You are not in business if you are not doing business with government
By GW Ngari
This is the fourth and second last part in the continuing series on how money was made, is made and will be made in Kenya and elsewhere. They say you are not in business if you are not doing business with government. That in Kenya involves winning tenders from the county or national government. For successful tender-preneurs, the rewards can be eye-watering. But when tenders payments are delayed or not paid at all, business can go on its knees. Money has also been made from sales and marketing in the case of Chris Kirubi and his forays in insurance premiums, discoveries like finding Paradise Lost is in your own farm in Kiambu County and inventions like George Njoroge inventing how people can recover lost data….
13. Government: The home of tender-preneurs and political brokers
There are tenders and the kickbacks besides outright theft by servant
The government is the biggest spender in any country. It is also the biggest employer, but the poorest payer. Being an extractive entity, there is a lot to be milked in resources including free government land and other properties including houses and businesses, tenders and the kickbacks that go with them besides outright theft by servant. Then there is access to scholarships, cheap loans, crony capitalism, tax evasion and more money to be made in influence peddling, power brokerage and ‘facilitation fees’ in the millions for political go-betweens.
The numerous multi-billion tender scandals are cases in point.
Some of the wealthiest Kenyans made money when in government and from government when they left: Former First Lady Mama Ngina Kenyatta did not go beyond basic education, has never been formally employed but alongside sons Uhuru and Muhoho Kenyatta own a combined Sh8 billion stake in Commercial Bank of Africa. Former Central Bank Governor Duncan Ndegwa in his 2009 memoirs, Walking in Kenyatta Struggles: My Story, inform us that a Kenyan could only get a beach plot in Mombasa from president Jomo Kenyatta’s assent or Mama Ngina’s-who allocated herself and family prime beach properties which became the nexus of the Heritage Hotels and Resorts.
Take the late JM Kariuki. Before becoming MP for Nyandarua North and Assistant Minister, he was the Private Secretary to founding President Mzee Jomo Kenyatta.
JM often lamented how “Kenya was a country of 10 millionaires and 10 million beggars,” yet he among the latter 10. While early cash flowed from loyalties of his 1963 memoirs, Mau Mau Detainee, from which he invested in hotels and secretarial colleges, he only became fabulously wealthy from being a go-between for foreign investors and President Kenyatta.
Kenyatta allocated JM a colonial farm and house worth Sh3.3 million as reward for ‘fighting for uhuru’
In exchange, he became their fronts for which he got shares and directorships in their casinos and other businesses.
British historian Martin Meredith informs us in his 2011 effort, Africa: A History Since Independence, that in 1965 Jomo Kenyatta allocated JM a colonial farm and house worth Sh 3.3 million as reward for ‘fighting for uhuru.’
Meredith covered JM’s assassination in 1975 for the Sunday Times and adds that he acquired significant shares in Kenya Breweries (whose beer he distributed), Block Hotels, Caltex, CMC Motors, Lonrho East Africa, BAT and Standard Chartered besides exporting game trophies, interests in hospitality, aviation, real estate, ranching, large scale farming and a mining concern with his brother in-law, Harun Muturi of the Mamba Village fame.
President Jomo Kenyatta was not averse to allocating himself beach plots and one mouth gaping case, Ndegwa recalls how he and George Criticos, the father of former Taveta MP Basil Criticos, divided an almost entire district between themselves at no cost!
The trend continued during the reign of second President Daniel Arap Moi and in which his personal assistant, Joshua Kulei became his business associate, proxy and henchman.
The lid on how Joshua Kulei became fabulously wealthy was lifted in 2003 when President Mwai Kibaki commissioned Kroll and Associates, a private eye based in England to trace the looting and stashing abroad of money by wheeler dealers during the Kanu regime.
National Milling Corporation exchanged hands for Sh 150 million when it was valued at Sh 550 million
Kroll and Associates completed their assignment in 2004 but the report was only exposed by whistle-blower website Wiki-Leaks in 2007.
The 106 page report revealed that through himself and Moi, Kulei held serious investments including a palatial home in upmarket London and other properties in Surrey.
Kulei’s court appearances revolved around how National Milling Corporation, which operated flour mills nationally, exchanged hands in 1994 for Sh150 million when it was valued at Sh550 million and by 1995 the Sh150 million had not been received by the government. New owners included Kulei and his acolytes. Head of its privatization, Lawi Kiplagat, refused to explain the tendering process. The Auditor-General asked for the sale to be cancelled.
This never stopped when President Mwai Kibaki and President Uhuru Kenyatta took over as third and fourth in command respectively. Each of their tenures was hit by mega scandals of shadowy tenders awarded to briefcase companies but in which billions feathered the pockets of a few whose wealthy can only be wasted by truly useless progeny over several generations.
14. Sales & Marketing was how Kirubi made early millions
The psychological theory of salesmanship demands one thing: faith!
Having gained what he considered enough experience working for Shell selling gas and Sterling Winthrop selling drugs, Chris Kirubi got tired of the little room for upward mobility.
He quit formal employment when he was the MD for Kenatco in the 1970s and left with three months paid leave-and his secretary.
He set up shop at a small office in Kencom House and equipped it with telephone lines and a fax machine, but three weeks of endless office tea and little else, his worried secretary who left with him “because I believe in you” wondered: “Boss, but what business are we in?”
Kirubi also had no idea as he had been flipping through the dailies from back to back in that time span. A break came while having coffee with some loaded friends. They were selling insurance, rolling in dough, had free time for golf and holidays.
They reckoned Kirubi, knew so many people, and would be a wonderful agent selling insurance. Shortly, they introduced him to their American managers at International House where the insurance company was based.
Heller informs us that the psychological theory of salesmanship demands one thing: faith! “the suspension of insecurity, the elimination of disbelief in oneself, its replacement by belief in the company and the product.”
Kirubi had faith, was in the right place at the right time.
It was at the height of the Coffee Boom in Kenya where coffee farmers became overnight millionaires. It so happened that Brazilian coffee had been hit by coffee frost creating a shortage. Prices of Kenyan coffee shot through the roof.
Within one year, I was the best insurance salesman
Overnight coffee millionaires some of whom had minted their dough smuggling coffee from the Ugandan border town of Chepkube were taking to showrooms at DT Dobie and driving out with twin-exhaust Mercedes Benzes. Others bought houses in Karen, Runda, Lavington, more coffee farms, buildings, companies…and life and general insurance!
“Within one year, I was the best insurance salesman,” he recalled in #AskKirubi. “Within two years, I was made a board member and after three years, the company was closing and the Americans sold the insurance business which was renamed Cannon Assurance.”
He added: “The Americans had such belief in me they asked me to buy International House. I told them I had no money but they introduced me to managers at Barclays headquarters in London and I was so scared I would be shot in the streets I brought a partner.”
The 17 storey International House has been the financial oven through which Kirubi’s wealth was baked. Designed by Kenya’s Dagliesh Marshall Architects, it is the most expensive rental per square foot in the country. It was the beginning of the journey to billionaire status which started with sales and marketing.
15. Discoveries: Finding is keeping
Years later, Omamo’s granddaughter Fiona Achola married Uhuru Kenyatta’s son
American prospectors, geologist John Saul and business partnerElliot Millerhad discovered rubies in Tsavo National Park in 1973. It was the world’s largest ruby mine. In January 1974,they registered their find and were given permission to mine and export the rubies through Taita International Ltd.
To get political protection, Saul roped in Vice President Daniel arap Moi and then Tourism and Wildlife Minister Jaxon Shako and Natural Resources Minister William Odongo Omamo as partners who were allocated 51 per cent of profits from the rubies.
Years later, Omamo’s granddaughter Fiona Achola married Uhuru Kenyatta’s son while her aunt, Raychelle Omamo is the Cabinet Secretary for Defense.
Things changed when the powers that be realized the full value of the ruby find, $5 million or Sh500 million today. Shortly, the Kenyatta family demanded a piece of the action. After all, Saul had discovered three finds he named Ng’ang’a, Penny Lane and Saul Mines. Ng’ang’a was the real deal.
“Acting for Mama Ngina and Kenyatta’s niece Beth Mugo, George Criticos, Kenyatta’s Greek-Kenyan partner who had minted his dough selling guns and scrap metal in Egypt, approached the Americans to demand their share,” writes Charles Hornsby in Kenya: A History since Independence.
Mama Ngina returned one of the mines, though the other remained in family hands
“A day later, on 18 June 1974, Saul was deported. The same day, the mining claims register was mysteriously lost. The first entry in the new register was the discovery of ruby mines by George Criticos.”
Criticos laid claim to Ng’ang’a Mine as the president castigated some “foreign geologist out to swindle Kenyans.”
The American Embassy through protests of Ambassador Anthony Marshall were followed by hostile press coverage in the US and the UK.
In fact, copies of Time magazine carrying the story were impounded at the airport and destroyed. It was only after America threatened to cut foreign aid that the Kenyans backed down. “The Criticos license was revoked in December, and Mama Ngina returned one of the mines, though the other remained in family hands. Compensation was only paid to the Americans when Kenya needed US military assistance in 1976,” notes Hornsby.
Mama Ngina is still in mining, Beth Mugo still operates Beth International, a gemstone concern at the Jomo Kenyatta International Airport. Saul and Miller returned to Kenya after Mzee Kenyatta’s death in August 1978 and continued profiting from Nga’ang’a Mine until the 1990s when they fell out of each other and is now owned by politician Johntone Muthama.
16. Inventions: George Njoroge’s Sh300 million campus project
The inventor has to preserve his birthright by refusing to be sold down, up, or across the river
George Njoroge lost his final year project when he was an IT student at JKUAT after his laptop crashed in 2006. He could not recover the project on online voting system in Kenya and which he had slaved on for eight months. Starting all over again meant not beating the deadline. Not even Microsoft partner companies in Kenya could recover his data. He was dropped from the graduation list. He went online and realized data recovery was possible and began working on the idea. He eventually landed a job as IT Director at Aitec Africa. Four months into the job, Njoroge approached Aitec’s chairman, Sean Moroney, with the data recovery business idea, requesting it to be incubated at the company. That’s how East African Data Handlers (EADH) was born.
He recalled: “We agreed that he would cut my pay into half and then I would set up a company incubated by Aitec. I had a leeway of hiring staff and using their facilities to run the company.”
Njoroge is among the first Kenyan experts in computer forensics with his first million made during the 2006 World Cup in Germany after a local betting firm lost its data and needed it recovered badly.
By 2014, the company was valued at Sh 300 million of which he controlled 90 percent
East African Data Handlers, where he is the CEO, is one of the continent’s foremost data recovery and storage, besides other services Cloud Protection and IT security and digital forensic companies. Clients include UN bodies, the government, commercial banks and telecommunications companies, among others in other countries. The most touching client though, was “a bereaved man I helped recover all his wife’s pictures spanning her life time. He had saved them on a laptop which had been stolen and on a hard disk which had crashed.”
By 2014, the company was valued at Sh300 million of which he controlled 90 percent. Heller notes “the inventor has to start by selling himself, continue by selling his invention, capitalize by selling the product of his inventiveness, cash in by selling, at least in part, the business that produces the product and preserve his birthright at all times by refusing to be sold down, up, or across the river.”
In Part V and the last next Sunday: Kimani Rugendo struck gold in manufacturing, Ayisi Makatiani in new products, Gatheca Muhoho with nepotism and Mbugua Mwangi with pure luck…