Isn’t it time we forgot about the political bickering? Time we stopped worrying about how politicians spend their time when they go to the beach resorts on National assignments? Shouldn’t all the politicians be sent on an eternal compulsory leave pending no investigations? I am writing this because despite the noise that has become very familiar in the local media, despite the politician’s failure to perform as per the expectations, the economic prospects are only getting better. We are witnessing a period of growth like it never occurred before. At such a time when our politicians are busy yelling at each other or discussing matters that only derail the economy, all sectors of the economy are recording improved performance.
More than any time before, the business environment is getting better and will hit a new time high as more companies have acquired licenses headed for the bourse. Recently seven companies among them; Kengen, Equity Bank, Sadolin Paints, Sarova Group among others announced their plans to seek listing in the Nairobi Stock Exchange (NSE). Previously, there was not only the trouble of being listed but also getting a mark up no matter how small the hurdle. Today however, almost every company seems to have a success story worth telling
The story even gets more exciting for the banking industry. The hype in the banking industry crept in recently as most companies released their half-year financial statements and disclosures. Contrary to the industry’s expectations, most banks seem to be on their heyday. Hitting the billion mark in pre-tax profits is no longer a surprise as most companies are getting way past that. This would be unexpected especially in the current times that have been characterized by two aspects. One is the reduced rate on borrowing which is a direct reaction to increased competition by banks. Secondly, the government has made attempts to suppress the interest rates to a single digit, a goal that they are yet to achieve. Competition has only played a role in this, the government- only talk.
Among the banks to receive a special mention both locally and internationally this year are Kenya Commercial Bank, Standard Chartered Bank, Co-operative Bank and National Bank of Kenya.
For Kenya Commercial Bank, the story behind their success is what one would term as a dream come true having survived the largest losses ever made by a bank, then returning to profitability until recently when it just received an award from Euromoney magazine for being the best Bank in Kenya. These efforts were all steered by Gareth George, and the current CEO, Terry Davidson (‘the optimist’).
Isn’t it only after government relinquished its National Bank’s shareholding that the company is now realizing its potential and developing a turn around approach? As clearly seen, they will soon be out of the government’s black book of the bad and doubtful debts portfolio. The development has been a clear indication that even the most troubled banks are on their way to complete transformation.
Then follows a big success for a local bank- Co-operative Bank of Kenya. Its profits have grown by 108% from Kshs. 182million before tax in June 2004 to Kshs. 380million in June 2005. The managing director, Mr. Gideon Muriuki reckons that the profits are the highest recorded since the bank was founded in 1968. Surprisingly, the profits are more than what they made in the entire year 2004. Anyone would agree with me that the political environment does not fully correlate to this.
There’s seemingly a lot of success to talk about. Success that is not at all reflected in any of governments’ efforts. Even as skeptics warn that a venture like Pesapoint is not viable considering the market size, I reserve my comments. However, I still hold to it that their concept is viable and they will sooner or later reach their targets.
Other industries have also recorded a marked improvement. Before the entry of Evans Kidero as Mumias Sugar Company’s CEO, Mumias was making losses amounting to over Kshs. 200 million. This however changed in 2004 when the company posted Kshs. 790million in the year to June 2004. In addition, the company anticipated spending Kshs.3.9 billion in a modernization program. This seems to have won a lot of confidence for its investors as reflected in the share price. The company’s shares were trading at an average price of Kshs.7.00 and prospects were not much. Many investors were selling off their investments with an anticipated downfall due to poor performance that characterized the company’s share. This according to me was not a case of bad speculation but the politics that had cropped the sugar industry almost crippling it. That was then. Almost two years later, the company’s share price has climbed by 75% to 32.50. The government gets no commendation for this but instead blame for failing to relinquish their influence when it was due.
Kenya airways, the biggest talk in the stock market is a clear indication of what a change driven manager can do. The company has already achieved 70% of projections made for their turnover strategy dubbed K-TAP, which aimed at enhancing the revenue generation capability and rationalizing costs structures through the reduction of expenses.
To the global economies, change entails embracing concepts that work, then nurturing them through the years. It entails picking the right strategies that help it achieve its goals. For the developing nations however, part of the process, and perhaps the most demanding is letting go of the government influence, a task that at times can be impossible. Even worse, the modern day politics can do more than damage- lead to absolute closure.
The problem therefore is not within the organizations but outside. We already know what our visionary CEO’s have done that the politicians have failed to do. If we can do one thing and be sure of some benefit, then things can only get better- send the politicians home.