s ambitions go beyond pure economics. The plan is for the common currency in 2012 to set up the groundwork for a political federation by 2020. Yet the other member states worry that Kenya, which is the economic powerhouse of the five, could end up being the dominant player.

It’s easy to understand why Chandaria, the son of a former shop attendant who built the business empire, is so passionate about integration. A Kenyan-born entrepreneur who returned from studies abroad to take charge of the family business, Chandaria has worked in Uganda, Tanzania and Kenya. In the past 50 years, the Chandaria family has transformed a scrappy medium-ranked business into a major global player with some of the most coveted brands, including roofing iron sheets, electronics, software, kitchenware, pots and pans. He won’t give figures about the net worth—the businesses are jealously private—but simple calculation points to a conglomerate worth millions of dollars.

Comcraft has invested in steel rolling, aluminizing, galvanizing, color coating and profiling. The companies include Mabati Rolling Mills Ltd in Kenya, Aluminium Africa Ltd (Alaf Ltd) in Tanzania, Uganda Baati, Safintra Steel in Zambia, Safintra Steel in Mozambique and Safintra Steel in Malawi. The others are Safintra Johannesburg, Safintra Durban, Safintra Cape Town, Safal Steel in Cato Ridge near Durban and Midget Steel in Nigeria. The group also has a presence in the pipe and section manufacturing division in Insteel Ltd in Kenya, Alaf Ltd Tanzania, Uganda Baati and Hoech Pipe in Nigeria.

Chandaria, who steered Mabati Rolling Mills to one of the most successful companies in the Comcraft stable, says success has taken a concerted effort of family, understanding, higher education and vision in entrepreneurship. “It’s basically the principle of joint family,” he says, sipping herbal tea at his palatial home. “Zero multiplied by zero is zero, one multiplied by one is one; until you reach two, where two times two is four, which gives you a base for linear multiplicity of four times four to get sixteen and so on. We decided we want multiplicity.”

That’s his mathematical way of explaining how his family teamed, with his in-laws, to build a business empire—from the pots and pans to iron sheets to manufacturing, electronics and software. Not very many people manage such a feat. This Indian family from Savrashtra, Gurjarat, has proved that blood relations can also build a strong bond for business.

This is a big lesson for African entrepreneurs who often go it alone in business and fizzle out, or at best, start small and remain so. In Kenya, the Indian community dominates businesses: in retail, think Nakumatt Holdings owned by the Atul Shah family; in manufacturing, think edible oil maker Bidco, owned by Vimal Shah, who controls virtually the whole of Kenya’s industrial area portfolio in Nairobi and major towns.

When Manu Chandaria’s illiterate father came to Kenya 96 years ago, he had a simple mission: to earn 4,000 rupees and return to Gurjarat.

Chandaria with Aruna, his wife of 56 years

But after a period of super-high growth, almost all the low-hanging fruit is gone. Now the group is left with expanding its existing business lines and scouting for opportunities in emerging sectors like ICT.

Chandaria joined Kaluworks in 1951, alongside his brother, a food technologist, and two other siblings—a civil engineer and campus graduate. Then Kaluworks had 40 workers and a grocery supply business. “We decided that everybody was going to work hard, from Monday to Saturday, and if there was maintenance on Sunday, we worked on Sunday. From 40 people, in five years’ time, we had 500 people. That cooperation planted the seeds of partnership that expanded the workforce to 800 people by 1960.”

Chandaria was sent to Uganda, the only country that was known to be rich in those days. There was a joke in town that Uganda would earn, and Kenya would spend, by selling them products. So he opened an office there and undercut the competition.

The dawn of independence in the early sixties opened new investment opportunities in newly autonomous states, and Comcraft went on a spree. It ventured its iron sheet business in Tanzania (Mabati Ltd), Zambia (Galco), Uganda (Bati Ltd) and Ethiopia (Ethiopian Steel), making it a pan-African business in just five years. “What we knew we duplicated, triplicated, four times, five times…” he says.

The group’s strength is in teamwork and building multiple plants in various markets. This is then boosted by Chandaria’s shrewdness in creating strong and loyal management teams. But he admits the group’s leadership is not always able to attend to difficult situations in time, leading to losses or lost opportunities. The company has also been slow in training enough numbers of management teams for existing and future expansion.

In 1953, Chandaria proposed a charity foundation, but his father initially rejected the idea. “You lived too much in America; we are not Ford Foundation or Chrysler,” said his father.

Today, Chandaria’s foundation is easily the biggest and one of the oldest charity organizations in the country. Some of its notable contributions in Kenya include Chandaria School of Business at United States International University (USIU); Chandaria Business Innovation and Incubation Centre, recently launched at Kenyatta University; and the Chandaria Emergency Centre at Nairobi Hospital, to mention but three. The foundation has done lots in helping the poor, in rebuilding houses and schools of those displaced in the post-election violence, and in educating bright children from poor families.

Philanthropy is the in-thing for the super-rich these days, with US investment guru Warren Buffet urging fellow billionaires to give at least half of their wealth to charity. In most of Africa, it is manifested mainly in corporate social responsibility—planting a tree here or donating a cheque there.

“If you can’t give what you have—experience, knowledge, philosophy,” Chandaria says, “I don’t know what else you can give. I can make a swimming pool of whisky, but I don’t drink. I have compassion for others. I have no hobbies because my game is to serve. I walk in slums and children come to play in my compound.”

As politicians struggle to fit their interests in the East African frame, it is clear that to achieve integration, and urgently so, the region could need more Chandarias.

Entrepreneurs

Enterprise And Traceable Tea From Tanzania

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Tahira Nizari; images supplied

How this Tanzanian entrepreneur’s tea startup is weathering the Covid-19 storm.

When Tahira Nizari started her social enterprise Kazi Yetu in Tanzania’s bustling city, Dar es Salaam, with her business partner and husband, Hendrik Buermann, almost two years ago, she didn’t anticipate the sheer scope of her big idea.

But she also didn’t expect that, because of an employee’s exposure to the coronavirus in April, she and her entire team would be quarantining for two weeks, stalling work in a year that she had projected growth for her company. With the pandemic’s onset, she lost most of her customer base in Tanzania, albeit temporarily, and was forced to come up with a game-plan and quickly pivot.

“It’s been an economic recession overnight, more or less,” says Nizari.

With family roots in Tanzania, and armed with formal degrees from Dubai and Canada, and experience in economic inclusion in the non-profit development sector, Nizari aimed to set a benchmark in the agribusiness sector in Tanzania through value-addition and by employing local women in her factory based in Dar es Salaam to produce “a traceable product” for the local and international market.

“Right now, tea is just exported in bulk completely (from Tanzania) and then all the jobs thereafter in that value chain are done abroad. So what we said was ‘let’s redistribute that job creation, let’s bring it back to Tanzania and let’s create a facility in which we can hire workers all locally and have a product that is 100% made in Tanzania’,” says Nizari. After extensive research in multiple target markets, both locally and abroad, building relationships with 250 Tanzanian farmers, setting up a factory exclusively employing local and previously-unemployed women, and many iterations of the seven blends of its flagship Tanzania Tea Collection using local flavors and spices, Kazi Yetu was ready to expand its scope in 2020.

“We were following our business plan… but we were really cautious and risk-averse (in 2018 and 2019). And then, we said, ‘you know what, when 2020 hits, it’s going to be growth’.”

Nizari was planning on reaching up to 4,000 farmers, buy machinery from China, grow the local B2B customer base, permanently employ all the women at the factory and begin to export on a larger scale after the launch of Kazi Yetu’s online store.

But when the coronavirus hit the local and international markets, things started looking very bleak, especially since Kazi Yetu is currently fully self-funded.

 Not only did it lose almost all of its monthly income, but the farmers stopped meeting in groups for the training, so the supply chain was disrupted.

“In Europe, people are all sitting at home. They’re looking for products to build their immunity – tea is a great solution.”

The factory also had to introduce safety protocols for employees at work and at home, as well as reduce the number of people working at any given time in order to adhere to social distancing.

An employee’s father also died of the coronavirus, which forced Nizari to ask everyone involved with Kazi Yetu to quarantine at home for 14 days.

“So what we said was, ‘look, we don’t want to risk their safety, but we also don’t want to risk their economic well-being’. So we just paid all of them their full-time salary,” says Nizari.

“Generally, our operational costs have been really hard to cover right now… but it’s okay, because it made us pivot.”

It inspired Nizari to expedite Kazi Yetu’s plans to export, kickstart the online store sooner than anticipated and build up stock to send to Germany, rather than just focus on the Tanzanian market, which is temporarily quite small. Exporting has been an issue, given limited shipping at the moment, but the European market proved to be a pleasant surprise for Nizari.

“In Europe, people are all sitting at home. They’re looking for products to build their immunity – tea is a great solution,” she says.

Slowly, the factory is moving back to normal operations and Nizari is trying her best to ensure a steady income for the employees. Kazi Yetu is also now available on local delivery applications in Tanzania, so people can order tea to their doorsteps.

Looking ahead, Nizari hopes to scale up exporting through the online store and retailers, whether in Europe, or also in markets like South Africa where products from sub-Saharan Africa are popular, and North America where innovative African products are in demand.

“We want our product to be competing with products made in Europe, and for example, Sri Lankan tea, Indian tea and Chinese tea. We want Tanzanian products to be well-regarded,” she adds.

Since the teas are traceable, which is a unique selling point, Kazi Yetu is also working on an app that uses blockchain to allow customers to access data on the tea they purchase, from the farm level, all the way to their cups. This way, they will know first-hand the impact the product has.

In addition, Nizari is working on a farm-hub model to build Kazi Yetu’s supply chain by helping them produce better raw products through a no-interest investment that can be paid back with their final product over time.

“The whole ‘economy versus safety’ debate… it’s something we have to think about moving forward… You can’t just operate as a business that makes money, you have to think about… the well-being of your workplace, the well-being of everyone in your supply chain… And I think this is where social enterprises really come in,” Nizari adds.

And a hot cup of locally-produced tea can certainly help take forward any such deliberations.

By Inaara Gangji

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Farmer Forays: ‘Creating A New Line Of Business’

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Shola Ladoja; image supplied

Nigerian agripreneur Shola Ladoja, the founder of Simply Green, says the pandemic-induced lockdown brought with it logistic adversity, but also more local sales.  

With the marauding coronavirus disrupting lives and businesses in Nigeria, the financial stability of a majority of the country’s 200 million inhabitants has been severely affected.

The significant toll it has taken on economic activities has forced many small and medium enterprises to reimagine new ways of staying afloat. Covid-19 is also set to radically aggravate food insecurity in Africa. In spite of Nigeria’s dependence on oil, agriculture remains an important cornerstone for its economy, providing employment for millions especially in the informal sector.

The threat of starvation is so present that in a public address in May, Nigeria’s President Muhammadu Buhari, urged Nigerian farmers to produce enough for the country to eat, saying that the country has “no money to import” food.

But every cloud has a silver lining. The food shortage has presented some agripreneurs in Nigeria with serendipitous opportunities.

Shola Ladoja is the founder of Simply Green, which is a farm-to-table company specializing in vegetables, fruits, juices, spices and herbs. The border lockdown has meant that many of the retail and supermarket chains can no longer import foreign produce into the country.

But this hurdle created a new opportunity for Ladoja.

“[Previously], I tried to get my juices into local stores in Nigeria but they all turned me down and most of them wanted to buy imported juices. The lockdown meant that they had to buy a local brand like mine because they could not get them from abroad anymore. We are now able to sell a lot more during this time than previous years,” says Ladoja.

On the logistics side, however, Ladoja has also felt the pinch of the pandemic like most business that require consistent movement of goods and services. The lockdown scenario prevented his workers from coming in and as a result, the company’s daily delivery of juices, has come to an abrupt stop.  

Ladoja has had to start thinking outside the box to make ends meet.

“We have come up with a fruit and vegetable box, which we sell directly on our website to our customers. So, they can now buy lettuce, kale and carrots, which we have never done before. So, this period has forced us to think about how we can expand the business and this time we actually created a new line of business, which was not in the plans for this year,” says Ladoja.

According to the United Nation’s Food and Agriculture Organization (FAO), even before the Covid-19 crisis, farmers had not been able to satisfy the demands of Nigeria’s population.

“I feel like the government should give out grants and loans and support for small businesses so that they don’t crash. I have friends who have complained they are going to shut down their businesses because they haven’t been paid for two months. A lot of people cannot sell their produce in Lagos because the markets are closed which is going to affect a lot of farmers at this time,” says Ladoja.

Nigeria used to import over a million tonnes of rice from Thailand annually. That number has been significantly reduced with the implementation of high import taxes. This has led to an abnormal increase in food prices in Nigeria since the onset of the coronavirus with the UN estimating the number of people facing acute food security stands to rise to 265 million globally in 2020 as a result of the economic impact of the pandemic.

Nigeria has substantially increased domestic rice production in the pandemic but is still a long way from reaching the levels needed for the country to sufficiently feed itself. Coupled with the decline in global oil prices, it is safe to say the adverse economic impact of Covid-19 on Africa’s most populous country is going to be felt for a long time to come.

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All For Grooming Future Leaders

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Katlego Thwane has had to dip into his own savings, with the Covid-19 crisis, to fund his noble cause, teaching the underprivileged in a South African township.

He is in his twenties, yet turning around the destiny of underprivileged young people around him.

Katlego Thwane, a 28-year-old born and bred in South Africa’s lively township of Soweto, is an educator and founder of the Atlegang Bana Foundation here that caters to primary school learners who struggle to keep up at school and need additional help.

“Our foundation also provides for needy learners from underprivileged backgrounds. One of my biggest campaigns at the foundation every year is to give confidence and motivation to learners for the year ahead,” says Thwane.

He has bagged numerous awards and accolades for his work, as a 2017 Young Community Shaper, 2018 Lead SA hero and featuring on live television show Big Up on SABC Mzansi in 2018.

Growing up, he was a “naughty boy”, as he describes himself, but says many are now astonished at the serious, ambitious young man he has become.

“Teaching has always been a passion of mine. I love seeing change, transformation and grooming leaders, and value their education while being innovative in taking our country forward.”

Thwane has recently established a clothing brand, BANA, under the Atlegang Bana Foundation. He is also currently handing out food parcels to the needy in his community, in partnership with Hollywoodbets.

“The virus has affected us immensely with many parents losing their jobs or taking salary cuts, we are not receiving the financial support as before. This has led to me [dipping] into my own personal pocket and [using it] to buy tutors data for teaching virtually,” says Thwane.

Most schools continue operating online because learners haven’t as yet returned to school, however, this has come with its share of setbacks.

Makosha Masedi, a parent of a Grade 4 learner, says her challenges come with network issues and understanding the tasks given to the child.

“Some of the programs that the work is loaded on to is not friendly for all devices, so submitting and retrieving becomes a problem, as also understanding some of the work,” rues Masedi.

But Thwane powers on, hoping for a better tomorrow, for himself and his country.

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