Premium

Rwathia heirs emerge from the shadows of their enterprising fathers

Rwathia Distributors Managing Director Maina Gikonyo.Right, Magomano Hotel, one of the businesses owned by Gikonyo. [Collins Kweyu, Standard]

For almost two decades now, Maina Gikonyo has been trusted with one of the crown jewels of the Rwathia Group business empire.

The managing director of Rwathia Distributors, one of Kenya’s oldest and biggest beer distributors formed in 1964, is very much his father’s son.

His father Mzee Gerald Gikonyo is the only remaining patriarch of the great capitalist boys from Rwathia village in Murang’a County and certainly Kenya’s only centenarian businessman.

At 108 years, Mzee Gikonyo, like clockwork, wakes up every morning to do what he’s best at – trade.

“I wish I could call him on the phone right now… he’s as astute as ever, still running his hotel in town; that’s where he is as we talk,” the younger Gikonyo tells Financial Standard.

“That’s all he knows from the time he started business as a young man. He knows that business is the easiest way out of poverty,” he adds.

Mr Maina, a businessman in his own right, is well refined compared with his predecessors and represents a change of guard among the group of villagers who struck gold in the city and now own the better part of downtown Nairobi.

“For us, the challenge was a bit more than our kids as we are filling the shoes of our old men in light of how difficult it was for them to achieve what they have,” says Mr Maina, aware of the burden of responsibility placed on the shoulders of the sons of the great men of Rwathia.

“They’ve lived to see us carry the business to levels they didn’t think [possible].” It’s fascinating how Rwathia – a small rural outpost in Murang’a’s Kangema – has produced a big chunk of Kenya’s billionaires, who began arriving in the city in the late 1930s in tattered clothes seeking a coin to send back home.

The group of uneducated men took over downtown Nairobi where they own a host of properties, including infamous bars such as Sabina Joy and Eureka, while their educated sons have helped build Upper Hill, a bustling commercial hub within the city, and also carved their corner at the Nairobi Securities Exchange (NSE).

An aerial view of Rwathia village in Kangema, Murang'a County. [Kibata Kihu, Standard]

“Business sometimes doesn’t look at the level of your education. If you become a good business person, it will probably reach a point where people will not even ask about your level of education,” quips Mr Maina.

“All those old men were not educated but were able to make something of themselves through hard work. They know the easiest thing for you to prove yourself is to go out there and sweat.”

The old-timers, such as Mzee Gikonyo, began their business journey in colonial Kenya by hawking vegetables to the well-heeled Asian community in the city and selling charcoal and wattle tree barks.

They braved the brutality of the colonial administrators, with Mzee Gikonyo, for example, detained for many years for funding the Mau Mau freedom fighters.

They then started establishing small dukas in African-inhabited areas such as Majengo and Bahati. A very tight and united bunch, they would pool resources and slowly acquire properties from the Asians.

Post-independence, the government was in a rush to place the economy in African hands, and it was through a programme dubbed Africanisation that the modern Kenyan enterprise was formed.

The people of Murang’a have also been boosted by the fact that since independence, they have been at the helm of Kenya’s economic decision-making organs.

Some of them helped steer the Africanisation initiative, enabling their kin to acquire foreign-owned establishments from those leaving the country. They included influential government officials such as the late Gikonyo Kiano, John Michuki and Charles Rubia.

Michuki, who hailed from Kangema, was KCB Executive Chairman, helping many people from the region to access credit to start businesses and take up leadership positions in the bank.

For a majority of the Murang’a people, reaching the apex of Kenya’s business space has been a result of a cocktail of factors, including networking, lifelong friendships and uplifting one another.

In 2020, Equity boss James Mwangi, another great Murang’a export, explained to this writer how the village networks shaped his career path. “King James” was taken under the wing of Peter Munga, the billionaire businessman, who is his village mate and one of the founders of Equity Bank.

Equity CEO James Mwangi. [Wilberforce Okwiri, Standard]

“If you look at Mr Munga, we come from the same village, so I saw him and aspired to be like him. Murang’a people have also been kind and generous enough to guide and mentor each other,” said Mr Mwangi.

The younger Gikonyo tables a layman’s theory on why Murang’a people seem to have a gift in the art of money-making. He explains this by breaking down the regions constituting Central Kenya, the home to the enterprising Kikuyu - Kenya’s dominant tribe with a population of over eight million.

The oldest schools in the region, he observed, were established in Nyeri and some parts of Kiambu where blacks were first allowed to undertake formal learning.

“Nyeri people have since valued their education more,” said Mr Maina, adding that some of the best brains are from there.

On the other hand, he pointed out, Kiambu’s proximity to Nairobi created complacency. This bunch could commute to and fro Nairobi daily, so they had no high stakes in the city.

But for Murang’a people, the city was all they knew, especially coming from a region with biting poverty and a harsh landscape.

“They stuck in town when these other people went home. They remained to see what they could do in the city,” he explained.

His father, Mzee Gikonyo, set up base at his Alfa Hotel on Ronald Ngala Street in the central business district.

Mzee Gikonyo’s business ventures have since earned him recognition from the government. He is among a select few to have received the Key to the City of Nairobi in recognition of his business acumen that over the decades contributed to the building of the city as well as employing hundreds of people.

Interestingly, there was a great wave of migration by the Kikuyus in the 1700s from Murang’a in search of fresh opportunities, with most of them settling in Kiambu and assimilating or buying land from the Ndorobos and Athi people.

Mr Maina noted that most of the buildings acquired by his predecessors belonged to Asians. They would rent them out and run lodgings, hotels and bars.

He said if one looks at the history of the local business scene, the Asians – the original dukawallahs – started something and moved up, leaving it to the Africans.

Mzee Gikonyo (centre) is among a select few to have received the Key to the City of Nairobi. [Jenipher Wachie, Standard]

They began with retail, which they left to the indigenous population after moving up to wholesale. And when Africans went into wholesale, the Asians scaled up to manufacturing or distribution.

Also, his predecessors bought the buildings owned by Asians in a financing arrangement that allowed them to pay over a given time.

A century ago this year, the first factory-produced beer in Kenya and bottled by hand was rolled out into the market.

Kenya Breweries Limited (KBL) and Tusker are celebrating 100 years of existence.

Fifty-eight years ago when the Rwathia boys first dabbled in the beer business, they did not expect the success they enjoy today. Over the years, they have seen the best and worst of the business.

Before the formation of Rwathia Distributors Ltd, the current main beer and spirits distributor for East African Breweries Ltd and UDV Kenya Ltd, the Murang’a investors were successful in their own right in the beer business.

They had already created a business culture and operated bars that sold local brews such as muratina before Africans were allowed into the mainstream alcohol business.

Rwathia distributes beer to most bars in the CBD and has a large footprint in the larger Nairobi County, especially Eastlands in areas such as Shauri Moyo, Majengo, Eastleigh and is also venturing into Westlands.

As the Covid-19 pandemic wreaked havoc on entertainment joints in the city, the only bars that survived belonged to the owners of the buildings they operate from.

Other buildings owned by the Rwathia group include Magomano, New Kinangop, Timboroa, Modern Green and Castle Garden.

Mr Maina said it has helped a lot that most of the shareholders of Rwathia Distributors also own bars, making it easier to trade on credit.

He noted that the first African beer distributors had political ties with the likes of Kenneth Matiba, who in 1977 opened the building that houses Rwathia Distributors deep in Nairobi’s Kariokor area.

He explained that the Murang’a networks helped the founders of Rwathia Distributors to pool capital in what was “a very capital intensive business.”

A section of Rwathia Distributors Ltd, Gikomba area, Nairobi. [Collins Kweyu, Standard]

Kenya was a young economy then and considering that the beer business is driven by support from the middle class, starting off was not easy.

“There was a limited financial capability on the part of the Africans. It was going to take some time for the Africans to be able to enjoy the newfound freedom, for example, of enjoying a beer,” said Mr Maina.

He noted that the biggest challenge for his generation is working in a fast-paced business climate that keeps shifting. Mr Maina said running a business is now more demanding and requires a lot of professionalism and expert training.

“One example I’d give is the calibre of personnel we need, which is different from what was required then. Back then, there was a shortage of professionals, but the kind of people we require now to drive the beer sales are not just drivers to just drop off drinks at outlets and leave. They are salespersons who have business analytical skills to help us scale up,” he said.

Technology has also changed operations through systems that interconnect beer distributors, a cashless economy using payment modes such as M-Pesa, and tracking of beer trucks to theft.

Now, they also have e-commerce partnerships with firms like Jumia and Party Central.

Back in the day, EABL used to deliver beer to distributors. The firm has since chosen to fully focus on manufacturing and outsources other functions such as warehousing.

Mr Maina noted that after 58 years, business turnover has grown but laments that in the last few years, the government has turned the alcohol business into a cash cow, taxing it heavily.

Details contained in the Finance Bill, 2022 show that the government will continue to raid beer makers to fund the Sh3.3 trillion 2022/2023 budget. The National Treasury plans to raise Sh300.96 billion from excise duty, popularly known as sin tax.

Treasury wants cider, perry, mead and opaque beer as well as mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of an alcoholic strength not exceeding six per cent to be taxed at Sh134 per litre, up from the current Sh121.85.

The Sh12.15 rise in excise duty per litre sets the stage for a rise in the price of beer by more than this margin once inflation adjustment by the Kenya Revenue Authority (KRA) is effected in the upcoming 2022/23 financial year.

“It’s time that the government realised that the beer industry is an integral part of Kenya’s economy ... Kenyans should be able to relax and enjoy their hard-earned money and be able to afford quality drinks without being overcharged,” said Mr Maina.

But the original dream of the Rwathia boys still lies intact.

“We’re still dreaming about a better future for our offspring just like our forefathers,” said Mr Maina in his parting shot.

Financial Standard
Premium John Ngumi: The blue-eyed boy of State corporations
Financial Standard
Premium With polls done, you can as well kiss State subsidies goodbye
Financial Standard
Premium Inside the Equity-KCB supremacy war
Financial Standard
Premium Economy on a standstill as country headed for elections