Undercover On Sunday

PART III: The 20 ways Kenyans become millionaires

 You can become stinking rich via being the best in your profession-and charging a king’s ransom-like lawyer Ahmednasir’s Sh300 million for two week’s work

The chosen few: Naushad Merali bought a dying cable maker, Delta Electric, for Sh105 million in 2000. He sold it three years later for Sh225 million to Trans Century which acquired a 75 percent controlling stake and renamed it, East African Cables (EAC), the manufacturers of electrical cables, transformers and copper wires. The presidency of Mwai Kibaki saw unprecedented growth in energy and shares of EAC rose from Sh12 in 2004 to Sh600 in two years! churning out millionaires from what was a dying company. The shares, though, are trading at below onion prices at the NSE today but Merali had made his dough!

By GW Ngari


The way millions are made appears to suggest there is no particular formula for financial success. But in the third installment in this series, we’ll look at arithmetic progression and resurrecting dead companies and breathing life into a money making machine like Ndirangu wa Maina did with Consumer Insight Ltd. Then there are also pyramid schemes which promise to multiply other people’s wealth faster than any other market option, you wonder why, if that’s the case, they want to include other people!  Read on…

9. Arithmetic progression: The story of Naivas supermarkets

One problem with growth nestled in the family and one ethnic-thinking are the wrangles

Here, the entrepreneur turns the success of one thing, say a store, and opens more still, greatly aided by the law of geometric progression. But it requires time. The span it takes for a small business to grow organically into a true colossus of commerce is 35 years-basically a generation. Some illustrative ventures in Kenya include Naivas chain of supermarkets which grew by focusing on estates instead of opening at the heart of a major town. Growth nestled in the family has its problems including wrangles and Naivas have had theirs play out in the courts. Here too include Chandarana supermarket which was nestled in Parklands and other muhindi estates, but is now expanding to miro territories.

10. Resurrecting dead outfits like Ndirangu wa Maina

He has many hobbies but his favourite sport ‘is making money

Consumer Insight: Ndirangu wa Maina bought a dying research division and resurrected it into one of Kenya’s largest consumer research companies by using one trick: Reversing its business model! The research division got business by waiting for commissioned work, and Ndirangu thought ‘why not do the research first instead of waiting, then sell it? He renamed the new outfit, Consumer Insight, now operating in Uganda, Tanzania, Nigeria and Ethiopia. Consumer Insight Africa also owns Gap Marketing and Voices Africa, the continent’s largest online research panel.

Ndirangu wa Maina had reached the glass ceiling as Deputy MD of advertising giant McCann Erickson Kenya in 1998. His other colleagues, Gachago Philip and Rose Kimotho had quit to establish Gap Promotions and Regional Reach Ltd, respectively.  So, Ndirangu took the MD out for lunch to break news of his imminent departure which was how he learnt McCann was selling its research division. 

The ailing division earned income from commissioned research. Ndirangu, whose favourite sport ‘is making money’, sniffed an opportunity. He bought it for a sum he rarely discloses, but the deal also included taking the division’s van, driver and the secretary. The rest is a history of selling market research to banks, manufacturers and media companies.

  Cons & Pyramid schemes of George Donde

Pyramid schemes rarely change, they only reemerge in variations

Games people play: A victim of George Donde’s DECI pyramid scheme. Donde fleeced Kenyans and later died with the loot. Kenyans have been conned through Saccos promising unrealistic returns, growing money on trees in greenhouses in Kajiado, betting on Brazilian soccer games and even praying for money and ‘Wash-Wash’  which involves buying chemicals for turning some pieces of dirty paper into crisp Sh1000 notes.

Con games and pyramid schemes have existed and will continue to exist as long as human beings are greedy and desire short cuts to riches. Pyramid schemes are also called Ponzi Schemes after the Italian-American swindler who separated suckers from their loot in 1920s America where his investment plot of multiplying investor money hit the headwinds. Schemers, as usual, make millions before disappearing. Like the late George Donde whose DECI pyramid scheme resulted in deaths.

Gullible Kenyans were shortly separated from their loot and the App deleted!

I wanna be rich: In 2007 alone, thousands of Kenyans lost their life savings, families were torn apart and lives ruined after several pyramid schemes sunk with an estimated Sh8 billion from over 140,000 investors in DECI, Global Entrepreneurship, Mont Blanc Afrique, Pesanet Ltd and Acid, according to a 2009 report by the Taskforce on pyramid schemes. But behind pyramid schemes are faces scheming for your hard earned cash the latest in Kenya was Amazon Web Worker, an online pyramid scheme which was offering 38 percent after seven days and gullible Kenyans were shortly separated from their loot and the App deleted!

Jane Musimbi, a retired banker, lost over Sh30 million in DECI where her brother worked as a financial controller

King Con: American Charles Ponzi is the father of pyramid schemes through which suckers are taken to the cleaners before they later ‘cry in the toilet.’ Pyramid schemes rarely change, they only reemerge in variations which always crumble in the end.

Jane Musimbi, a retired banker lost over Sh30 million in DECI where her brother Elphas Kimiywi worked as a financial controller. Irate investors threw him eight floors down when DECI went under with Sh2 billion from 94, 000 investors in 2007. Donde bolted and when some investors cornered him in Kiambu at the wee hours, he managed to dish out Sh20 million at gun point. He later died in 2012. But the money was never recovered.

He was jailed for 14 years when the law finally caught up with him. But the idea of paying the naïve on the ‘first to invest, first to be paid basis’… as the bottom half gets financially screwed, has never failed. 

12. Profession: Ahmednassir charged Sh300 million for two week’s work

Charging what reads like kidney transplant fees

The Grand Mullah: Ahmednasir Abdullahi charges fees that afford him Sh1 million Brioni suits. Like the one above. He justified the payment thus: “Going by what we charge as senior lawyers, that was the lowest amount (Sh40 million). They could not afford the original fee.”

You can become stinking rich via being the best in your profession-and charging a king’s ransom. Like high baller lawyers Ahmednasir Abdullahi, Cecil Miller, James Kamau and Fred Ngatia- some of the most expensive legal hands in Kenya.

  Ahmednasir, for instance, charged the Independent Electoral and Boundaries Commission (IEBC) Sh2.9 million a day for representing it for 14 days during the presidential petition in 2013. Total pay for Ahmednasir was Sh40 million which is not even what some Kenyans are paid as terminal dues after working for 30 years!

Jane Michuki is a high roller…her 9.5 per cent stake in Britam is valued at Sh5.4 billion!

Legal Champion’s League: City lawyer Jane Michuki, the Managing Partner at Kimani&Michuki Advocates where she specializes in litigation, constitutional and administrative law and arbitration, is one of the wealthiest women in Kenya via her law firm charging handsome conveyancing fees for such huge projects as Thika Greens.
Her hefty income enables her to play the stock market as a high roller at the Nairobi Securities Exchange where her 9.5 per cent stake in Britam is valued at Sh5.4 billion.  She owns the Britam stake through owning 44.4 percent of investment vehicle Equity Holdings, the largest shareholder in Equity Bank-which her law firm advised before its listing in 2006.

In medicine, there is David Silverstein, eminent cardiologist. The late Bob Collymore spoke about spending Sh100, 000 on blood tests at Dr Silverstein’s clinic before he was diagnosed with cancer of the blood. He is the personal physician for the high and mighty who pay dearly for his services including retired President Daniel arap Moi and former Attorney General Charles Njonjo and which accounts for Dr Silverstein living his weekdays like a pasha in Lavington Nairobi and weekends at his Naivasha ranch. 

In Part IV next Sunday: How governments, discoveries, inventions, sales and marketing made others filthy rich

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