Gina Din Kariuki was not what you would call a bright student.
Teachers mocked her from Nanyuki, a tiny red-soil township in central Kenya where she went to primary school, to the London School of Journalism.
“I wasn’t very clever. I had negative reports, and I was at times told I was wasting my time in school,” she says.
Gina Din—as she is known in Kenya—hauled this baggage, heavy with low self-esteem, into her first job as a communications manager at Barclays Bank Kenya in 1985. Yet, that job turned out to be Gina Din’s epiphany, catapulting a below-average student to the top of Kenya’s public relations and corporate communications class.
As her role at the bank expanded over a 14-year period, so did her obsession with the job.
Like a meticulous chess player, Gina Din planned her exit years before.
“It wasn’t really challenging as it was the same old thing. I even set up the bank’s CSR agenda through a community relations department, which was replicated in the whole of Africa. I had no interest in it but I found myself enjoying it very much,” she says.
Blue-chip companies in Kenya, such as Kenya Airways, Kenya Commercial Bank (KCB) and East African Breweries (EABL), were keen to recreate what Kariuki had done at Barclays.
“I became a generic term because these corporates were looking for a Gina Din. That made me realize I can replicate what I did for Barclays, but I really didn’t want to go to another company because it would be the same thing. I had been building a brand without realizing it. When I stepped out I had a name and brand that stood for something,” she says.
She set up Gina Din Corporate Communications, a promising public relations outfit that would be courted by global companies. Interestingly, her first client as an entrepreneur, on October 1, 1997, was the employer she had just ditched and from which she poached four of her colleagues. A year later, she won over South African Breweries, which was entering the Kenyan market, followed two years later with Safaricom, then a struggling start-up without an office.
Gina Din was on a roll, amassing clients as the PR market grew in Kenya. Four staff grew to 15 in five years.
Over the last decade, Gina Din has been a mean closing machine. At one time, she enjoyed the lion’s share of blue-chip accounts, including national carrier Kenya Airways, leading mobile operator Safaricom, Kenya’s biggest bank in terms of geographical distribution KCB and LG Electronics.
But this unassailable position has waned over the last few years forcing Gina Din, a feisty dealmaker with a penchant for showbiz, to rethink her strategy. She has lost the big-dollar accounts, including Safaricom, which she held for 10 years, KCB, and Kenya Airways.
The losses have been a big blow to Gina Din. Many in the industry were writing her epitaph. But she claims—in a bit of ambitious PR—that the loss of business was strategic, even though the huge Safaricom loss sparked speculation.
“I had to take the backstage to consolidate business without them (Safaricom), because if we continued with them they would have been every part of the decisions we made. In terms of staff we had lots of people on the Safaricom account. It did not make business sense,” she says.
Gina Din argues that she actually walked away from the most profitable company in the region and the highest-paying client, to save her business. Still, it was her worst day as an entrepreneur.
“I wanted to do other things. We didn’t walk out in totality; we still do government work for Safaricom. It was very amicable. Our other clients were complaining because we were so Safaricom. It didn’t seem that there was enough space for anybody else,” she says.
“It was a strategic decision. I didn’t want my brand to be identified with one client. It was tough financially, but it was necessary to take a year off making huge amounts of money to rebuild the business.”
Part of this consolidation strategy, or what others see as a comeback plan, is a partnership with big brands in the industry. Recently, Gina Din, with a personal fortune estimated at more than $5 million, entered into an affiliation partnership with Weber Shandwick, one of the world’s leading public relations firms, to anchor expansion into the African market. Africa is the strongest of emerging markets, with a growing population and middle-class attracting multinationals.
“We had requests from many firms to partner with or even buy us out. We searched and vetted and agonized, and found we had chemistry with Weber.”
The show-stopper in Gina Din’s revival was the October 2013 marriage with a rival Kenyan company after six months of secret courtship. The transaction involved a share swap with IMAGINE, a mid-level marketing and communications firm in Kenya, strong in one aspect that Gina Din lacked: creative marketing.
The firm was rebranded to Gina Din Group to consummate the union and has launched an ambitious five-year strategy that seeks, among others, to have a presence in West Africa. Now Gina Din, which already serves Camac Energy in West Africa, can boast a significant presence in the region, thanks to IMAGINE’s clients, such as Vodacom in Tanzania and Heineken.
“Traditional PR no longer works. Clients want a one-stop shop. I know PR and nothing else and so I had to get someone with a background in marketing and creative. Also, the average CEO in Kenya today is 40 years old. The workers need someone of their age group to take the brand to the next level so I can focus on business development.”
The shift in gear comes with a change in its offering. Gina Din says the group is now focused on providing strategic communication solutions.
“I don’t want to be your average PR company putting up banners at events. I want to provide and shape discussion. We are shaking up the industry. I want to change the business from the event organizer thing. There is space for those who want to do that. I want to be a consultant and I want to offer strategic guidance and counsel in the league of Deloitte or PwC. I’m not really keen on golf competitions. We have taken some shocks because of this decision. I am confident this will lift my brand to the next level.”
Dismas Mokua, who worked for Gina Din for five years as a media director, says the company has the capacity to bounce back given the founder’s extensive connections and lobbying prowess.
“I think she started developing interests outside her core strength of political lobbying and that diverted her attention. She can come back as her political connections are still intact and now she has built systems to run the business. Gina knows how to open doors and she’s charming,” said Mokua, who is vice-president of Sadiki East Africa, a political advisory firm based in Nairobi.
Gina Din emphasizes that she is not ready for a buyout yet, but to grow the brand further.
“I have reached the point in life where it’s not about money. I am transitioning from being successful to significant, and going across Africa is part of the new direction. As we speak, we are helping (the United States International University) USIU-Kenya to build a public relations curriculum,” she says.
Looking back, she relishes her journey in PR which has deepened her understanding of societal issues. She spearheaded the Kenyans for Kenya campaign in July 2011 to feed starving people, which raised KSh700 million ($7.9 million). Now she is the Kenya Red Cross goodwill ambassador.
The last born in a family of four sisters, and a mother of two, Gina Din turns heads with her flamboyant lifestyle and dress.
“I love being a woman and owning that space. I love to dress and I don’t do it for anybody else. If a guy can be manipulated by how you are looking, what kind of guy is that? It’s really sad. I love being feminine.”
For this, Gina Din has been a target for gossip. One of the most hurtful was about her coziness with former Safaricom CEO, Michael Joseph. Talk resurfaced when Safaricom engaged a different PR agency just two years after Joseph’s term expired.
“I am so used to that; I have developed a thick skin. At Barclays, whenever a woman got promoted you’d hear stories. We had a very turbulent relationship with Michael. If anything, we would fight like crazy; we would challenge each other and it was intellectually stimulating. We were never good friends until after six years. It took hard work to get that respect from Michael,” she says.
It is this defiance, in an unforgiving business that has seen her rise, fall and rise again. Gina Din says she has learnt from her mistakes, for instance, holding onto the business for too long at the expense of professional management. She rues that she didn’t hire more staff earlier on.
“You have this founder thing that I have to nurture this baby. But it’s never too late, we are there now. Two or three minds are better than one.”
She also made mistakes in under-pricing her services in a market with high overheads. She was excited to get business, she says, and cared less about payment. At some point Gina Din had 40 clients, but was subsidizing some.
“I have become much more of a businesswoman in the last three years. I was following my passion blindly; it didn’t matter whether I made money. Women lead from the heart and at times we do things because we love to do them. Sometimes you take steps and ask if they make sense. But, a time comes when you can’t do everything you want to do. I ran my business as if it was a foundation.”
Gina Din has had many worst days in her business, but the Kenya Airways Doula crash in May 2007, which killed all 114 on board, hurt her as she presented the airline’s message to the people.
“The communication support I gave KQ changed me as a person. It made me realize how fragile life is. My hubby is a pilot with KQ and it could have been him. I also realized how crisis communication is important. From then, we started insisting our clients prepare for crisis communication. There’s no point building the ark after hearing the thunder.”
You can be sure, in business, Gina Din, will have hammer and nails in hand long before the sky turns dark.

What Gina Din Next?

Njeri Rionge and Joe Mucheru, her then colleague, traveled around the most remote parts of Kenya in 1999 to research the demand for telecommunications. They found that rural communities, alive to the value of the mobile phone, represented the mass market potential for a technology that was relatively nascent in the region.
They reported back to their employer, Interconnect, that the country had a huge latent demand for information. This was well before the massive undersea cables brought broadband capacity to Africa’s east coast; well before the privatization of the crumbling national telecoms operators injected life into the moribund sector and well before the world had woken up to the potential of Africa’s appetite for technology.
Interconnect did not share their view. The two found an angel investor the following year and created Wananchi Online. It was the region’s first internet service provider to offer ‘triple play’—a new concept that combined internet, television and telephone down a single line.
The process of acquiring licenses became tangled as the company refused to slip brown envelopes into their bids. This culminated in an episode that demonstrated Rionge’s mettle. As they waited for approvals, 17 men arrived at her office with the intention of extorting a bribe. Intimidated, she told them, at length, of the need for Kenyans to do business the right way, to work with integrity. After 15 minutes, one said in Swahili, “She doesn’t get it”. They left empty-handed.
More than a decade later, Rionge and Mucheru stand among the founding members of what may be Africa’s most vibrant technology scene. Today, Nairobi is the center of a thriving community of entrepreneurs, incubators and venture capitalists; driven, first by the massive expansion and innovation in the mobile telecoms sector and then by the arrival of undersea fiber optic cables which deliver international data connectivity. Kenya has exported world-leading technology products—most famously the M-Pesa mobile money transfer system—to the rest of the world. The country has moved fast, but if anything, she says, things have gone too slowly.
“We did have a very big vision for the industry. 2000 to 2004 was an amazing time for us and we were constantly ahead of our time. A lot of the stuff we were talking about then is just now happening,” says Rionge.
Infrastructure, policy and knowledge and “understanding what this internet beast, at the time, was really about” has held back the industry.
“Today things are really different. People get it. People have moved on from thinking about connectivity to thinking about what’s going to be on the bandwidth.”
In August, IBM opened its first African research center in the city, the latest blue chip company to put its weight behind the ‘Silicon Savannah’. As the hype around Nairobi increases, Rionge warns that many entrepreneurs are struggling to take the step from great ideas to commercial businesses. That, she says, will take the community to the next level.
So many “techies” lack the commercial skills and acumen to make their ideas saleable. Rionge and her colleagues turned Wananchi into the region’s largest internet service provider, before she moved on to a senior role at the part-privatizing national phone company, Telkom Kenya. “The likes of Safaricom, the Telkoms, any of the big guys, the CEOs or the strategists need to see that there is a pool of experts or a pool of engineers who can actually develop their back office tools,” she says.
A recurring theme in her discourse is the problem of discerning noise from signal in the hype-fuelled tech space.
“You have to be careful where you’re hearing [the hype] from. If you’re hearing it from Google, they’re definitely doing it. If you’re hearing it from [business accelerator] NaiLab, it’s a different conversation. A lot of the techies I know, they’re still sitting on their grand idea and it hasn’t gone to market successfully. If you sit down, one-on-one, you can actually see it’s going somewhere. But if it’s not picked up by Google or Safaricom or Nokia, it hasn’t gone anywhere. It’s still a great idea, but there’s no uptake in the market,” she says.
Today, Rionge works with and sits on the boards of a number of successful enterprises. She has also started an incubator on Ngong Road, the city’s technology cluster, to help those with ideas to take the step to becoming businesspeople. Part of her message is that technology is not an end in itself but rather an enabler of other sectors. The successes in the African technology space have been in areas that plug gaps in the infrastructure or the market—creating solutions for the specific context of the continent. M-Pesa solved the problem of moving money in a cash-based economy with little infrastructure to support it.
Africa, with as many opportunities as it has challenges, needs entrepreneurs who can use technology as an enabler in key sectors, such as agriculture, manufacturing and education, while entrepreneurs need real applications for their grand ideas.
This is sometimes where international investors and observers fail to see the true value in the Kenyan, and wider African, technology opportunity. Measuring existing and potential successes by the experience of Silicon Valley, or other developed world technology hubs, misses the point.
“There will be people who have great ideas and grand ideas on the ground. The difference, in terms of developing them and scaling them, is whether we are creating criteria that have worked in developed markets to identify them, or whether we are going to get on the ground and recreate the criteria, so that the criteria is suitable for the local environment. That’s what’s not there. Because that local idea or local criteria is not structured yet, we continue to completely miss the opportunity. So the reengineering of the mindset in terms of the approach, I think, is what needs to take place for emerging markets or Africa.”
It is for this reason that she is cautiously critical of some of the initiatives in Nairobi, which seem to focus more on attracting international capital to the country than on building the domestic opportunity. The government’s ‘Vision 2030’ lays out an ambitious plan to greatly increase the value and depth of the IT sector. It has spawned ideas such as Konza City, a proposed development backed by Kenya’s ICT Board, which is designed to give a physical home to the country’s technological talent. Rionge is skeptical.
“That’s bricks-and-mortar. The ideas, the technology phase, are not about bricks and mortar. The investments we need are not about bricks and mortar&#8230; The bricks and mortar is really for international investors, that’s all it is. The innovators and entrepreneurs need to scale up pretty much on their own through some genius way.”
For all of her reservations, however, she is optimistic. The government support may be slightly misdirected, but it is not misguided. The city is fast becoming a hub for the entire continent and the heart of a technology revolution that is made in Africa.
“Nairobi happens to be the location but when you’re there, you’re thinking Africa. And Africa is the next economic frontier. If that is the case, you want to be in Africa, you want to be investing with Africans.”

The Rionge Person  To Ask For A Bribe

Nothing signifies the unbridled optimism in this East African nation more than the well-known Swahili phrase Kenya hakuna matata: there are no troubles in Kenya, which is bandied around in tourism circles; printed on T-shirts and repeated in blockbuster movies like Out of Africa and The Constant Gardener. But its economy has known more trouble than relief.
When inflation reached 100%, in 1993, President Daniel Moi printed money to fund his re-election campaign for the country’s first multi-party elections.
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Before President Mwai Kibaki was elected in late 2002, Kenya’s economy was in bad shape. Its growth averaged 1.1% for two consecutive years and shrank to minus 0.2% in 2000. Key sectors were stagnant; agriculture and tourism recorded marginal growth of 0.7% and 0.8% respectively.
To resuscitate the economy, government formulated the Economic Recovery for Wealth and Employment Creation Strategy in 2003, which hinged growth on the overhaul of infrastructure as well as political and economic reforms that would unshackle the economy. The most notable result was the investment of billions of dollars on infrastructure—from roads and railways to electricity. Since 2004 growth has averaged 5% and peaked at 7% in 2007.
Kenya’s economy is dominated by agriculture; the sector employs more than 70% of the population and accounts for 24% of the GDP. More than a third of Kenya’s agricultural produce is exported, which accounts for around 60% of the country’s exports. This, despite the fact that its arable land is a paltry 15%, the rest is either too dry or infertile
Irrigation systems could double this percentage. The country’s cash crops—tea, coffee and horticulture—have led to an increase in earnings due to high commodity prices.
Last year, the country exported 48% of its goods to African countries, mostly in the East African Community (EAC) trading bloc, which is not severely affected by the Eurozone debt crisis. During the last decade, however, Kenya’s imports have surpassed its exports. Despite a surge due to high global crop prices, earnings from its top four exports have been insufficient to pay for oil imports.
The services sector follows closely behind, with tourism leading the pack. Tourism earnings rose by 32.8% in 2011, bringing more than $1 billion to the country. Other sectors like wholesale and retail, transport, communications and education are following suit.
Kenya is a hub for the ICT sector with the largest fiber optic network in the region. M-Pesa—the mobile money transfer service operated by Vodafone’s subsidiary Safaricom—transfers $27 million a day and has more than 25 million mobile subscribers.
By the end of the year, the economy is expected to have grown between 3.5 and 4.5%, according to government projections; while World Bank estimates stand at  5%. Inflation, driven by high oil prices and inadequate rainfall which lead to high food prices, has fallen from 14% last year to around 5% this year.
The 2008 post-election violence saw more than 1,000 fatalities and led to a decline in economic growth from 7% in 2007 to 1.5% in 2008. Kenya’s new constitution, enacted in 2010, is expected to herald good governance and reforms. Yet the economy still faces structural challenges. According to the World Bank, its economy has become even more vulnerable as the country’s current account deficit could reach 15% of GDP this year. This is among the worst external balances in the world and poses a significant risk to Kenya’s economic stability. A sharp rise in oil prices could trigger severe inflation and economic downturn. Its debt levels of 45% are in decline from 65% at the turn of the century and are below the global benchmark of 60%.
Like many other African countries, Kenya  faces an energy shortage, which allows for investment from the private sector. The peak power demand, estimated at 1,191MW, is projected to grow at 7% annually over the next decade. To meet this  demand, the generating capacity will have to be raised from 1,534 MW to 2,263 MW by 2018.
State-owned Kenya Electricity Generating Company (KenGen) is set on providing geothermal power in the future. Investors are establishing wind farms in Northern Kenya as part of the Lake Turkana Wind Power Project. The government is looking to partner with the private sector to generate coal power, after deposits were discovered in the eastern region. Hydro and thermal power accounts for 80% of the country’s total generation, making its energy price susceptible to high oil prices and power rationing when rains fail.
On the social and political end, half of the population is younger than 35 and unemployment is at around 40% of the country’s 42 million. Experts says that job creation, especially among the youth, is necessary for long-term stability. Two of the leading candidates in the upcoming March elections—Uhuru Kenyatta and William Ruto—face crimes against humanity charges at the International Criminal Court at The Hague over their role in the 2008 post-election violence.
Vision 2030—which aims to make Kenya a medium income country by 2030—is hinged on economic growth of 10% per annum through governance reforms and a focus on infrastructure, energy and science. By that time, the population is expected to reach 60 million.
The recent discovery of commercially viable oil will welcome new investments and save the country on its huge monthly oil bill. Tullow, a London-based oil and gas company, discovered 143 meters of net pay oil deposits in northern Kenya. More than 23 companies have exploration licenses.
Mining—which contributes 1% to the economy and is confined to the extraction of soda ash—may receive a boost after Tiomin Resources, of Canada, was allowed to mine titanium deposits along Kenya’s southern coastline.
Infrastructure, needed to foster more trade, is also set to improve. The $23 billion Lamu Port-South Sudan-Ethiopia Transport Corridor (LAPPSET) project is being touted as one of the biggest in Africa. It will entail the construction of a port, standard gauge railway, pipeline and highways connecting Kenya, South Sudan and Ethiopia. Throw in a resort city at Isiolo, in Northern Kenya, and they are betting it will be a winner.
As the World Bank aptly put it in 2010, if Kenya is an airplane, it’s flying on one engine. If the second is turned on, the  economy will ascend at supersonic speed, like a fighter jet.

‘Flying On One Engine’

You have probably watched Nigerian movies and marveled at the common theme of African magic. If you have lived in Africa long enough, you have heard those who claim to be victims or beneficiaries of witchcraft, declare its supernatural powers.
From Malindi in Kenya to Balagaza in Nigeria, magic is a way of life, its mythical powers verge on religion. In Kenya, someone who suffers from a twisted mouth or a businessman who loses a client is likely to blame an envious neighbor or relative for the misfortune.
And witchcraft is big business and not just in Kenya. Before modern religion, magicians and witches were consulted for all ailments and circumstances. They doled out, and still do, curses and blessings for believers and decided who became wealthy and who became poor.
Never mind that most witch doctors and magicians have little or no money. African communities have a common saying: a doctor cannot be his own doctor.
Kenyans who believe in witchcraft use it to seek revenge, wealth and power and to keep their marriages alive. Many associate the practice with the impoverished masses who visit witch doctors in pursuit of an ever elusive change of fortune. But in Nigeria and Kenya, as with many African countries, the prosperous too look for fame and fortune through magic.
A local television station in Kenya recently ran a series on witch doctors. At a witch doctor’s shrine, on the outskirts of Nairobi, expensive cars drove in and out—politicians were looking to bewitch their electorate and contractors were looking for charms to win huge tenders. All over Africa, people battle remotely by using charms. The affluent, worried about losing their wealth or seeking to suppress rivals, will pay a fortune for protection from their enemies or to improve their luck.
This witch doctor was clearly not the kind found in the villages, who is paid in animals and food. So it’s little wonder that she owns a huge compound in an area that the middle class would need some magic to afford.
Politicians are some of the biggest consumers of black magic, some pay up to $10,000 per visit. With elections on the horizon in a good number of African countries, magicians and witch doctors are looking forward to an even bigger boom in their business. At Kenya’s last polls, presidential contenders were rumored to fly out to visit the most potent witch doctors south of the country.
In the fiercely competitive market, it’s a battle of the witches. Shopkeepers, hotel owners as well as livestock traders go to shocking lengths to attract customers. The success of Indian retailers is often attributed to charms—a cat jumping over an Indian shopkeeper’s counter at the close of business may mean more business the following day. For hotel owners who believe in the powers of magic, rinsing an undergarment in cooking water is a business strategy. Football teams are known to hire the services of expensive magicians to increase their chances of winning.
A Pew Research Center survey, conducted in 2010, showed that a quarter of Kenyans believe in witchcraft despite being deeply religious. Kenya was ranked as being the 11th most religious nation in Africa and 16th in the world—78% of Kenyans are Christian and 10% are Muslim. Close to nine out of 10 people stated that religion played an important role in their lives, but most of them forget the Bible or Koran soon after worship to seek solace in shrines and witch doctors’ dens.
Despite their belief in one God, heaven and hell, the survey found that sub-Saharan Africa leads the continent in the worship of witchcraft and evil spirits; sacrificial offerings to ancestors and religious healers as well as the belief in reincarnation.
The study ranked Kenyans 15th in Africa most likely to believe in witchcraft, a few points behind the Democratic Republic of Congo and way ahead of Ethiopia, Nigeria, Zambia and Rwanda.
According to the report, “A quarter of Kenyans, both Christians and Muslims, confessed they believe in the protective power of juju (charms or amulets) and that they consult traditional healers”.
A number admitted to revering their ancestors and treasuring animal skins and skulls or knowing people who did. Tanzania leads the pack in believing in witches and superstitious objects, with six in every 10 Tanzanians confessing to making sacrifices to spirits and dead ancestors. Rwandans, according to the poll, are the least superstitious people in Africa, with only five out of 100 people interviewed saying they believed in juju.
These results from across the continent would make any televangelist or fast-moving consumer goods manufacturer drool, as witchdoctors are not taxed. Maybe the receiver of revenue has been bewitched too.

Magic Spells Money

When Kenya decided to go to war against the Somali offshoot of al-Qaeda terrorist group, al-Shabaab, it looked like a straightforward affair: go in with powerful hardware, smoke out these little irritants all the way to their port base of Kismayo and get back by Christmas. That was October. A month later, the Economist lamented that the Kenyans had spent more time tweeting than fighting.
Take for instance Afmadow, which fell to the joint force of the African Union and the Kenya Defence Forces in late May. This southern Somali town—al-Shabaab’s stronghold—should have been captured just days into the offensive: “Our troops are heading to Afmadow now, and we expect to capture it either today or tomorrow,” the head of a Somali militia collaborating with the Kenyan army told Britain’s Guardian on October, 18.
Just three days before al-Shabaab rebels abandoned Afmadow, allowing the African Union team a walkover, another stinging reminder of the cost of war hit Kenya. Police blamed the Islamist militant group for a blast in downtown Nairobi that killed at least one and left 35 injured. International news agencies reported on the blast with typical breathlessness and urgency. Both Mount Kenya University, the building next to the blast site, and Moi Avenue, where it happened, were trending worldwide on Twitter within minutes. For the outside world, more evidence that Kenya was unsafe, had just presented itself.
Britian’s Foreign and Commonwealth Office (FCO) and the US Department of State both keep helpful guides on travelling around the world with updated travel warnings. “The US Department of State warns US citizens of the risks of travel to Kenya. US citizens in Kenya, and those considering travel to Kenya, should evaluate their personal security situation in light of continuing and recently heightened threats from terrorism…” stated the official website.
Kenya’s former colonial master, Britain, also advises “…against all but essential travel to within 60km of the Somali border (including Kiwayu and coastal areas north of Pate Island), to Garissa district…” on the FCO website. All the reconstruction work done by hard working Kenyan entrepreneurs and the government are rubbished within a single mouse click.
The country had little choice but to take al-Shabaab head on. In the months leading up to October, the militant group was responsible for a sequence of kidnappings and attacks in coastal areas of the country. When two Spanish aid workers were abducted, it was time for decisive action.
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Screwed if you do, screwed if you don’t
In 2011, Kenya earned about Ksh98 billion ($1.1 billion) from one of its largest foreign exchange sources—tourism. The notable take-away from this was that the increase from Ksh74 billion ($863.5 million) in 2010, was mainly because of improved arrivals from high spending Emiratis, Chinese and Indians. The traditional source markets of Europe and America were slowing down as the constant fear mongering by their governments took effect. Not that bureaucrats in Washington, London, Paris or Zurich are to blame, they are merely doing their job. The same way the Kenyan government is doing its best to secure homeland security.
Al-Shabaab has threatened to carry out more retaliatory attacks in Kenya’s highly populated urban centers within the next six months. The American ‘private contractor working for intelligence agencies’ warned, in a report in early June, that a huge attack against Kenya was imminent because of the increased Kenyan activity in Somalia.
What Kenya has on its hands is a perfect storm. Al-Shabaab continues to cause fear at home with their spontaneous attacks, the international community is afraid to visit or invest in the country because of the security concerns and everybody is on edge. If it were to pull out of Somalia before conquering the militant group’s Kismayo headquarters, there is no telling what harm they could do. If it continues advancing to the port town, just 115 kilometers from Kismayo, its people remain targets for retaliatory attacks. Either way, tourism suffers, investor confidence dampens and the economy slows. Just how costly is a march to Somalia?

Kenya’s Long, Painful  March To Somalia

When, let’s call him Robert S, the CEO of Dutch multinational IT firm X, decides to open a branch in Kenya, he is enthusiastic about expanding into an emerging market that promises substantial return on investment. His firm teams up with a local shareholder to ease transition into the Kenyan business environment. With primary experience in developed markets, the choice of partner is largely financial, neglecting the shareholder’s political connections or ethical track record.
The local partner helps with raising finance, acquiring trading licenses, registering premises and managing the operational set-up including the supply chain. Issues like nepotism, fraud and bribery don’t cross Robert S’s mind until his company successfully tenders for a big contract and is promptly accused of corruption by the losing party. An internal investigation brings severe irregularities to light. Company X finds itself faced with reputational damage, threats from the local shareholders’ political connections and liability of hundreds of millions of dollars.
Two years later, Company X still operates successfully in Kenya, but Robert S wishes he knew back then what he knows now.
Bribery, theft, corruption and other types of fraud cost African governments and companies at least $11 billion last year, the first Africa Fraud Barometer, recently published by auditing firm KPMG, found. That’s a good 10% of the roughly $100 billion in foreign direct investment made on the continent in 2011.
The actual cost of fraud is likely to be much higher, since the barometer only takes into account cases reported in English-language media, and access to police and criminal justice statistics are unavailable in most African countries. More reliable corruption trends will emerge as KPMG updates the fraud barometer every six months.
“It’s very difficult to estimate how high corruption really is. The $11 billion might be quite understated,” admits the firm’s global forensics manager, Petrus Marais, who developed the barometer.
It’s a sobering reminder of the challenges facing the continent, which has, in recent years, attracted massive foreign investment due to impressive economic growth rates of up to 8%. Some of the continent’s largest economies—South Africa, Nigeria and Kenya—have the highest incidence of fraud, according to the barometer, showing clearly that with more economic activity and investment comes increased risk.
Everywhere on the continent, governments and the public sector were hardest hit, claiming about 40% of all fraud cases, closely followed by businesses with 17%. This shows that African business operations have practically experienced “a breakdown in the ethical and moral environment”, warns KPMG.
Investors need to be prepared for this. “It’s extremely difficult to turn the tide. If you don’t have a moral base to operate from, you will have to waste lots of money on checks and balances, on jacking up processes and systems to manage risk,” says Marais. That’s the tradeoff any company wanting to operate successfully in Africa needs to make.
The main culprit of fraud is white-collar crime. Almost every third employee commits some form of fraud, the study found, ranging from junior staff to top management. Perhaps unsurprisingly, the highest value of fraud—$3.3 billion in 2011—was committed by managers, who are generally in positions with authority to approve large transactions and override controls, followed by professional advisors.
“Fraud occurs most where money enters and exits a company or institution. At the interface of financial transactions, perpetrators tend to be most successful in defrauding funds,” says Marais, identifying procurement, recruitment and contracting as the biggest risk areas.
“We hear a lot of anecdotal evidence of corruption,” confirms Thomas Schultz, chief operating officer at Sanlam’s investment management arm in its Africa division, which has branches throughout the continent. But if companies plan well, they can avoid being drawn into corruption, even in Africa, he believes. Choosing a trustworthy local shareholder or auditing firm with the right code of ethics is therefore key.
That means expanding into Africa is not a simple step. Investors need to do a lot more homework before they decide to invest; be better connected to access inside information; consider weak infrastructure, from roads to electricity; and be aware that setting up operations, from administration to licensing, might take longer. “All those issues raise the cost of doing business. It’s not a bandwagon you can jump on,” says Schultz. “You have to be sure your profit margin is sufficient to cover those costs.”
But it’s not all doom and gloom. A 2011 Ernst &amp; Young survey predicts that Africa’s economic growth will outpace its Asian counterpart over the next five years due to increasing foreign direct investment. Africa has remained an attractive investment destination throughout the global downturn and stayed high on the agenda of global investors, with 42% of businesses considering investing further in the region and an additional 19% of executives confirming they will maintain their operations on the continent.
“Although the overall perception of Africa remains quite negative, investors recognize that the continent has a window of opportunity because of its economic growth potential,” says Marais. “Whoever wants to see good returns simply has to go to Africa. It’s a great place to invest if you have the ability to assess the risk involved.”
Another plus is that African governments have shown greater willingness to address fraud, and be more transparent and accountable by passing anti-corruption laws. But for now, this trend needs to be viewed with caution, as it remains mainly a commitment on paper, with little implementation and enforcement of those regulations. “Very few anti-corruption regimes have gone beyond rhetoric. There is lack of political will to implement them and they remain under-funded,” says Charles Goredema, a corruption expert at the Institute for Security Studies in South Africa.
Businesses should choose to invest in countries with regulatory and legal frameworks they can rely on to enforce contracts, says Goredema. That means taking a close look at a country’s real situation, not just skimming the paperwork. Rwanda, Mauritius and Nigeria, for example, have made “huge strides” in fighting corruption, he notes, while the situation in countries like the Democratic Republic of Congo and Zimbabwe remains “very bleak”.
In the end, investors must be careful not to tar the whole continent with the same brush.

The Truth About Fraud In Africa

It came like a bolt from the blue. On the evening of October 20, 2006, Tabitha Karanja the chief executive officer (CEO) of Keroche Brewery Limited was working late in her brewery head office in Naivasha—65 kilometers from Nairobi. Her husband, Joseph Karanja had just gone to Nairobi hospital where he was to undergo minor surgery the next day.
Karanja was winding up so she could rush to see him. As she was leaving, a fax arrived. It was after 5pm and she was curious about who sent a fax so late in the day. Her curiosity turned to shock in seconds. It was the tax man. The Kenya Revenue Authority (KRA) demanded KSh 1.2 billion ($14.117 million) in arrears to be paid within 14 days.
The competitive Kenyan brewing game is tough and like many entrepreneurs, Karanja had weathered many storms. Detractors allege that Keroche products were not prepared hygienically; once she invested in a multi-million dollar plastic bottling plant which was made obsolete overnight by a law banning plastic packaging. On a radio at the office, in the press of busy day, Karanja would hear politicians attacking her beer in Parliament.
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“One member of Parliament alleged that our drink was killing three people in his constituency every day. Considering Kenya has over 220 constituencies, how many people is that?” she asks.
Karanja fought back, she wouldn’t allow anyone to denigrate Keroche products unless they had evidence from the government chemist or the Kenya Bureau of Standards.
It meant the feisty Karanja was often in the media, if she was not threatening to sue the government, she was complaining about raids on Keroche depots by administration police or damage to her billboards by the competition. She has been to court six times to defend her beer business.
This was a world away from her humble beginnings in the age-old story of an entrepreneur spotting a gap in the market. Karanja and her husband, who were traders of manufactured goods, started out as rookie brewers in a cut-throat market. They found themselves in competition with multinational giant, East African Breweries Ltd (EABL).
Their strategy for the alcohol business was simple—to supply beer to thousands of villages in Kenya.
“The brewers who were there, only catered for the upper end of the market and people in the villages were left to drink whatever they could make—the traditional drinks. So we thought, why not make a hygienic and affordable alcoholic product. Our first product, a fortified wine, was released in 1998,” says Karanja.
Karanja says the rough waters have merely made her more determined.
That is, until the brush with the tax man crushed her spirit.
“That was the day I understood why people collapse when running a business. You wonder why a businessman who was getting into his car just died or collapsed in his office.”
On that fateful October evening, Karanja saw the future and it looked terrible. Her eight-year-old brewery, the business she had shed sweat and tears to build, was about to die.
The tax demand did not include interest and penalties. In total she owed the KRA around KSh2 billion ($23.8 million).
“I thought these people wanted to kill me so my employees could find me dead the next morning,” she says.
It got worse. After reading the fax several times, she called the KRA Commissioner’s office in a panic, but she could not get through. It was late in the evening and the government office was closed.
“KRA claimed that the business licence I was given in 1998 was wrong. I was paying 45% tax but they were demanding 65% backdated to 1998. You know how powerful the tax authorities are, not only in Kenya but everywhere in the world. I was literally shaking!”
At the back of her mind, Karanja knew it would be difficult to get a lawyer to fight KRA. Unable to get through to KRA, she went to visit her sick husband. She did not break the news to him that night, instead she went home and had one of the longest nights of her life. She did not sleep a wink.
“I was feeling awful; I panicked because I knew these guys had cornered me. My spirit was devastated,” she explains as her voice breaks.
When she informed her lawyer about going to court, he was hesitant.
Two days later, the lawyer broke the news of court action to her husband on his release from hospital.
“I remember I called the KRA Commissioner and told him I was not going to die. I am strong and I was going to fight!”
Karanja wanted the matter settled out of court but her efforts to get any of the KRA officials before the 14-day deadline were unsuccessful.
“I wanted to show them that they were wrong because I had all my facts,” she says.
It did matter. Time was running out and she knew, if she waited, KRA would freeze her bank accounts and take over her business. So she went to court and fortunately the 14-day order was stopped and after one year the case was thrown out—she had won. After all the pain, angst and fear—she had won.
That was the most horrifying point in her life. There were days she was filled with doubt and fear.
“Fortunately, the judge ruled that it was misuse of power and nobody could explain the KSh1.2 billion ($14.3 million) figure. Furthermore, I was the only one required to pay yet there were 10 other players. I am sure if we did not win that case, Keroche Breweries would be no more,” she says.
In the year she was battling KRA, there were money worries too. The bank was in the process of approving a KSh500 million ($5.9 million) loan for a new plant she wanted to set up for the launch of a new beer called Summit Lager.
“There was so much at stake—our business, our dreams, our investments and other entrepreneurs who looked up to us…”
Fortunately, the loan was approved in December 2007. But her struggles were not yet over, with an on-going case in court, things turned sour when Kenya experienced post- election violence following elections in December 2007. The equipment had been delivered and installed but business only started in June 2008.”
Despite the turmoil in the country, for banks it was business as usual. By February 2008, the bank was knocking on Karanja’s door. She had to start repaying her loan and the interest.
“The bank had warned me they would repossess the equipment if I did not start repaying the loan. I borrowed KSh10 million ($118,835) from a friend without a clue of how I would repay the rest in the coming months,” she says.
Karanja borrowed from the same friend twice.
“I struggled for months. I was entirely dependent on the products and we did not have extra money.”
For three months Summit Lager beer did not move off the shelves.
The sales from a vodka mix, launched in 2007, were not adequate to service the loan. While the company was in the process of growing the Viennese vodka brand they noticed a gap in the beer market—the same market where EABL enjoyed a monopoly.
“People only had one choice. We decided to produce a premium beer product and that is how Summit Lager was born.”
Keroche was in direct competition with EABL’s cash-cow—Tusker. Even the mighty South African Breweries Miller (SABMiller) had been unsuccessful in the Kenyan market and now Keroche found itself staring the giant down.
With a big loan to repay, Karanja was hell-bent on hanging on. She tried every trick in the book and even hired marketing professionals from the competition to help push her products but they too were unsuccessful.
“I understood them; we were fighting a losing battle. The people in the bars were being paid not to sell Summit Lager, our posters were defaced, a client would ask for Summit but they would be told the drink is not available.”
Frustrated, Karanja decided to do something radical. Together with her husband, they went to the market and talked to the distributers in 10 regions around Kenya and offered them an incentive—for every two crates they sold, they would get one free. They also went to the Parliamentary Committee to complain about the unfair competition.
“There is a time we had one million liters in the tanks and had nowhere to take it. Our business was 100% financed by the bank and it would not have been long before they [the bank] came for us.”
Karanja went before the Committee and EABL officials were summoned. She only wanted one meeting because she felt it was a waste of her time.
“I left the meeting disgruntled and told them [my staff] we should fight it out in the market so that I know I was defeated out there instead of a boardroom.”
The courts and then Parliament: it was a long way from the humble beginnings of Keroche. The seed capital was KSh100,000 ($ 1,176) which came from family savings.
The money was used to buy a second hand bottling machine that produced 200 bottles a day—around 10 crates.
“We could not approach the banks but as the business grew, we started attracting financiers,” she says.
When they needed additional capital, the local banks could not loan them the money, so in 2006 they approached Barclays Bank Plc in London for a KSh500 million ($5.9 million) loan. With all that was going on, Karanja, was in constant touch with her bankers. In 2009, her bankers almost gave up on her and a risk audit team from London was sent to look through her books—they spent one month there.
“We were put on a business support program because they also panicked when they saw we were unable to move any beer.”
When having a discussion with one of the auditors, he asked Karanja why she had decided to compete with a multi-national like EABL.
“I remember pleading with him because he was the one who was going to write the report. I begged him to give me an opportunity so that I could prove that a local entrepreneur could make something better than Tusker. I also challenged him to tell me why there should not be a competitor to Tusker.”
The bank official seemed to agree but he was very skeptical. He told her that her business would not last long.
“He gave me three months before I went under. For me to compete with Tusker I had to make a superior drink and I am convinced without doubt that our quality is superior!”
To date, Keroche has two beer brands, two ready-to-drink vodka brands, four spirits and three wines. With a current 5% market share, by end of 2014 Keroche is looking at controlling 20% of the market. Keroche currently owes the bank less than KSh200 million ($2.4 million) and is looking at borrowing KSh1.5 billion ($17.9 million) to expand by producing soft drinks.
<h3>What Did She Learn From Taking On A Giant In The Industry?</h3>
“Whatever you feel you want to start, you must know exactly what you want to do otherwise when you face one challenge, you will run away. Secondly, whatever you are doing you must offer a superior quality and be convinced beyond doubt that it will succeed.”

Beer, Sweat and Tears

Carlo Van Wageningen’s working space is not his private office on the fringes of Nairobi , nice though it is, but rather a narrow corridor running between two high-range mountains near Kenya’s border with Sudan and Ethiopia.
The 250km corridor, along Lake Turkana and cutting through Kuala and Nyiru mountains, enjoys gusts of wind all-year round. It has a stunning 24,000 acre geography that lends itself to the newest obsession of generating wind power. Wageningen, the chairman of Lake Turkana Wind Power (LTWP), finds the space and wind quite inspirational, and has turned them into his working station for seven years.
“A good wind resource is tantamount to an oil discovery,” he says, clearly a euphemism for the lucrative nature of green and cheap energy in era of expensive oil. “It’s good to look for oil, but it’s even better to exploit the wind.”
LTWP, the company he founded seven years ago, will begin construction of 365 turbines in June in this arid region. The wind farm is valued at $775 million and is expected to produce 300 megawatts (MW) of power to be fed into Kenya’s national grid.
This will be Africa’s largest wind farm, dwarfing Morocco’s $300 million plant, with a capacity of 140 MW generated from 165 turbines. Wageningen says the wind farm is expected to begin producing power in 2014 at a threshold capacity of 50 MW, reaching its full capacity of 300 MW in 2015.
Like many great businesses today, the wind farm idea was mooted in the most unlikely way. In 2004, Wageningen and his Dutch entrepreneur friend, Vuillem Dollem, who had cut his teeth in agribusiness, were drinking coffee, from enamel cups, at a Nairobi café when wind became a topic.
“Dollem used to do sport fishing,” recalls Wageningen. “He was baffled by the amount of wind he was met with during his expeditions.”
Dollem had always been a fan of wind energy, if you will pardon the expression. In those days, oil prices were cheap at $20-a-barrel and wind technology was still rudimentary. Motivation for cheaper alternative energy was sparse.
In 2004, when prices rose, hitting $50-a-barrel in 2005, Wageningen started looking at the wind opportunity seriously. So, he got his two investment partners, Christopher Staubo and John Mwangi, to buy into the idea and soon they were six.
“I had little knowledge in wind but simply sensed it was a very good time to do it. I brought in partners and other entrepreneurs from Netherlands who were mature in wind energy,” he says.
Most of the partners liked what they saw. Lake Turkana was an impressive site with vast space and few people.
“We knew from an environmental point of view it would be easy,” he says.
Wageningen and his partners guarded jealously the project lest it be taken up by other cash-flush investors. For two years they did feasibility studies.
Then the dream turned nightmare.
The new company faced logistics challenges. Turkana is an investor’s version of hell on earth. For starters, it’s a semi-arid region and with no physical infrastructure–no roads, power or even water.
“It became clear that we would have to go large and spend really good money on constructing power lines&#8230; and roads to transport materials and turbines.”
Despite these costly troubles, there was one consolation: the wind was ideal for power production. It rates better than US and European wind farms.
The wind blows in off the Indian Ocean as a low-level jet and hits the Ethiopian islands. The thrust diverts part of it to the Far East, creating monsoons, the rest is attracted by the low pressure in the Sahara desert to blow through the Turkana corridor towards Sudan.
“When it hits the two mountains it’s compressed and creates a venturi effect that accelerates the wind. There’s no such phenomenon anywhere else in the world,” says Wageningen
The wind project proved a hard sell to Kenyan investors and private equity firms. “We approached a number of local investor groups who basically said, ‘Thank you very much, but no thank you,’” Wageningen recalls.
His first overseas stop was the Netherlands. The project needed lots of funds initially—around €5.5 million ($6.8 million)—for a comprehensive feasibility venture. They got €4 million ($4.9 million), thanks to two prominent Dutch wind investors who convinced others to invest in the Kenyan project. The initial investors raised the difference.
“As entrepreneurs we said we will not be scared because of the cost. We are looking at 300 MW and a yield of 50% to 65% of installed capacity. In the US on-shore wind farms average 26-27% yield, meaning for every one megawatt of wind power installed the actual power per year is 270KW. In our case we’ll get 500-600KW,” says Wageningen.
The company expects to reach a financial close for the project as soon as the World Bank gives guarantees to investors. The wind farm is financed 70% debt and 30% equity. The African Development Bank is arranging loans to cover 70% of the project cost, with the remaining 30% from private investment funds and co-developers.
Seven years later, €17 million ($21.2 million) has been spent for no energy. By the time of financial close, Wageningen reckons they would have cast €23 million ($28.7 million) to the wind.
This kind of investment is for those with a long-term view. It will take 12 years for the wind farm to break even though Wageningen says there will be a dividend payout to investors in between.
“This is normal for projects of this size if you consider that the six founding fathers of this project have been working for six years. It is a deferred salary, and we hope to get it one day. The passion has been more important than the money. To do something like this as a first case, we feel proud. We are driven a lot more by dedication; of course the money will be very welcome.”
On completion, the power generated from the wind farm will form 17% of total installed capacity in Kenya. Together with geothermal, the new sources of power by 2015/16 will represent at least 40% of power pool/mix and could halve tariffs.
Managing such a huge project is no walk in the park. Wageningen says he works with a construction management plan that identifies the various interfaces.
“Once construction starts, we know what starts and what follows. You need prudent management to ensure each one of these contractors works and meets targets.”
Wageningen, who holds a high school diploma and a number of specialized courses in personnel and project management, says success in business is about thinking big and outside the box.
“It’s about experience. I have been so diversified. And I don’t work alone. I have strong teams,” he says.
Wageningen has always been a trouble shooter, after the experience he gained working for the United Nations. He worked for Food and Agriculture Organization (FAO) for 12 years in Rome, Niger, Benin and then Zimbabwe until 1988 when he joined Fata European Group, an Italian engineering company, in Kenya.
Five years later, the parent company collapsed, but he decided to stay on in Kenya and went into entrepreneurship.
“I have had a number of businesses,” he says. “Some have been successful while others have failed. You can’t win them all.”
His first venture was Sally Days, a furniture maker, in 1993, which he exited after selling his stake to the local partner and went into technology.
“I have always liked innovation. Even with furniture we were doing it in a different way. We started garden furniture made of wood. Those days you’d only see metal furniture not even plastic and even shelter umbrellas were metal. That always bewildered me. Kenya was rich in wood and cotton, and we found a way to use it,” he says.
It turns out Wageningen is the serial entrepreneur who sets up businesses and sells. “I like seeing success and going for something new. That excites me,” he says.
Wageningen was the first to bring plastic cards, like credit cards, to Kenya. He sold the businesses when it had 70% market share, and went into telecommunications as a franchisee for Global Star in 22 African countries. But the US parent company collapsed and left him high and dry. In 1996/7 he invested in a small bank in Nairobi and today Chase Bank is a big player in the financial services industry.
“I’m not sure. Maybe when this wind farm is up and running something exciting may just come up,” he says.
Lake Turkana Wind Power has opened a whole new investment world for Wageningen and Kenya as a country. He is looking at expanding the project, technology allowing, to 2,000 MW. Before he came in there were only a handful of turbines in the country. Now there are at least a dozen projects awaiting approval. The government is developing a comprehensive wind atlas to attract more investors.It is very predictable wind, but the investor had to measure and observe its trends for close to six years–just to be sure.
“The wind pattern is predictable. We know when power will go down and maximum production, and so we can inform the power distributor in advance. We have no turbulence, something that turbines don’t like–gusts of wind at 29m/s, like a hair drier.”
In Europe wind can drop in 10 minutes by 50% , and if providers are not prepared you suddenly get blackouts. Lake Turkana Wind Power has entered into a contract to sell power to Kenya Power at a cost of less than $.10 per kilowatt hour, making it Kenya’s cheapest energy source, next to geothermal energy.
A 428-kilometer transmission line will also be built to link the wind farm to the national grid at an additional cost of $188 million. For a world slowly turning to wind power after being let down by hydro-electricity, gusts of high-speed winds have become a precious resource.

Casting Money To The Wind

Professor Njuguna Ndung’u, the governor of the Central Bank of Kenya, and one of the country’s most influential men in economic matters, is not known for being talkative. Partly because of his reticence, the few public remarks he makes are studied carefully.
These days, however, Ndung’u is displaying a wholly different side, allowing himself to be caught up in spectacular public squabbles with politicians over deteriorating economic indicators reflected in high inflation, a weak Kenyan shilling and rising interest rates.
“Policy making is very challenging,” he says. “You have to understand what  the right policy is and understand which tools to use.”
Booking an appointment was a lot easier than actually sitting down with the governor on the day. He postponed twice—from 10am to noon, and then to 3:30pm—so he could attend a grilling from the parliamentary committee on the controversial award of a currency printing tender to De La Rue of France. You would think that facing unforgiving legislators in an unforgiving part of the world would be about the worst thing for a banking regulator who is used to dealing with polished economists and bankers.
“There are no worse days for me,” he says calmly, as he sinks into his black leather seat which squelches in protest.
“I work day and night. There’s no worst day or best day. Today it could be inflation; tomorrow a parliamentary committee wants certain statistics; and so on,” he says.
But looking back, it is obvious that as far as bad days go, some are worse than others. In 2009, the global financial crisis started trickling down to Africa, especially in countries connected to the west like Kenya and South Africa.
Even worse, the financial melt-down—which began in the US with the collapse of the mortgage market—came to Kenya when the country had barely recovered from the violent two-month political crisis of January and February 2008 which had not only scared away foreign investors, but also slowed economic growth and production.
“That recovery was painful. It was painful because 2008 was a difficult year, and 2009 was devastating because by the time we were dealing with the post-election aftermath, the economic crisis hit us,” he says.
When there’s a crisis in Europe or the US, skittish investors fear it will spread to developing countries. In 2009, Ndung’u, who is an associate professor of economics at the University of Nairobi and holds a PhD in economics from the University of Gothenburg, Sweden, was a worried man.
“We tried to understand our
internal crisis, but with the global financial crisis, you were waiting every day, waiting for something to happen.”
For a man who implements quick yet well-thought out actions, the waiting game was unbearable.
It was just past 5pm on a cold Friday in August in 2009. In a dimly lit office at the Central Bank headquarters in Nairobi, Ndung’u, an economics author and a fan of Shakespeare, stared blankly at the markets trading board, his lower lip trembling at the gravity of what he was witnessing. This was tragedy worthy of Macbeth.
What was happening was crazier than anything he could have imagined. Global stock markets were swooning, currencies were being crushed and financial systems across the world were punch-drunk.
From his third floor office, looking out at the skyline of East Africa’s strongest economy, Ndung’u’s well-tuned economic antennae began picking up danger signals. Too late for him; Kenya’s financial system and stock market were already in panic, and the numbers were not looking pretty.
“There was not much we could do. It was the public panic that we were waiting to contain,” he says.
That day, when the global financial crisis hit and he could do nothing about it, was his worst day.
Helpless, he could merely watch as it triggered events that would challenge his reputation as Central Bank governor and plunge Kenya’s economy towards recession. The economy grew by 2.6% that year, compared to 7.1% in 2007. It was all work and no play for the professor.
“We were looking at all avenues to manage it. The other crises we knew [about] were speculative attacks from Europe. But now we were, day and night, looking at what we could do without contradicting domestic policy. Because we had signed Article 4 with the International Monetary Fund (IMF) and so we could not restrict forex controls like South Africa and Tanzania.”
This meant that the humble Kenyan shilling was left to the mercy of the crisis. It was pummelled daily as investors dumped it and scampered for safety to international currencies like the dollar.
This was not good for Kenya, as it further squeezed an economy emerging from intensive care.
This is the man named after a leprosy outbreak, that hit Kenya in the fifties, who takes struggle in his stride. With a smile, he remembers the famine of the 1960s, when the country was forced to eat maize, and the multiple political economic crises of the 1980s.
“Crises will always come and go. Any crisis is a lesson and any challenge must be surmounted,” he says.
Ndung’u is a tall, tireless 60-something with an angular face, a modest voice and a smile that rearranges everything on his face, ending with deep dimples on either cheek. Armed with years of experience in theoretical economics, teaching at the university and working for a number of organisations, he intended to beat the global financial crisis.
No longer would the Central Bank of Kenya sit and wait for an onslaught by the big boys, he resolved. But like many central bankers across the world, Ndung’u was merely chasing shadows.
“Even America didn’t understand until Lehman Brothers collapsed and that’s when we started mapping out who was trading with Lehman and who was holding the toxic assets.”
Lehman Brothers Holdings Inc. was a global financial services firm and the fourth largest investment bank in the USA after Goldman Sachs, Morgan Stanley and Merrill Lynch. It conducted business in investment banking, equity and fixed-income sales and trading, investment management, private equity and private banking.
On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. This is believed to have played a major role in sparking the global financial crisis.
The domino effect spread through the global financial system, and fuelled capital flight from markets thought to have been overly exposed to the so-called toxic assets.
“The beauty of it is that we have a strong financial industry in Kenya. And it has developed. Only we don’t have faith in it; but in CBK we have faith.”
Ndung’u says his academic background combined with his years of experience gave him the upper hand in managing the crisis. He used all the monetary tools at his disposal, such as interest rates to reduce the cash supply in the economy and increased vigilance on banks and other financial institutions, to ensure they were operating within the required liquidity levels.
In spite of the best that his arsenal could muster, the impact of the financial crisis – which is still being felt in certain quarters, especially through inflationary pressures and currency swings—saw the governor being voted as worst performer in Africa by Reuters in 2011. He takes the dubious honor in his stride.
“I don’t fear being rated; it makes you think fast. If you ask them to give you the previous ratings of governors, they won’t show them to you. Rating is a family of indicators and having to control inflation is a weak way of rating. If there’s a shortage of maize and there’s a rise in prices, you cannot say you are going to rate the governor on that. People will laugh at you. But I don’t fight with the media. That’s their business.”
With a demanding job that requires a stiff upper lip, the governor says he unwinds by playing golf on Sundays. But even his madness has a method, and the reason he enjoys golf, he admits, is because ultimately it is about strategy.
“Golf is about the brain: you have to be relaxed in mind and you have to have a strategy. I used to play lawn tennis until I realized I was growing old and my legs were wobbling,” he says.
But it is his football stint during his school days that he talks passionately about.
“My advantage was that I could dodge with the left or right leg and I would use both legs for scoring as well. That’s why you can see my hands are injured and not my legs,” he says, exposing three scars on his left arm from his footballing days. His ambidexterity and the game’s ability to stimulate intelligence, vision and strategy stood him in good stead both on the football field and in the wood-panelled offices of the Central Bank.
A nation passionate about football could not wish for a better captain guiding their economic future.
“Soccer requires intelligence, good vision and strategy. And all these qualities are applied in managing the economy,” he says.
Except when a striker, in the shape of a world financial crisis, is tearing your defense apart.

Crisis 1 Governor  0

On March 18, football fans in green and white T-shirts flocked to Kenya’s Nyayo National Stadium to watch the country’s two major clubs playing. But 25 minutes from the end of the game, the referee stopped the match between Gor Mahia and AFC Leopards after fans threw plastic bottles onto the field in protest against one of his decisions.
While condemning the incident, a radio presenter had this to say: “We did not wish them to be unruly, but at least we have fans inside the stadium. That’s a good sign.” The match was sold out.
For the last decade, the country’s sport has been in chaos. Rival federations each ran their own leagues; football chiefs were corrupt, inefficient and ranked high on the list of people Kenyans hated most. A crowd of 100 at a match was considered an achievement. At one point, FIFA banned Kenya from international football after the minister of sports disbanded the Kenya Football Federation (KFF). The body was then charged with running the sport. In 2007, Kenya’s football hit rock bottom as the country’s FIFA ranking fell to 115.
Players in most clubs went for months without pay, resorting to manual work to pay their bills. Pessimism filtered into the national team, which did not qualify for the African Cup of Nations. This was hard to bear for a country that loves football so much that a fan committed suicide after Arsenal’s 2009 Champions League defeat.
But the last few years have seen a football revival. The rivalry between KFF and Football Kenya Limited (FKL) ended when FIFA gave FKL the mandate to run the sport. Recently elections ushered in a team under the banner of Football Kenya Federation (FKF). Then 16 clubs broke away from the squabbling factions to form the Kenya Premier League Limited, which runs the local league. It is owned by the clubs, the federation and representatives of other football stakeholders.
It’s the best decision the clubs could have made. Companies are pouring money into the sport, fans are flocking to the stadiums and footballers are competing for attention with hip-hop artists in the gossip columns.
The sport is also attracting new investors. SuperSport, the South Africa headquartered pay channel has paid $12 million to air KPL matches in a deal expected to run until 2015. SuperSport’s head of Africa, Gary Rathbone, says they spend close to $43,000 a match to air more than 100 games on the channel each season.
“Kenyans love football, so when management got its act together, it was natural for us to partner with them,” says Rathbone. The station has trained more than 20 Kenyans to work in the production department.
Danish investors have also moved in for a piece of the pie. In March last year, they invested $93,000 in futaa.com, a football website that had recorded 1.6 million hits by the end of March this year.
“Our investment in football was because of the opportunity that presented itself. There was no credible site to provide information on players and other important data,” says chief editor at futaa.com, Patrick Korir.
Local business is getting involved too. East African Breweries has forked out $1.3 million to sponsor the national team. This is in addition to the amount it spends on Tusker, its KPL club and top of the league last year. It follows Mumias Sugar, Tuzo and East African Portland Cement, which have spent a total of over a million dollars to sponsor teams at KPL.
The rise of football has also encouraged entrepreneurs. Congolese millionaire Elly Kalekwa has invested millions in Sofapaka, a team that won the league in its debut in 2009. Nkaari Martin, a businessman in his early 20s, won funding to expand Ticket Masters, a firm that had the monopoly to sell match tickets last season.
“In 2007, I attended a league game that had 37 spectators. More than 100,000 tickets were sold last year,” says Korir.
And, players are now being paid for their efforts. Internationals like MacDonald Mariga and Dennis Oliech have inspired local footballers with their flashy rides and bevvies of beauties. Others like Allan Wanga have taken the game a notch higher. Wanga launched a book in March this year at an event attended by Prime Minister Raila Odinga.
Despite these gains, hurdles remain. Rathbone says stadiums need to be improved to meet international standards. Only two are qualified to host international matches and one of them is under repair.
“Our football is still mainly political, so our fortunes will remain scant until the day we hit equilibrium between business and politics. Then, business sense will take over,” says Martin.
“And we need to develop our structures, like a young under-19 team,” says Korir. Fans hope the national team, which has not won a major trophy in seven years, can replicate the success at club level.
Though there is still disagreement, this much those on opposing sides recognize: Kenya’s football is no longer scoring an own goal. That is a good start.

Kenya’s Football Revolution

One of the greatest contemporary ceramicists to emerge from London’s Royal College of Art since Elizabeth Fritsch is Kenyan-born Magdalene Namakhiya Anyango Odundo. The strange thing is, though she is well-known abroad, she is only now being acknowledged in the country of her birth.
Odundo lives, breathes and talks art. Currently, she is a professor of ceramics at the University of Creative Arts in Farnham, England.
Odundo’s handmade ceramic pieces can be found in museums and public and private collections in Europe, North America and Africa. Phillips de Pury recently auctioned one of her earlier works for £30,000—a tidy sum for a contemporary ceramic piece.
<div id="attachment_675" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-675" class="size-large wp-image-675" src="/wp-content/uploads/2012/05/ODUNDO-20032004-1024x696.jpg" alt="" width="474" height="322" />Ceramic vessels made between 2003 and 2004. These are exhibited at Crafts Study Centre, University for the Creative Arts, Farnham, Surrey UK</div>
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“Pottery is a human art that has significance as material culture in all societies. It plays an important role in all aspects of the study of human sciences. Ceramics has been valued for its artistic as well as its utilitarian use. There is hardly any society that does not use or handle pottery in some form. It is just fantastic!” says Odundo as she explains the significance of her work.
Odundo was born in Nairobi and grew up in Mombasa. After high school, she worked as an apprentice with the SH Benson advertising agency (later acquired by Ogilvy &amp; Mather). In the early 1970s Odundo left for England, where she continued her studies in commercial art. But she soon grew disenchanted working on commercial projects.
“I began looking for other creative avenues and applying to art colleges. In 1973, I accepted a place at West Surrey College of Art and Design in Farnham, for me one of the best liberal arts colleges in the UK. I spent the next three years in the three-dimensional design department focusing on ceramics, printmaking and photography.” Odundo graduated in 1976 with a first-class honors degree.
During her undergraduate studies, Odundo became interested in the anthropological relationship between ceramics and material culture. She wanted to compare African with other world cultures and returned to Kenya to research the relationship between ceramics and rites of passage among the Abaluhya people living around Lake Nyanza (Lake Victoria).
But Odundo’s approach to her ceramics goes beyond field studies. She believes experience is gained through theory and practice. “That is why libraries and museums have played such an important part in my research.”
As a student at Farnham, Odundo took every opportunity to visit collections like the British Museum. Through one of her influential lecturers, John Donne, she discovered the Petrie Museum of Egyptology, University College London, which remains one of her favorites.
“I have a passion for knowledge. If you have a passion for something, you are inclined to study it in depth. Knowledge is a vehicle that enables me to understand myself, my profession and allows me to continue to be creative.”
Ceramics is philosophical and spiritual and a part of everyday life. For her, art is life and life is art.
“Being an artist requires discipline—it’s hard work!” Odundo says. “You need to immerse yourself in the making while continuing to reflect on ideas. I spend much time thinking about what I am going to make.”
Odundo begins with a concept. Then she draws the shapes she imagines. “The thinking and drawing is where you get all the blocks and interruptions. But once the concepts have been formalized and sieved, I can begin handling the clay.” All of Odundo’s pieces have spent a lot of time in her hands. She takes the clay through a ritual of kneading, mixing and kneading again until it becomes elastic. “I don’t use the wheel. I use a method that combines sculpting, coiling, curving and forming.”
Her method evolves from traditional ways of potting practised in non-industrialized societies like Kenya and other African countries, as well as Asia and South America. “Europeans and American anthropologists have referred to these techniques as being primitive, but these technologies have evolved over more than 2,000 years of hand-building. These methods are highly skilful and technical, and knowledge and experience are required for their mastery. I love working with my hands because of the personal contact with the material. At this point, the analytical process becomes secondary; the making becomes less visceral and more tactile.”
Odundo works on several pieces simultaneously. A single piece can take six to eight weeks to complete and that’s not counting the firing process. Generally her exhibitions, which take 18 to 24 months to prepare, are made up of between 10 and 12 ceramic pieces. “The hardest part is reaching perfection—achieving what you had envisioned.”
And then, the demands of teaching make it difficult to be prolific. In the first 15 years of her career, Odundo held an exhibition annually. Now it’s every two years. Being a renowned artist comes with obligations to serve on advisory boards, work on collaborative projects and lecture. These commitments impact on an artist’s time.
In the last two years, Odundo has been working in other media. She recently participated in a printmaking workshop in Belfast. Metamorphosis and Transformation, an installation in glass, is currently on show at the Museum of Glass in Tacoma, Washington—it’s the culmination of an artist-in-residency there last year.
Odundo is reluctant to attach prices to her pieces. “I feel the value of a work is intrinsic and perhaps better assessed in terms of its longevity and repute.”
I asked Odundo if there were any pieces which were given special attention or created specifically for commissions. She says that all her work demands equal attention, but acknowledges that at an exhibition there will always be some pieces that are more distinctive than others. These pieces will be immediately snapped up by museums or big collectors. “My favorite pieces include the vessel loaned to the Murumbi Permanent Collection here at the National Archives in Nairobi. To be honest, all the pieces that are in both public and private collections are special to me.  They are all my favorites. They are all my creation. They are my children.”
Most artists will tell you they are possessive of their creations. At the same time, artists create work that matures with time and they are able to let go of the pieces into the possession of others for equal appreciation. “My work is about me, but it is also hopefully made to enhance the material culture of our society. A successful piece of work for me is one that moves an individual in a personal manner.”
Odundo’s vessels are not utilitarian—they are not fired to vitrifying temperatures, so they’re porous to retain the organic quality of the clay.
When Odundo had her first exhibition at the African Heritage House, she remembers her relatives being astonished at the refinement of her work. To her, this was the greatest accolade she could have hoped for. “I realized that my choice of working in clay had been justified and that clay had this wonderful, universal language with no barriers to appreciation or understanding.”
What do Odundo’s pieces represent? “Spirit, movement, ideas—I capture negative and positive spaces, solids, voids. I try to express the human spirit in my work; the qualities of being; and I try to reflect some of the rituals and rites of passage which concern us all. I attempt to move, to dance and to arrest moments of stillness crucial to my existence.”
As a master ceramicist, Odundo is glad to be part of making history through art. I asked her how she sees the future of pottery in Africa. “There is a wonderful tradition of ceramics in Africa that will continue to inspire generations of young ceramicists and potters. Introducing subjects like the science and art of ceramics into our education curriculum is the greatest challenge we face in this generation.”

The Human Spirit In Clay

In a rundown street in the center of Mombasa, Kenya, a short walk from the port, I sat down in a Chinese restaurant for a meeting with an infamous man of whom I had heard many talk about. Waiting for him to arrive, watching the door, I saw him enter the restaurant, his eyes flitting across the empty room. He beckoned to a table more secluded and out of the view of most patrons.
As I sat down, extending my hand to greet him, he looked me up and down with suspicion. “Who are you?” he asked, seeming very wary of me despite the fact that we had been in email contact for about a month before my arrival in Kenya. I pulled my papers and business cards from my bag, by way of introduction, only for them to be taken from me. He made off, papers in hand, to conduct an inspection and make copies.
“It’s a very sensitive business this, Miss Otto,” he elucidated upon his return, staring at me intently, still clearly unsure of my intentions.
Piracy, the topic that I was there to research, is a complex affair, and now also an industry that costs the global economy between $7 billion and $12 billion a year.
Andrew Mwangura, the man I met that day, is a famed piracy negotiator at the heart of this industry, which has spawned an underground economy generating hundreds of millions of dollars in illicit profit every year.
Mwangura has been dealing with piracy for nearly two decades, spending most of his time running the East African Seafarers’ Association. The rest of the time he negotiates ransom deals between pirates and shipping companies for vessels and kidnapped crew.
Mwangura has found a degree of notoriety in this line of work. Indeed, modern-day piracy, particularly the Somali version, has captured the attention of the world through reports that could be straight out of a big-budget movie about growing organized crime plaguing African waters. These are tales of desperate, young, armed men in fishing boats; capturing vessels, kidnapping crews and holding them for months claiming multi-million dollar ransoms.
The 21st century face of piracy is a world away from the adventurous romance of Blackbeard 300 years ago. It is a slick and nasty trade.
Since the turn of the century, piracy has been on the increase and shifting from Southeast Asia to Africa’s north-eastern coast. Maritime piracy is now a well organized and sophisticated industry where young Somali men, armed with automatic weapons and rocket-propelled grenades, carry out attacks on specific targets and collect roughly $240 million in ransom money each year.
According to the latest figures released by the International Maritime Bureau, on January 19, Somali pirates held 151 hostages to ransom; worth roughly up to $90 million. A study released by Oceans Beyond Piracy in 2010 illustrates that the cost of ransom payments only makes up a small portion of the total cost that the global economy incurs.
While these costs are being carried worldwide, countries in the Horn of Africa region are suffering even more, especially Kenya. The Kenya Shippers Council estimates piracy costs the Kenyan economy $400 million every year.
Piracy surcharges, which are now applied as an additional tax to shipping tariffs, have increased the costs of both imports and exports in Kenya. These surcharges are now commonplace, as a result of the rising cost of insurance, owing to the risks they take in pirate-infested waters. Inchcape Shipping Services says piracy surcharges have added around $100 million to the cost of container imports, and roughly $260 million to the costs of dry bulk and liquid cargoes.
Tourism, a cornerstone of the Kenyan economy, has also been suffering. Cruise ship calls, for example, which brought in around $300,000 a year, have declined from 35 in 2008 to none because of the pirate threat.
Despite so much money being at stake, the fight against piracy has been ineffectual. Why? There are a number of reasons: the lack of the political will to galvanize money and people into action. One of the biggest problems has been that piracy, having arisen from the failure of the state in Somalia, has been fought on one front alone—the ocean. In reality, piracy must be tackled in a two-pronged approach—also in the land from which it emanates.
Somalia suffers from acute instability. It is under these conditions that piracy carries relatively low risk and high reward. It is this element that counter-piracy ventures seem to ignore.
“Piracy must stop naturally,” Mwangura would say. “You can’t fight poverty with guns.”
How can Africa fight piracy? Some gung-ho types have argued that international law can be interpreted to allow forces to ‘blow’ pirates out of the water—perhaps using private armies onboard. Other more peaceful methods include: following the flows of pirate funds; attempting to bring stability to Somalia; improving the quality of life in Somalia for those who otherwise may be seduced by piracy; prosecuting pirates and strengthening the laws against them.
As Captain Jack Sparrow, the fictional buccaneer in Hollywood’s Pirates of the Caribbean, said: “The only rules that really matter are these: what a man can do and what a man can’t do.”
According to the latest figures released by the International Maritime Bureau (updated on February 29, 2012), Somali pirates are currently holding a total of 12 vessels and 177 hostages to ransom; worth roughly $120 million, assuming that top ransom settlements are attained.
Up until now, the Somali piracy debacle has been overwhelmingly characterized by what the pirates can do and what international forces cannot.
<h3>Pirates Punish With The Pain Of Captivity</h3>
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Twelve gunmen wielding AK-47s stormed a South African yacht en route to Richards Bay, on the coast of KwaZulu-Natal, on October 26, 2010. They took hostage Bruno Pelizzari and his girlfriend, Debbie Calitz. The pirates turned the vessel around and set sail for Baraawe in Somalia.
In the 16 months since then, armed groups have bought and sold the couple like a commodity. First Pelizzari and Calitz were sold to Al-Shabaab, a radical Islamist group associated with al-Qaeda. The group then sold the couple to Somali traders.
In the quest for freedom, a complication has arisen—the South African government does not pay ransom demands. Defense Minister Lindiwe Sisulu dispatched the Navy frigate, SS Mendi, to patrol the Mozambican Channel in a bid to curb piracy.
The Gift of the Givers Foundation, the largest African disaster relief organization on the continent, has been in Somalia to negotiate their release. It has managed to bargain down the ransom price from $10 million to under $1 million. The ransom was increased to $1.5 million when negotiators met with the captors on February 27, who alleged that a third party had matched the amount.
Dr Imtiaz Sooliman, founder of the Gift of the Givers Foundation, hopes the hostages will be home in Durban before the end of April.
“We know where they are. The time is now… We are telling them take it, leave it, or keep them forever,” he says.
Vera Hecht, Bruno Pelizzari’s sister, raised money for the ransom through an online and SMS campaign. She said car guards and petrol attendants reached for their cellphones to SMS when they saw a campaign poster on her car. Small businesses have also come up with thousands of rands, along with South African-based Somali communities.
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Pirates of  the Indian Ocean

You know times are tough when a star player exits the game. Those who play stocks agree that a move like this is not a good omen.
So when Centum, a listed investment company, announced in November last year that it had reduced its holdings at the Nairobi Securities Exchange (NSE), everyone stopped to listen.
In March 2011, Centum Investments, which invests in both listed and unlisted companies in the East African region, cut its exposure at the NSE from 23.6% to 9.1% of its total portfolio of $170 million and expanded its property investments by $11.8 million.
The move was to cushion its $170 million asset base as the stock market suffers from the jitters over a gloomy economic outlook in East Africa’s biggest economy and fears of political instability ahead of a general election later this year.
Centum’s investments at the NSE were punished with a 6.6% drop in half-year net profit for the six months, ending September 2011. In January this year, British American Investment Company began reallocating its assets to real estate to cut its reliance on the NSE.
2011 was a bad year for stock investors in Kenya, with the NSE dropping 31.4% by end of December, sending both institutional and retail investors scampering for safety. High inflation—which peaked at 19.72% in November but eased to 18.3% in January—along with severe drought, a weak shilling and turmoil in Western economies, resulted in the panic selling of stocks, which depressed the market.
Prices have remained low for the most part, while some have fallen to historic lows. The NSE was rated the second worst stock exchange performer in 2011, second only to the Egyptian bourse, which was down 47.2% due to political upheaval that toppled Hosni Mubarak.
“Institutional shareholders have been trashed in the bond market. The spike in the inflation rate, the excessive volatility of the Kenya shilling and a behind-the-curve Central Bank [of Kenya] have impaired the bourse,” says Aly Khan Satchu, CEO of Rich Management, an investment company based in Nairobi.
Kenyan billionaires in shilling terms, with huge stakes in the stock market, have seen their fortunes mauled by the bears. Investors lost an estimated $4.5 billion in the 12 months to December 31, 2011, as market capitalization shrank from $14.5 billion on January 1, 2011, to $10.1 billion at the end of the year.
But the six months between February and August suffered the deepest dip. Within the period, Chris Kirubi, one of the top investors at the NSE with 26.8% of Centum, lost about $7.7 million on the counter after the firm’s share fell 20% in the six months to August. Equity Bank CEO James Mwangi lost $20 million in the six months that saw the bank’s stock shrink by 30%.
Naushad Merali, the chairman of Sameer Group of Companies and ranked one of the wealthiest at the NSE, lost $6.2 million from his three listed companies—Sameer Africa, Sasini and Eveready East Africa—which fell 24%, 5% and 25% respectively, during the six months.
Most investors are shifting to less risky and now lucrative Treasury bills and bonds, as government increases borrowing to finance its budget. A sharp rise in interest rates, after the Central Bank of Kenya (CBK) raised its policy lending rate to an unprecedented 18% to tame inflation and buoy the weak shilling, is also squeezing money out of investors and limiting cash flow to the stock market.
Commercial banks have raised lending rates to above 22% in recent weeks, while CBK has steadily raised the coupon rates on Treasury bill and bond issues to attract investors. The coupon rate on the two-year bond, for instance, jumped to 22.8% in November from 16.5% in October, as investors bid for higher returns to hedge against rising inflation that touched a new high of 19.7% in November.
If the impact of two new listings at the NSE in the third quarter—Transcentury Limited and British American Insurance Kenya Limited (BRITAK)—is any guide, the chill at the Nairobi Stock Exchange is deep-seated. The BRITAK initial public offering (IPO) attracted a subscription of 60%. Analysts say this is an indication that investors are still skittish about stocks. Both Transcentury and BRITAK closed the year down 50% and 67.2% lower than their offer prices.
With an election year in 2012, there’s every reason for investors to be pessimistic. Most investment analysts project a sustained market recovery in 2013 after the elections.

Bourse Black Hole

Robert Okubo switches on his vacuum cleaner and blows a cloud of dust from the boot of a grey BMW outside his office in Hurlingham, a suburb west of Kenya’s capital, Nairobi. This is his third car to clean on this hot January afternoon and he has four orders to steam-clean floor carpets in the bustling city.
Many Kenyans may dread the choking dust that comes with this drought season, but Okubo is clearly making money out of removing it from cars, carpets, offices and houses.
Besides cars and furniture, Okubo, through his company aptly named 200Degrees, cleans the grout between floor tiles, kitchen and bathroom tiles, concrete (terrazzo), roofing tiles, pavements, mattresses, pillows and car interiors. It is a business he has run on both sides of the Atlantic Ocean.
Okubo, who runs an identical steam cleaning business in New York, returned to Kenya in 2011 to open a subsidiary of 200Degrees. He is among an army of Africans who have made the Western world their second homes, but who are now returning home to invest their earnings. For many like Okubo, it’s a matter of survival—running away from the US, which was worst hit by the financial crisis that began in 2008.
He read in many reports that the business environment in Kenya had improved markedly and decided to try it out.
“Things have improved,” says Okubo, 43. “I registered the company in a day and getting licenses wasn’t much of a hassle.”
According to the 2011 Doing Business report by the World Bank, which tracks the ease of operating business globally, Kenya’s rank has been falling over the past three years, although it was among the top 10 reformers worldwide in 2008.
In last year’s report, East Africa’s biggest economy with 40 million people came in at 98, dropping four places since 2010, out of the 183 countries studied. It is this kind of optimism that is attracting hordes of entrepreneurs.
The report says Kenya made only two reforms: reducing the time it takes to get the memorandum and articles of association stamped and harmonizing tax. Registration procedures were cut and records at the registrar digitized. It also implemented an electronic cargo tracking system and linked it to the Kenya Revenue Authority’s electronic data interchange.
These, among other reforms, are luring Kenyans in the diaspora with money to spare to invest back home.
Okubo left Kenya 16 years ago to chase the American Dream after his tour and travel business was snuffed out by travel advisories issued by Washington in the wake of the bombing of US embassies in Nairobi and Dar es Salaam in 1998. In the US, he landed a job with Stanley Steamer, a carpet cleaning conglomerate, where he was paid on commission.
“What caught my eye was that my truck was giving this company about $400,000 a year and we were six trucks in my station, and I was getting only $4,000,” he says.
So after three years he started 200Degrees, named after the high cleaning temperature used, which earned $6,000 in the first year. In the second year, turnover jumped to $100,000 and doubled last year. He quit his full-time job to focus on his new business. “I realized I was living the American Dream,” he adds.
But when the economic recession struck, revenues dropped 15%. Paying staff on commission saved 200Degrees from the pain of a hefty payroll, but that wasn’t good enough to keep the business profitable. So to grow revenues, he cut his prices.
In 2009, when Okubo visited Kenya to see his relatives and friends, he was impressed at the way the economy was being run. But he discovered something else: there were no professional cleaning companies. “I decided to give it a shot,” he says. “Kenya is warm all year round, as opposed to US where most of our work is in seven months of summer.”
In just over a year, the Kenyan subsidiary of 200Degrees, is turning over $40,000, and retains more than 15 workers.
Professional cleaning is a new concept in Kenya, making Okubo’s business a little hard because he has to do more in terms of marketing and creating awareness about his service and why it comes at a higher price. “The biggest mistake that people make is using too much soap and failing to rinse it out completely,” he says. “What many people don’t realize is that if you don’t completely rinse out the soap, it keeps cleaning and suds a lot. Worse still, many vigorously brush out stains from a carpet, pushing the dirt even deeper.”
The marketing response has been improving, growing from a handful of clients to over 100. “It’s not easy,” Okubo said recently, as he waited in the lunch-hour traffic jam on Uhuru Highway, the main artery road to Westlands, a Nairobi suburb where some of Kenya’s richest reside.
After 20 minutes, the car has barely moved 10 metres. Then the phone rings. He twists his nose and grins. “Oh, no!” he exclaims, banging the steering, which unleashes a horn that rattles other motorists in the gridlock. “The client just postponed the job, man.”
Traffic jams are a major issue here, burning fuel worth $50 million every year. This has forced the government to intervene, and it is investing about $1.5 billion on infrastructure to revamp roads and establish a modern commuter train in the capital. Upgrade of the key 40km road connecting Thika, an industrial hub east of Nairobi, into the first regional superhighway is almost complete.
When I first interviewed Okubo in August 2011, he was serving clients in just few sections of Nairobi. Six months later, he has spread his business to major towns, including the coastal city of Mombasa, where he opened a branch in early January. “Business is not bad,” he says. “We are getting inquiries from neighboring countries and we are really thinking about going regional.”
The rains are expected in Kenya from March and Okubo will have nothing to lose. It will be business as usual, he says, or even more because of the mud. “Cleaning is a basic need. No one wants to stay in a dirty environment. Those who do so pay the price through higher medical bills.”
The job has turned into a passion and as Okubo sees me off, he remembers something. “Chief,” he signals as I turn the car ignition keys. “I forgot to tell you our slogan. ‘We don’t cut corners, we clean them!’” <img loading="lazy" decoding="async" class="alignleft size-large wp-image-458" src="/wp-content/uploads/2017/04/Robert-4-1024x683.jpg" alt="" width="474" height="316" />

Cleaning Up

It has a claim to being one of the most photographed houses in Africa. It was the first house in Africa to be featured in the prestigious US Architectural Digest in November 1996; it appeared on the cover of Marie Claire and hosted a photo shoot for the St. John Collection for Saks Fifth Avenue in New York.
The African Heritage House is the fruit of years of sweat and toil by Alan Donovan, who has dedicated his life to collecting, promoting and preserving art from Africa. The house resembles the mud mosques of Timbuktu and the Grand Mosque in Djenne, Mali, which he saw on his first journey across Africa in a VW bus in 1969.  He came to Africa in 1967 as a food relief officer for the US State Department during the Nigerian-Biafra war. In the midst of war, death and suffering, Donovan fell in love with Africa’s art and culture.
<div id="attachment_388" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-388" class="size-large wp-image-388" src="/wp-content/uploads/2017/04/Donovan-008-683x1024.jpg" alt="" width="474" height="711" />O It has a claim to being one of the most photographed houses in Africa. It was the first house in Africa</div>
Donovan is an art collector, designer and proprietor of the African Heritage House. Forty years ago, together with his wife, Sheila, and Kenya’s second vice president, Joseph Murumbi, they co-founded African Heritage—Africa’s first Pan African gallery in Nairobi, Kenya. According to a World Bank report, African Heritage became “the largest, most organized retail and wholesale operation of its kind in Africa”, and a major source of African art and crafts from Africa to the rest of the world. In its heyday, it had 51 outlets selling around the world.
Donovan is famous for staging Kenya’s African Heritage Festival, an extravaganza that went around the world showcasing Africa’s rich art and culture. Many of the models in the shows wore jewelry designed by Donovan, and went on to become stars in their own right. One of them was Iman, the most famous model to come out of Africa; there was also Khadija, who was fashion maestro Yves St. Laurent’s first star model from Africa.
Donovan has collected artefacts, masks, paintings, textiles, ornaments and sculptures for the last four-and-a-half decades.
A visit to Heritage House is strictly by appointment. Donovan gives a personal tour of the three-storey house, which takes at least one hour.
The African Heritage House in many ways is a story of Donovan’s life. The design of the house was inspired by the mosques in Timbuktu, Mali, Emir’s houses and palaces in Nigeria, and Ghana’s mud houses of Navrongo. The latter are round or rectangular mud houses painted in geometric designs of ochre, brown and ivory hues. These features can be seen in the exterior of the house. Before commencing construction, Donovan also visited the mud palaces of Morocco and learnt how builders make bricks with straw and mud. In the end, Donovan opted to build the house with stone blocks covered with dyed plaster.
In the house,  Donovan has hoarded his African collection: ceremonial daggers from Nigeria; Turkana headdresses made of  ancestral human hair; Bapende masquerade dolls from Zaire; Kente cloth worn by the Ashanti royalty; Kenya’s Kamba beadwork; necklaces from Egypt made of rare quartzite clay; beads worn by a Shango priest in Nigeria.
Among the fascinating items are Ibeji dolls made by the Yoruba women of West Africa who have a very  high incidence of multiple births. The children of multiple births—called Ibeji—were thought to share one soul. If one of these children died at birth, the mother would carve a wooden effigy for the dead child. The mother would feed the doll like the living child. Ibeji dolls have become one of the most popular pieces of African art and can fetch up to $10,000.
Donovan also has a large collection by some of Africa’s great artists, including a six-foot wooden piece called Three in One by East African pioneer sculptor Francis Nnaggenda. Vice president Murumbi lauded Nnaggenda in his opening speech for African Heritage beseeching the then Mayor of Nairobi, Margaret Kenyatta, and the Nairobi City Council to buy Nnaggenda’s mammoth works on behalf of the people.
“I own five of this man’s works and I am the only African who ever bought a piece from him. Otherwise, Africans should not get upset if their artists and art leave Africa,” said Murumbi.
The words fell on deaf ears and Nnaggenda went into exile in Texas for decades before returning to be Chairman of Fine Arts at Makerere University in Kampala.
<div id="attachment_389" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-389" class="size-large wp-image-389" src="/wp-content/uploads/2017/04/Donovan-028-1024x683.jpg" alt="" width="474" height="316" />Alan Donovan with a traditional headdress, worn by a Karomojong warrior from Uganda</div>
One of Nnaggenda’s towering metal sculptures, called “Woman at the Gate”, stands sentry at the Murumbi grave in Nairobi City Park.  Thieves in search of scrap metal for the burgeoning scrap metal trade tried to dislodge the mammoth sculpture from its stone plinth, not knowing that the sculpture could fetch several million shillings if it were kept intact rather than a few thousand shillings as scrap metal. Nnaggenda sculptures are very rare now because the artist is quite old and there are only a limited number available. Thus, his pieces will always increase in value. Some of his works sell for over $50,000.
Donovan also owns a magnificent collection of Tinga Tinga art by disciples of the late Edward Saidi, a Makonde artist. The original paintings by Saidi can sell for up to $20,000 or $30,000, and are especially sought after by Japanese collectors.  There is also a painting by a Haitian artist who “liked to paint animals”, says Donovan.
Inside the House, Donovan has pottery by Magdalene Odundo, who is based in London. “Odundo is Kenya’s most famous artist abroad but little known in Kenya,” he explains. She takes at least one month to make a pot. They are so few they can fetch over $50,000 each.
Then there is an amazing painting by Twin Seven Seven, a West African artist, who was one of seven sets of twins born to his mother; all the babies, but him, died at birth. Seven Seven died two months ago; he was a phenomenal artist, musician and dancer. His works only recently started to attract international attention at galleries in Europe and the US. Since his death, prices of his works are among the top tier for contemporary African artists who break $100,000. His former wife, Nike Seven Seven—who has had  seven exhibitions at Nairobi’s African Heritage—also sells works for around $40,000. Other works in the house are paintings by Charles Sekano, a jazz musician and artist from South Africa who lived in Nairobi, and Ancet Soi, a pioneer artist from Kenya, who won a calendar award in the 1960s. His works are highly sought after and may sell for several thousand US dollars, along with the flamboyant works of Jak Katarikawe, a well-known Ugandan artist living in Nairobi.
For a long time, artefacts, masks, jewelry and textiles from Africa have not been accepted as art, but Donovan has helped to change all that. He says a sturdy prejudice exists from the West when it comes to African objects which is not there when discussing objects from other parts of the world. In his book, My Journey through African Heritage, Donovan writes: “If the object has not been seen in a museum or a book on African art, then it is not ‘African’, regardless of who created it. Besides, if the object is not something to hang on the wall or adorn one’s table, it cannot be ‘art’.”
After living amongst the Turkana in northern Kenya, Donovan wanted to exhibit their items as “art”, but when he tried to exhibit his collection in American galleries in 1970—after successful showings in Nairobi—he was told  that they were “artefacts”, “utensils” or “functional” items.
“The Turkana do not need paintings on their walls or their donkeys. Their instincts and talents in producing their phenomenal designs is clearly art. Period. Why would I want to pay three million US dollars for a painting of a Campbell’s soup can, a ‘functional’ item reproduced by American artist Andy Warhol? This artefact may have been characteristic or pivotal in a period of Western consumerism, but is it art?” asks Donovan.
Is there money in collecting and selling African art? I ask. After a few seconds of silence, Donovan says yes, but adds a disclaimer about the types of art on demand.
“The value of many art pieces is based on their originality and age, and some of the things being sold now are not original,” he says.
The business of art is a thriving business in Africa. For example, an African Grebo female mask from Liberia costs $149; a framed Kuba cloth from Congo sells for anywhere from $100 to $1,500; a Bamileke Stool from Cameroon is worth $1,500; and a storage chest from Zanzibar can sell from $4,000 or more, depending on age, beauty, size and condition.
Donovan reiterates that art is indeed a viable business in Africa.
“Investment is not as important as the expertise. It is the affinity for the cultures and materials. Investment depends on the intended outlets; for instance, a huge chain of department stores or one exclusive gallery,” he says.
What will become of Donovan’s outstanding collection of art, crafts, textiles and artefacts in a house based on the vanishing mud architecture of Africa? Donovan seems puzzled. He discloses to me that he is in negotiations with several foundations and organizations and is also speaking to other private investors about plans to add suites and a hotel based on African traditional architecture.
What lessons has Donovan learnt as an art collector? “Sadly, many items in my house have disappeared and others will soon follow. As local demand for traditional items dries up, artists and craftspeople are forced to seek out new markets. Africans have embraced new religions and modern ways, their traditions have changed, some have vanished and we may lose in less than half a century what took ancient cultures millennia to create,” he explains.
“If you are interested in your heritage, you should collect it and cherish it as much of it is being lost as we speak, and in some cases even before we knew it existed.”
As for the house, he hopes it will remain intact as a museum for future generations.
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Tag: Kenya

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