McKinsey bags lucrative Kenya advisory deals

Beer maker EABL has contracted global consultancy McKinsey to advise on restructuring of its distribution model, adding to a growing list of blue-chip Kenyan companies seeking services of the firm.

McKinsey is advising EABL on how to increase efficiency of the movement of its products from its Ruaraka factory to distributors and later on to thousands of retailers across the country.

“We have engaged McKinsey to help us with the route-to-market project in order to implement the best model for the Kenyan market,” said Charles Ireland, the EABL managing director.

National Bank, Kenya Airways, KCB and the Kenya Revenue Authority (KRA) among several other local companies have also hired the New York-based management consulting firm in recent months. McKinsey has offices in Nairobi at the Delta Corner Towers in Westlands.

EABL’s restructuring has seen the appointment of former managing director of its Ugandan subsidiary to head the distribution unit in a bid to rev up sales whose growth slowed to four per cent in the half-year to December.

“We believe that getting the route to market right will give us a competitive edge, improve our performance and growth rate. McKinsey is also going to do some work for us in Uganda,” added Mr Ireland.

McKinsey’s main areas of consultancy expertise include defence and security, economic development, operations, strategy and organisation.

The company, which Fortune magazine lists as one of the world’s top consultancy firms, also advises on public finance, health care as well as information technology.

The National Bank has hired McKinsey to advise on restructuring of its executive suite in the mid-tier bank’s effort to revamp its business. This led to the scrapping of two positions of deputy CEO and implementation of a freeze on recruitment.

In place of deputy CEO positions, NBK now has divisional directors including finance, corporate and retail banking, who report to chief executive officer Munir Ahmed.

READ: National Bank scraps deputy CEO post, hires corporate head

The bank’s restructuring plan mirrors that of KCB Group which in 2010 did away with the deputy CEO’s position.

KCB also hired McKinsey to advise on its restructuring, and resulted in the scrapping of about 15 director positions as the lender sought to cut reporting layers and increase efficiency.

The bank shed senior and mid-tier jobs at a cost of Sh1.2 billion in a three-year restructuring plan aimed at cutting its wage bill.

The lucrative consultancy contracts have seen McKinsey open its sixth African office in Nairobi. McKinsey also has offices in Egypt, Morocco, South Africa, Nigeria and Angola.

Complex matter

The Kenyan office signifies the value that McKinsey has placed on Kenya, as a country with a huge economic potential and the East African business hub.

McKinsey is also in negotiations for a possible consultancy deal with financial services provider Britam on its multi-billion shilling buyout of Real Insurance.
If it gets the contract, one of its duties will be to advise on the merging of the two companies and how this will affect employees.

“Integrating two stand-alone businesses is a complex matter and that is why we are holding discussions with consultants like McKinsey and Accenture to advise us,” said Benson Wairegi, Britam’s chief executive in an earlier interview.

“Kenya is the only country where the two businesses have interests and integration is likely to be more complex. For instance, you cannot have two departments of human resource (employees) in Kenya doing the same thing.”