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The good and the ugly about joint ventures

By John Kariuki | March 25th 2015

Nakuru, Kenya: Harold Irungu, a farmer in Nakuru County, entered into a partnership with a friend to grow tomatoes on a large scale. It was a good year, with perfect conditions for growing the crop. From an initial capital of Sh20,000 each, the two partners had accumulated Sh2 million by the fourth lorry load of the crop to the market.

Irungu had taken the fifth lorry load of tomatoes to Nairobi’s Wakulima Market when his partner cited a sudden commitment elsewhere. Irungu did not sense anything unusual. Even when he banked the proceeds from this sale, nothing seemed amiss. He remembers calling his partner, who lived a short distance from his home, to alert him that he was on his way back so the two of them could do the calculations of the entire venture as the current crop was coming to its end.

“It was getting dark and the last thing I remember seeing was hooded men coming for me,” he says. He would spend one year in hospital and is today lucky to be alive.

“I have since learnt that the two hoodlums thought they had killed me but some good Samaritans spotted my apparently lifeless body moments later and saved me,” he says.

While Irungu was in hospital, his partner withdrew all the money they had earned. Their joint account could be operated by either of them as they were both signatories. Among the many unresolved questions Irungu contends with daily is whether his partner had a hand in his mugging. There was no documentation whatsoever of their partnership and he cannot sue, institute private investigations or publish a caveat about his friend.

Some business partners have not been as lucky as Irungu if the many unresolved and business related murders are anything to go by. Stories abound of people who went to distant places to do business, came back extremely rich and retired in villas and bungalows that are the envy of their neighbourhoods.

But in often shocking developments, killers who appear to have been hired catch up with them with only one agenda - to silence them forever. No valuables are ever stolen, lending credence to the theory that these could be business partnerships gone sour.

According to Simon Kagiri, a business development officer, people should know fully who they are signing partnerships with.

“Just as in marriage, absolute trust rules in business partnerships,” he says. He adds that a business partnership can be a recipe for relationship disaster or a positive experience depending on who forms it and why.

“Even with a law stipulating how formal partnerships are formed, it is essential for any joint venture to be founded on trust because in African customs, friendship precedes the contract law,” he says.

“A common mistake some people make in partnerships is to start out without a shared vision,” says Kagiri, who advises new and old partners to discuss their business vision as it will give their partnership a purpose.

Writing down a vision for the partnership helps it move along and serves as a reference for all that goes on within the partnership, he adds.

Caleb Oduor, a banker, says as far as informal partnerships go, the worst are those crafted by people in the diaspora with their relatives at home.

“Many diaspora returnees routinely enter partnerships with their kin but come to regret the lack of safeguards when the find out they have been defrauded,” says Oduor.

In the course of his work, Oduor has seen many people in the diaspora channel enormous amounts of money into dead joint ventures as their relatives squander everything.

He advises such people to hire managers or advocates who can safeguard their interests while they are away.

If the aim is to get more capital or win Government contracts, then a limited company partnership is advisable. Such an entity can also be granted bank loans and its liabilities do not include the individual partners’ property.

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