|Rift Valley Railways: Being rescued by an upstart|
The growth, our survey established, is well distributed covering all sectors of the economy such as Manufacturing, transport, consumer’s goods, financial services and communications.
Leading the pack is Safaricom, the mobile telephony firm which posted a whopping US$303 million in gross profits last year. Hot on its heels was the youngest bank in East Africa, Equity bank which grossed US$207 million. In the third place is Kenya commercial bank which grossed US$207 million. East African Breweries was fourth $176.2 million followed by Kenya Power and lighting, an electricity distribution company, and Bamburi Cement tie in fifth place having grossed US$100 million. KenGen, the electricity generation company was sixth at $48 million. An Upstart, Athi River cement grossed US$21 million
The survey established that a majority of the firms are younger than 40 years old; some were born hardly a decade ago but have grown into mega corps with presence in the entire east Africa and beyond. Among these is Equity bank. Equity converted into a commercial bank from a building society in 2005. It has revolutionized and demystified banking in east Africa. The 8 year old bank now boasts of almost 200 branches in East Africa including Kenya, South Sudan, Uganda, Tanzania and Rwanda. The bank has 8 million account holders making it the largest bank in Africa in terms of customer base.
Another 8 year old that stomping the continent is Trans Century, an investment firm that has grown from an investor’s club to one of the largest holding companies in east Africa. The firm specializes in acquiring firms suffering from financial and management deficiencies, it removes them and builds a profitable business. Its flagship Company East Africa Cables has grown from a small struggling firm to the largest cable manufacturing outfit in East Africa. Trans-century now owns profitable companies in Engineering Transport and infrastructure sectors in 12 countries in Africa. Among these is Rift Valley railways, the privatized Railways services operator in east Africa, and Civicon engineering.
Although Safaricom is 12 years old, it is in still in its pre-teens and in the league of the 8 year olds when it comes shaking things up. It is the largest Mobile phone company in east African with a subscriber base of 19 million in Kenya alone. It is the leader in technological innovation, using its strength to create a huge number of small businesses. Safaricom is the leader in the world in money transfer platform with its M-Pesa money transfer system.
Kenya commercial Bank is definitely not a pre-teen. It can be viewed as a grand old man of Kenyan banking. It will be 116 years next year in east Africa. However, in the Moi era, the Bank was mismanaged and almost driven to its knees. By 2003 the bank was insolvent. A new prudent management was put together in 2004 that turned the bank around. Now the bank has grown in stature and is now among the top performers in the economy. It has a total 251 branches in east Africa.
|Bidco Plant : An Upstart that upstaged TNCs e|
In addition to large profits, the companies also lead in terms of growth of physical assets, such as land, plant and equipment. KCB here is a clear leader with physical assets valued at US$4.318 billion. KenGen is second with assets valued at US$1.42 billion. Kengen is the power generation company in Kenya. Its assets include hydro-dams and geothermal steam wells. Its asset base it expected to grow rapidly as the firm is on top gear investing to generate 10,000MW by 2030.
Third in line is Kenya power with assets valued at $1.242 billion. The company is also under pressure to expand its customer base as demand for power grows. This growth will result growth in has seen its asset base grow five- fold in just about 8 years to $1.242 billion from US$292 million in 2005.
Kenya Airways is in fourth position with its asset base valued at US$653 million. This is also expected to grow rapidly as the airline grows its fleet . It plans to expand its fleet to 107 aircraft by 2020 from the current 37.
|Vimal Shah :CEO Bidco|
Kenya-Airways has been flying over rough skies due to the economic meltdown in Eurozone. However, it is expected to weather the storm by turning its attention away from Europe to the east and Africa. It should however be noted that, this list is not exhaustive as there are Kenyan born mega corps that are family businesses that do not publish their accounts. Among these is the consumer goods manufacturer, BIDCO limited which is rumoured to be worth US$2.5 billion. It has subsidiaries in all east Africa countries and distributes her products in 15 more countries in the region.
Also included here is Nakumatt chain stores. It has 39 branches in east Africa and is still growing. Nakumatt is said to be worth US$3 billion or thereabouts.So how did upstarts grow so fast and to dominate East Africa.
Three things: The companies are run by aggressive and creative entreprenuers who make their decisions standing. Two Liberalization of the Kenyan economy in the mid 1980s gave them an elbow room in the market, while the re-birth of the east African community broadened their horizons, our study established. These factors combined has catalyzed the rapid growth of these giants. According to Vimal Shah, the CEO of Bidco-one of the upstarts that has grown into a regional TNC- the TNCs that existed in Kenya then were used to protection. “Consequently, they were not creative. The Local upstarts then exploited the weaknesses among TNCs to curve a niche for themselves and eventually elbow out the TNCs. In the process the upstarts grew into TNCs themselves.