Key local companies make big gains from Kibaki presidency

 ARM now commands over 15 per cent of the multi-billion cement market in Kenya, that had for decades been dominated by French-controlled Bamburi Cement, whose market shares is estimated to have dipped to just over 40 per cent.

Surendra Bhattia, the deputy chief executive of ARM says the last decade has been a turning point for his firm, as most other indigenous firms, owing to improved policy environment from the government that has encouraged investment and consumption at the household level.

“The past ten years has seen a big improvement on policy which has helped individuals find jobs, earn salaries and desire to live in permanent homes,” said Bhattia of the growing demand for cement.

“With the right policy, there is higher propensity to consume and the wider economy benefits,” he adds.

The growth of ARM is replicated amongst several indigenous firms, most notable Equity Bank that was no more than a micro-building society in the 1990s and the listed investment firm TransCentury that controls a minority stake in railway concessionaire RVR.

Equity Bank has led a host of local banks that were previously struggling like KCB and Cooperative Bank to the top echelons in the banking sub-sector and supported financial inclusion.

James Mwangi, the group managing director of Equity Bank said in a recent interview that the success of his bank, and by extension other indigenous banks, lay in the ability to understand the local market and providing unique solutions.

The segment was firmly under the control of Barclays and Standard Chartered, both forming part of global firms with parentage in the UK but whose shares are listed in various stock markets in major cities around the world.

Bamburi, Barclays and Stanchart, however, are still thriving as vibrant companies, reaping from the rapid economic expansion of the Kibaki regime, where they have recorded huge profits.

Job Kihumba, the executive director at the Standard Investment Bank and a management consultant, says the past decade provided the right mix of environment for business.

“It all has to do with the public policy and the deliberate efforts by the government on expenditure,” said Kihumba, adding “banks have not been coerced to give unsecured loans to the political elite like in the past.”

Kihumba said increased budgetary allocation towards development expenditure had helped in creating jobs in public and private sectors, which meant many more people were actively involved in economic development, were paying taxes and able to purchase goods and services.

“Deliberate budgetary allocation towards development and infrastructure has boosted consumption and the purchasing powers for the common household.”

CIC, UAP Insurance and Britam are all local-owned insurers that have emerged as industry leaders in the last decade, but were previously playing in the minor league in a field dominated by multinationals.

It is in the energy sector that the changing fortunes of the indigenous companies is perhaps most visible.

KenolKobil is now neck on neck with French-owned Total in the downstream petroleum business which involves selling fuels through retail outlest.

Before the 2010 acquisition by Total of American-owned Chevron’s assets, then trading as Caltex, KenolKobil was the most dominant player in the petroleum business, after the subsequent exits of multinationals like Agip and BP.

A host of other smaller local players like Hashi, National Riva Petroleum and Gulf Energy have equally registered significant growths.

There has been more than a dozen new listings at the Nairobi Securities Exchange as privately owned companies open up the ownership to the general public, as a means to raise new capital for expansion and inject diversity in their managements.

Mobile telecommunication company Safaricom Limited holds the record as the biggest firm in the NSE with a capitalization of over Sh200 billion, but was hardly in operation ten years ago.