Why State should step in when shareholders fight

Know the state of your flocks, and put your heart into caring for your herds, for riches don’t last forever, and the crown might not be passed to the next generation. Proverbs 27:23-24 NLT

Poor disaster management is not the preserve of African governments. When hurricane Katrina struck New Orleans in 2005, the Federal Emergency Management Authority (Fema) was caught flatfooted; their resources seemed to be randomly positioned.

Fema’s director Michael Brown was hapless while other government leaders fared no better; they appeared utterly disconnected from the growing crisis.

The day was saved by Wal-Mart (a family business) and Home Depot. It was they who responded with water, food and other essential items.
It was Wal-Mart that raised more than $20 million (Sh2 billion) to attend to people caught in the crisis.

Sadly, because government did not understand these corporations they saw their acts of service as interference. The first three trucks of aid from Wal-Mart were turned back by Fema who said that “they (the people affected by the hurricane) did not need them”.

When Fema’s failure became obvious, Wal-Mart stepped in with 1,500 trucks of free merchandise, 100,000 meals in addition to promising jobs to every one of their workers affected by the disaster.

According to the Washington Post, Wal-Mart “held up as a model for logistical efficiency and disaster planning”.

While this surprised government, it came naturally to Wal-Mart who only did what they did best; getting goods where they are needed when (or sooner) than they are needed and at the lowest possible cost.

This response was in line with Wal-Mart’s value system; they anticipated the need long before the events and took measures to prepare.

Kenya has a large number of family businesses that have excelled in their fields of operation; Brookside dominates local dairy processing, Pembe and Mombasa Maize Millers dominate cereals while Tuskys, Naivas and Nakumatt straddle the retail market.

Little has been done by government to harness these obvious competences to solve complex problems such as processing, marketing and addressing food shortages in various parts of the country.

Even less is done to address issues that threaten their stability, case in point being the recent family disputes that rocked Tuskys and Naivas.

This ought not to have been so; when family conflicts affect the livelihoods of large numbers of ordinary Kenyans they pose a serious risk to the economy and to social stability.

Immense portfolio

Consequently, government ought to take more than an academic interest in the well-being of family-owned businesses; they should carefully monitor the conditions of the leaders and the ventures themselves.

Governments at national and county levels must concern themselves with the state of family businesses in their jurisdictions. At stake is an immense real estate portfolio in addition to other business interests.

Responsible governments cannot allow nature to take its course where such a large amount of Kenya’s national resource is concerned.

Government should find a way to help family businesses in transition to properly structure their ventures, manage changeovers and live out national values in their local communities.

Future prosperity

Family businesses offer excellent cost-effective solutions to tough developmental problems.

Stable family businesses can provide the foundation upon which to build Kenya’s future prosperity and when they provide important tax revenue streams.

Poor transitions between generations of family business contribute negatively to the country’s development record. Poor succession management costs jobs, devaluation of property and clogs up the judicial process.

In extreme cases, the collapse of particular family businesses may pose a national security threat. Well-run family businesses can be the avenue through which government carries out its development agenda.

They reach into every corner of the country, are interested in their local communities and — since they resemble royalty — do not normally have more than a casual interest in political power. They are ideal partners for astute political animals.

Mutua is a Humphrey Fellow, leadership development consultant and author of the book “The African Prince” available on Amazon Kindle. E-mail: [email protected]