Companies

How my brothers and I built Kenafric into one of top consumer goods makers in East Africa

BOSS

Kenafric senior executive director Mayur Shah. PHOTO | FILE

Kenafric Industries is one of the largest homegrown and privately owned consumer goods makers in East Africa with a market presence that rivals its multinational competitors.

With an annual turnover of Sh10 billion, the business owned by four Kenyan brothers, has grown to become a leading pan-African manufacturer of footwear, confectionery, food and stationery.

The Business Daily talked to Mayur Shah, a founding member of the Kenafric Group, for an inside look at the company and how it is handling the many changes in its operating environment. Here are the excerpts.

You have risen from working as a janitor in the United States to owning a successful homegrown consumer goods company that exports to more than 14 countries in Africa. How did you do it?

It all starts with getting the right education. My personal background is in sports — which gave me a chance to travel to many countries representing Kenya at a very young age. This gave me very crucial exposure and critical international market experience that ignited in me a burning desire to work for a better future for Kenafric Industries, its staff and my family that owns it. 

Because this is a family business, success can only be achieved through teamwork. While in the US pursuing university education, my own father’s business back in Kenya ran into trouble and I took up work as a janitor in the US to support myself because it was difficult to get a white-collar job.

In 1987 after graduating and working in the US for a year, I returned to Kenya, and we started this business as Kenafric Shoe Industries.

We then worked aggressively to gain market share, used innovation to respond to the market demands and applied relevant experience from the US.

How is the ownership shared among the four of you?

We own 25 per cent each.

What is the biggest challenge you ever faced in your business journey?

The challenges have been many — from losing everything in the failed 1982 coup when I was a student to entering a new business in the middle of immense political and economic drawbacks. 

Day one challenges included rising capital, learning the nuances of the industry and keeping “our heads above the water”. In the early days, you are a shareholder, a director and a worker — doing all in one.

Externally, there were huge currency fluctuations, political unrest, and a global oil crisis. There were also unfair competition in the market, dumping, bureaucracy and harassment, delays in VAT refunds, overnight changes in custom duties to name a few.

Was there anything you did or experience you had in America that helped nurture or support your entrepreneurial spirit?

During my stay in America, I had the privilege of meeting up close renowned entrepreneurs such as Ted Turner (founder of CNN), Frank, Dan Harney (founders of Pizza Hut), Lee Lacocca (of GM motors), Steve Jobs of Apple, and The Koch brothers.

The one thing I learned from them is the art of perseverance and importance of staying the cause. They taught me that no matter the challenges one always succeeds if they stay the cause. I have employed these principles to great benefit.

Kenafric Industries started towards the end of 1989 making PVC shoes and transitioned to producing sweets, chewing gum, chocolates and lollipops, and then exercise books. How did you choose and arrive on the product range?

From retail and wholesale experience in my father’s shop we got to know which consumer goods moved at very fast pace.  Early on, we had adopted three principles, namely visibility, accessibility and affordability of our goods and these have worked well for us.

What has been the impact of the Japanese principle of Kaizen in the productivity and growth of your business?

Kaizen is an excellent and outstanding practice that focuses on teamwork and continuous improvement, not on overnight results. There are a number of ways Kaizen has helped.

First, we have standardised our processes through Standard Operating Procedures — a move that has helped us maintain high quality products.

We have drastically reduced Muda and Muri — Japanese terms for wastages — non-value adding activity and strain respectively. We have been using the ‘just-in-time’ practice to reduce our inventory. These are just a few examples but the list is endless.

A third generation is now actively involved in running the business, yet as we all know many family-run businesses have faltered after transiting to a new generation. How are you equipping your sons and daughters to assume leadership of the business?

Yes, it is true that many family businesses have failed. They lack proper foundations to integrate younger members of the family into the business.

We have to give them freedom and opportunity to learn otherwise they will leave. In our case, most of our kids are generation X and slowly it will be generation Y/Z in a shortwhile.

They have different ways of making things work and we have to accept that. This, after all, is their business, we have built it for them so why not let them take the baton?

What are your future expansion plans and do you intend to go public through listing at the Nairobi Securities Exchange?

Definitely no plans to go public till 2025. We are looking at various categories to complement our existing lines through diversification and strengthening our brand extensions.

Every day we receive emails and solicitations with different ideas so there are a lot of things that go on in the background. Kenya and the African continent in general have a fast-growing consumer market and we need to be part of that story.

We shall also be looking at partnerships for foreign players who want a local presence to grow to the next level. We can’t be alone all the time.

In the near time, we are looking at Ethiopia, which has a huge affordable labour force. We are conducting feasibility studies there and we could possibly set up a plant by 2019.

What is the biggest obstacle facing big Kenyan businesses like yours and how can Kenya and her neighbours improve the business environment?

EAC is a mess frankly. It tends to waste too much time dealing with important issues and is constantly changing or introducing new duties. We need a level-playing field. Excise duty within EAC is a big discouragement. Such duties are impeding the idea of free trade.

Tax collection is improving so government needs to improve on VAT refunds and encourage homegrown businesses. 

Besides, the Kenyan government and its EAC partners have made doing business very bureaucratic and need to get out of the way to enable us build businesses and create jobs.

Other big obstacles are the non-tariff barriers and rising labour costs that are much higher in Kenya compared to neighbours such as Ethiopia.