Changing face of corporate Kenya as firms seek renewal

Saturday December 01 2012

Executives in and out of boards and top management as firms seek fresh brains to drive growth in uncertain year. TEA Graphics/Photos/FILE

Kenya’s corporate sector has in recent months seen brisk revolving door activity with executives moving in and out of company boards and top tier management positions, as firms seek fresh brains and strategies to drive growth in an uncertain year.

Two chief executives of listed banks — Barclays and KCB — last week had their successors at the corner office named, while the managing director at power generating firm KenGen, Eddy Njoroge, resigned.

KCB appointed Joshua Oigara to replace Martin Oduor-Otieno, whose tenure ends in April, while Barclays Bank picked Jeremy Awori as the new CEO for its Kenyan operations, replacing Adan Mohamed, who takes up a new role in the lender’s sub-Saharan business.

Other changes in the second half of the year were at Mumias Sugar and regional beer maker EABL, where Peter Kebati and Devlin Hainsworth were appointed CEOs. At National Bank, Munir Ahmed replaced Reuben Marambii on August 1.

READ: Two Kenyan firms, CMA brace for change of guard next week

At Kenya Airways, CEO Titus Naikuni’s contract will end sometime mid next year, possibly ushering in a new boss at the national carrier.


While most of the changes have been linked to expiry of contract, retirement and resignations, they are transforming the face of corporate Kenya, phasing out a crop of executives who have over the past few years been closely associated with the blue-chips.

The changes come at a time when dark clouds, brought on by high interest rates, political risk around the March 2013 General Election and uncertainty in the global economy, hang over Kenya’s economy, prompting companies to seek new strategies and talent to grow their earnings and ring-fence their profitability.

“What we are seeing is organisations searching for renewal. Firms want fresh blood. Some CEOs are reaching the point where they feel they have been in their organisations for long enough,” said a management expert working in a audit firm who did not wish to be named.

“In most cases also, it’s a matter of talent hunting as firms look for a cutting edge by changing their human capital,” he said.

Analysts said the chopping and changing is set to intensify as companies look for the right people and ideas to help post growth after two years of sluggish performance in the country’s soft economy.

A report released Friday by IHS Global Insight, an international market intelligence firm, says the Kenyan economy is likely to remain depressed in coming months due to fears over the outcome of the general election and high lending rates.

“While we expect the central bank to continue easing interest rates, the extended tightening of credit conditions has undoubtedly damaged the prospects for private consumption, and by extension GDP growth over 2012 as a whole” said IHS Global.

Re-engineering executives

The changes are also seen as a signal of the arrival of a new order on Kenya’s management scene.

“This is the beginning of a new order, where executives will no longer keep jobs for ages until retirement” said David Muturi, the executive director at the Kenya Institute of Management.

“Managers are going into top jobs with specific objectives to achieve both at personal and organisational level. Many are moving on after this and want to leave while they are doing well,” he said.

Several other changes in boardrooms have been announced over the past few weeks, top among them the resignation of chairman Richard Kemoli from the board of listed cement maker Bamburi, ending a decade-long boardroom stay.

Marshalls East Africa announced a board shake-up late last month, replacing four directors, while Kenya Reinsurance Corporation mid November appointed three directors following the resignation of two board members.

And influential businessman Jeremiah Kiereini last month left the board of Unga Ltd, months after quitting EABL and CFC Stanbic, in response to a directive by the Capital Markets Authority barring him and five others from holding directorships in companies listed on the NSE.

Firms have also been reengineering their C-level executives — top officers (C for chief) such as chief financial officer (CFO), chief operating officer (COO), and chief information officer (CIO) — titles mostly borrowed from American corporate culture.

In October, Equity Bank head-hunted Julius Kipng’etich from the Kenya Wildlife Service and named him chief operating officer.

The bank also appointed Samson Meshack Oduor as the group finance director after poaching him from Ecobank Transnational, where he served as the chief financial officer.

On November 20, KQ appointed Chris Diaz, formerly marketing director at edible oil manufacturer Bidco Oil, to a new position of marketing director, signalling the national carrier’s resolve to go for a public relations blitz after a disappointing year in which it reported a massive loss.

Appetite for regional growth

In September, East Africa Portland Cement Company changed the face of its executive team, appointing new heads of production and human resource departments as well as the production and maintenance managers in what amounted to the biggest shake-up of the firm’s executive suite in recent years.

Management experts said an ongoing search for new roadmaps to growth is forcing a change in corner offices, as companies overhaul executives and boardrooms seeking new ideas amid growing appetite for regional markets.

“Mohamed’s performance at Barclays Kenya fits the profile of the leadership we seek; to drive an ambitious pan-African foray that touches the entire financial services spectrum as the leading financial services group in the continent,” said Kennedy Bungane, Barclays Africa chief executive and head of Africa group strategy, commenting on Mr Mohamed’s departure from BBK.

A look at the new appointees, especially in KCB, Barclays and Mumias, reveals a growing bias for executives with regional experience and finance backgrounds. Mr Kebati and Mr Oigara have in the past served as finance directors.

The work is cut for the incoming top honchos in Barclays and KCB as they seek to ring-fence the banks’ growth and regional growth momentum.

For KCB, Mr Oigara will have to find creative ways of bringing down the bank’s cost to income ratio, even as the institution looks to roll out more banking agents, as well as introduce new mobile banking products and enter new markets in Southern Africa.


In a June research note, analysts at Kestrel Capital estimated KCB’s cost to income ratio over the past three year as averaging 61.6 per cent, which is above the industry average of 53.6 per cent for the same period.

While KCB reported a 45 per cent growth in net earnings for the six months ended September, to Ksh9.3 billion ($109 million), Barclays reported a two per cent jump in net earnings to Ksh6.2 billion ($75.2 million) in the same period.

Barclays’s incoming boss will face a completely different challenge.

Some analysts hold that Barclays Kenya has not shone during Mr Mohamed’s tenure and has instead lost the crown of being Kenya’s most profitable bank under his watch.

The size of its loan book has been fluctuating at a time when industry credit to the private sector has been growing in double digits, sliding from Ksh108 billion ($1.3 billion) in 2008 to the current Ksh99 billion ($1.2 billion).

Stability over growth

Market watchers have argued that the bank’s cautious approach to lending is partly to blame, arguing that the bank has chosen stability over growth in the wake of rising interest rates that have increased the risk of defaults among customers.

So Mr Awori will have to walk a tightrope between growing the loan book and keeping a tight lid on non-performing loans.

For Kenya Airways, the expiry of Mr Naikuni’s contract will be a defining moment as the firm fights falling profits and growing rivalry in the African airspace.

For one, KQ will have to find ways of repairing the mistrust between management and the employees’ union, following the company’s recent retrenchment of some 570 employees, a dispute that ended up in court. KQ is also desperate to cut costs.

KQ also needs to prop up its share at the stock market. The counter is currently the worst performing since January, trading at an average price of Ksh12.10 ($14.1 cents).

Some shareholders bought into the counter when it was trading at a price of Ksh120 ($1.41) a few years back.

Earlier last month, the airline issued a profit warning for the full year ending March 2013 as it reported a net loss of Ksh4.8 billion ($56.4 million) in the six months to September on the back of surging costs and lower revenue.

For EABL, Mr Hainsworth, three months after his appointment, faces the testing task of growing beer consumption in Kenya and spirit consumption in Uganda and Tanzania.

Another key concern will be to make sure the cash EABL has pumped into various investments in the region is earning a decent return, and fight off growing competition.

Its local rival Keroche, a domestic Kenyan brewer, plans to spend Ksh2 billion ($29.27 million) to put up a beer plant, with the company targeting a 20 per cent market share, up from its current estimated three per cent.

SABMiller and Kenya Wine Agencies Ltd (Kwal) have also been expanding, chipping away at EABL’s dominance in the low volume high margin spirits market.

As KenGen begins the search for a new CEO next month, interested candidates have reasons to prepare for one major task.

The chief executive has to ensure that the firm raises enough money to support KenGen’s plans to double Kenya’s installed of electricity capacity of 1,500MW over the next five years.

For example, the company estimates it needs to secure $12 billion in the next four years, to help it add an additional 585MW from geothermal sources.

It’s easy to see why. It costs $0.18 (Ksh15.30) per kWh to produce electricity using medium speed diesel and about $0.07 (Ksh5.95) per unit from geothermal; so, though expensive to install, geothermal plants are cheaper in the long-term.

Reporting by Mwaura Kimani and Peterson Thiong’o