For a man who claims he never lobbies for appointments, John Ngumi has been on a roll, bagging top positions on the boards of major State-owned enterprises.
The larger-than-life boardroom veteran was recently tapped to chair Safaricom – East Africa’s most profitable company.
The Sh1.2 trillion corporate behemoth is 35 per cent owned by the government, with board appointees having the blessings of the National Treasury.
Mr Ngumi, who was one of outgoing President Uhuru Kenyatta’s Mr Fix It, had just been reappointed last month as the chairman of the Industrial and Commercial Development Corporation (ICDC) for two years.
ICDC is Kenya’s premier development finance institution responsible for the loans that powered the country’s industrialisation but is a pale shadow of its former self.
The wearisome ICDC got a new lease of life and is set to oversee Kenya’s largest parastatals with assets worth over Sh685 billion and Sh72 billion annual revenue.
This is after operations of the Kenya Pipeline, Kenya Railways and Kenya Ports Authority (KPA) were brought under an outfit called the Kenya Transport and Logistics Network (KLDN).
Interestingly, Mr Ngumi’s first-ever government appointment was in ICDC in 1997 where he served for a year before being edged out.
President Kenyatta also turned to Mr Ngumi to chair a committee that is overseeing reforms within the troubled power sector.
The committee is a predecessor of the Presidential Task Force for the Review of Power Purchase Agreements (PPAs), which was also chaired by Ngumi.
The task force, formed in March last year, made major recommendations aimed at turning around the power sector, including the 30 per cent reduction in power prices and the renegotiation of contracts between power producers and Kenya Power.
Mr Ngumi is also a director of Kenya Airways. The shrewd sharp-suited investment banker is a suave, calculating and extremely well-connected man.
“I’ve been working with the government for a very long time, so I reckon they know me,” he chuckled in a recent interview when asked how he managed to bag one State appointment after the other.
He Is also smart, no doubt.
A lingering stammer notwithstanding, Mr Ngumi was for most of his career spanning almost four decades Kenya’s hottest dealmaker, brokering deals worth over Sh1 trillion.
He was there when Kenya’s financial markets were being carved.
He helped raise funds for the coffee board in the 1980s and arranged financing for the government on several occasions by mapping out Treasury bonds and syndicated loans.
He was also the lead banker for the infamous Eurobond.
His journey to success began at St Peter’s College, Oxford, where he studied Philosophy, Politics and Economics (PPE), aptly captured as the degree that “runs Britain,” with its graduates populating the country’s ruling class and elite.
“It teaches you to be very quick on the uptake, quick on understanding briefs and also gives a very good ability to weave words together, so they can sell virtually anything,” said Mr Ngumi of the degree in a previous interview.
This is how his outlook was shaped – by the multidisciplinary degree also described as a “passport to power” and has a broad approach to learning and one doesn’t necessarily study it with a particular career in mind.
“It really triggered a lot of interests that I’ve maintained... it also inspired a lot of curiosity,” he said.
He is best remembered for his tenure as the chairman of Kenya Pipeline Company (KPC).
While most chairpersons only appear during annual general meetings and leave management to bask in the limelight, Mr Ngumi is the opposite.
“Having done what I did (reforms) and being turned into a larger-than-life figure by the media, other people on the board and management needed room to breathe and grow. I was becoming an overpowering presence. Many people wouldn’t even recognise the company had a managing director. I remember other chairmen enviously asking me how I got myself so much in the media. I didn’t. It’s you guys (media) who insisted,” he told Financial Standard in a previous interview.
Conflict of interest
On being appointed chairman of KPC, Mr Ngumi quit his lucrative job at Stanbic where he was director of investment, citing conflict of interest, with the bank having been the lead financier in a Sh35 billion loan that KPC had taken from a consortium of banks to build the new Mombasa-Nairobi pipeline, referred to as Line Five.
In past interviews, Mr Ngumi has said he took this as an opportunity “to again roll up his sleeves, this time for public services and play a bigger role in nation building.”
He reiterated this point after ascending to the helm of the Safaricom board.
“We can better ourselves and our circumstances, so let’s stop whining about past injustices, instead let’s focus on sorting out our problems and cease relying on foreigners, or on foreign aid, to do the job for us,” said Mr Ngumi in a profile that accompanied the announcement on his appointment.
He is no stranger to Safaricom. In 2001, he was the sole arranger and joint lead manager of the Sh4 billion Safaricom bond, which at the time was Kenya’s largest-ever corporate bond issue.
While KPC was what catapulted him from the private sector to the public sector, his term as chair of the pipeline company could be termed his baptism by fire.
He appeared to be the only one running the show at KPC at a time when the State corporation appeared to be perpetually in crisis.
In a recent interview with The Standard Group’s Spice FM, Mr Ngumi said he came across the ugly side of parastatals that he had only read or heard about.
“All the things that we read about, the challenges of heading a parastatal were evident... the cliques, capture by various business forces, fierce fights for tenders, the allegations of favouritism and tribalism,” he said.
“One had to take a decision, do you go and disappear into the void that chairs of parastatals disappear into or do I take an active interest and try to navigate as carefully as I can? I chose the (option of being active as KPC chairman) and by that stepped on many toes. I became a star on social media,” adds Mr Ngumi.
He was a frequent guest of the parliamentary committees both at the Senate and National Assembly, answering various queries on the management and governance of KPC.
Most of the sessions were heated and in many instances, Mr Ngumi was painted as overbearing to the point of being in charge of KPC’s day-to-day operations and usurping the role of management. This is despite his job description being more that of oversight.
It was during his tenure as chairman that the Directorate of Criminal Investigations (DCI) arrested senior managers, including the then chief executive Joe Sang and charged them with graft.
Mr Ngumi was also on numerous occasions accused of conflict of interest in the financing of the Mombasa-Nairobi pipeline. He came into office in June 2015, a month before the deal was concluded in July.
“I realised that there was a potential conflict of interest when I was appointed as chair of the board of KPC, and I recused myself from further negotiations. I also took a painful decision to resign from Stanbic,” he once told National Assembly’s energy committee.
In one of his exit interviews when his term at KPC was lapsing, Mr Ngumi said he hoped to have transformed KPC into a normal entity – “even a boring company” – devoid of the high octane drama and allegations of major corruption.
There has since been a lull at KPC, which could be the result of Ngumi’s transformative agenda or perhaps it is the quiet before the storm.
Last week, he said he was proud of having the firm delivering on its mandate of transporting fuel without fail.
During his tenure, he said, the country never experienced fuel shortage, which was previously a common occurrence and mostly blamed on hiccups around KPC’s operations.
He also noted how KPC has been able to take over operations at Kenya Petroleum Refineries Ltd (KPRL) and, in turn, “kept another parastatal alive.”
PC had initially planned to buy the refinery but this proved difficult due to KPRL’s legacy problems including debts to oil marketing companies as well as pending court cases.
KPC then leased KPRL’s facilities. It has since refurbished some of the facilities previously used in the storage and processing of crude oil and now stores refined products imported into the country.
KPRL – under KPC – played a critical role in the Early Oil Pilot Scheme that saw Kenya export its first barrels of crude produced in Turkana.
It would store the crude oil delivered by trucks from Lokichar Oil Fields for export.
KPC is currently in the process of constructing a bulk cooking gas facility at KPRL, a move that is expected to ease the importation of gas into the country and, in turn, lower consumer prices.
“What I am most proud of… (and which is the reason the government starts State-owned entities) was two-fold – that KPC was able to successfully provide commercial service and provide that service in a manner that ensures a return to the taxpayers. State-owned entities are meant to augment or increase resources available to government,” said Mr Ngumi.
“KPC gave the government dividends of Sh18.9 billion. It recently paid another Sh8 billion. This was after we got to grips with issues of procurement and all other things that created arteries and capillaries for cash to wander on the desert,” said Mr Ngumi.
In 2019, he was appointed to the board of Kenya Airways, in an attempt by the airline to tap his brilliance in implementing its turnaround plan.
He describes the downfall of KQ – which has reported losses for the last decade – as “death by thousands of blows.”
Mr Ngumi noted that the revival of the national carrier is in the best interest of the government.
“The government has guaranteed KQ’s debts. It is on the hook for hundreds of millions of dollars whether the airline keeps going or not. KQ is worth saving because it has proven in the past that it can be a profitable self-sustaining airline.”
He added that other than keeping the carrier afloat to avoid the loss of taxpayer’s money, KQ serves a strategic purpose as it is at the heart of other industries such as horticulture and tourism.
Mr Ngumi is, however, of the view that the airline is not yet out of the woods as it still consistently needs the State’s backing.
“Airlines are notoriously difficult businesses even at the best of times, and the most successful of airlines tend to be those which are State-owned or State-backed. America Airlines consistently goes in and out of bankruptcy,” he said.
“As we bring it out of its period of storm, I am confident that we have stopped the dive, have stabilised and are on our way back. We need to ask those fundamental questions – are Kenyans prepared to back KQ through thick and thin as Ethiopia do, whether through subsidising fuel, directing traffic to KQ or using KQ effectively as a tool of national policy.”
“It is also arguable that KQ has no business being on the stock market. The investment and the risks are not your retail investor stuff, maybe we should take it back.”