Investment News November - December 2016

NOV/DEC 2016 | PRICE: KSHS 250

MACHAKOS COUNTY

THE SMALL BUSINESS OPPORTUNITIES MAGAZINE

The emerging Industrial Hub

HOW TO COLLECT YOUR DUES WHEN CLIENTS WON’T PAY Delayed or non-payment for goods supplied to Government bodies and corporations by small businesses is worrying even President Uhuru Kenyatta. But what can you do in the meantime?

INVESTMENT NEWS, NOV/DEC 2016 3

THE SMALL BUSINESS OPPORTUNITIES MAGAZINE

INSIDE THIS ISSUE

Nov/Dec2016

SPECIAL REPORTS PULL-OUT ON INDUSTRIALIZATION OF MACHAKOS COUNTY Machakos County is fast becoming the hub of industrialization in Kenya. This special guide discusses the reasons why Machakos is being preferred and details some of the companies located there …………..Start on page 11

REGULARS Publishers View………… 4 Making banks responsible

Why Small and Micro Firms are Thriving in Kenya Today

The last word……………

30 Protection of businesses during campaigns and elections .

Letters………………. 5 Books and culture…….27

Grow Opportunities for your small Business Azerbaijan opens more business opportunities in Nairobi ………………..Start on page 7

4 INVESTMENT NEWS, NOV/DEC 2016 Investment News Editor

PUBLISHER’S VIEW

Making Banks Responsible

Muli wa Kyendo Associate Editor Emily Muli Contributors Francis Ochieng Wilfred Gachanja Nguli Muli

Marketing Charles Kavuu Mary Mumbua Investment News is published bi -monthly by Investment News Ltd, P.O. Box 20257-00100, GPO, Nairobi, Kenya, Tel: 0773991820 , 0721302418,

Email: Editor @investmentnews.co.ke

ISSN 1814 –9966 The Editor welcomes contributions but takes no responsibility for loss or damage.

All rights reserved Copyright: Investment News Ltd

No lesser person than the retired President Daniel arap Moi was happy with the new banking laws. Despite the fact that he is not a man counting coins in the manner of most Kenyans, now that he is fully immersed in business, he can understand the suffering loan borrowers were going through. It had reached a point where borrowers would bribe bank employees to get loans even when they were aware they would single-handedly repay the loan.

The reason why this was so was because banks didn’t need customers. They were already chocked full with those they were milking.

Just consider it— you put money in a savings account, and if you borrowed it back, you would pay an account maintenance fee on your savings and nearly twice the amount you had borrowed in interest on loans.

In pure language, that was theft— an elementary theft that is known in the Holy Koran as Haram.

Haram is usury—a bad practice of lending money in which the borrower pays with a pound of flesh.

The new law makes sure that depositors are paid interest on their deposits while the banks charge reasonable rates on loans.

When the banking industry is allowed to run amok, there is fear of borrowing. And that fear translates in economic stagnation because it suffocates the flow of cash.

It is our hope that the government will continue to implement laws that benefit the small businesses.

INVESTMENT NEWS, NOV/DEC 2016 5

Azerbaijan Embassy Responds to Investment News Story on Trade Relations with Kenya Asfaw said in the statement: The Embassy of the Republic of Azerbaijan in Addis Ababa says that the country’s foreign investment in its neighborhood has exceeded $35 billion and therefore it looks to Kenya to increase the portfolio.

The statement was a reaction to a story published in investmentnews.co.ke titled “Azerbaijan Embassy in Nairobi Opens More Business Opportunities."

The Investment News story was in response to an increased readership and questions from Azerbaijan about business opportunities in Kenya. The purpose was also to highlight to Kenyans the kind of business opportunities that trade relations between Azerbaijan and Kenya offer to them. The Embassy statement, signed by the Public Relations Officer Mr. Aderajew Asfaw, also pointed out that the picture we published as that of Ambassador Elman Abdullayev was incorrect. We publish with this story the correct picture of Ambassador Elman Abdullayev and wish to offer

our apology for the mix-up.

Azerbaijan Ambassador to Kenya Elman Abdullayev

“On behalf of the Embassy, I am very grateful that you produced such a splendid news article on the relations of Azerbaijan and Kenya. I also hope that our cooperation in this regard and beyond will continue.”

Azerbaijan is situated at the crossroads of Southwest Asia and Southeastern Europe. It is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west and Iran to the south.

OUR ORIGINAL STORY AMMENDED

Azerbaijan Opens More Business Opportunities in Nairobi The appointment of an ambassador for the Republic of Azerbaijan to Kenya underlines the determination of both countries to establish trade and business links. ―We are very much eager and very much ready to explore Kenyan market for Azerbaijan goods. And of course, we plan to launch a joint initiative to boost trade between the two countries. We are working to increase our trade volumes on both sides,‖ Elman Abdullayev, the ambassador has said.

With European standards, Azerbaijan industrial products are known in many parts of the world. They include petrochemicals, food industry Turn to next page

6 INVESTMENT NEWS, NOV/DEC 2016

YOUR LETTERS Anything to say? Write to: editor@investmentnews.co.ke.

Make sure you indicate “Letters to the Editor” @editor.investmentnews.co.ke

Dear Sir,

Here’s Where We Are! We are delighted and feel proud that you have mentioned in the investment

News (July– August 2015) us as the first cooperative in Kericho. In your article ‗Fascination with Kericho’, you state ―…. The first cooperative in Kericho, Kipsigis Traders Savings and Credit Society still stands.

We are in fact Kipsigis Traders Cooperative Society registered CS 138 on May 5, 1949 through the initiative of the White Administrator, Mr. Gregory Smith locally known as Kiptabut.

Apart from out property in Kericho town, we have also

developed a plot in Bomet town.

On matters of investment we are currently desirous to build a plaza in our Kericho plot and have talked to various consultants and investors.

We are confident the County Government of Kericho will play its role where necessary.

Kimutai arap Chelulei (for Chairman) Kipsigis Traders Cooperative Society, Kericho

Azerbaijan Opens More Business Opportunities in Nairobi From Previous Page products and other manufacturing products.

Azerbaijan‘s foreign investment in its neighborhood has exceeded $35 billion.

Tea and Coffee Azerbaijan needs raw materials and agricultural products for which Africa is known.

Kenya is a big producer of tea and coffee in the world.

Its horticultural products, including flowers play also a significant part in its trade with other countries.

In Azerbaijan, industrial

goods make up 53 per cent of the GDP with services constituting 36 per cent. Agriculture contributes only 5.7 per cent.

In Kenya, the manufacturing sector contributes 19 per cent to the GDP. The economy is heavily dependent on agriculture which directly contributes 24% of the Gross Domestic Product (GDP) and 27 per cent of GDP indirectly through linkages with manufacturing, distribution and other service related sectors.

About 45 per cent of Government revenue is derived from agriculture and the sector contributes over 75 per cent

of industrial raw materials and more than 50% of the export earnings.

Employment The sector is the largest employer in the economy, accounting for 60 per cent of the total employment. Over 80 per cent of the population, especially living in rural areas derives their livelihoods mainly from agricultural related activities.

Among the activities planned

by Azerbaijan and Kenya are visits of business communities to explore business opportunities. ―We plan to organize joint business events and missions,‖ he said.

INVESTMENT NEWS, NOV/DEC 2016 7

COVER STORY Delayed or non-payment for goods and services to small business by Kenya Government bodies and large corporations is becoming a matter of concern even to President Uhuru Kenyatta. Follow the discussions with INVESTMENT NEWS and find out what you can do if you are caught up in the situation.

How to Collect When the Customer Won't Pay I

f you are running a small business, chances are most of your customers pay you within a reasonable amount of time. But sooner or later you will have to deal with a customer who pays very slowly or not at all. What can you do? And just importantly, what can't you do

to collect the money you are owed ?

Delayed or nonpayment of money owed to small businesses has been a subject of at least two important business discussions forums in Kenya.

In Kisii Investor Forum held a few months ago, no lesser person than the celebrated Kenyan billionaire Chris Kirubi raised the issue.

Many small business owners stood President Uhuru Kenyatta: Wants small business up in support. Many owners to be paid promptly

Anne Waiguru, Former CS: Charge more to cover losses were owed money by both the national and county governments and even large businesses that won‘t pay until six or more months after the supply of goods—some times never at all.

The question was: How then does a small business which in most cases does not have credit facilities survive? What about those with loans from

8 INVESTMENT NEWS, NOV/DEC 2016 banks or financial institution?

The sad answer was that many of the businesses in such situations actually collapsed. Jane, a business woman, narrated her tribulations when she got a business contract from a County Government. To fulfill the contract, she needed to assemble a lot of items from different suppliers on credit.

The County would however not pay even after six months.

Creditors started to doubt her sincerity. Eventually she had to sell her property to repay the loans.

The issue also came up at State House during an early morning conference to showcase the achievements of the Jubilee government. In response, President Uhuru Kenyatta ordered Government ministries to: 

 

Cleopa Mailu, CS Health: Charging more is not a crime ate more than 78 per cent of the employment in Kenya.

That is why the government is putting more efforts on small business creation for the youth and women. But all will come to nothing if the entrepreneurs are not paid in time.

Buy more from small businesses especially those owned by disadvantaged groups. buy goods and services at the prevailing prices pay in time especially to small businesses.

Small businesses bring much of the income to government not to mention that they cre-

.Faced with the question, public purchasing officers advice that small businesses should over charge for their goods and services. Former Cabinet Secretary Anne Waiguru when asked why the National Youth Service purchased goods and services at many times higher price than the prevailing market price said the reason was that the Government was slow in paying. ―To recover their losses, businesses must charge higher prices.‖ It was the same answer given

by Cleopa Mailu, Cabinet Secretary of the Ministry of Health when answering questions regarding the theft of Shs5 billion from the ministry. ―Businesses normally charge higher prices because payment can be delayed.‖ In many cases, it can be delayed for up to more than a year, he said.

President Uhuru Kenyatta does not agree with this line of argument. That is why he ordered all government bodies to purchase goods and services at the prevailing prices – and pay on time.

Chris Kirubi: Industrialist and media owner: Something should be done

One of the purchasing officers at the forum informed the President that delays were Turn to page 25

NOV./ DEC 2016

PRICE KSHS 250

Industrialization of Machakos Availability of Land, Security and Proximity to Nairobimakos Spurs Rise in Industrial Development

Doing Business in the Counties in Kenya

10 INVESTMENT NEWS, NOV/DEC 2016

2016 Editors Note The editor acknowledges with grateful thanks, the help of a very large number of information sources who have cooperated in the compilation of this guide.

The major concentration of the guide is on industrial investment. Because of its proximity to Nairobi City, security and availability of land, Machakos County is now being referred to as the hub of industrialization in Kenya.

Content: The key focus is on industrial development. The effort is to answer as many questions as we can regarding the opportunities to establish an industry in Machakos County.

Tourism and hospitality: These are closely related to industrial investments while they are also a part of investment opportunities. For this reason, we discuss the tourism industry in Machakos County. Opportunities for tourism in the County are rarely talked about since the County was separated from Makueni County which is surrounded by two national parks—Tsavo West and Amboseli.

But there are not only a variety of national parks in Machakos County, there are also opportunities for the investor in the hospitality industry.

Industrialization In Machakos County: Availability of Land, Security and Proximity to Nairobi Spurs Rise in Industrial Development Copyright 2016 Investment News, P.O. Box 20257-00100. Nairobi Kenya. All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, photocopying, mechanical recording or otherwise without the prior permission of the copyright owner Map shows Machakos and Makueni counties

INVESTMENT NEWS, NOV/DEC 2016 11

INVESTOR SUMMARY

The emerging industrial hub of Kenya The Machakos Miracle In 1937 the population of the entire Akamba community living in what the colonial government called Ukamba Reserve was only about 250,000. And the problem was, as seen by the colonial government “Extensive livestock raising was combined with shifting cultivation on small hand-cultivated plots of maize and other food crops.” Machakos itself was described by Colin Maher, senior soil conservation officer, as “an appalling example of a large area of land which has been subjected to uncoordinated and practically uncontrolled development by natives.”

In I990, the population of Machakos District (now Machakos and Makueni Counties) had increase to nearly 1,500,000 and Machakos was being described as a “miracle.”. Population densities increased from under 80 per km² in the wettest areas in 1932 to nearly 400 per km² in 1989, and from about 50 per km² in the drier areas to nearly 150 per km².

The annual rate of population increase peaked at 3.76% in the period 1969-79. Livestock population also increased. Agricultural output (food and cash crops, horticulture and livestock) increased from less than 0.4 tons per capita in 1932 , to nearly 1.2 tons per capita in 1989. Cash crops, particularly coffee, made up much of the increase during the

Eroded country near Machakos town in 1937 (Top). The same area in 1990 with population increase

1970s, and fruit and vegetables production in the 1980s.

District food sufficiency improved substantially. Living standards also improved through higher cash income. Soil and water conservation structures were extended, during 196090, to almost 100 per cent of the district's arable land.

These changes have led to a heavy investment in land which has become basis of the Counties development.

12 INVESTMENT NEWS, NOV/DEC 2016

Early Trading and Civilization Traditionally, trade connection extended to beyond Kenya Investors in Machakos County enjoy a rich tolerant culture and a long tradition of trade and business. The Akamba became long distance traders because of the expansive area they inhabit and the nature of climate.

In the process they developed a deep understanding of many areas and good relations with neighboring communities as well as excellent communication skills.

Barter trade flourished with the Kikuyu, Maasai, Meru and Embu people in the interior and the Mijikenda and Arab traders at the Coast and that trade formed a basis of their economic activities.

Over time, the Akamba extended their commercial activity and wielded economic control in the interior of part of the country that was later to be known as Kenya (from the Kikamba, 'Kiinyaa', meaning 'the Ostrich Country' derived from the reference they made to Mount Kenya and its snow cap

similar to the male Ostrich), It also extended to Uganda in the West where they traded with the Kingdom of Buganda. as well as all the way up to Lake Turkana on the northern frontier.

The Akamba traded in locally produced goods such as, ivory, iron ore, brass amulets, iron tools and weapons, millet, cowries, tobacco, gourds and cattle. Important markets included Masaku town (now known as Machakos) for cattle and Matinyani for iron goods. Iron ore from Kitui where Matinyani is located, was in high demand, especially among the Arabs because of its high quality.

They also traded in medicinal products known as 'miti' (literally: plants), made from various parts of the numerous medicinal plants found on the South East African plains.

The Akamba are still known for their fine work in wood carving, basketry and pottery, .

Machakos County Indicators at a Glance Population Total population Male

1,098,584 49%

Primary schools

850

Literacy rate

80

Secondary

154

Female

51%

Enrollment

Children (0-14 years)

39%

Universities

Growth rate

1.7%

Health

No. of households

264,500

Health facilities (public)

Urbanization

52%

Environment:

No of SMEs

75%

Forest cover

Security

High

93 % pri 4

120

4%

INVESTMENT NEWS, NOV/DEC 2016 13

Their artistic inclination is evidenced in the sculpture work that is on display in many craft shops and galleries in the major cities and towns of Kenya and abroad.

The result of this extensive trade was the growth of a rich culture, unrivalled in its tolerance for cultural and ethnic differences and maintenance of peace. The communities many settlements in places such as Mariakani, Kinango, Kwale, Changamwe and Chaani and Kisauni, in Taita-Taveta and even Tanzania, depended on these qualities. In the coastal areas, the settlements were the beginnings of urbanization.

Outside Kenya, the Akamba are found in many towns and cities of the world where they continue their trade in cultural items such as carvings and baskets. In many places they have been absorbed into the cultural, economic and political life of the modern-day societies. Several notable businessmen and women, politicians, as well as professional men and women are direct descendants of these ―settlers‖.

Machakos County has a population of 1,098,584 as per 2009 census (Male – 49

%,Female – 51 %). Most of the population consists of young people below the age of 30 years. The population annual growth rate is 1.7 % with a current estimate of 264,500 households of which 17% have access to electricity.

Machakos County is possibly the most urbanized with many significant towns and markets.

Over 52% of the population lives in the urban centers, which is way above the national average of 29%.

Its capital town Machakos is cosmopolitan and is located 64 kilometres South East of Nairobi. Because of its proximity to Nairobi, Machakos town is a part of the Greater Nairobi which includes, Nairobi City, Kajiado, Thika and Kiambu.

Picking from this, the Machakos County Government emphasizes business and trade, infrastructure, improvement and modernization of urban centres. In deed, the first investor conference was held in Machakos town with plans to construct a Dubai-style international trade centre, the Machakos City.

14 INVESTMENT NEWS, NOV/DEC 2016

Natural Resources and Infrastructure Machakos County is endowed with a variety of natural resources including wildlife, water (rivers) and land.

It also has natural resources for construction and industrial raw materials.

Mapping and exploitation of other natural resources such as oil, gas, iron ore, bauxite, limestone, coal, zinc, lead, rare earth metals is still going on.

There is high potential for renewable energy generation including solar and wind farms, bio gas , solid waste recycling, small hydros and related resources.

Close proximity to Nairobi dump sites guarantee additional solid waste raw materials to an energy generation plant.

The main economic activities include, beekeeping, trade, dairy farming, coffee, ecotourism, businesses and manufacturing.

The primary agricultural products include mangoes, pawpaws (papaya), watermelons, maize, cow peas, beans, pigeon peas, lentils

and livestock.

Potential exists for tourism with the County bordering the Nairobi National Park and being home to the Ol Donyo Sabuk National Park.

Nearby is the famous Fourteen Falls and you can travel further ahead to the beautiful castle of Lord MacMillan which has housed as great people as American Presidents.

Kapiti plains, seen from the view of the many hills that make the terrain of Machakos County are a wonderful experience. This view from Kilimambogo, the tallest hill in Machakos County, is for example what impressed Lord MacMillan whose remains, and those of his wife and their maid are buried atop the hills.

On clear days, Mt. Kenyan‘s snow covered top makes a breath taking

INVESTMENT NEWS, NOV/DEC 2016 15 sight, exactly what entranced the German missionary Dr. L. Krapf in 1849. The beauty is still as it was.

The hills and plains also offer wonderful opportunities for watching nature in a trail walk In terms of infrastructure Machakos County benefits from its proximity to Nairobi. The Mombasa railway network and the Mombasa road pass through it. The stretch between Nairobi and Athi River is a dual carriage modern road which is currently being extended to Machakos town turnoff at Kyumbi. President Uhuru Kenyatta while initiating the construction, observed that the new road will increase the number of people doing business between Nairobi and Machakos Other Key international roads like the Thika - Garissa road traverse the County.

Internally, the County has a network of good, all weather and tarmacked roads that ease transportation and distribution of goods.

Extensive urbanization creates ready market for industrial goods as well as a skilled

The villa of Lord MacMillan which has housed great people manpower pool.

There has also been fast growth of middle class with high purchasing power especially in areas next to Nairobi such as Syokimau, Mlolongo, Kamulu and Embakasi, Businesses targeting this middle class have also increased in the same areas.

There are large supermarkets, shopping malls, hospitals, schools, universities and most notably housing estates. As some people have observed, there are all types of houses—bungalows, villas, apartment blocks and maissionettes.

Large estate investors include Superior Homes with Green Park Estate which is next to the Daystar University.

Superior Homes describes the beauty of Athi River thus: ―Greenpark is located within an area of outstanding natural beauty and tranquility.

Enjoying close proximity to the main road, the trees, the gently sloping ground and the fresh breeze from the Lukenya hills make Greenpark a most relaxing place to live.‖ Property market too is thriving in Machakos County where many buyers are complaining of fast increase of prices.

16 INVESTMENT NEWS, NOV/DEC 2016

KENYA MEAT COMMISSION

Experience and Perfection Unrivalled efficiency leads to high volumes of quality meat The Kenya Meat Commission (KMC) was established in 1950 through an Act of Parliament to provide ready market for livestock farmers and high quality meat and meat products for consumers. It is a public institution and by far the oldest and most experienced meat processor in Kenya and the larger East African region.

KMC is a fully integrated meat processor whose strength lies in the unrivalled efficiency of its meat processing plants along with its ability to process high volumes of quality meat in line with consumers’ tastes and preferences.

At the KMC, we are committed to consistently providing quality meat

products that exceed customer expectations and regulatory requirements through continuous innovation, improvement of our technology and service.

its activities. It therefore continues to invest in the local community as it recognizes the importance of its role in managing social, economic and environmental issues.

Our elaborate program for training of our staff ensures we have the capacity required to meet the ever changing market needs, professionalism and high standards of hygiene in all aspects of our operations

Engagement with key clients, employees, community, environmental stakeholders, regulators, business partners and suppliers is central to KMC’s approach to CSR.

CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility (CSR) is the principal way KMC seeks to coordinate and manage practices to maximize positive social and economic contribution and minimize the environmental impacts of

Under community segment the Commission supports corporate fundraising campaigns through the provision of time and/or financial contribution to different entities in the county. It has ensured the environment around is well taken care of and has also been able to plant 1,000 trees quarterly and keeps them watered around the Commission and KMC residential houses.

OUR STRATEGY The Commission’s business strategy is to provide superior meat and meat products that rely on innovation and superior quality as a core differentiator. KMC places strong emphasis

INVESTMENT NEWS, NOV/DEC 2016 17

on product quality as it considers the quality and reliability of the products to be valid to its success.

The quality control procedures are implemented across the entire value chain, starting from the selection of raw materials to processing, packaging as well as delivery and distribution.

PRODUCTION FACILITIES Our facilities include the following: An abattoir at Athi River factory which is 30km from Nairobi, with a capacity for slaughter of 1,000 large stock and 1200 small stock per day and another one at Kibarani, Mombasa with the capability of processing 250 large stock and 500 small stock per day.

Landhies Road distribution depot in Nairobi that is easy to access and able to hold up to 100tons of products and has a cut beef building.

Shimanzi depot in Mombasa capable of storing 200tons of products.

A meat deboning section for processing high quality prime beef cuts.

A meat value addition section for the preparation of beef burgers, meat balls, stir fries, beef

sausages and several new products that are still under development.

A hides and skins semi processing facility By products rendering facilities A meat canning facility with separate lines for the canned products such as corned beef; pet food and ox tongue.

Vast cold storage facilities for both chilling and freezing.

MARKETS The Commission aims to be the preferred source of quality meat products for all including the learning institutions, medical centers, correctional facilities, hotels, and for every home. It is aiming at in-

creased distribution of its products in all parts of the country and also working towards expanding the export market and reach into more countries in Africa, Middle East, Asia among others.

OUR CONTACTS KENYA MEAT COMMISSION P.O BOX 2-00204 ATHI RIVER TEL: + 254 45 6626041/3/4 , +254 20 24 24 051 Email: sales@kenyameat.co.ke Web: www.kenyameat. co.ke.co.ke

OUR PRODUCTS The Kenya Meat Commission is renowned for its wide range of high quality Halal certified products with the majority categorized under the beef cuts.

CARCASSES These include the various graded carcasses of Prime beef carcass, Choice beef carcass, FAQ beef carcass, Standard Beef carcass and carcasses of Whole lamb and goat.

BEEF

CUTS

The prime cuts such as T-bone steak, prime ribs, strip loin, rump steak, fillet, boneless cubes, boneless chunks, ossobuco, topside, silverside, top rump, chuck on bone, sirloin steak, sirloin roll, stewing beef, meat on bone, eye roast, stir fries, standard mince, lean mince, among others.

VALUE ADDED PRODUCTS Various value added products including beef burgers (tray), meat balls (tray), sausages (pack), canned ox tongue, and corned beef .

18 INVESTMENT NEWS, NOV/DEC 2016

Industrializing Machakos County Land and proximity to Nairobi City remain key incentives The key motivators for industrial growth of Machakos County are the availability of land, its proximity to Nairobi and the Jomo Kenyatta airport and security.

More than 60 kilometers of nearly empty Kapiti plains lies between Nairobi and the hills of Machakos creating a ring around the city of desirable land for investment.

Key investments that have found a home in these plains is the government sponsored multi-billion shillings Konza Technology City.

Another significant government sponsored project is the Leather City at Kinanie in Athi River where the government says it has already received applications from many companies wanting to set up business in the city.

The city area has been subdivided into one and five hectare plots with land set aside for 15 tanneries and treatment ponds in addition to space for 200 leather factories and another 200 showrooms for the sale of finished products.

Kenya supplies 20 per cent of treated skins and hides to foreign factories but imports costly finished products.

Other big companies owned by the government in Athi River include the EZP which became famous for its role in the production of garments for United States markets under the AGOA trade agreement.

Kenya Meat Commission is synonymous with Athi River.

It was started in 1950 and has over the years, overseen the growth not only of the town but of the animal and meat trade in Kenya.

The East Africa Portland Cement Company—EAPCC—is another of the oldest and most established in Athi River. It is impossible to think of Athi River without these two names coming into the mind.

For years, they have been a great source of employment for the people of Machakos County—as in deed—for Kenyans in general.

Artists impression of Chinese City at Athi River

Portland has its key competi-

INVESTMENT NEWS, NOV/DEC 2016 19

tors also housed in Athi River.

Construction work at the offices They include Bamburi, Saof the China Wu Yi at Athi River vannah, National cement.

ARM Cement and Mombasa Cement. other major companies across Africa A myriad of private companies—media houses, tobacco The Chinese have not been manufacturers, food manufac- left behind in the rush to put turers supermarkets and up industries in Machakos malls and many more— are County. Blue Sky Internationall represented in Athi River. al is set to join in with a Shs1 billion prefabricated house Some of the significant recent factory. entrants include the giant manufacturer of chewing gum China Wu Yi is another buidwhich is setting up a Sh 5 bil- ing industry manufacturer lion ultra modern manufactur- which is putting up Shs10 biling factory set to create jobs lion building materials plant for youth in Kenya‘s‘ on a 30 acre piece of land.

Machakos county.

It will include a pre-cast eleWrigley is focused on devel- ment plant, a display area, oping the factory to a state-of- warehouse and a constructhe-art technological standard tion material supermarket to effectively compete with which will introduce materials

from China, effectively making it a one-stop shop for building materials in the country. The supermarket will stock among others stones, ceramic tiles, bathroom appliances, construction electrical fittings, lamps and kitchen furniture But by far the most ambitious of Chinese investments in Athi River is the Shs65 billion Chinese City with skyscrapers and infrastructure that they say will match the splendor of Dubai.

Styled as ―a Chinesecontrolled economic zone‖, it will host corporates from the Asian giant and serve as its hub for Eastern Africa.

When complete, it will create some 200,000 jobs.

20 INVESTMENT NEWS, NOV/DEC 2016

INVESTMENT NEWS, NOV/DEC 2016 21

Chloride Exide A Legacy of Durability and Power Chloride Exide does more silently at its factory in Athi River Chloride Exide Kenya is now ISO certified. Established in 1963, Chloride Exide aims to comply with, maintain and continuously improve the effectiveness of the ISO Quality Management System.

Its products range from leadacid automotive batteries (including maintenance free), deep cycle batteries, solar panels, solar water heating, inverter power back-up systems, motive power batteries, standby batteries and related accessories.

Chloride Exide batteries are manufactured to the highest standards at our factory – Associated Battery Manufacturers, which is also ISO certified In addition, we are the appointed service center for Outback Power (USA), Victron Inverters (The Netherlands), Morning Star (USA), Phocos (Germany), Megasun (Greece) and SouthWest Wind pwer (USA).

The core business is dis-

tribution of automotive batteries, solar systems installation, backup systems installation, solar water heating and wind energy systems installations.

Chloride Exide has grown from a single based operation to being the largest battery and renewable energy distributor in the East African region while enjoying considerable presence in the PTA trading block. Of particular pride is our strong brand supported by a region wide network of over 17 branches and over 400 dealers in the region.

With our vision, ―Energy Solutions – for all!‖, and our mission

―To provide quality batteries, solar panels and related energy solutions while consistently exceeding customer expectations and ensuring continued market expansion‖, being the driving force behind our entire operation, Chloride Exide looks forward to the challenges of meeting the ever changing consumer demands now and in the coming years.

The Chloride Exide Corporate Social Responsibility (CSR) is an integration of business operations and values, whereby the interests of all stakeholders including investors, customers, employees, the community and the environment are reflected in the company‘s policies and culture. Chloride Exide recognizes that our organization has the potential to make a significant impact on the society and the environment.

Our CSR is born from the desire to formalize the good culture already inherent in our staff and share them with our community and our environment for the benefit of all.

22 INVESTMENT NEWS, NOV/DEC 2016

THE EXPORT PROCESSING ZONES

Hope for Entrepreneurs Best chance for growth, development and wealth creation EPZ presents the best opportunity for growth, development and wealth creation for your business ambitions. Our main interest is to assist small businesses to reach their goals.

We has established a suitable investment climate to help you capitalize on untapped opportunities in East Africa, the whole of the African Continent and the world.

Located at Athi River, Viwanda Road EPZ offers industrial buildings, office space, business centre, serviced industrial land, commercial and residential Land.

Rates: Office Block and Business Centre: Rentable space in the 5 storey zone office block is available to service companies or light assembly industries. In addition, the business centre located at

the gate is suitable for a bank or other service agency. Rents are US$ 2.8/sq. foot/annum for partitioned space plus 15% service charge. The leases are renewable every 6-years while the rents are reviewed after every 2 years.

Industrial Buildings: Industrial buildings of various sizes ranging from 1,000 – 7,000 sq. m.) are available at rents ranging from US$ 2 - 2.8/sq foot/annum plus a 15% service charge. Investors may also purchase industrial buildings from the EPZ Authority or from licensed EPZ service companies who construct buildings for rent. Prices will be available on application.

The leases are renewable every

6-years while the rents are reviewed after every 2 years.

Serviced Industrial Plots: Serviced land in units of 62 x 1 hectare plots are available on a minimum 30 year lease with an annual ground rent of US$ 5,000 per annum per hectare plus 10% service charge to cover common services. Investors can also lease land for 60 years upon payment of a one-time fee of US$ 100,000 per hectare.

The land may be charged by financial institutions, but may only be transferred to a licensed EPZ entity.

INVESTMENT NEWS, NOV/DEC 2016 23

MACHAKOS COOPERATIVE UNION

Cutting the Chains of Poverty Value addition remains the main focus in coffee marketing The Machakos Cooperative Union is the umbrella organization for cooperatives in Machakos and Makueni Counties.

With the help of the Union the Lower Eastern Coffee Mill, which is owned by members of the Union, individuals and corporates, has installed a coffee milling plant in Machakos town.

The purpose is to help the farmSome of the crafts produced by the women groups ers to add value to their coffee. coffee from the Union’s memOne of the most important bers. The branded coffee will be things that the mill has done so marketed all over the world and far is to reduce the distance farmers are likely to boost their farmers have been travelling to incomes. have their coffee milled leading The Union represents 81 affilito reduced costs and wastage ate cooperatives with more that occurs during transportathan 70,000 individual production. their own milling plant, farmers ers.

Secondly farmers are milling are sure to get the same Besides the cooperatives the their coffee at rates lower than amount of coffee as they Union also assists 26 women those charged by any other milbrought for milling. groups with a membership of ler in Kenya while at the same Recently Machakos Cooperamore than 4,000 producers. The time eliminating wastage and tive Union started roasting, women groups produce sisal thefts that occur in milling. In packaging and selling branded baskets (syondo) and mats .

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INVESTMENT NEWS, NOV/DEC 2016 25

When they won’t pay From page 9 caused by delays in money being released from the Treasury.

Pointing at the treasury officials at the Forum the President said, ―We don‘t want to hear money is delayed at the Treasury!‖ He ordered for the publication and distribution of a list of goods and their market prices to government purchasing officers .

But this is one of the orders that have been more honored in disobedience So what can you do when you are owed money by people that won‘t pay? And just importantly, what can't you do to collect the money owed to you?

Start by keeping away from payment problems by checking on new clients. Don‘t just run to supply because you have the order. Discuss your prices, service fees and payment requirements with new customers before you do their work.

Secondly, if you work on a retainer basis or provide services under a contract, make it clear what services you will

charge for, what deliverables the customer will get for the fee, and what work will incur additional charges.

Be sure to let the customer know how often you will bill and how long they will have to pay each bill. Put it all in writing and be sure to include a section about your rights and responsibilities regarding ownership of products, intellectual property or records of work you perform if bills are not paid Third, send out your invoices promptly at regularly scheduled intervals. Be sure the client can tell that your mailing is not just another routine reminder. You may want to stamp the envelope "Invoice Enclosed" so it doesn't accidentally get thrown out.

Send out reminder notices promptly to any client who doesn't pay within a predetermined time frame - usually ten to 30 days.

Fourth, if a client still doesn't pay after reminders are sent, have someone from your accounts receivable department call the late-payer and try to determine the cause. If you don't have an "accounts receivable department" have a spouse, secretary or bookkeeper play the role. If the customer is one you want to keep and is worth keeping, using such an intermediary will make it easier to maintain a good working relationship with the customer after the bills get paid.

If the company or individual is having a financial problem, offer them a chance to pay you in installments.

Finally, if these attempts at collecting do no good, consider more aggressive means to collect what you are owed.

Only remember filing a suit in court should be you last resort. You should do so only if the amount involved is large enough to afford a lawyers fee.

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The Small Business Growth Plan The Column that guides you on how to move your business to the next level

Why Small and Micro Firms are Thriving in Kenya Today Micro and Small businesses make a large contribution in Kenya – a good reason why the Government is making great effort to encourage entrepreneurship. The facts are that they contribute more than 80 per cent of the country‘s GDP and more than 80 per cent of jobs created.

Those are powerful figures.

But what defines a micro and small (MSE) business in Kenya? There are various definitions. A general definition of a medium enterprise is that it has an annual turnover of Shs 250 million or less. The government makes more detail definitions with micro businesses being described as any business with less than 10 employees and an annual turnover of less than Shs500,000. A small enterprise is described as one with

more than 10 but less than 50 employees and a turnover of between Shs500,000 and Shs5 million.

Why is it good to start an MSE business in Kenya today? There are many reasons ranging from the pleasure of following your dreams and passions to earning more money. But from an economic point of view these are the key reasons: 

Demand for local products and services is increasing.



Favorable environment for doing business. Devolution which has established 42 counties has created more competitive and increased opportunities as each county government strives to create more job opportunities.



Accessing capital markets for businesses is much easier than before.

Controlling interest rates has brought bank loans within the reach of many MSEs.



Thriving retail sector.

Competition in this sector continues to improve boosting demand for goods produced locally.



Regional markets are easily accessible now thanks to improved regional economic integration.



It‘s now affordable for Micro, Small and Medium entrepreneurs to access technical training that ensures competitiveness and growth of business in Kenya.



40% of all goods and ser-

INVESTMENT NEWS, NOV/DEC 2016 27



vices procured by the government must be 100 % locally produced.

A vegetable dealer. Businesses like hers contribute significantly to the economy

40 per cent of goods and services procured by the government must be specially allocated to MSEs.

asset is passion. They do not have marketing skills.

Kamau, a manufacturing entrepreneur cites his own example where he has rooms filled with goods that he doesn‘t know where to sell. Similar problems were cited by others such as publishers who find accessing markets a big challenge.

Challenges Despite this, of course, there are challenges that entrepreneurs have to be aware of.

Most entrepreneurs mention the following: 

Accessing markets. Most businesses are started by entrepreneurs whose only



Knowledge of how to access funds. Despite the fact that funds for business are increasing, MSEs require knowledge of where the funds are available as well as negotiation skills. They further need skills on how to manage the funds when they get them.



Delayed payments. This is one of the most daunting challenges. Banks and financial institutions have put up structures to report and circulate names of firms and individual that fall back on their payments, but what happens to institutions – including banks - that fall back on paying SMEs? Kamau wonders saying that he has millions held up in government systems that have not paid. ―When they don‘t pay, we borrow again. And when that is also not paid quickly, we are blacklisted. Our businesses go burst.

See what others—including President Uhuru Kenyatta are saying about the problem of delayed payments in our cover story in this issue. Read also some suggestions on what you can do if your payments are delayed or not paid.

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TRAVEL, CULTURE AND BOOKS

Are the Remains of Early Man Guide to Locate The Garden of Eden in Kenya?

Now that the entire world is locating the home of the early man in Africa, does it confirm what scientists hypothesized that early man lived somewhere In Kenya. In fact northern Kenya has been often cited as the location of the Biblical Garden of Eden.

early human species marked a critical milestone in paleontology. "We now have scientific evidence to prove that Kenya remains the cradle of man and urge the government to gazette the fossil site where re-

Talking at the unveiling of the remains of the early man fossil in Nairobi, the Chinese News agency Xinhua writes: “Believed to be 3.5 million years old, the remains of Australopithecus afarensis, had earlier been discovered in Tanzania and Ethiopia while their discovery in Kenya could reinforce its famed status as a cradle for mankind.”

Turkana County Governor Josephat Nanok: His County will utilize discoveries of the remains of the early man to increase tourists

Archeological Tourism And Dr Emma Mbua, an Associate Research Scientist at the National Museums of Kenya said discovery of remains of the

mains of Australopithecus were discovered.”

Xinhua adds, “Discovery of remains of the earliest man near the Kenyan capital, Nairobi could position the country as a hub for archeological tourism.

Exodus “Hints of an early exodus of modern humans from Africa may have been detected in living humans,” says one report.

“People outside Africa over-

INVESTMENT NEWS, NOV/DEC 2016 29

whelmingly trace their descent to a group that left the continent 60,000 years ago.

Analysis of nearly 500 human genomes appears to have turned up the weak signal of an earlier migration. But the results suggest this early wave of Homo sapiens all but vanished.

Writing in Nature, scientists Luca Pagani, Mait and Metspalu describe hints of this pioneer group in their analysis of DNA in people from the Oceanian nation of Papua New Guinea. After evolving in Africa 200,000 years ago, modern humans are thought to have crossed through Egypt into the Arabian Peninsula some 60,000 years ago.

Genetic Evidence Until now, genetic evidence has shown that today’s non-

The art of ancient Africans: Sophisticated. evocative use of colors and simple lines

Africans could trace their origins to this fateful dispersal. Yet we hadn’t known for some time that groups of modern humans made forays outside their “homeland” before 60,000 years ago.

Fossilized remains found at the Qafzeh and Es Skhul caves in Israel had been dated to between 120,000 and 90,000 years ago. Then in 2015, scientists working in Daoxian, south China, reported the discovery of modern human teeth dating to at least 80,000 years ago.

An additional piece of evidence recently came from traces of Homo sapiens DNA in a female Neanderthal from Siberia’s Altai Mountains. The analysis sug-

gested that modern humans and Neanderthals had begun mixing around 100,000 years ago — presumably outside Africa.

Turkana Boy In order to reconcile this evidence with the genetic data from living populations, the prevailing view advanced by scientists was of a wave of pioneer settlement that ended in extinction.”

In view of this increasing interest, the Turkana County has said it will unveil the remains of the famous Turkana Boy. Paleoanthropologists have estimated that the boy was between 9 and 12 years and was 5ft 1 Inch (1.6m) tall at the time of his death If the Turkana boy had grown to maturity, he may have grown to 1.84m tall.

30 INVESTMENT NEWS, NOV/DEC 2016

The Business Owners Demand Protection for their Enterprises in Election Campaigns With the election mood starting all over the country, it will be essential for leaders to avoid sensitive statements that may lead the country to the kind of chaos as was witnessed in 2008. When such chaos occur, businesses— especially small businesses— suffer.

It is no longer the days when business people used to start their enterprises at their rural home backyards. Today Kenyans are going further afield - beyond their tribal boundaries - looking for opportunities and investing where they find a chance to make money.

Everywhere I travel, I find business people from all over the country, because the prime consideration for them

is the opportunity to make money.

And they are welcome wherever they go because they bring with them job opportunities, services, goods and wealth that the people so desperately need. Tribalism plays no part in this. It is the need and who can satisfactorily fulfill it.

But it seems that politicians are unaware of this. Most will go around preaching ideas that inflame tribalism and create danger to the business community and their businesses.

And that is why the businesses community should join hands with those people who preach unity among all communities in the country.

Women especially should be in the fore front ensuring that the country stays stable.

They are hurt most when chaos erupt not to mention that they carry the God given duty to protect their children and families—and the family business. This is the reason they are benefiting from the Affirmative Action policy.

A good politician isn’t the one who is loudest or is seen rolling on the streets in demonstrations—a shame for women. A well reasoned argument will do.

Similarly we expect business people to be sensitive of the damages they get from chaos—it is their shops and matatus that are looted. It is themselves who get hurt if not killed.