Biashara Leo (BL) September 2018

NO LONGER AT EASE

Ina process that was largely political, Kenya’s new Constitution was promulgated on 27th August 2010. This replaced the 1963 independence Constitution. One of the most significant developments of the new supreme law was the introduction of two levels of government - national and county. Consequently, new centres of power were created - both at the county and national governments - in order to safeguard civil liberties. Given the bad experience by the citizens under a centralized government since independence, most of them were hell bent on having a new Constitution that promised to bring such excesses to an end. But that was as far as the story went.

The new governance structure has proved to be very expensive. Whereas it is okay to devolve funds to the counties for instance, many audit queries have been raised about how such funds have been used. Indeed, there is no rationale of allocating most of those funds to recurrent expenditure as opposed to development. What about all those political seats that the new Constitution created and whose bearers earn a fortune? Do we really need all of them or we are over represented as Kenyan citizens all in the guise of safeguarding our civil liberties? Further, what was the rationale of creating forty seven counties instead of eight as guided by the provincial administration units under the old Constitution? Wasn’t Nairobi a province under the old constitution and it is now just one county?

As we ponder on this, the chickens have finally come home to roost. Inevitably, we are now being heavily taxed in order to finance the cost of the new governance structure while still meeting our development goals. As the committee of experts (dominated by lawyers) drafted the new Constitution and laid a lot of emphasis on how to safeguard the rights of citizens through the creation of many constitutional offices, did they spare a thought about where the funds to finance the juggernaut would be sourced from? Did it occur to them at any time as they retreated to cosy hotels to come up with the draft that the same citizens they were trying to protect with a raft of civil liberties would bear the burden of financing the same? In our humble view, that nagging issue would have been solved if there was an able team of accountants and economists while drafting the new Constitution just as we had lawyers.

Is it too late to rectify the mess created or shall we continue bearing the burden of heavy taxation while not really enjoying the fruits that we were promised by the political class while pushing us to pass the new Constitution? Regrettably, before we come up with viable solutions to this nightmare, the cost of doing business in the country will continue going up to the detriment of both local and foreign investors. By the same token, many jobs will be sacrificed and our economy will receive a thorough beating. We are no longer at ease.

george.gichuki@biasharaleo.co.ke

MANAGING EDITOR: George Gichuki

EDITORIAL ASSISTANT : Catherine Kuria PHOTOGRAPHER: Brenda Muthemba

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more than a thousand words

Mrs. Joyce Ndegwa, CEO, Mentor Sacco :

“We are fully committed to accomplishing our goal of offering quality products and services to our members at very competitive rates in order to enhance their socio-economic transformation.”

Patrick Gathondu, Executive Director, Bimas :

“One of the key benefits of being regulated is that there is no risk of being associated with the rogue players who have in the recent past invaded the microfinance sector in droves.”

Ms. Anne Karanja, MD, Postbank :

“As the only bank in the country mandated to mobilize savings for national development, we have leveraged on technology in order to deliver cost effective and affordable financial products and services to our customers.”

“I think today’s youths are highly innovative but they have been inhibited by, among other things, lack of capital, ignorance and the usual ‘thinking-inside-the-box’. Most of them have succumbed to pressure from family and friends to go for job opportunities and have a stable life as opposed to taking the rough terrain of entrepreneurship. Education should foster innovation. To succeed, they should take the risk. Youths should not wait to have a lot of money before they can venture into business. They should think big and start small without wasting time.”

Eric Kinoti, MD, Shade Systems East Africa (Kenya) :

Dr.

Articulate

VERY INSPIRING!

The ‘from zero to ten’ young entrepreneur story ( July 2018 issue) was very inspiring. It re minded us as the youths that we don’t need to be employed to earn an income and we can still work when schooling.

Antony Jabal, student, Nakuru Via social media

YOU DON’T NEED TO HAVE A DEGREE

I am college dropout. I had almost lost hope in life but the story of Mr. John Mwaura (Career Growth column – July 2018 issue) really encouraged me to soldier on despite going for a long time without job.

Robin Omukese, farmer, Migori Via Email

PASSION CAN TAKE YOU PLACES

I was highly motivated by the story of Mzungu Dairies (BL Kilimo section – July 2018 issue). You can start from scratch in business but with passion, it is possible to achieve your goals in spite of the challenges that you might be facing.

Faith Ndula, hawker, Kitengela Via text

A FAN OF YOUR WORK

I recently relocated from Nairobi to Mombasa how do I get to access to BL magazine? I don’t want to miss a copy. Kudos and keep up the good work.

Mary Anyango, accountant Via Email

Editor: Kindly subscribe to us on: info@biasharaleo.co.ke. We shall be sending you a copy every month.

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POLYCARP IGATHE BECOMES THE MANAGING DIRECTOR OF EQUITY BANK KENYA

Mr.Polycarp Igathe is now the Managing Director of Equity Bank Kenya. This marks the completion of the group’s strategy of separating the management of its subsidiaries from that of the holding company. Following this development, Dr. James Mwangi will now serve as the group’s Chief Executive Officer and Managing Director providing overall strategic direction and oversight.

Speaking while making the announcement, Dr. Mwangi said: “The board has completed the process of separating the operations and management of the Kenya subsidiary from that of the group and appointed Polycarp the Managing Director of Equity Bank Kenya.

Polycarp’s strong values and passion have enabled him to quickly fit in the Equity Group’s organizational culture.

He has distinguished himself as a result oriented and committed business leader who is renowned for fostering productive partnerships with external stakeholders and customers, resulting in the delivery of outstanding company results. He has taken over a very successful subsidiary and market leader. We believe he has the skill, competence, capability, and vision to retain

Equity Bank Kenya in its leadership position while taking it to the next level.”

At 12.6 million, Equity Bank currently has the largest customer base in the Eastern and Central Africa region. It is also the largest bank by market capitalization, while its balance sheet is the second largest. The lender is listed at the Nairobi Securities Exchange and cross-listed in Uganda Stock Exchange and Rwanda Stock Exchange. It has banking subsidiaries in Kenya, Uganda, Tanzania, Rwanda, South Sudan and DRC.

Equity Bank Kenya holds the lion share of the group’s business and contributes over 80% of the profitability. It is the first subsidiary of Equity Group Holdings Plc which has become a case study of excellence in growth management and transformation from a technically insolvent building society to a globally competitive bank. The bank has been named the top banking Superbrand in Kenya for ten years in a row since 2007. Moody’s gave the lender a global rating of B2 with a stable outlook - same as the sovereign rating of the Kenya Government in 2017. Global Credit Rating Co. (GCR) rated the bank AA- for long-term and A1+ for short term, with a stable outlook, reflecting the group’s strong competitive position in Kenya’s banking industry in 2017-2018.

The Banker Top 1000 World Banks 2018 ranked Equity Bank position 11 globally on return on assets, position 44 on profits on capital and position 35 on soundness or capital assets ratio. In 2018, the bank was recognized by the Banker Awards East Africa as the best commercial bank in Kenya and East Africa, the bank with the best digital offering in East Africa and the most innovative bank in Kenya. The East African Business Council on the other hand awarded Equity Group Holdings the overall best regional company in East Africa, 2018.

Moreover, the African Banker Awards 2018 feted Equity Bank as the African bank of the year, while Euromoney named it the best bank in Kenya.

Kenya led in the implementation of the group’s digitization strategy that has seen the bank move over 97% of its transactions from the banking halls to self-service digital banking tools. The bank pioneered in rolling out agency banking in the region, setting the pace for the other subsidiaries. The group’s social impact investments coordinated by Equity Group Foundation have benefited immensely from Equity Bank Kenya’s infrastructure which provides the Foundation with unrivaled implementation capability giving it a high return on investment.

Equity Bank Kenya Managing Director, Polycarp Igathe (left) makes remarks during the release of Equity Group Holdings Plc 2018 half year financial results at Equity Centre. Looking on is Equity Group Managing Director and CEO Dr. James Mwangi.

BRITAM’S PRE-TAX PROFIT IN THE FIRST HALF OF 2018 REGISTERS GROWTH

access to strategic, financial and investment advice and support in the areas of social im pact, environmental standards and corpo rate governance.

Dr. Wairegi noted that the investment by the two internationally respected organizations in Britam was a clear pronouncement of the confidence in which the market holds the long term strategy and management of the company.

During the period under review, revenue from the insurance business increased by 11percent to Kshs. 10.8 billion compared to Kshs. 9.7 billion in June 2017.

Britam’s international businesses contrib uted net insurance revenue of Kshs. 1.5 bil lion compared to Kshs. 1.2 billion last year, accounting for 14% of the total net insur ance business revenue. These businesses made up11 percent of the total income and 7 percent of the total assets of the group.

The group’s investment in financial assets returned fair value gains amounting to Kshs. 2.4 billion compared to Kshs. 2.1 bil lion in June 2017, while investment income (dividends and interest), increased to Kshs. 3.3 billion from Kshs. 2.5 billion in June 2017.

BritamHoldings Plc recently re ported a pre- tax profit of Kshs. 1.4 billion in the first half of 2018, a 7 percent growth from Kshs. 1.3 billion in June 2017. This was achieved against a backdrop of an 11 percent increase on gross earned pre mium and fund management fees to Kshs. 13.0 billion from Kshs. 11.7 billion in June 2017, and 15 % growth in total income to Kshs. 16.8 billion from Kshs. 14.7 billion in June 2017. The profit was further boosted by a strong performance of investments in equities in the same period.

Announcing the results, the Group Manag ing Director Dr. Benson Wairegi said: “The group’s asset base has increased by 14 percent to Kshs. 112 billion from Kshs. 99 billion in December 2017, while sharehold ers’ funds have increased by 27 percent on the back of a strong performance and issu ance of new shares to AfricInvest SPV III during the period.”

AfricInvest SPV III, a private equity fund was officially admitted as a shareholder of the diversified financial services company this year, following the successful acquisi tion of 360,888,281 million new ordinary shares amounting to a 14.3 per cent stake in Britam. AfricInvest is a Pan African focused private equity fund which manages about one billion dollars in 14 private equity funds. It is a special purpose vehicle (SPV) formed by a consortium of global inves tors from the Federal Republic of Germany, Netherlands and France.

The deal with AfricInvest came on the heels of a release of Kshs. 3.6 billion by Interna tional Finance Corporation (IFC) the invest ment arm of the World Bank, to fund strate gic projects in the company.

The two global investors bring world-class management and technical support to Bri tam, while providing senior management

Britam has concluded the first phase of its strategic plan dubbed “Go for Gold” and is now in its second phase of the strategic plan - disruptive innovation. In the second phase, the group will seek to leverage on project Jawabu platform, the information technology (IT) enabled business trans formation project to further transform its customer value proposition by delighting customers through various portals. It will also enhance customer experience through big data and business intelligence as well as workflow efficiencies.

Dr. Wairegi further announced that the company’s board of directors had resolved on an early redemption for the six billion shilling medium term note issued in June 2014. “The early redemption of the notes is subject to the consent of the holders and the timelines for payment will be announced once this consent is obtained,” he said.

Proceeds from the corporate bond, which was oversubscribed by 147.7 per cent, were used to fund Britam’s regional expansion into seven African countries and other strategic projects. Since the issuance of the bond, the group asset base has grown from Kshs. 72 billion to Kshs. 112 billion.

Britam Holdings Plc Principal Executive Director Business, Stephen Wandera, Group Managing Director Benson I. Wairegi and Gladys Karuri, Principal Executive Director Operations, Strategy and Finance go through the company’s results for the first half of 2018.

MKU COLLABORATES WITH INTERNATIONAL ORGANIZATIONS IN FIGHT AGAINST DISEASES

a neglected surgical disease using an innovative mobile telehealth application, for fast-track referral to a Level 4 Hospital. For the first phase of the pilot study, every child suffering from a cleft lip or palate will be referred for treatment by the partner organization, Smile Train.

Mount Kenya University ( MKU) , the International Collaboration of Essential Surgery, Henry Family Advised Fund, Smile Train, the College of Surgeons of East, Central and Southern Africa (COSECSA), and Kenya’s Ministry of Health have partnered to contribute to national health systems strengthening that identifies gaps in health service delivery and processes and identifies priorities for improvement and strengthening, with the end result being an eradication campaign to facilitate the treatment of children born with congenital defects, mothers suffering from obstructive labour complications such as obstetric fistula, and trauma victims living with home, workplace or roadside injuries that can be easily fixed, preventing lifelong disabilities.

According to the co-director of the Henry Family Advised Fund, Dr. Jaymie Henry , the first country-wide effort will focus on a phased approach to eliminate the backlog of approximately 7,000 clefts in Kenya, beginning with a national surgical capacity study that assessed and qualified level 4 hospitals across 47 counties in Kenya and their surgical workforce to help deliver robust, safe and cost-effective basic and comprehensive surgeries, and ensure adequate availability of surgical equipment, trained health workforces and mobile/ telehealth connectivity.

Correspondingly, case detection for neglected clefts, cleft eradication, and community health worker and surgical training will be piloted in Meru County to execute proof of concept for largescale eradication of clefts in the country that will lead to the establishment of cleft centres of excellence at the county level and create a fast-track referral process

from the community to Level 4 hospitals to county referral hospitals for pre-operative, surgical and post-operative care.

While giving a public lecture at MKU’s main campus in Thika, Dr. Henry said every day, people are dying or being disabled from medical conditions and simple injuries that can be averted with simple, one-time procedures. Of the 234 million surgical procedures performed worldwide each year, 75% benefit the richest people. This means that in some countries, the global population receives less than 4% of surgical procedures, while in others, there is limited if any access to essential procedures that save lives and prevent life-long disabilities. “Neglected surgical diseases (NSDs) are conditions that have a public health burden for which costeffective interventions currently exist. They include cleft lip and palate, cataracts, clubfoot, hernia, obstetric fistula, and neglected injury,” she further said.

The Henry Family Advised Fund founded by Dr. Henry and her husband Orion Henry promotes surgical interventions that save lives and prevent permanent disability and life-threatening conditions. It is a firm believer that essential surgery should – and can – be safe, accessible, and affordable to people worldwide regardless of income or geography. Essential surgery involves common and basic procedures that meet high standards of care even in limited resource settings and require only modest infrastructure.

Dr. Jaymie said MKU is collaborating with the Henry Family Advised Fund in implementing a pilot programme in Meru County that recruits and trains the community health workforce to identify and catalogue every patient with

MKU and the Henry Family Advised Fund are committed to working with Smile Train to train physicians in delivering robust, safe and cost-effective cleft surgeries, that will result in the creation of centres of excellence at the county level in surgical equipment, trained health workforces and mobile telehealth connectivity for fasttracking patient pre-operative, surgical and post-operative care.

The Henry Family Advised Fund and its partners; College of Surgeons of East, Central, and Southern Africa(COSECSA), Smile Train, and MKU’s e-Health and Informatics Centre have signed an MOU with Meru County Government for piloting county-wide eradication of the backlog of neglected surgical diseases (NSDs). They include cases of children born with congenital deformities such as cleft lip and palate, cataracts, hernias, and clubfoot, women who have been disabled with a fistula in their noble act of giving birth as well as victims of untreated injuries because of violence, and road traffic accidents. Such victims do not have a chance to live a normal life unless they receive life-saving or disability-preventing procedures.

According to Henry Family Advised Fund Co-director, Orion Henry, their strategy is to identify the NSDs, map the cases to nearest level four hospital and treat the NSDs. Phase one will involve elimination of the backlog of all the existing cases of cleft lips and palates and subsequently move to the next category of neglected surgical diseases. Once the backlog of neglect surgical diseases is eradicated, they will include these conditions in a basic package of interventions covered under NHIF so that every child that is subsequently born will receive life-changing treatment, every mother who needs emergency or surgical care will receive it, while the injured will be cared for, regardless of their ability to pay.

He said the Meru County pilot eradication programme is scheduled to end by December 31st, 2018 after which the government will analyze the results and lessons learnt to help in scaling up the same in the other 46 counties in Kenya.

CO-OPERATIVE BANK’S TIMELY SUPPORT TO MSMES

Micro,

small and medium enterprises (MSMEs) contribute at least 30 percent to the GDP. Over the past one year, Cooperative Bank of Kenya, in partnership with the International Finance Corporation (IFC) has expended a lot of resources, customer engagements and research work to understand the dynamics of this critical business segment.

This sector has over 1.7 million registered and 7 million unregistered businesses, employing over 15 million Kenyans.

The bank will issue unsecured loans of up to Kshs. 2 million to MSMEs to be disbursed via mobile phones. The move comes after it obtained a $150 million (Kshs. 15.2 billion) seven-year loan from IFC for onward lending to the key sector.

Speaking during the launch of this

partnership, Co-operative Bank’s acting director for retail and business banking Arthur Muchangi said that the lender will offer also offer training to MSMEs

— a process that will be overseen by relationship bankers - to boost the small firms’ repayment capabilities.

“Co-operative Bank has committed to align itself with the regulator’s requirement that banks dedicate a minimum of 20 per cent of their lending to the MSMEs sector,” Mr. Muchangi said when the lender launched the loans plan.

“We are confident of delivering on this promise to MSMEs as we now have the product, the skills and most important, the resources to make this a reality,” he added.

MSMEs have been hard hit following the capping of interest rates charged on loans by commercial banks in the country.

Most lenders in the risk-averse industry have suspended unsecured personal loans due to a perceived higher risk of default. This has been aggravated by higher impairment costs as a result of global accounting rules enforced in January.

Co-op Bank acting director for retail and business banking Arthur Muchangi speaking during the launch.

We are confident of delivering on this promise to MSMEs as we now have the product, the skills and most important the resources to make this a reality

M-CHAMA: A REVOLUTIONARY PRODUCT BY POSTBANK

Bank launches a product for savings groups (chamas) as it aims to mobilize more savings from Kenyans in line with its mandate

By George Gichuki

Savings groups (popularly known as chamas in Kiswahili) are effective vehiclesfor collecting money from a group of people who have come together in order to achieve certain socio-economic goals. Indeed, over the years, savings groups (chamas)have proved to be a viable path to financial freedom.

Most savings groups in Kenya were started by women residing in the rural areas. They were avenues for saving money. In the early days of this model, majority of them operated as merry-go-rounds where members would contribute money to buy household goods such as utensils for one another. Additionally, the money contributed would be given to one member in lump sum during the group’s weekly or monthly meetings. Members exercised their own discretion while utilizing the money received but mainly, it was used in establishing micro enterprises, buying household goods and food, payment of school fees or replacement of thatched roofs with corrugated iron sheets among others.

However, in recent years, many savings groups have graduated from merry go round outfits to investment clubs with clear management structures and strategies as well as internal borrowing mechanisms. Most of these clubs raise hefty amounts of money which is channeled to major income generating activities like investing in real estate and stocks. By and large, they have assisted in uplifting the living standards of their respective members.

Mobilizing savings

Established in 1910, Postbank is primarily engaged in mobilization of savings for national development. Recently, in fulfillment of this mandate and as a response to the needs of its customers, the solid organization launched a mobile banking product for savings groups dubbed M-Chama. The innovative product allows members in a formal group to make deposits into their joint account using M-Pesa. In addition, these members can request for loans from their group account which are in turn sent to their individual or M-wallet accounts upon approval by the group’s designated signatories. Moreover, the

mobile banking product permits signatories of a given savings group (chama) to check their account balances.

The colourful event kicked off with members of the public registering and interacting with the Postbank staff who were keen on building relationships with them. In the process, the bank won a good number of new customers eager to save their hard earned money.

The bank developed M-Chama with the technical support from Financial Service Deepening –Kenya (FSD Kenya). The decision was informed by the need to have an ideal product for different savings groups. The product would be based on the groups’ diverse needs.

Attributes

Postbank was keen on developing a product that would meet most (if not all) of these needs. One of the key attributes of this product is that it guarantees security of the members’ savings and instant transfer of the same whenever a need arises.MChama also allows the group members to use their mobile phones in making savings and withdrawals. It is very ideal for the customers residing in the far flung and remote parts of the country where one has to cover long distances before accessing a bank. Consequently, the product will go a long way in deepening the country’s financial sector.

According to Postbank’s Managing Director, Ms. Ann Karanja, the bank has always endeavoured to come up with innovative and efficient ways and means of accomplishing its mandate.To that end, it has recently rolled out highly successful financial literacy campaigns throughout the country, besides reaching out to the unbanked and under banked populace by developing innovative products that are technologically driven.

“We are keen on enabling as many Kenyans as possible to have access to formal financial services and in that vein, we have developed an array of savings products for all ages and income groups,” says Ms. Karanja.

The launch

Speaking during the launch, the chief guest,

Mr. Nicholas Mac’Botongore, the Ministry of Labour and Social Protection Assistant Director in charge of Social Development, emphasized that savings is a precursor for wealth creation, financial freedom and peace of mind.

Financial access has been identified as a catalyst for economic growth and poverty alleviation both in developing and advanced economies. Postbank has therefore continued to execute its mandate of inculcating a savings culture among Kenyans by developing friendly and technologically driven products to meet the ever changing needs of its customers. M- Chama is an addition to the bank’s mobile and internet banking platform. Mr. Botongore emphasized that Postbank plays a critical role in enabling Kenya to meet her development goals.

The launch of M-Chama will go a long way in ensuring that small groups contribute positively towards the advancement of their income status, while defying the risks associated with physically handling cash. Going by the trends of savings groups (chamas) in the country, specified amounts of money are contributed by the members on a regular basis - including payments of the loans advanced to them plus the interest accrued. M-Chama will therefore come in handy while saving any surplus money belonging to a savings group.

Postbank recognizes and appreciates the technical support of the World Savings Banks Institute (WSBI) among other partners in the development and roll out of this innovative product.

Brand heritage

The M-Chama account is open to formal and informal groups. In order to support the groups, there is no joining fee. The platform is therefore expected to significantly improve the banking experience for individuals with group savings as they are not required to physically visit the bank’s branches or automated teller machines (ATMs) in order to transact. The launch heralded the dawn of a new era for the only bank in the country with a mandate of mobilizing savings. It was another feather in its cap and a plus for its rich brand heritage.

MOBILISING SAVINGS: New customers being registered by Postbank’s staff.

GUESTS ARRIVING FOR THE LAUNCH FROM LEFT: Hon. Dr. Tecla Songok Tum, Women Rep. Nandi County, Postbank MD, Ms. Ann Karanja, Nicholas Mac’Botongore, Ministry of Labour and Social Protection Assistant Director of Social Development, Hon. Lilian Cheptoo Tomitom, Women Rep. West Pokot and Hon. Gladwell Cheruiyot, Women Rep. Baringo County.

A women group from Nairobi County performing during the launch.

The guest of honour Mr. Nicholas Mac’Botongore, (2nd left) jigging together with Hon. John Kiarie, (centre) MP, Dagoretti South and Ann Karanja during the launch.

The launch of M-chama was informed by the need to ensure that small groups contribute positively towards the advancement of their income status, while defying the risks associated with physically handling cash

The M-Chama brand ambassador, Mary Omoso making her presentation.

The M-Chama project manager, Jacinta Kasingiu addressing guests.

Postbank MD, Ann Karanja making her speech.

(L) Mr. Nicholas Mac’Botongore, Ann Karanja and Hon. John Kiarie unveiling the M-Chama brand.

MHASIBU SACCO: THE GAME CHANGER

finance, management or other business areas. In that regard, all its decisions are carefully thought through before being implemented. The sacco also gives back to the community and in that vein, it has constructed a sanitation unit at Hesana Children’s home that houses over 80 children in Githunguri township.

By Catherine Kuria

Asavings and credit cooperative’s (sacco) objective is to pool savings for the members and in turn provide them with credit facilities. The general objective of saccos is to promote the economic interests and general welfare of their members. Mhasibu Sacco Society Limited was formed in 1986 to serve members engaged in the accounting profession including inter alia: qualified accountants yet to be members of ICPAK, students of KASNEB & ACCA, employees of institutions that offer training in accounts as well as the spouses and children of existing members.

However, the sacco now boasts of open membership to professionals in all sectors of the economy. The registration of Mhasibu Sacco 32 years ago was spearheaded by the Institute of Certified Public Accountants of Kenya (ICPAK) which was driven by the goal to provide savings and credit facilities to its members.

From a paltry 37 members in 1986, the Sacco now boasts of a membership of more

than 19,000 and has elaborate marketing plans to maintain the growth trend. During the 2018 Ushirika Day celebrations, Mhasibu Sacco emerged the best managed sacco in Nairobi County with an asset base of nearly Kshs. 5 billion. Out of the 2, 500 cooperatives in Nairobi, Mhasibu is the only society that holds an expo for its members.

Management

The Sacco is managed by a nine-member board and a three member supervisory committee who are elected at the Annual General Meeting. Mr. Andrew Bulemi, the chairman Mhasibu Sacco says: “Mhasibu is privileged to have a wealth of diversity in its membership both locally and abroad which is not very common in Kenya. While such diversity may come with associated challenges, the sacco has fostered unity of purpose among members and is proud to say that the results have been a resounding success.”

Mhasibu also holds a unique position as a sacco that has a board and management team who are professionals in either

In addition, the best performing student in KCSE from the home is sponsored to study accountancy at Githunguri College. Mhasibu also finances two awards annually for the best KASNEB student in quantitative techniques

Subsidiaries

As a parent company, Mhasibu has two subsidiaries; Mhasibu Housing Company Limited (MHCL) and Mhasibu Investment Company (MICL). MHCL is a subsidiary company fully owned by the Sacco to provide opportunities in land acquisition. The company identifies land and mobilizes members to contribute towards purchase after which it is subdivided and allocated in an open and democratic system.

MICL was set up to provide investment opportunities to members so that the sacco does not compromise on its main objective of giving loans. To qualify for shares, a member must purchase a minimum of 100 shares at Kshs. 100 each. The shares can also be used as guarantee for a loan from the sacco.

The Expo

The Sacco recently held its 2nd annual 3-day expo at the Nairobi Railways Club. The expo brought together members who interacted and showcased their products and services. Trade shows, exhibitions and conferences are important to organizations and their professional staff. No matter the career or discipline, these events provide organizations with opportunities to meet specific goals and objectives. Whether you are an attendee or an exhibitor, there are benefits to being involved.

Sacco strives to mobilize savings and economically empower its members in their quest to attain financial freedom

Mr. Andrew Bulemi, Chairman, Mhasibu Sacco addressing members of the press.

As a parent company, Mhasibu has two subsidiaries; Mhasibu Housing Company Limited (MHCL) and Mhasibu Investment Company (MICL)

Key note speakers included: Mr. Oltesh Tobias, a motivational speaker of great repute, Mr. Bonnie Kim, a renowned international speaker, author, trainer and strategist and Mr. Chris Odongo. Madam Dolphin Arena, the Director of Cooperatives in Nairobi County was present and officiated the opening ceremony of the expo.

She commended the sacco for the good work it has been doing and encouraged the members to keep on mobilizing their savings. “Mhasibu is amongst the giant cooperatives not only in Nairobi County but also in the country and its liquidity is good,” she said.

The chief executive officer of Mhasibu, Mr. Antony Kahoru welcomed the members to the expo and urged them to visit all the stands, interact and exchange ideas that could grow their businesses. He also encouraged the non-members who were present to join the sacco so that they could grow together. Those who attended were treated to a master class on each day of the expo.

There were fun activities for the children on the last day of the expo, including entertainment from Churchill Show comedians Njoro and Smart Joker. There also were financial literacy classes for the children because as they say, it is never too early to learn how to save. The kids had full access to a play ground packed with a bouncing castle, trampoline, geodesic dome, metal slide and teeters-totters. They were also treated with the latest hit songs where they danced and sang along.

This Sacco that is guided by excellence, integrity, innovation, teamwork, fairness and social care as its core values has come a long way since its inception and is not slowing down any time soon.

Mr. Antony Kahoru, Chief Executive Officer, Mhasibu Sacco giving his remarks during one of the master classes.

Madam Dolphin Arena, Director of Cooperatives, Nairobi County officially opening the Expo.

Kids having fun with Churchill show comedians.

Mhasibu is amongst the giant cooperatives not only in Nairobi County but also in the country and its liquidity is good

Mr. John Ngumi, ICX Chairman comparing notes with the chief guest Hon. Joe Mucheru, CS, Ministry of Information, Communications and Technology while opening the Africa’s Annual Customer Experience conference.

Participants at the conference keenly listening to the presentations.

Agatha Juma, the master of ceremony during the conference. Dr. Julius Kipng’etich, CEO, Jubilee Holdings delivering his speech.

FOCUSED: Agnes Gathaiya, CEO, IPSL.

PESALINK: MOVING MONEY

EFFICIENTLY AND EFFECTIVELY

The era of digitization enhances the velocity of money through the establishment of an innovative payment platform

By George Gichuki

Afew

decades ago, transacting in a banking hall was a hal lowed experience. During the end of the month especially, customers not only queued for hours on end to be served by the of ten tired cashiers, but they had to be very clean and dress smartly lest they spoilt the aura of sacredness that was associated with the imposing halls. This was nothing short of a ritual. Luckily, times have changed. With the advent of technology, the brick and mortal model traditionally associated with banking is gradually crumbling. From the comfort of their houses or work places, customers can now use their mobile phones to make banking transactions conveniently and efficiently.

This revolution has ushered in an era of fast development in cutting edge mobile bank ing products and a very exciting customer experience.

Digitization

With the deepening of the digitization pro cess, an opportunity for banks in the coun try to develop a fintech company that would provide interoperability arose. That way, they would be able to communicate with each other directly. Accordingly, the Inte grated Payment Services Limited (IPSL) - a fintech company owned by members of the Kenya Bankers Association (KBA) - unveiled the PesaLink brand in February 2017. The brand was formally launched in July 2017 with 27 commercial banks on board. “The decision to establish a company jointly owned by KBA members was informed by the fact that doing so individually would have been very expensive and complicated,” says Agnes Gathaiya, the chief executive of ficer (CEO), IPSL. Before the establishment of PesaLink, banks would only be able to share automated teller machine (ATM) ser vices by using either the Visa or MasterCard switches which were based all the way in the United States of America (USA).

Additionally, they would only send money to each other either through electronic funds transfer (EFT) or real time gross set

tlement (RTGS). Effectively, that slowed down the velocity of money.

Efficiency

Secondly, the advent of mobile phonebased money transfer services in the coun try got people accustomed to a certain level of efficiency and convenience. This challenged commercial banks to come up with a service which would efficiently send amounts of money larger than what the tel cos were doing. “At PesaLink, the average size of transaction is Kshs. 86,000 which is way above what the telcos move,” says Gath aiya. PesaLink offers instant payment and it is available round the clock. “One of our ma jor objectives is to make our economy cash light especially as it endeavours to run on a twenty four hour basis,” she emphasizes.

Through this innovative platform, money is paid directly from one customer’s account to another. This process is cost effective and efficient because it does not go through un necessary loops. Essentially, PesaLink is a payment gateway that is connected to banks forming its membership – currently they are thirty. All of them have equal shares. “Our most critical mandate is to ease pay ments, significantly bring down the cost of transaction and to create a new efficiency in banking services,” she avers.

Membership

To become a member of PesaLink, the bank in question must undergo an elaborate and thorough audit process. The process starts with an application letter to IPSL. The appli cant is then given a set of minimum stand ards on technology that must be met before being considered for membership.

After meeting those standards, the IPSL team starts integrating its system with the applicant’s to verify whether they are com patible. This is followed by further tests to ensure that there are no threats, before the full integration and going live. Finally, a pilot is conducted. “The results of the pilot are then taken to the Central Bank of Kenya (CBK) for product approval,” says Gathaiya.

The PesaLink team is currently working round the clock to ensure that it brings on board all the commercial banks in Kenya ir respective of their size. The fintech is also planning to roll out a partnership with the government of Kenya’s official digital pay ments platform – eCitizen. This will enable customers to pay for government services directly from their bank accounts.

Besides commercial banks, PesaLink is also planning to grow its membership by bring ing on board microfinance banks and as well as savings and credit co-operative soci eties (Saccos). “ We want to ensure that Sac cos which are very critical in deepening our financial sector are able to disburse money to their customers on a real time basis, besides collecting the same,” Gathaiya ob serves. Moreover, there are plans of offer ing this key service to merchants as well as third party payment providers. During its first twelve months in the market, PesaLink moved a total of Kshs. 38 billion within its platform, while in the last six months, it has moved Kshs. 43 billion.

Fantastic product

“We have a very fantastic product and our challenge is to create more awareness about it in the market,” observes Gathaiya.

Tasked with the responsibility of moving huge amounts of money, PesaLink has an obligation to ensure that all the transac tions are clean. UK was the first country in the world to offer instant payment, but the trend is fast being embraced by other coun tries. “Instant payment enables customers to move money fast and securely; it is very ideal in enhancing trade,” she further says.

Currently, CBK is working on a policy that will allow cross border payments through instant payment platforms like PesaLink. Once it has been implemented, the policy will enable business beyond our borders to thrive. “Clearly, that is our next frontier in our quest to grow our brand and we are eagerly looking forward to its implementa tion,” Gathaiya ends.

URITHI CELEBRATES SEVEN YEARS OF EXCELLENCE

Grounded on seven principles and guided by seven board members, giant housing co-operative aims at growing from strength to strength as it celebrates its seventh birthday

By George Gichuki

2017will go down in the history of Kenya as a very volatile year for business across the board. The better half of the year was spent in a prolonged and heated political campaign that resulted in the presidential election being repeated. Needless to say, this took a heavy toll on business as investors and customers tightened their pulses. “ After going through that difficult period, we are optimistic that 2018 will be a year of recovery for the local businesses in various sectors of the economy, as they pick fully in 2019,” said Mr. Samuel Maina, the chairman of Urithi Housing during the organization’s sixth annual general meeting ( AGM) that was held at the Hill Top resort

– Nakuru. The iconic resort is owned by the giant housing co-operative.

Having been registered as a housing cooperative by the government in September 2012, Urithi is celebrating its seventh birthday this year. “Seven in the bible is the number of completeness and perfection,” said Mr. Maina during the AGM. “As an organization, we are guided by seven principles including openness and effective members’ participation, we have seven board members, we are launching the seventh ‘nyumba mia’ product this year and we shall also be developing cottages at the Hill Top resort,” he added.

Rebirth

Against this background, Urithi is set for a rebirth after a successful journey of seven years. “We have picked important lessons within our short history as an organization which will inform the course we are going to chart in the years ahead,” the chairman emphasized. The organization is therefore set for a thorough restructuring exercise that will make it lean and efficient. “In our new strategic direction, we are going to focus more on building strong relationships with our members as opposed to merely transacting business with them,” he further said. Currently, Urithi has a membership of 27,000 and a branch network of 16. The new strategic direction will be based on three pillars: engaging members, delivering and securing quality houses and land as well as well as advocacy (this will enhance the organization’s visibility).

Of critical importance, Urithi will put in place a very strong foundation that will enable it to manage its expansion and differentiate it from other co-operatives in the country offering similar products. Bearing in mind the need to give its members exemplary services, another key pillar of Urithi’s new strategic direction will be strengthening its

Mr. Samuel Maina, Chairman, Urithi Housing Co-operative Society Limited addressing members during the sixth AGM at the Hill Top resort, Nakuru.

governance structure so that it is in tandem with the members’ needs and aspirations.

Affordable housing is one of the four pillars of the ‘Big Four’ agenda which the government will focus on during the next five years, in order to accelerate socioeconomic development. The other pillars are: manufacturing, universal healthcare and food security. With an asset base of Kshs. 3 billion, Urithi is therefore well positioned to play a critical role in the actualization of the ‘ Big Four’ agenda’s aspirations, by

offering affordable housing to Kenyans. A good case in point that it has a good track record in that field is its huge success in rolling out the ‘Nyumba Mia’ product which entails developing modern housing units in secure and serene locations.

Styled in the popular gated community housing concept, the product has enabled many Kenyans to own decent houses, without going through the laborious and expensive exercise of managing the construction of such houses on their own.

Some of the milestones as Urithi celebrates seven years of completeness include: growing from an idea to a giant organization with a membership of 27,000, starting with a single land project to selling over 3,000 acres of land and 1,670 housing units, besides issuing over 6,500 title deeds. Urithi has also registered a revenue of over Kshs. 4 billion, while it now has over 300 members of staff and sales executive, compared to the skeleton staff of 5 who established it seven years ago. With such muscles, its next phase of growth promises to be more exciting and far much better.

(L) The Director of Co-operatives, Kiambu County is assisted by Mr. Maina (R), Chairman, Urithi Housing in issuing a title deed to a delighted member.

Mr. Maina and his team launching the construction of cottages at the Hill Top resort.

ALL EARS: Attentive members during the sixth AGM.

CONNECT MED

A tele-health company enables customers to access affordable, high quality and convenient healthcare from the comfort of their homes

By Catherine Kuria

Theterm technology is not foreign to many. Experts spend hours on end behind computer screens trying to come up with better applications that will outdo the previous ones. Social media applications, money transfer platforms, dating and gaming applications have been invented and are quite common. Heck, even toddlers are familiar with them. Medical applications however, are still fairly new in the market.

We are living in the digital era where everything including food and clothing can be ordered online from the comfort of your living room. How cool is it that you can now access your doctor while

still in bed? Connect Med is a tele-health company focusing on the African continent and striving to bring primary healthcare to patients in a more affordable way. It provides a simple, affordable, all-inclusive package for managing chronic diseases.

Health consultation and coaching is delivered virtually through a smart phone app, in combination with medication and point-of-care testing at a local pharmacy partner. The company’s core offering is chronic disease management programmes that enable patients with diabetes, hypertension and heart conditions to manage them more effectively and affordably through online consultation

with doctors and virtual coaching with nutritionists.

Technology in the European, American and Asian markets has revolutionized the way patients access healthcare by reducing cost and improving quality. Borrowing a leaf from them, Melissa McCoy saw this as an opportunity to bring the same online, affordable and quality healthcare to developing countries especially in the African continent. She introduced the context in South Africa initially and later expanded to Kenya in 2016.

“It’s a challenging market because it’s hard to figure out how to introduce a product that the patient with a low income is willing to pay for. But nonetheless, we have worked through certain obstacles like learning the patients’ behaviour and have adjusted with the market demands quite well to fit the needs of the patients,” narrates Ms. McCoy.

Product offering

The company’s offering includes disease management programmes for patients with hypertension, diabetes and heart conditions. It also provides therapy where its coaches guide patients on proper

Melissa McCoy, Co-founder & CEO, ConnectMed.

nutrition and exercise and how to manage their conditions better hence enabling them to live a longer and healthier life. Doctors do virtual consultations with the patients every month to follow up on their conditions, see whether the medications are working and change the prescriptions where needed.

The company’s doctors are available 24 hours a day and it’s convenient for patients to access its services. Its services are quite affordable compared to other private clinics. The hypertension programme for instance costs from Kshs. 1,000 to 1,400 for the first month. Here the patient is introduced to the right medical, diet and exercise programme. There after it’s around Kshs. 500 to cover the medication cost.

For diabetes it ranges between Kshs. 1,500 to 2,000 in the first month for titration, then thereafter it becomes Kshs. 1,000 for medication, stripes and other educational benefits. Currently, the company’s focus is on the South African and Kenyan markets but in the future, it is planning on expanding to other African markets.

“Initially when I started the company it was part of my masters’ computer science thesis project in Oxford. It involved a lot of user research and interviews with doctors and patients, understanding whether virtual communication works for them as well as the costs and constraints that they face. Thereafter I built a platform where I was getting direct user feedback from focus groups and customers,” says Ms. McCoy. Other than being convenient and cost effective, Connect Med provides the patients with very personalized services, tailor made to suit their needs.

Passive behaviour

One of the challenges encountered by Connect Med is the passive behaviour of clients. “Patients especially the older generation are used to seeing the doctor physically. Hence when you introduce the new concept of virtual communication they don’t quite get it,” laments Ms. McCoy.

Getting people to come on board and buy its idea of affordable and convenient healthcare at the comfort of their homes also has not been a walk in the park.

There are a lot of sceptical views surrounding online services. “Getting people to have faith in you and trust that you are not going to fail them is hard,” she further points out. The invasion of fake doctors is not helping the business either.

Universal healthcare is a core focus on the government’s Big Four agenda

Connect Med has strived to build a credible brand. The company is working hard to create a bond with clients in order to earn their trust and confidence.

“Getting a person who earns a below average monthly income to prioritize health care is difficult. People have more urgent bills to pay and thus they end up compromising on health care. Educating people on the seriousness of chronic illnesses has borne little fruits which is saddening because these diseases are fatal,” she further laments.

The Connect Med team is working hard on bringing awareness to people about their brand. They have developed a partnership with Nairobi County government for instance to facilitate screenings within the Central Business District (CBD) and its environs. They are also working on their online presence because their services are digital bearing in mind that internet is one of the cheapest and fastest medium of communication these days. They have also signed a partnership with Jubilee Insurance that to create further awareness.

Market trends

According to Ms. McCoy, the popular trend in business has been provider-consumer telemedicine as opposed to provider-provide which was the initial method. The last decade has seen an increase in the provider and consumer interaction. That is the trend that Connect Med wanted to capitalize on in Africa by bringing convenience in accessing health care services to consumers.

Health care providers are going digital

because of the hype surrounding online services. The data gathered by studying the behaviour of patients is helping them improve their service to suit the patients’ needs.

Tele-health care providers are also working with government bodies especially in the United Kingdom and the United States to enable citizens to access virtual consultations under the national health schemes. This has helped reduce the cost of accessing quality health care on the ordinary citizen.

Road ahead

Most of these chronic diseases are brought about by lifestyle changes. People are eating unhealthy food and not working out due to their busy schedules. This has brought about the increment in obesity and weight gain cases. Connect Med is therefore planning to introduce a weight loss programme to assist in curbing this epidemic. It will be targeting people living in the urban areas because they are the most affected. Its focus will be on proper nutrition and fitness.

In the next five years, the company is planning to expand its product offering to include treatment programes for other diseases like asthma and arthritis. It also wants to expand geographically to the cover the West African market especially Nigeria.

Moreover, it is planning to create a solid platform and build a stronger customer base. “Universal healthcare is a core focus on the government’s Big Four agenda. Stakeholders are coming together to make this a reality. I’m excited to see what the future has in store for us,” she ends.

WORK TO BECOME, NOT TO ACQUIRE

An enthusiastic man who helps young minds build confidence, open doors and shape their future

By Catherine Kuria

Aristotleonce said that those who educate children well are more to be honoured than parents, for these only gave life, those the art of living well. Albert Einstein followed up and stated that, “It is the supreme art of the teacher to awaken joy in creative expression and knowledge.”

While it’s a popular belief that teachers only work from eight to four and have more

weeks of holidays than other professions, a teacher’s job is a challenging one that does not end with the school day. Teaching is a rewarding career that requires high level knowledge and a range of personal qualities to help students on the path to success.

A teacher presents the past, reveals the present, and creates the future. He/she nourishes the soul of a child for a lifetime. One such person is Mr. Stephen Abuko. He attended Multi Media University and

undertook an undergraduate course in journalism and mass communication. After completion, he worked for a few years then proceeded to Catholic University and studied bachelors of commerce in marketing management. He also has a diploma in public relations and advertising. Initially, he aspired to be a mechanical engineer. He humorously claims that his parents ‘short-changed’ him. The admission letter to study journalism arrived earlier before the one for mechanical engineering

Stephen Abuko, HOD, Journalism, NIBS Town Campus.

and his parents convinced him to take the former. “I have zero regrets with regards to the career path I took because life is what you make it. The profession I took has given me further openings within it and I’m content with that,” he says.

Mr. Abuko started lecturing in 2009 just 2 years after attaining his first degree. He worked with Eldoret Aviation till March 2013. He then relocated to Nairobi and taught public relations in various institutions such as East Africa school of Media Studies, ICS College and Nairobi Aviation as a part-time lecturer. In July 2014 he joined NIBS Technical College, Thika road campus as a full time lecturer. On 28th of December 2017 he was then promoted to head the journalism department at NIBS town campus.

Role as head of department

As the head of a section you do more of the managerial functions. He foresees all the functions of the department at the staff and student level. He is there to provide leadership, mentorship, support and motivation to his staff. He acts as a parent, a counselor and provides hope to students of diverse background.

“As a manager, you have to be all rounded. To students I am their teacher and friend because it’s about impacting positive growth in their young minds. I connect the staff, the students and the management at the end,” he notes. Every semester he sits with the staff and sets target to be met by the department in terms of academics and overall performance and at the end he evaluates the performance of both students and staff members. He develops and sustains appropriate structures for management, consultation, decisionmaking and communication with staff and students. He elaborates that, “I ensure the best possible student experience through the fulfillment of the institutions responsibilities concerning students in respect of their admission, instruction, progress and examination and also avail of pastoral assistance to them.”

Experiences and drives

He credits life for giving him experiences, both good and bad. He has met people in the teaching profession who have impacted his life in different dimensions. Mr. Abuko is proud of having produced over 23, 000 graduates who have gone through his hands and have their success stories to share. He

is a happy man today because he has helped shape and change people’s lives.

He is one of the brains behind the introduction of NIBS Thika town campus. When the campus was started it was offering hospitality, journalism and cosmetology only.

He says that, “We foresaw the start and introduced the courses. Today the campus is developing at a high speed and soon it will be bigger than the town campus.” In his current position, he has initiated some upcoming projects that are still in the initial stages of development and hopes to unveil them to the world soon.

He is driven by hard work, objectivity and having some realism in life. Hard work opens up opportunities and challenges that help you grow in life as a person. He tries to instill it in the people around him at the work place. Objectivity enables him to measure the results. It measures his time, resources and set targets.

The place of journalism

Journalism is a major stakeholder in the growth of our economy. When you look at the core functions of journalism; to educate, entertain and inform, you find that it has opened up lots of opportunities. It has provided employment for individuals who serve at different capacities and through this, peoples living standards have been uplifted within our community.

He credits journalism for helping develop programs that have uplifted the society.

It has help bring discussions on poverty eradication and prevention of various lifestyle diseases. This has created awareness and empowered people on how to take care of themselves. There is also the aspect of spiritual nourishment in the programs aired. “Journalism is doing a lot in education, politics, economics and environment related issues hence the country is reaping massive economic benefits from that,” he utters.

There is a lot of growth in journalism today. The upsurge in technology has revolutionized the way the industry operates. The news gathering, processing and dissemination have changed. The available technology has introduced us to elements like mobile journalism which has given rise to citizen journalism. Mobile phones and the internet have given citizens without any journalistic training the power and ability to perform journalistic functions. This has given journalists a loop hole to enhance the content they present to their audiences.

Advice on careers

Mr. Abuko encourages young people to follow their hearts. He acknowledges the fact that most parents want to have a say in their children’s lives but that at times can be toxic. He notes that, “Individuals have varying interests and it is okay to love something different. If your heart is into something then don’t be afraid go for it. Try to perfect what you are passionate about and success will follow.”

He does not end there, but instead continues to give hope to the hopeless by saying that, “Life does not end just because you don’t have a way out. Your chance is coming and one day somebody somewhere will take note of your abilities and lend you a helping hand. Make a choice today and be happy with the choices you make because you only get one shot to live.”

Billionaire investor Mark Cuban says that, “To me, the definition of success is waking up in the morning with a smile on your face, knowing it’s going to be a great day. I was happy and felt like I was successful when I was poor, living six guys in a three-bedroom apartment, sleeping on the floor.” Life is what you make of it. If it gives you lemons, make lemonade. Learn to be happy in the space you are in because peace of mind is attained only through self-satisfaction in knowing you made the effort to do the best of what you’re capable.

Learn to be happy in the space you are in because peace of mind is attained only through selfsatisfaction in knowing you made the effort to do the best of what you’re capable

KIPACHA TECHNOLOGIES: A TWIN BORN IDEA

A tiny seed germinates to a cutting edge ICT firm that is being guided to prosperity by a committed pair of hands

By Catherine Kuria

Jacob Bigelow in 1829 defined technology as principles, processes and nomenclatures of the more conspicuous arts, particularly those which involve applications of science and which may be considered useful, by promoting the benefit of society, together with the emolument of those who pursue them. Technology has helped develop more advanced economies (including today’s global economy) and has allowed the rise of a leisure class.

Innovations have over the years influenced the values of society and raised new

questions of the ethics of technology. Examples include the rise of the notion of efficiency in terms of human productivity, and the challenges of bioethics. Philosophical debates have arisen over the use of technology, with disagreements over whether it improves the human condition or worsens it. To some, technology may be the undoing of mankind but to others, like Godffrey Ngotho, technology is life.

Godffrey Ngotho is an Information communication technology (ICT) fronted developer. Kipacha Technologies was

started by Godffrey, his twin brother and a friend while they were still in campus in 2008. In its early days, Kipacha was just a briefcase company. After campus in 2013, the trio decided to register the company and it was incorporated in 2015. Soon after, the company kicked off and it started doing web design, web hosting, and web and software development.

Why technology?

Growing up in the village, Godfrey was always fascinated by electronic hardware. He humorously recalls when his dad would beat him and his twin brother because of operating his tiny transistor radio. Godfrey and his brother pursued a degree in information communication technology (ICT) at Mount Kenya University.

The course gave them the hands on skills they needed to kick off their business. “After campus, I ventured into business while my brother was formally employed. We have heavily invested in software development because we are passionate about it,” he says.

The Kipacha team engages with clients and directs them on how they can make their business go digital. In that regard, it develops software for them in order to assist them in establishing an online presence that will boost their sales and visibility. The team also integrates social

ALL SMILES: Godffrey Ngotho, CTO, Kipacha Technologies.

media platforms on websites so that the client can reach a large number of audience hence generating more income. At the beginning, it was difficult to convince clients to install software. But nowadays, given that most processes have gone digital, the business has grown. One of the biggest challenges that the business has been facing is the dynamic changes in ICT. Softwares keep on upgrading. “What is current today will have an upgrade tomorrow so there is a lot of pressure exerted in trying to keep up with the market trends,” laments the young entrepreneur.

The journey

Currently, the company has majored mostly in software design, web design and hosting. In the next two years, it is planning to make its e-learning platform more visible by marketing it and developing offshelf products. It is working on creating an e-learning platform that will serve as a triple threat (voice, video and content that is able to talk to the client). Kipacha will phase out processes where people have to write and print out pdf’s which not user are friendly.

“Our biggest success came from a contract we obtained with Africa Water Association (AWA). We developed software for them to manage delegates who were coming for a conference in Nairobi. This project gave us an insight as to what was lacking in the market. As a company we were able to feel the pressure of working with a big client and this helped us blossom,” he fondly recalls.

Godfrey has gone through the Graduate Enterprise Academy (GEA) programme courtesy of Mount Kenya University and Equip Africa. The training he received has made him grow as an entrepreneur and he has consequently invested more time and resources to the company. He credits GEA for moulding him into a better entrepreneur and manager. He was also involved in an entrepreneurship and leadership programme with Rapid Africa.

The company is currently working on improving the experience of its customers. Its aim is to make them happy and content with the products they receive. Well, as Steve Jobs once said : “Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we have done something wonderful, that’s what matters to me.”

Hurdles

One of the greatest challenges that the company encountered when getting started was insufficient capital. The young entrepreneur for instance remembers approaching a local bank seeking about Kshs. two million to fund the business. He pitched the idea to the lender and after listening, one person said that the idea could not be monetized. He was so frustrated and vowed that when the business finally kicked off, he would invite them to see it.

In addition, convincing people to buy his idea was not an easy task since many of them didn’t have faith in him. Unlike today, at that time, the company didn’t have good systems so playing a demo to a potential client was an uphill task. Potential investors were looking for a well structured business that they were confident in and most of them considered his venture a ‘risky gamble’ and were unwilling to take a chance with him.

Kipacha Technologies has also ventured into another business - The Crux Gaming Lounge and Cyber which targets the youth who are aged between 13 to 25 years. Mr. Ngotho describes these millennial clients as ‘jumpy’ because each has a different taste from the

other. “How to make them understand your model of business is a constant conflict that we have been facing.” He credits his wife (who has studied psychology) for helping him iron these issues and bringing the clients closer home.

Advice to young people

He puts emphasis on the value of focus. He attests to this by saying that as a child he was raised to be perfect in everything from school work to home chores. The elders wanted him to focus on things that did not necessarily interest him but he chose to focus on what his heart loved - technology. Collaboration is another important element he values. He encourages the youth to be open and speak up about their ideas and desires in life. One should not be afraid to speak up because somebody might steal his or her idea according to him.

“Take advantage of the resources your parents provide you with. Watch, listen and learn from those around you. Have fun if you must but avoid alcohol and drugs. Shun bad company but most importantly love each other and keep up the faith,” he concludes.

If you are young and entrepreneurial, one of your greatest assets is your age. What they fail to tell you in school is that being older doesn’t necessarily make you better.

What it makes you is different. When you are older, you see things through a lens created through the years by other people’s experiences. Take charge of your youth and make something great out of it - something that will inspire another young person when you are gone.

Focus on what you love not what you must

Customers having fun at the Crux Gaming Lounge.

Q & A

THE CHANGING LANDSCAPE OF THE MICROFINANCE SECTOR

The microfinance sector stands out because of the pivotal role it plays in deepening financial inclusion in Kenya. Nevertheless, the sector’s landscape has in the recent past undergone a lot of transformation largely driven by a new legal regime and uptake of technology. These changes have brought about both threats and opportunities and it is a whole new ballgame in the key sector. To that end, BL magazine recently interviewed Caroline Karanja, CEO, (pictured) the Association of Microfinance Institutions – Kenya (AMFI-K). Below are the excerpts:

BL: Highlight some of the emerging opportunities and threats in the local microfinance sector?

Caroline: The microfinance sector has witnessed significant growth since 2008 when the first microfinance bank (MFB) was licensed. To start with, the number of licensed MFBs has grown to 13 with a total of 114 branches as at December 2017. In addition, the number of marketing offices has grown to 106 as at December 2017. However, a considerable drop in performance was observed in the year 2017 with the total assets decreasing by 4.6 percent from Kshs. 72 billion in December 2016 to Kshs. 69 billion in December 2017. The level of profits has also declined in the last three years from Kshs. 549 million for the period ended December 2015 to a loss of Kshs. 377 million and Kshs. 731 million for the period ending December 2016 and 2017 respectively. The continued drop in profits is largely attributed to the reduction of financial income.

BL: Highlight some of the challenges facing the microfinance sector?

Caroline: The microfinance sector is currently facing various challenges most of which are as a result of the rapid growth experienced in the last few years and the changing market dynamics. These challenges form the key drivers of change and include starting with the need for enhanced corporate governance structures and practices in the changing banking sector environment. This presents the need to review current shareholding structures and introducing new ones such as nonoperating holding companies. Secondly is the need for resilient and viable business

models by ensuring adequacy of capital and liquidity given the changing market dynamics across the entire banking sector. The third is the elevated credit risk which has contributed to increasing nonperforming loan portfolios.

The other challenge is reduced reliance on deposits and increased reliance on more expensive borrowed funds. This is attributed to the low visibility of microfinance institutions which hinders mobilization of deposits. In addition, the few willing depositors demand for higher interest return, which is not sustainable in the long-run. The sector is also grappling with the need for improved transparency mechanisms and on-demand customer response mechanisms owing to growing consumer complaints. Moreover, emerging financial technology (fintech) has created new opportunities as well as new risks that need to be understood and mitigated.

By the same token, imposition of interest rate caps has led to change in pricing and uptake of credit. The sector has also experienced changes in the reporting standards, including the introduction of the revised International Financial Reporting Standards (IFRS) 9. Donors have also changed their financing models and hence the flow of grants to the sector has been limited. Finally, the regulatory framework in the sector is not inclusive.

BL: How has the sector addressed the threats above - especially cyber-crime?

Caroline: To start with, AMFI-K is addressing the cyber security threat by organizing workshops for the members.

The workshops feature a simulation of real world case scenarios, the latest trends in cyber security, the laws and regulations around it and the impact of cyber-attacks.

It also covers and equips participants on how to prevent and mitigate cyber-attacks. In addition, we are creating awareness and organizing trainings on the implementation of the IFRS 9. Moreover, we are encouraging financial literacy campaigns by financial providers to enable individuals to embrace technology. Finally, we are partnering with regulators in developing regulations for the sector.

BL: Give us the measures that AMFI-K has recently put in place in order to enhance its service delivery?

Caroline: Financial institutions need to take deliberate actions to be sustainable in order to serve clients’ interests. Though this effort requires time and attention, a balanced management approach benefits both the institution and the clients. There are two key dimensions for implementing responsible finance: client protection and social performance management (SPM).

AMFI-K promotes their integration in the member institutions. Client protection is the responsibility of all financial institutions (FIs), while SPM is essential for all double bottom or triple bottom line institutions— those with both financial and social goals. Finally, we are focused on emerging issues that are affecting the operations of our members. These include cyber security, corporate governance and compliance to (IFRS) 9.

Hatubagui mtu yeyote

Pata bima ya afya kwa matibabu yote ya familia.

Afya Yetu. Bima Yetu.

THE CHANGING CUSTOMER EXPERIENCE IN THE MICROFINANCE SECTOR

By Carolyne Gathuru

The microfinance industry in Kenya has indeed undergone a revolution. A revolution because things have turned around, they have been spinning and gone full circle. The same could be said but possibly postulating that it isn’t a revolution but an evolution, given that there has been development, advancement, growth and unfolding, witnessed over time. Whatever the case, there has been significant change witnessed with more disruption predicted to come. The microfinance sector has shifted from its original ‘space’ with its accompanying brand as a source of financial support and delivery for the poor or financially challenged sector with pro poor messaging being the hook, the themes around gender, age, cause driven or economically indigent. This has since changed with the sector becoming highly profitable, often performing competitively when pitted against mainstream financial institutions, up to and including its expansion to redefine its space outside of the ‘poor’ arena.

With this changing landscape and with microfinance rapidly occupying the position of being the go-to accessible and affordable financial solution in the country, what are some of the changes in customer experience excellence that the industry must be cognisant of for a sustainable outlook?

The changes experienced in the past ten years have seen a more empowered customer, ready to take on social, technological, economic, legal and environmental awareness and to challenge the status quo. The changes in these factors both specific to the sector or otherwise, has seen the emergence of a more enlightened customer that all the players in the microfinance sector need to profile, and be ready to serve.

Customers have very high expectations

To raise the levels of customer experience excellence, organisations in the microfinance space need to create the stimulus to go beyond service delivery and anticipate, meet and exceed customer expectations. There needs to be a shift from service to experience excellence.

Customer expectations continue to escalate, with the desire for both their functional and emotional needs to be met. Organisations therefore need to know and understand what customers need and to strive to deliver this. A satisfied customer is no longer something organisations should deign to be excited about. Customer satisfaction has become the standard baseline that must be achieved. Once done and dusted with this, which should be very early in the

organisation’s priority list, then moving on to customer retention and loyalty would be the goal. Customer satisfaction is based on merely meeting customer expectations which are on the rise by the hour especially in the digital age, whilst exceeding these expectations leads to the return of and selfpropelled recruitment of others.

To attempt to exceed customer expectations would require that these expectations are not only identified and documented for clarity, but also reviewed against the scale that tips towards providing more value. Expectations will differ including the financial services needs for the microfinance client. The responding requirement would therefore be to fully understand the customer and what underlying need that may not be

expressed, is in place. The default stance to assume that loans are suitable for everyone may need to be readdressed with clients served and attended to, based on their different situations. The so called ‘poor’ more than ever need to receive service that is positive and unexpected, and their loyalty and commitment to the process will be unprecedented. Amongst the target group, access to finances is deemed to be the preserve of greater beings that in essence is a myth that needs to be busted. The common view that financing is a long and arduous process also requires to be shot down by exceptional service that turns around this narrative. Happy customers bring other customers. In the microfinance space, that is heavily customer based, the pipeline of customer referrals needs to be fanned continuously as inspired by service excellence. By exceeding customer expectations, and understanding that customer delight stems from this, microfinance players will be taking an important step in their strategic outlook for the future.

Customers have very high awareness of their rights

To say that the current customers are very discerning about their rights is to put it quite mildly. Unlike in the past when the microfinance customer was classified as one who is self-employed, inexperienced entrepreneur and start – up types with small businesses centered on provision of social services, crafts and minor agricultural set ups operating on the brink of the poverty threshold; the profile of the current customer has since changed. Transformed actually. And with the changing customer demographic in terms of social and economic status, has emerged the microfinance customer who has a heightened awareness of what is due to him or her and the promises ( both overt and covert) that the microfinance institution has pledged. Hinged on this awareness track, are the opportunities that abound for customers to channel their communication. As with mainstream finance institutions upon which the microfinance sector tends to map processes, systems and structures, communication channels are published to customers and the general public on how to access and reach out for different services. With the advent of the more digitised customer, whether communication is in person or by proxy, the

opportunity to speak to the provider offers an avenue for reaching out. The nature of the communication flow is determined by the microfinance organisation’s dedication to customer engagement. Where at the tap of a keyboard organisations of high repute have in the past gone down faster than they would have ever imagined, the microfinance sector is not immune to the same treatment.

The financial service sector in the region has taken over prime space in the customers’ mind field as the sector from whom much more is demanded in terms of service delivery and delight. As such, demands are getting higher by the day, and delivery on these demands are awaited in high anticipation. Any diversion or deviance from the imagined service offering, then constitutes an anomaly from which turnaround is an uphill task. Whether written or assumed, when handling customer finances, the expectations of communication, responsiveness and solution provision are at the fore, much more so than other industries where money is not involved. It is the customers’ expectation that their money and money matters will be handled with the highest level of professionalism and diligence, and that what is covered in both fine print and otherwise will be adhered to. The need for immediate feedback should there be any matters touching on customer financing or affecting products or services signed up for, occupies a rung high on the microfinance ladder. Institutions should in no way minimise or downplay the risk of legal ramifications from unhappy customers who feel aggrieved in one way or the other.

The region is continuously breeding a litigatious lot, and the finance sector is bearing the brunt of loopholes and grey areas from the customer perspective. The need to move with swiftness to deal with customer issues and to ensure that feedback

received is handled in a way that leaves the customer feeling their rights have been upheld is paramount, and should form the focus of any customer focused microfinance player. That the Consumer Protection Act, in this country, leans very heavily towards the customer to the extent that where written agreements may be passed over for assumed obligation, should be the driver for organisations in this space to handle every customer with utmost diligence and care.

Target market

The ultimate change stemming from the world continually becoming a global village vide bridging the technological divide, is that the target consumer market for microfinance players has unrestricted access to global options. Whereas economists harp on and recommend the use of domestic sources of financing and the need to localize finance options for Africa, based on anticipated risk of volatility, vulnerability and potential limitations to adherence, there is an observed increase in the positioning and pitching by entrepreneurs and startups alike, for external funding. The advantages of geographical accessibility, response time, and the ease of finance mobilization, are increasingly overtaken by the promise keeping nature of finance players from across the globe. Where services are delivered and efficiency is at an all-time high, then the attraction to look externally is magnetic. Many an institution weary from knocking on local microfinance doors, and adhering to numerous requirements not designed for customer convenience but towards satisfying internal check boxes, have rejigged and repackaged their appeal and locked onto funding from grants, seed financing providers, investors and lenders across wider geographies. The microfinance industry therefore should not rest on its laurels with regards to the need for adaptability to change. And as Heraclitus of Ephesus(535 BC – 475 BC) the Greek philosopher, known for his doctrine of change being central to the universe, so aptly postulated “The only thing that is constant in life is change”. Microfinance players need to anchor their strategies on this age old wisdom that remains true through the years.

Carolyne Gathuru is the founder and director of strategy at Lifeskills Consulting. She has a wealth of experirnce in customer service strategy development and training. Email: cgathuru@life-skills. co.ke

Microfinance players need to anchor their strategies on this age old wisdom that remains true through the years

CAROLINE KARANJA: PASSIONATE ABOUT MICROFINANCE

By George Gichuki

The Kenyan microfinance sector is one of the most vibrant in Sub-Saharan Africa. It includes a diversity of institutional forms and a fairly large branch network to serve economically active, albeit low income earners. The business takes different forms ranging from microfinance banks ( regulated by the Central Bank of Kenya), institutions that are registered as non-governmental organizations, church based microfinance institutions, merrygo- round groups ( popularly known in Kiswahili as ‘chamas’), rotating savings and credit associations , accumulative

savings and credit associations as well as investments groups.

Delivery of the microfinance products and services takes different forms from group lending, individual, corporate and non-formal lending. Wide coverage of the telecommunication services has enhanced lending to the marginalized areas which are characterized by illiteracy, poor infrastructure and a vicious cycle of poverty.

The economic pillar of Kenya’s Vision 2030 objective of enhancing deposit mobilization, increasing savings levels and improving the

general quality of life for all citizens has seen the government introduce regulations through the Microfinance Act 2006 and subsequent amendments to ensure that the sector is able to meet its objective of serving the economically disadvantaged population.

The sector’s umbrella body is the Association of Microfinance Institutions –Kenya (AMFI-K). As the voice of the sector, AMFI-K has achieved key milestones since its inception. One of them is successfully lobbying for the enactment of the Microfinance Act and regulations which saw the establishment of microfinance banks. AMFI-K has a board drawn from the different categories of its membership including: microfinance banks, wholesale microfinance lenders and credit only microfinance institutions. In the same regard, it has a secretariat of five staff members, headed by a chief executive officer (CEO) who is currently Caroline Karanja.

Career growth

A career banker, Caroline is a Bachelor of Science (international business administration –finance option) graduate from the United States International University – Africa (USIU-A. “My banking career was shaped while still at USIU-A when I got an opportunity to work at Citibank as an intern,” says Caroline. “Among other duties, I assisted in the processing of the Kenya Airways share issue which was floated to the public in March 1996 - this involved the creation and update of applicants’ database, “she adds.

After her one year internship, Caroline joined Commercial Bank of Africa (CBA) as a graduate trainee. The university had a partnership with the bank which opened doors for its graduates to join as trainees. She worked with CBA from 1998 to 2005.

In 2006, she joined AMFI-K as a coordinator. “That was an exciting time for me because the association was lobbying for the enactment of the Microfinance Act,” she recalls. “I was involved in this critical process where I learnt a lot about the sector given that I was coming from a background of corporate banking,” she adds.

Lessons

The process of lobbying for the enactment of the Microfinance Act and regulations was industry led and championed by the secretariat. Caroline and the other members of the secretariat worked very closely with the key stakeholders and the leaders in the industry in order to actualize it. “These leaders mentored me a great deal and I learnt a lot from them about the

Caroline Karanja, Chief Executive Officer, Association of Microfinance Institutions – Kenya.

importance of preparing and embracing any changes that may occur in an organization,” she avers.

In the same breath, she learnt various fundraising skills because by and large, AMFI-K’s operations are supported by membership subscription and revenue that is generated by activities that the association initiates. “As the coordinator, it was my responsibility to develop the membership of the association and inclusion by recruiting new players in the market who met our requirements, besides maintaining linkages with other microfinance networks regionally, “ she says. “ I would also Identify and develop relevant capacity building programmes for the members by continuously engaging them on a needs assessment as well as coordinating thematic workshops to ensure that they remained relevant in the market,” she adds.

Owing to her immense contribution in strengthening AMFI-K, Caroline was promoted to a programmes manager in 2008. The board confirmed her as the CEO in 2018 after acting in that position for one year.

Besides being mentored by various leaders in the microfinance sector, Caroline attributes her meteoric career growth to the networks and partners she has worked with over the years. One of them is the Citi Foundation, the sponsor of the Citi Micro-Entrepreneurship Awards (CMA), a global event that promotes and illustrates how microfinance strengthens the entrepreneurial spirit in impoverished communities around the world. Some of the other key partners are: Semaine Africaine de la Microfinance (SAM), the organizers of the African Microfinance Week, African Rural and Agricultural Credit Association (AFRACA), a lead advocate and coordinator of rural and agricultural finance in Africa. She has also attended various leadership courses locally and internationally. Moreover, she has moderated sessions in several international microfinance forums. This exposure has helped her to hone her leadership skills.

Over the years, Caroline has also become very passionate about the microfinance sector, especially because of its impact on transforming people’s lives. “Our members develop products that go a long way in assisting the bottom of the pyramid clientele (often shunned by the mainstream financial institutions because they are perceived as high risk borrowers) to alleviate their plight,” she underscores. “This experience really excites me and it has drawn me closer to the sector,” she adds.

Hurdles

One of the biggest hurdles that the sector faces according to the new AMFI-K’s CEO is partial regulation. “We have countless money lenders (shylocks) and pyramid schemes who are coming into the market disguised as genuine microfinance institutions and this has distorted the market,” she laments.

To overcome this hurdle, AMFI-K has continuously engaged the Central Bank of Kenya (which regulates all the thirteen microfinance banks in the country) and the National Treasury, in order to develop regulations for the credit only microfinance institutions. In addition, through its communication initiatives, the association sensitizes the public about its activities and membership.

Leadership skills

As the leader of the AMFI-K team, one of Caroline’s major responsibilities is to ensure that all her staff members clearly understand the association’s vision and mission. “By so doing, they are able to know the association’s goals as they engage in their day to day work,” she emphasizes. In addition, she ensures that the team clearly understands the pillars that drive AMFI-K.

One of the association’s key roles is to build its members’ capacity and consequently, the team has to engage them continuously, in order to develop activities and programmes that serve their interests. “As the team leader, I therefore pay close attention to the ideas generated by the rest of the team as well as the feedback they share with me in my endeavour to drive the agenda of the association forward,” she avers.

The team holds a strategic meeting once per week in which they evaluate their performance and plan for various activities

including workshops and training sessions for the members. “If we notice that we are under performing in a certain area, then we come up with solutions that will enable us to fill the gap,” Caroline emphasizes.

The road ahead

In the next five years, Caroline is determined to strengthen the association by coming up with initiatives that will make it more sustainable and inclusive. She is also optimistic that within that time frame, AMFI-K will have successfully lobbied for the development and implementation of regulations for the credit only microfinance institutions so as to eliminate regulatory gaps and raise the level of protection to consumers.

Currently, the sector is operating in an environment that is rapidly evolving because of innovations in technologyespecially in mobile and internet banking. This has led to the emergence of risks like cyber crime which AMFI-K is addressing through sensitization workshops. The association is also sensitizing its members about the Movable Property Security Act and Regulations 2017 as well as the International Finance Reporting Standard (IFRS-9) which was adopted by all the lenders in the country effective the first of January 2018. The standard requires a lender to recognize a financial asset or liability in its statement of financial position when it becomes party to the provisions of the instrument.

The affable CEO is a very committed Christian. “I am a very prayerful person and I put God first in all my undertakings,” she says. Indeed, one of the items that clearly stand out on her neatly arranged work station is the Holy Bible. She is also an avid reader of inspirational books – mainly on business as well as personal and spiritual growth themes.

THE AMFI TEAM: Shadrack Mithika, finance manager, Caroline Karanja, CEO, Nancy Chotero, programmes manager and Pauline Otieno, administrative officer.

Mr. Raphael Kuria, Head of Credit and Business Development, MESPT.

MESPT: MORE THAN A ONE STOP SHOP FOR WHOLESALE LENDING

Changing with the market trends, wholesale lender uses a unique model in rolling out innovative products and hence contributing immensely to the growth and sustainability of micro and small enterprises

By George Gichuki

Manyhouseholds in Kenya depend (either directly or indirectly) on micro and small enterprises (MSMEs). Employing an average of ten people and operating in sectors like agriculture and trade, these enterprises

(fondly referred to as Jua Kali in Kiswahili) contribute a big share of the country’s gross domestic product (GDP).

Nevertheless, despite the pivotal role they play in the country’s socio- economic development ( especially in creating jobs

and providing an avenue for households to market their farm produce among other goods), micro and small enterprises face overwhelming challenges that hinder their growth to the next level. In the worst case scenario, these challenges ultimately lead to the death of the said enterprises. Indeed, according to a survey that was conducted by the Kenya National Bureau of Statistics in 2017, about 400,000 MSMEs do not celebrate their second birthday, while only a few reach their fifth. Some of the major challenges faced by MSMEs include inadequate capital, limited market access, lack of adequate skills and knowledge on how to run their businesses formally as well as poor infrastructure.

From the interviews that Biashara Leo magazine has conducted in a span of ten years with entrepreneurs in the MSMEs sector, topping the list of these hurdles is inadequate capital for the day to day

operation of their businesses (cash flow) and to facilitate growth to the next level.

Sadly though, given the informal nature of their businesses, most of the mainstream lenders shun them. For that reason, microfinance institutions (MFIs) have come in handy in financing MSMEs through their flexible lending models. For instance, microentrepreneurs form groups which enable them to co-guarantee one another in order to access credit as opposed to offering collaterals (like title deeds) to the lenders. The loans disbursed by MFIs though small enable MSMEs to navigate the turbulent waters of entrepreneurship.

To paint this picture further, MFIs also need huge amount funds for on lending to the small businesses at fair rates. One of the key sources of these funds is wholesale lenders (apex institutions).

Indeed, the approach of wholesale lending to financial institutions for onward lending to micro-enterprises has spurred economic growth largely in the MSMEs sector. One of the major wholesale lenders in Kenya is the Micro Enterprises Support Programme Trust (MESPT) which was established way back in 2002 by the European Union and the Government of Kenya. The Trust became operational in 2003. It was amended in 2007 to incorporate new partners and subsequently, the Danish Development Cooperation (Danida) came on board.

As a trust, MESPT has always operated with the aim of enabling Kenya to attain her economic goals by supporting and contributing towards the country’s key national development agendas. It is predominantly involved in agriculture value chains development as well as financing of financial intermediaries. In that regard, the trust focuses on serving unique and emerging sectors which require financing and capacity building such as clean and renewable energy for households as well as smart agriculture whose objective is to promote a sustainable green economy in our country.

Unique business model

MESPT’s development approach is based on a three tier (triangular) model that focuses on farmers, small and medium enterprises ( SMEs) as well as financial intermediaries – all intertwined . At the apex of this model is the producer group, at the bottom left we have the off takers/ marketers , while at the bottom right is the financing component. “ The underlying objective of this unique model is to create

linkages through products and services which enable beneficiaries to access capital, increase agricultural productivity and access markets,” says Mr. Raphael Kuria, the head of credit and business development.

The Trust has endeavoured to make this model sustainable so much so that in the event of its exit, the enterprises are able to continue with their operations in a profitable way. In all sides of the triangle there are service providers offering inputs, agro products, animal husbandry and extension services, hence making the model sustainable.

Product offering

Through its financial intermediaries, MESPT is currently offering three major products: the general loan, value chain loan and green financing loan. The general loan goes to the enterprises while the value chain one is lent to the players in various agricultural value chains ranging from the farm all the way to the market. The green financing loan on the other hand is for green technology solutions including renewable energy, waste management, solar energy, biogas and water management (drip irrigation kits). The facility enables farmers to access capital for the installation of green technology solutions.

The end result has been enhanced financial inclusion for micro enterprises since they are able to access capital, create jobs and earn their livelihoods. “For general and green technology loans, we have devised a mechanism which enables us to know who has borrowed, the type of product they have borrowed and the households that have been reached,” says Mr. Kuria. “Consequently, we are able to access the impact of these loans,” he adds.

The trust is focusing on growing its portfolio sustainably in order to reach more players at the marketplace.

In essence, as a trust, MESPT is not commercially driven. “ Our objective is to alleviate the plight of small enterprises by offering them innovative and affordable solutions, as opposed to making profits,” says Mr. Kuria. Working with MESPT as a financial partner of choice goes beyond giving out of a loan facility. “We encourage and partner with the financial partners to take up capacity building on a need basis in their bid to upscale their businesses to a higher level,” he emphasizes.

A faithful servant

According to Mr. Kuria, the growth of MESPT

over the years can mainly be attributed to the fact that it has remained faithful to its mission of promoting economic growth, employment creation and poverty alleviation by offering financial and capacity building support to small enterprises. “We have had very good support especially from our major partner and donor, Danida, mainly because we have delivered on our promise,” says Mr. Kuria.

“Going forward, we are confident of strengthening our market leadership position as an apex institution that is engaged in financing value chain development and green growth,” he adds. MESPT is also looking forward to growing its financial muscle and portfolio by raising funds locally and internationally.

In order to reach the rural areas where most of the MSMEs are based, MESPT has regional offices in Eastern, Coast, Rift Valley and Central regions. The objective of these offices is to promote the organization’s programmes and interventions in the respective regions and to be well positioned among the target market.

Since one of its core objectives is to enhance financial inclusion, MESPT does not lend directly to individual borrowers. That is clearly spelt out in its Trust Deed. On the contrary, it does so through financial intermediaries by offering them very competitive rates. “Lending directly to the enterprises might cause market distortion which will be contrary to our objective of enhancing financial inclusion,” emphasizes Mr. Kuria.

MESPT does a thorough due diligence on all the institutions it lends to in order to ensure that they are of a sound financial standing and their corporate governance structure is solid, the default risk is minimal. “Most of our customers honour their debt obligations with us on time and we have therefore been able to build a very cordial working relationship with them,” avers Mr. Kuria.

The potential of wholesale lending in the country remains largely untapped and there are only a few key players in that market segment. As more financial institutions continue to be set up in the country owing largely to the entrepreneurial spirit of Kenyans, MESPT is set to grow its share of the cake in that business because of its friendly terms and innovative product offering. The future of the leading apex institution can therefore only get better.

Huge impact

As a wholesaler in finance, MESPT is currently working with about thirty two financial institutions with a countrywide presence. On average, the loans are accessed by about 20,000 clients per institution. On average then, over 600,000 clients have been reached by MESPT’s funding through the financial intermediaries it has partnered with. As at December 2017, the cumulative value of loans that MESPT had disbursed since its inception was a whopping Kshs. 5.11 billion. This is a clear demonstration that it has had a huge impact on the growth of MSMEs which is largely dependent on the availability of adequate capital. It is also important to note that MESPT’s loan pricing is relatively fair and that is why many financial intermediaries have partnered with it.

Partnerships are a win-win Partnerships in business come with various benefits ranging from new ideas, tapping experiences, creating opportunities and avenues for improving the existing products. “No one understands the importance of having an ally in form of a strategic partner both locally and internationally like Juhudi Kilimo,” says Mr. Bernard Kivava, CEO, Juhudi Kilimo. “In that respect, we are very glad that MESPT, a microfinance wholesaler is one of our partners,” he adds.

It’s never easy to get a partner who entrusts you with financial resources unless you have a clear and concise investment plan, can be trusted and pass the background checks. Late last year, MESPT extended a loan of Kshs. 100 million to Juhudi Kilimo for a number of projects and programmes. Besides offering a facility to further the operations of Juhudi Kilimo through an increased loan portfolio, MESPT continues to offer other supportive services such as technical assistance in various areas.

MESPT gives Juhudi technical assistance around capacity building, staff training and clean energy insights to accelerate the uptake of the clean energy loans. “Our staff members have gained invaluable skills and knowledge from the training offered by MESPT in a number of areas ranging from designing products that have a positive impact on smallholder farmers, to capacity building on how to navigate the changing landscape in the microfinance sector,” affirms the Juhudi Kilimo CEO.

Juhudi Kilimo looks forward to growing and nurturing the partnership with MESPT. The two institutions have some level of convergence in their mission and vision, and this is what informs the commitment

towards the partnership. MESPT has shown commitment in a number of areas including the provision of loans to financial intermediaries for on lending to enterprises, issuance of agriculture value chain loans, credit guarantees for green growth enterprises and capacity building. Such support and partnership from MESPT will help bridge the gap in affordable lending to smallholder farmers in rural areas, encourage agri-business and spur economic development.Mr. Kivava expresses his gratitude to MESPT for the collaboration and looks forward to more engagements for the benefit of the rural smallholder farmers as the institution strives to revolutionize agri-lending.

Micro Enterprise Support Programme Trust (MESPT) is also one of the biggest partners of BIMAS. MESPT was one of the first institutions that BIMAS borrowed from way back in 2011. When the credit

only microfinance institution approached MESPT for support, it not only got a loan facility, but also a training package for its staff in corporate governance and financial management.

Of critical importance, BIMAS was able to interconnect all its branches through that support hence facilitating real time data sharing. Over the years, MESPT has provided capacity building to the BIMAS staff and board members in different areas especially in corporate governance.

“Without this partnership BIMAS could not have become one of the leading and most profitable credit only microfinance institutions in Kenya,” says Dr. Patrick Gathondu, the Executive Director of BIMAS.

“From a very humble beginning, we now have an asset base of Kshs. 1 billion, thanks to this partnership,” he ends.

PASSIONATE ABOUT FARMING: Joseph Mureithi, a BIMAS customer at his farm near Embu town.

JUHUDI KILIMO’S SUCCESS IN AGRICULTURAL LENDING

Lender provides wealth generating solutions to rural smallholder farmers and micro entrepreneurs by providing unique products and value added services, besides embracing cutting edge technology

Over the years, microfinance institutions (MFIs) have played a critical role in deepening financial inclusion in Kenya. The institutions have filled the gap created by the failure of mainstream banks to develop financial products for the low-income clientele. Since the enactment of the 2016 Microfinance Act, the sector has undergone many changes, key among them being the establishment of microfinance banks which mobilize deposits and are regulated by the Central Bank of Kenya (CBK). However, the sector is currently grappling with a major challenge of an

increasing number of micro lenders, mainly riding on digital platforms and positioning themselves as microfinance institutions, yet they are neither members of the Association of Microfinance Institutions – Kenya (AMFI-K) nor are they focused on alleviating the plight of the economically disadvantaged populace in line with the sector’s mission. As AMFI-K continues to lobby for the passing of the credit only microfinance regulations, Mr. Bernard Kivava, the Chief Executive Officer (CEO) of JuhudiKilimo believes the move will help in building investor confidence, offering a clear regulatory framework and creating a level playing field.

Roots

Founded in 2004 as a social enterprise project within a wider development agency under K-Rep Bank (nowSidian Bank), Juhudi Kilimo has over the years curved a niche in the competitive microfinance market by providing credit to smallholder farmers. It spun off from K-Rep in 2009 and became a for profit credit only microfinance institution owned by three social impact investors. The fast growing MFI has its headquarters in Nairobi and has an asset base of Kshs. 1.9 billion. It targets rural smallholder farmers and micro entrepreneurs in the agricultural sector based in various parts of the country. The decision to serve this market was informed by the fact that many financial institutions in the country shy away from providing credit facilities to rural smallholder farmers because of the perception that they are high risk borrowers.

With 28 branches in 18 counties and 257 employees, Juhudi Kilimo is currently serving over 41,000 active borrowers using mainly the group lending methodology (the Grameen model). Juhudi Kilimo has bravely defied the widely held perception that lending to rural smallholder farmers is risky business. The lender’s current loan

QUITE OPTIMISTIC: Mr. Bernard Kivava, CEO, Juhudi Kilimo.

portfolio is Kshs. 1.4 billion of which 52% has gone to women. “Women are engaged in various agricultural activities throughout the country and they are very faithful in servicing their loans,” says Mr. Kivava adding that is why women are their major clientele.

Agriculture is associated with unpredictable weather conditions, poor infrastructure, lack of information and access to markets, inadequate government policies to support the agricultural value chain among other uncertainties. “However, with good financial products for smallholder farmers and effective training of the target market, it is possible to overcome some of these hurdles,” the CEO points out. “We understand the significance of agricultural development in the economy and that is what informs our values and commitment to penetrate the rural areas deeply with our well tailored products,” he adds.

Product offering

Distinct from the conventional products offered by many microfinance institutions, Juhudi Kilimo offers six products that are market driven and meant to build the capacity of the smallholder farmers. Crop financing takes the lion share of the products offered by Juhudi Kilimo at 49%. Working capital loans on the other hand (which provide financing within the agricultural value chain) stand at 25%. In the same breath, 17% of the loans offered by Juhudi Kilimo finance the purchasing of farm equipment, while 5% go to purchasing of farm animals. Consumer and clean

energy loans comprise the remaining 4%.The clean energy loans support farmers to have biogas digesters, energy saving jikos, and solar lanterns. “Our products are 99% agri-focused and we are continuously innovating and adopting models that support the agricultural sector,” the CEO emphasizes.

Emerging trends in the microfinance sector

There are several key trends that are emerging in the microfinance sector whose impact has been major. Since Juhudi Kilimo does not operate in isolation, it has also been affected by these trends. To start with, there has been the invasion of the micro lending space (loans ranging from Kshs. 1,000 to Kshs. 50,000) by mobile network operators (MNOs), commercial banks through digital platforms and other fintechs. Traditionally, that market has been the domain of microfinance institutions. While fintechs have made access to credit fast, they are known for charging exorbitant interest rates on short term (one month) facilities. “The competition offered by the new entrants is healthy and we view it as an opportunity for members of the microfinance sector to either start or acquire their own fintechs,” says Mr. Kivava who is also a board member of AMFI-K.

Secondly, there has been a shift by players in the sector from cheque and cash disbursements in group lending methodology to product offering through the mobile phone. Whereas this has enhanced convenience and efficiency, it has minimized the one-on-one interactions

between the staff of the microfinance institutions and their respective customers. Thirdly, the use of technology in product and service delivery has led to the escalation of the cyber crime threat with the culprits losing critical and expensive data. Nevertheless, this threat is not limited to the microfinance sector – it has also negatively impacted on commercial banks. “To address this challenge, many players in the sector have invested in robust financial systems which are regularly audited,” says Mr. Kivava adding that the sector’s umbrella body (AMFI-K) has also been organizing regular workshops to train its members on how to detect and handle cyber crimes. As one of AMFI-K’s members, Juhudi Kilimo has been sending some of its staff members to these workshops. In turn, the beneficiaries of the said workshops have been sharing the knowledge acquired with their colleagues.

In order to align itself with the emerging trends in the microfinance sector, Juhudi Kilimo has partnered with likeminded organizations including AMFI-K and Safaricom’s M-Pesa. “For instance, to enhance efficiency, we have digitized our loan application and disbursement processes,” says Mr. Kivava adding that the organization has also started making and receiving payments digitally either through electronic funds transfer (EFT) or M-Pesa.

Road ahead

The secret of Juhudi Kilimo’s turnaround and profitability has been its ability to attract highly talented , motivated and innovative staff who are not only equal to the tasks assigned to them, but are also willing and able to go an extra mile in serving their organization. In addition, it has developed innovative products which are relevant to the needs of its target market. Most importantly, Juhudi Kilimo endeavours to give its customers exemplary services, bearing in mind that they are the pillars of its business.

A solid organization whose current asset base is Kshs. 1.9 billion, Juhudi Kilimo is looking forward to growing its loan book to Kshs. 3 billion in the next 3 years as outlined in its 2017 to 2021 strategic plan. In the same breath, the institution is planning to have a presence in 26 counties from the current 18 and grow its branch network from 28 to 41. Of critical importance, the fast growing lender is looking forward to growing its customer base from the current 41,000 to 70,000 by 2021. If its current momentum is anything to go by, Juhudi Kilimo is set to not only achieve the said target, but also scale greater heights.

READY TO DELIVER: A section of Juhudi Kilimo’s team.

BIMAS: CONQUERING TOWNS FROM A RURAL AREA

Headquartered in Embu, lender strategically spreads its tentacles into new regions

By Catherine Kuria

Bimas

Kenya Limited is a credit only microfinance institution that was established by Plan International in 1997. It was started in Embu, but it now has a presence in 18 counties with 22 branches and 36 outposts, touching the lives of its customers - especially in the rural areas – in the process. Its focus is transforming lives

by creating livelihoods to promote econom ic development and eradicating poverty.

The lender’s flagship product is a loan for small scale businesses. In addition, it offers agri-business loans as well as loans for pur chasing and installing energy saving prod ucts like cooking stoves and solar panels. Green financing is a new trend in the market

whose objective is to enable households ac quire energy products which are cost effec tive and friendly to the environment. It has gained popularity in the rural areas that are off the national grind and therefore, house holds mainly rely on firewood for cooking and kerosene lamps for lighting.

Disruption

Dr. Patrick Gathondu, the executive direc tor of Bimas is an experienced microfi nance professional. “I have served in the microfinance sector for the past 16 years, witnessing its tremendous growth in the process,” he says. The most impactful change has been brought about by tech nology. In this regard, the market has been disrupted by fintechs offering short term micro loans which are expensively priced. They have posed very stiff competition to the traditional microfinance lenders. “Back in the day, we used to fill pass books, ledgers and interact physically with our customers,” says Dr. Gathondu adding that today, they are mainly interacting with their customers via the mobile phone technology.

In order to remain relevant against a back ground of numerous changes in the sector that have been occasioned by technological disruption, microfinance institutions and banks have become more innovative. In that regard, Bimas has developed an elaborate mobile banking platform in partnership with M-Pesa which has enabled the lender to enhance efficiency and reduce costs.

Embracing technology has come with its fair share of challenges. “Before the advent of mobile banking, we used to interact with our customers frequently on a one-on-one basis, but this has now reduced,” Dr. Gath ondu avers. Since most customers are now applying for loans via their mobile phones, Bimas has cushioned itself from the risk of default by integrating its systems and processes with credit reference bureaus (CRBs) and the Integrated Population Reg istration System (IPRS). By so doing, the lender is able to know the credit history of those applying for loans. Before technology became a key driver of its business, BIMAS loan officers would recruit customers, train and journey with them before offering them credit.

Regulation

Only microfinance finance banks are regu lated by the Central Bank of Kenya (CBK) as per the Microfinance Act of 2006. “We ap plied to be a deposit taking microfinance institution (DTM) - as microfinance banks were then known- way back in 2008 but

Dr. Patrick Gathondu, CEO, Bimas.

Bimas headquarters in Embu.

because of the stringent requirements and the high cost of investment involved in the transformation process, we shelved those plans,” notes Dr. Gathondu. Nevertheless, Bimas is now on a firm road to becoming a microfinance bank. In that regard, it has invested heavily on a robust information technology (IT) system and it has changed its legal status from a company limited by guarantee to a company limited by shares.

“ Within the next two years, we shall have diluted our shareholding in line with the 2016 Microfinance Act and we have already started sensitizing our staff members about any new developments in our organization arising from the need of becoming a mi crofinance bank as well as how to conduct business in a regulated regime,” Dr. Gath ondu emphasizes.

Most importantly, even before achieving the said goal, Bimas has already started em bracing some of the prudential guidelines outlined in the 2016 Microfinance Act, in particular, provisioning for non-performing loans. “One of the key benefits of being regulated is that there is no risk of being associated with the rogue players who have in the recent past invaded the microfinance sector in droves,” Dr. Gathondu points out.

Alarm

The key mission of players in the microfi nance sector is to alleviate poverty among

the economically active low income earners by providing them with innovative and af fordable products. “The sector is more de velopmental than commercial in nature and that is why it should be regulated to weed out rogue players whose motive is to gen erate huge profits at the expense of their customers’ socio-economic welfare,” Dr. Gathondu points out. Over the years, Bimas has enabled its customers to create wealth sustainably by offering them affordable and innovative financial as well as non-financial solutions.

He further observes that the capping of interest rates among commercial banks in the country has led to a significant reduc tion on borrowing from the formal lenders, microfinance institutions like Bimas includ ed. “Most people are now borrowing from fintechs and informal lenders (shylocks)

at very exorbitant rates which defeats the spirit of microfinance,” he laments.

In as much as the microfinance sector is thriving, it has been plagued by quite a num ber of challenges. The major one has been an increase of default cases. “ The portfolio at risk in most institutions has gone up and this has mainly been attributed to the vola tile electioneering period in the last half of 2017 which had adverse effects on many businesses and households countrywide,” Dr. Gathondu avers. Secondly, the micro finance model is labour intensive. Conse quently, this has significantly increased the cost of doing business in the sector to the players’ detriment.

Thirdly, the sector is grappling with the challenge of multiple borrowers especially in cases where information on the same has not been shared with the credit reference bureaus. More often than not, customers who borrow from many lenders become financially overburdened and ultimately, they are unable to service their debts. As a responsible lender, Bimas educates its customers on the need to be prudent while borrowing in order to avoid falling in the debt trap.

Aiming high BIMAS has come a long way. The lender started by doing business within one divi sion (Gachoka) in Embu County twenty years ago. Over time, it now has a pres ence in 18 counties. In its new strategic plan (2019- 2013), Bimas is focusing on conquering new territories like Mombasa, Kericho, Eldoret and Voi among other 24 counties. Its current customer base is 40, 000 but it is planning to grow the figure to 70,000 within the next five years. By the same token, it is aiming at growing its loan portfolio by 30 per cent.

“Our strategic direction takes a critical view of various opportunities that are available to grow our business and we leverage on them in a sustainable way,” observes Dr. Gathondu. In its 2013-2018 strategic plan, Bimas focused on penetrating deeper the areas where it already had a presence. That wise decision yielded good results. In Nai robi County for instance, the lender grew from one branch at Ngara to four. That was after opening three new branches at Kasa rani, Kitengela and Rongai.

Even as it aims at gaining a national pres ence, Bimas headquarters is still at Embu. This decision has been informed by what Dr. Gathondu refers to as the ‘grab’ strategy - conquering the cities from the rural area.

Our strategic direction takes a critical view of various opportunities that are available to grow our business and we leverage on them in a sustainable way

Visit your nearest branch for opportunities and efficient delivery of services.

Embu office

Tel Aviv Plaza-near urban primary school next to Neema plaza Branch manager number-0720211623

Nairobi office Enkei center-ngara-same building with KCB Branch manager number 0788410342

Nakuru office Uchumi house next to Tuskeys supermarket Branch manager number-0721616273

Marimanti office Next to knut office Branch manager number-0722960709

Maua office Next to forester fashion Branch manager number-0721623434

Nanyuki office BENIND IBIS HOTEL. Branch manager number-O725681446

Machakos office Kinyali building-behide equity bank Branch manager number-0728812157

Nyahururu office Mbaria plazaBranch manager number-0715576414

Kitengela office Gate house next to gate petrol station Branch manager number-0714360403

Makueni office Double K Plaza Branch manager number-0723817142

Tala office Fiona complex next to KWFT Branch manager number-072368855211

Kitui office Fena house near mosque Branch manager number-0723418921

Kibwezi office Tarabu house Branch manager number-0720046147

Mwingi office Kasina house Branch manager number-0720382814

Masii office Peter mulei building Branch manager number-0728390916

Nkubu office Kariigi plaza Branch manager number-0723793050

Kerugoya office Opposite FEP Branch manager number-0727873985

Kiritiri office Jodi enterprises building Branch manager number-0723110989

Nyeri office Peak business centre Branch manager number-072816077818.

Mwea office Next to coop bank Branch manager number-0715576414

Thika office Biashara plaza opp Equity plaza Branch manager number-0775277978

Matuu office Free Market Store Branch manager number-0714396224

Murang’a office Muguma building next to Barclays Bank Branch manager number-0702716323

Kiambu office Geoma house opp Equity Bank Branch Manager number-0720738343

Meru office BIMAS House Opp Barclays Bank Branch manager number-0720738343

Chuka office Nthiga Plaza next to KPLC Branch manager number-0724229395

Mikinduri office Mwimbi Building Branch Manager number-0721945955

Emali office

Next to post office Branch manager number-0727102359

Laare office

Opp Kampala House Branch manager number-0701623622

Kasarani- pivoli heights building .Opp PCEA kasarani church

Loitoktok-Next to Metropolitan Sacco

Limuru- Next to Metropolitan Sacco

Siakago-Muriuki Building Opppeko Petrol station

Utawala Office

FIND YOUR SPACE IN THE ENGINEERING, OIL AND GAS INSDUSTRY IN KENYA

By Catherine Kuria

Following many years of exploration for oil and gas in Kenya, economically viable oil deposits were confirmed in Turkana and Lamu Counties, while gas deposits have been confirmed in Wajir and Kajiado Counties. In Turkana, about 70,000 barrels have been extracted and stored awaiting transportation to Mombasa for export. Exploration of the commodities is still going on in various parts of the country.

On 3rd June 2018, the President flagged off the first consignment of 600 barrels by road in the Early Oil Pilot Scheme, signaling a new dispensation for the country.

Immediately thereafter, it was reported that hundreds of jobseekers began pitching camp at the Kenya Petroleum Refineries Limited (KPRL) depot in Mombasa, seeking employment opportunities.

Such interest has also been observed among Kenyan professionals and investors, locally and in the diaspora. This reveals the high hopes that Kenyans have in this emerging and growing industry.

The government plans to commercialize oil export by 2022, and projects that within the next few years, the oil and gas sector will be Kenya’s fourth highest foreign exchange earner after tea, coffee and tourism. The

long-term plan is to transport crude oil through a pipeline along the LAPSSET Corridor, currently under development.

The LAPSSET project includes a port, Inter regional standard gauge railway lines, a crude oil pipeline and a product oil pipeline. In addition, the LAPSSET corridor is designed to encompass other economic infrastructure such as international airports, resort cities, special economic zones, Industrial parks, and mineral exploration to generate and harness the economic and business activities for the corridor. The project is expected to have an impact on the livelihoods of 166 million people in Kenya, Ethiopia, South Sudan and other East African countries.

Further, the government is committed to eliminating use of charcoal and firewood in the country which have led to gross environmental degradation. There is a move towards the use of LPG, which is expected to bring down the use of wood fuel. These developments are rapidly changing Kenya’s economic landscape, and presenting new opportunities for all Kenyans. The oil and gas sector will not operate in isolation. It will rely on other industries including banking, insurance, hospitality, education, accounting, transport and agriculture among others.

Local content Information around the ongoing development is still in many ways scanty, given that most of the work so far has been undertaken by the government and multinational companies. There is therefore need to unpack the concept of local content. The Petroleum Exploration, Development and Production Bill (2014) defines Local Content as the use of Kenyan local expertise, goods and services, people, businesses and financing for the systematic development of national capacity and capabilities for the enhancement of the Kenyan economy.

In its basic definition, it is the commitment to generate in-country capability to support the long-term development of the emerging oil and gas sector. It represents the opportunity to maximize the use of local human capital, goods / material resources and services, promote real and effective partnerships, as well as benefit local business and communities through: local business development (goods and services), local employment (re-skilling, job

Members of staff from IMAC and some key speakers during the workshop.

development, redeployment) and creating sustainable local economic development.

The oil and gas upstream sector is dominated by foreign investors in terms of supply of technical exploration and production skills, goods and services. On the other hand, local content is characterized by semi-skilled and unskilled labour, and limited supply of goods and services. This implies that the cost of skilled labour, goods, services and supplies are high at the beginning but through a well-planned and structured local content strategy, the cost of local technical skills and labour will be available and cheaper in the long run.

It is against that background that IMAC, a training consultancy firm, organized a oneday workshop for individuals, Investors, corporates and entrepreneurs that ultimately feed into or feed off the oil and gas industry. It was a platform for interested parties to understand various aspects of the industry and identify investment, innovation or employment opportunities. It aimed at essentially answering two core questions; what is in it for me or my company? How do I or my organization plug into the oil and gas business or supply chain?

Key industry speakers and policy makers interacted with the participants through presentations and plenary discussions. The main plenary speakers in the workshop were drawn from the State Department of Petroleum, Ministry of Energy & Petroleum, LAPSSET Corridor, Tullow Kenya B.V, National Oil and Jomo Kenyatta University of Agriculture and Technology (JKUAT).

Status and plans for petroleum activities in Kenya

Kenya has a total of 4 petroleum sedimentary basins namely: the Lamu Basin, Anza Basin, Mandera Basin and tertiary Rift Basin. The petroleum basins cover a total surface area of 485, 000 km. A total of 83 hydrocarbon wells have been drilled in the country.

Recent drilling rates amount to about 9 wells per year as compared to historic drilling rates - less than 2 wells per year before 2012. These statistics however are bound to change due to the current world oil prices.

The 4 petroleum basins have been subdivided into licensed blocks. 36 blocks have been licensed to 18 international oil companies and block 14T to the National

Oil Corporation of Kenya. Mr. James Mbugua Ng’ang’a, the principal superintending geologist, State Department of Petroleum observed during the workshop: “We license blocks for various phases of exploration. After every phase, the company is required to relinquish 25%. From those relinquished parts we create some more blocks.”

Crude oil has been discovered in Ngamia, Amosing, Twiga, Ewoi, Etuko, Ekunyuk, Ekales, Etom and Agete. Gas has been discovered in Mbawa and Sala while in Sunbird, both oil and gas has been discovered. The exploration activities have currently been slowed down due to depressed international crude oil prices. An appraisal programme in South Lokichar is currently in progress. Working hydrocarbon systems have been discovered in the Cheptuket exploration well in Kenya’s Kerio Valley. Mr. Ng’ang’a continued: “Before you allow a company to develop a field, it has to submit a development plan where we have people on board following the matter. The draft field development plan was submitted in December 2015 and it is being updated as further data is availed. The final field development plan is to be submitted for approval by the government.”

The Kenya and Uganda Governments agreed to develop their resources with separate export pipelines in April 2016. Uganda opted to use the Tanga route through Tanzania while Kenya preferred a pipeline from Lokichar to Lamu port. A Joint Development Agreement was signed between the Kenyan Government and Kenya Joint Ventures was signed on October 24th 2017. The contractor for ESIA is on ground and has already started work. The first oil production is planned to start in 2021.

Crude oil and natural gas discoveries in Kenya’s 4 sedimentary basins are evidence for active and working petroleum systems. A plan to reduce the size of blocks and license the vacant ones is in place to increase oil and gas operations. The ministry still needs to promote and develop capacity in oil and gas techniques in skills and competences to allow for local content participation.

Investing in Kenya’s mineral sector where global challenges are the opportunities

Kenya has a surface area of 582, 650 sq km with expansive areas suitable for Investment. We have substantial untapped mineral resources. Location at the heart of East Africa and direct access to the

sea makes the country strategic business partner in the region. Heavy minerals and sand occur at the Kenyan coast. Recently, deposits of about 3.2 billion tons containing titanium were discovered. Carbonatites that are known to contain several minerals including Rare Earth Elements (REES) are found in the Mrima Hills, a southern part of the coastal region.

Possible areas of investments include collaboration in geological mapping, mineral processing for value addition, manufacture of gold jewelry, gem stone cutting and polishing, investments in industrial minerals such as cement and mineral exploration and mining. Prof. Bernard Kipsang Rop, chairman , department of mining materials and petroleum engineering ( JKUAT) observed during the workshop : “Kenya has a substantial untapped mineral resource and is striving to create an enabling environment to attract increased investments in the mineral sector.”

Liquefied Petroleum Gas (LPG)

The National Oil Corporation of Kenya is a fully integrated state corporation involved in all aspects of the petroleum supply chain covering the upstream, midstream and downstream operations. National Oil has a Liquefied Petroleum Gas (LPG) market share of 7.1%. Some may wonder, why LPG? LPG has to have a compelling proposition and must be understood by consumers and policy makers as a clean safe fuel. It is the solution to air quality associated with indoor pollution.

According to the last national census, at least 6.57% of Kenyan households rely primarily on clean fuels for cooking. LPG generates revenue for the government and a rise in GDP leads to a rise in LPG consumption. This creates direct and indirect employment opportunities. It also encourages capital investments and solves the energy trilemma i.e. environmental, price of energy and security of supply.

Andrew Omolo, head of sales and marketing, National Oil during the workshop said: “LPG bunkering- a third of all LPG is moved by ship. It is also evolving from its most common use as a cooking fuel and is being used in the marine industry for propulsion of ships, in power generation and auto gas, thus creating opportunities in mobile power.” This is one of Kenya’s most promising sectors in the years to come. Find your space and let’s grow together.

ACHIEVING UNIVERSAL HEALTHCARE WITH LOW EXPENDITURE: KENYA’S MODEL

To many, out-of-pocket payments to access healthcare prevents them from seeking and receiving the needed services as many do not have enough resources. Some opt for alternative methods of accessing treatment such as traditional doctors while others die helplessly as the cost of health services is skyrocketting on a daily basis.

Many countries are now working on ways to offer its population universal coverage of health services but one of the main questions facing these countries is how their financing system can maintain this. Universal health care or coverage means everyone is covered for basic healthcare

services, and no one is denied care as long as they are legal residents of a country.

While it takes years to achieve universal coverage, many countries are striving towards this goal. According to World Health Organization, Singapore is generally acknowledged as having one of the most successful healthcare systems in the world, in terms of both efficiency in financing and the results achieved in community health outcomes.

The key to Singapore’s success in offering universal cover age to its citizens is the emphasis on the individual to assume responsibility towards their own health. The use of compulsory deductions has also helped significantly in private funding for

hospital expenses. According to Singapore Ministry of Health, the government has also ensured that overall health expenditure does not fall victim to the inflationary pressures by regulating the supply and prices of healthcare services.

It is however important to note that while Singapore is tops in universal coverage, their system runs concurrently with development of the country which is politically stable and the fact that it has a small population. It might not be as easy for other larger countries but definitely achievable.

Kenya has also made strides with their system. The National Hospital Insurance Fund (NHIF) is the primary provider of health insurance in Kenya with a mandate

to enable all Kenyans access quality and affordable health services.

It offers a family based health insurance cover which is available to the contributor, spouse and children regardless of whether they are in the formal or informal sector. Like Singapore, Kenya’s system has been running concurrently with the develop ment of the country allowing successive governments to introduce consistent measures relating to individual responsibility, compulsory savings and regulatory control of healthcare services and costs.

Indeed NHIF has continuously improved its cover since its inception over 40 years ago. The NHIF health cover has been ex panded to allow as many Kenyans as possible to benefit and has been achieved by opening membership to informal sector, with no age limit and no discrimination based on ailment.

However, while there has been increased awareness of importance of being insured against unforeseen situations like sickness in the country, there is still a gap in a large percentage of the population, especially the poor, vulnerable and pastoral communities who cannot access quality healthcare.

Hence the increased emphasis in the capturing of the informal sector membership by NHIF as it strives to reach out to all these groups. Kenya’s NHIF covers dependents of the member automatically including spouse, children under the age of 18, students (even if over the age of 18 as long there is proof that they are attending school/ college or are disabled and are dependent on their parents for support.

Other adult family members require separate premium contributions to be covered. NHIF requires compulsory membership for all salaried employees with contributions automatically being deducted through payroll.

These contributions are remitted by the employer on a graduated scale based on their gross income. The self- employed members and retirees contribute a standard amount of Kshs. 160 per month. NHIF has about 2 million contributors spread across 41,000 employers.

Together with their dependants makes more than 10 million people who the Fund takes care of. Although a new proposed increase in premiums gazetted in June 2010 was met with bottlenecks, plans are still

underway to revise the rates which have been in existence for at least the last two decades. According to a study conducted by PriceWaterHouse Coopers (PWC) and International Finance Corporation (IFC), there is need to revise the rates to go hand in hand with the ever increasing cost of living.

The proposed changes will also see other sectors of the government, nongov ernmental organizations and other wellwishers able to purchase NHIF cover for indigents. Once the rates are increased, NHIF plans to introduce outpatient care. However, the proposed changes are currently under judicial review and have not yet been implemented.

NHIF members’ benefits package includes comprehensive inpatient cover and maternity cases. NHIF has put hospitals under:

Category A which mainly includes gov ernment hospitals where members enjoy a full comprehensive cover including surgery.

Category B includes non-profit private hospitals, faith-based hospitals, and private hospitals in rural areas or areas not adequately served by the public sector where members enjoy comprehensive benefits but in the case of surgery, the contributor may be required to chip in.

Category C includes higher cost private International Finance Corpora tion (IFC), there is need to revise the rates to go hand in hand with the ever increasing cost of living. The proposed changes will also see other sectors of the government, nongovernmental organizations and other well-wishers able to purchase NHIF cover for indigents.

Once the rates are increased, NHIF plans to introduce outpatient care. However, the proposed changes are currently under judicial review and have not yet been implemented.

NHIF members’ benefits package includes comprehensive inpatient cover and maternity cases. NHIF has put hospitals under: Category A which mainly includes government hospitals where members enjoy a full comprehensive cover including surgery. Category B includes non-profit private hospitals, faith-based hospitals, and private hospitals in rural areas or areas not adequately served by the public sector where members enjoy comprehensive benefits but in the case of surgery, the contributor may be required to chip in. Category C includes higher cost private

TO BELIEVE IN YOURSELF IS THE BEST FORM OF SUCCESS

A scalable and resilient business lady who sees the beauty in everything, including failure

By Catherine Kuria

while growing up, people around me used to ask often about what career path I desired to follow in life. I thought I had it all figured out; go to college, get a degree then a well paying white collar job. But I didn’t quite work like that. I had nobody to hold me when I fell off the wagon. It often makes me wonder whether that was a good or bad thing. Most parents want a comfortable and secure life for their kids and that is why they are actively involved in their decision making.

When it comes to career choices, parents always want to have a say in it. Why not let children be children and make mistakes? Statistics show that over 50% of students pursuing higher education in Kenya are studying a course they are not passionate about. 72% of the 50% are studying because it’s their parents dream and not theirs. Why go through the torture of living somebody else’ dream at the expense of yours? Grace Itumbiri held on to what she was passionate about and has shaped her own path as the founder of Dice Freelance.

She is a 25 years old graduate of the University of Nairobi. She graduated with a Bachelors degree in communications and political science. After doing a stint in formal employment she quit and went on to found a web company known as Dice Freelance. Ms. Itumbiri says that, “I founded dice freelance after spotting a need and niche in the way businesses are run in Kenya. I decided to help organizations create a wellmanicured web content and visual element in order to create their place in the web.”

She continues to say, “The market online is huge, the clients therein are also abundant. All business need to know is what to say when and how. This is what dice freelance all about. We help you create content and market it online.”

What exactly do communication strategists do?

A communication strategist is an intriguing individual who has created a completely new role for her or himself. Although invariable among the best in the business, the communication strategist has taken an extra step. They’ve looked hard at the way companies use language and the results they achieve, and they’ve sought out new ways of making language work better for their clients. That is exactly what Ms. Itumbiri does.

Grace Itumbiri, founder, Dice Freelance.

Her role as a content creator and communication strategist is basically to study the market that a business is in and craft a mode of communication that is suitable for it. She creates a marketing strategy for firms regardless of the level they are in.

She is more involved in planning than in execution. As a strategist, she has a highly developed client-relationship skill (to talk to client companies at the most senior level).

She engages with organizations through communication, learning from them, getting to know the company’s situation and responding to stakeholder needs appropriately to achieve business goals. Tony Manning, once said, “Organizations are managed by conversations.” Every day you and your organization communicate.

There is an ongoing flow of information, ideas, opinions and emotions between an organization and its audience or stakeholders – but is this communication well-planned to achieve its goals? Is it sufficiently strategic?

“Many business owners, managers and leaders need a helping hand in developing a clear, consistent and effective communication strategy. That is where I come in. I begin my conversation by getting the ‘boss’ to reflect on the business, its purpose and goals, its strengths, weaknesses and challenges. This is by asking questions like; what is the outcome you want? What stands in your way? How do you overcome these obstacles?” Ms. Itumbiri expounds.

Challenges and lessons learnt

Her journey has been anything but smooth sailing. Setting up a business can be terrifying as it is exciting. At any time a fledgling company can come up against a number of obstacles. Inadequate finances had taken a toll on her company when starting out. She had to toil in order to get what she wanted.

“When you don’t have an investor you basically have to source all the capital by yourself. It is difficult and I often considered quitting and going back to the village. But I had a dream and I knew I had what it takes to make it,” Ms. Itumbiri narrates.

Making sure that your product keeps up with changes in the market is vital. For Internet-based start-ups, this often means adapting the website. She conveys that “Is your website mobile-friendly? Does it have an attractive, easy-to-manage user interface? With so many websites, it is difficult to make yours stand out in the crowd.”

However, a secure, reliable and wellperforming website can often speak for itself.

She goes on to say that in campus, she learned a lot and that had to do with being able to think outside the box. She did not stick to the set curriculum but instead took extra courses, joined clubs and movements.

She grew her network through interacting to with people. The industry is fairly new especially in Kenya. So basically the main

issues are setting up the parameters of the industry as it is and selling the idea to the people and business owners.

Her biggest concern is that young people believe there is a set structure for career choices while there is none. Young people should listen to their inner voice and venture into a profession that they love.

They should do a detailed research about the profession and find mentors they can relate with. Having somebody whom you look up to and inspires you to step out of your comfort zone is healthy for you as a person and in your career as well.

Ms. Itumbiri concludes by saying that, “Take time to enjoy life and just grow personally and professionally. Let not the success of others intimidate you. There is no secret to success because it all starts with you. Take a chance on life and it will smile at you.”

With the advent of technology, everything starts and ends with the internet. Entrepreneurs are a rare breed of individuals who are constantly exploring new business opportunities. Some seek out new opportunities on their own while others are constantly pitching new ideas. The majority of opportunities, no matter how good they might sound, end up being a complete money-sucking nightmare due to expensive overheads, slow scalability and low margins. Online businesses, however, can be very appealing because they don’t have the traditional hurdles that most new ventures face.

The majority of opportunities, no matter how good they might sound, end up being a complete money-sucking nightmare due to expensive overheads, slow scalability and low margins

MILLING MONEY FROM CASSAVA

An underrated gold that can be used as food, animal feed, biofuel, laundry starch and for medicinal purposes

By Catherine Kuria

Cassava is an important source of food in the tropics. The cas sava plant gives the third-highest yield of carbohydrates per cul tivated area among crop plants, after sugarcane and sugar beets. Cassava plays a particularly important role in agri culture in developing countries, especially in sub-Saharan Africa, because it does well on poor soils and with low rainfall, and be cause it is a perennial that can be harvested as required. Worldwide, 800 million people depend on cassava as their primary food staple. In the humid and sub-humid areas of tropical Africa, it is either a primary staple food or a secondary co staple.

In Ghana, for example, cassava and yams occupy an important position in the agri

cultural economy and contribute about 46 percent of the agricultural gross domestic product. Cassava accounts for a daily caloric intake of 30 percent in Ghana and is grown by nearly every farming family. The impor tance of cassava to many Africans is epito mized in the Ewe (a language spoken in Ghana, Togo and Benin) name for the plant, agbeli, meaning “there is life”. In Kenya, cas sava is mainly grown in the Western part of the country. It is however not a staple food in the country.

Mhogo Foods

Cassava milling is not a new concept but very few people have ventured in to the sec tor. However, it is a very promising source of incoming and the market is full of untapped opportunities. Elizabeth Gikebe, a former

software developer, is the founder of Mhogo Foods, a cassava milling company based in Banana, Kiambu. Mhogo Foods was founded in early 2016. Cassava flour is gluten-free, which means unlike wheat or barley, it can not cause abnormal body reactions. The flour has a six-month shelf life and can be used to make bread, pancakes, cassava uga li, brownies, cookies and more.

When founding the company, Ms. Gikebe had a full time job but as the company found its footing in the market, she quit to give it her undivided attention. Her starting capi tal was Ksh. 10,000. She sourced her first batch of cassava tubers from a friend who taught her the basics of the business and from there her interest piqued. She sold her first milled batch to a supermarket in South C, Nairobi and that is where she established her market for the flour.

Contrary to popular belief, Mhogo Foods is not a family business as she narrates, “This Company is not a family business but the premises used to belong to my dad. He got into the maize milling business in 1990 but later left to engage in other ventures.”

Ms. Gikebe decided to make use of her fa ther’s mills. After a lot of market research she spotted a niche in the cassava milling business since maize milling was doing badly at the time. She was looking for flour that was gluten-free and could be mad from a drought resistant crop. “We source raw materials from small-scale farmers in Busia. We contract the farmers and provide them with seeds which they use to grow the cas sava tubers,” she says.

It takes eight to twelve months to grow and harvest the tubers. They assemble the tubers in a central location in Busia where they are washed and dried. Later the tubers are transported to Kiambu for processing. On a monthly basis, they process 5 to 8 tons of cassava that is sold both locally and inter nationally. “We are very active on our social media platforms and over the years we have amassed huge followings. This is our core channel of marketing but we also engage in above the line medium of advertising” Ms. Gikebe narrates.

At Mhogo Foods, they target the middle and low income earners. They distribute their flour top retail outlets country wide. “Cas sava tubers go bad after a few hours if unat tended to. We contract and engage farmers from Busia because they have been trained

Elizabeth Gikebe, founder, Mhogo Foods.

and know how to handle the produce,” she says. The company has created employ ment opportunities not only to the factory workers but also the small scale farmers in Busia.

The journey

When the company was still fairly new, their biggest challenge was how to source cassava tubers from farmers. It took them a long time to find farmers who were willing and able to plant tubers for them. The con sumption of cassava flour has also scaled up because in the beginning they recorded sales as low as 200kg a month but now sales are as high as 5 tons per month.

One of their biggest obstacles is that the consumer is not well educated in terms of where to get the flour and how to use it. However, that has not deterred them from reaching out to the consumer and educating him/her about the benefits of the flour and the multiple uses of the flour. Finances are a huge determiner of how quickly a new start up picks in the market. Without a proper starting capital, most start ups are doomed for failure. This was the case for Mhogo Foods but they but they survived the tides.

Ms. Gikebe says that, “Currently in Kenya, we don’t have anybody who is processing pure cassava flour with the exception of Mhogo Foods. That is what sets us apart from the rest. We are the pioneers in the market and plan to keep providing the con sumer with high quality multipurpose flour with zero additives.” Plans of expansion are still underway and in the next 3 years they plan on relocating to a bigger and better equipped facility. Currently they export 1 to 2 tons but they plan on expanding they market oversees to be able to import close to 10 tons. They also plan on introducing fortified cassava flour but still maintain the 100% pure cassava in the flour with zero additives.

According to 2014 data by FAO, Kenya’s an nual cassava fresh root production is esti mated at 662,405 tons, against an estimat ed annual demand of 301,200 tons of dried cassava and 1,204,800 metric tons of fresh roots (one ton of cassava flour is obtained from four tons of fresh cassava roots). That demand for cassava is high compared to the supply. Kenyan’s should exploit this oppor tunity and make a living out of it.

Gluten-free chocolate cake.

Gluten-free pancakes.

Prof. John J. Struthers, the newly installed 2nd chancellor of Mount Kenya University giving his acceptance speech during the 14th graduation ceremony.