Two Recent Trends in Kenya - Regional Expansion & Selling Equity

On continental expansion, Kenyan companies have rapidly spread across Africa primarily over the last 10 years. People are looking for business opportunities but there is clearly another reason especially for big businesses. And it probably comes from bitter lessons learnt during the Moi years. If a hostile administration checks in and/or starts attacking your businesses, you wont go bust. There will be remnants spread across other countries. Also, neighboring states might openly express discomfort with interference/sabotage of a company whose shocks will be felt in their own countries.

Two examples demonstrate the extreme ends of this - Manu Chandaria Family & Kenneth Matiba. Chandaria family's businesses were founded in 1915 (100 years ago!) and have survived every administration since. Part of the reason must be because the group's interests are today spread across 45 countries. You can see the confidence in the geezer. Its because even if the state suddenly shut down all his businesses in Kenya today, his lifestyle will not be affected. He'll simply relocate to Tanzania, Uganda, UK, India etc.

Matiba once one of the country's richest persons, has seen his wealth diminish. Granted the family still has some important assets. But if you consider where his peers at the time are today, he is not where he could have been. Of course it partly has to do with the resources he used in the 1992 presidential campaign which starved his businesses of cash. Rebuilding must have been hard since the family was now operating in a country where his bitter opponent ("Moi must go!") was president and a dictator to boot. If the Matiba family's business interests were well spread outside the country, I doubt they would have been hit as hard.

On equity, it is the same reason local companies are selling a stake to international investors especially those from powerful countries i.e. US, UK, France. Yes, there is knowledge transfer, access to capital and other business benefits. But at the same time, it ensures that irrespective of who comes into power, they will be hesitant to wage a frontal attack on a business whose shareholders are non-Kenyan. What comes to mind most recently is the Brookside sale. Because Danone now owns 40% of the company, I doubt the French government will keep quiet if anyone tries to unfairly sabotage Brookside today.

Also within this same point is listing on the NSE and cross-listing in TZ,UG,RW. Must have been part of what informed the listing of Equity Bank and Transcentury both of which happened just before an election if I'm not mistaken. Roto Tanks and UAP are in the pipeline. A hostile administration would have to come to terms not with five or ten people but thousands of shareholders representing a very diverse demographic of class, race, nationality, ethnicity, religion and age.


Lesson Clearly Learnt.

I second you both @innairobi and @Boris Boyka. Top companies ought to be wise enough to know that political interference can be catastrophic if the owners are caught off-guard.

For large local businesses, it might not matter sometimes whether they delve into politics or not especially when under a paranoid regime like Moi's. Their size can attract political attention.

Expansion, listing & international shareholding mitigate risk. One cannot eliminate political risk 100%. A new government can still do an Idi Amin and e.g. nationalize Brookside. But Danone ownership means it will have to think a little longer before taking action.

And if Kagame/Rwanda business goes rogue, it will be covered by UG,TZ,SS,KE. Likewise for Uganda. Near impossible for all countries to go rogue simultaneously.