Philanthropy boosts university growth in Kenya

Wealthy Kenyans have adopted the global trend of endowing millions of shillings to social causes that do not get adequate funding from the government.

Equity Bank’s chief executive James Mwangi last weekend gave a personal contribution of Sh100 million for the construction of an innovation centre at Meru University where he was appointed the chancellor in March.

“My hope is that this donation will help evolve and develop a model university for us and possibly create a centre of excellence that will be the source of our next generation of leaders in innovation, scientific breakthroughs and developing homemade solutions,” Mr Mwangi said.

Outside Kenya, Mr Mwangi is the biggest individual sponsor to the African Leadership Academy in South Africa, where he sits in the Global Advisory Council, with total donations of Sh30 million ($350,000).

In Kenya, he joins billionaires Manu Chandaria and Naushad Merali who have given up significant portions of their personal wealth to social causes, mostly in the education and health sectors.

“When you self-actualise, you want to achieve significance; you want to impact and I think that is what they are seeking,” said Boniface Ngahu, marketing and research director at Strategic Business Options on the motivation behind the philanthropy.

Foundation

Last year, Mr Chandaria and Mr Merali made it to the Forbes Top 40 list of most generous philanthropists in Africa.

“It was difficult to convince the family in the beginning but finally the family agreed to establish the Chandaria Foundation,” Mr Chandaria said in an interview with the Business Daily.

In December, the Foundation donated Sh100 million to Gertrude’s Children’s Hospital, aimed at improving the intensive care and diagnostic services at the hospital.

The foundation started in 1956 has also funded accident and emergency centres at Nairobi Hospital and Pandya Hospital in Mombasa; a business incubation hub at the United States International University and another at Kenyatta University which will be launched on Tuesday by Deputy President William Ruto.

In March last year, Naushad Merali, the chairman of Sameer Group, donated Sh100 million to facilitate the construction of a full-fledged day care medical centre at Kenyatta National Hospital (KNH).

The man who featured on Forbes Top 40 richest men in Africa last year made the donation through his Zarina & Naushad Merali Foundation. He is also associated with tyre-maker Sameer Africa, Equatorial Commercial Bank, and agricultural firm Sasini Tea.

Mr Chandaria said the motivation behind his giving was to set an example for others.

“It is not that I want Chandaria name everywhere, but someone else who is capable will see it and it will challenge them to also contribute,” said Mr Chandaria.

He declined to disclose the total amount spent by the foundation in philanthropy, but noted that the donations were not pegged to a percentage of their wealth.

The government has been asked to offer incentives, largely by way of tax concessions, to people who contribute to philanthropic work so as to deepen the culture in the country.

“There’s not much recognition by the government for giving. Taxes for individuals who give publicly should be reduced. Essentially, it’s doing what the government should be doing,” said Mr Mwangi.

Funds spent by companies in corporate social responsibility are also not tax-deductible expenses.

Mr Mwangi owns 4.88 per cent of Equity Bank, which has a market capitalisation of Sh6 billion. He also holds a stake in insurance firm, Britam.

Mr Chandaria is chairman and CEO of the multi-billion dollar privately held transcontinental Comcraft Group. The conglomerate is a leader in the steel, plastics and aluminum markets in Africa. The group, founded by Mr Chandaria’s father more than 80 years ago, employs some 40,000 workers.

Mr Ngahu said philanthropy had an impact on businesses run by the givers by leveraging their brands.

“Personal brand is more prominent than in the past so what the executive does is seen in the context of the company; the link is direct,” said Mr Ngahu.

Chris Kirubi, who was listed among the 40 wealthiest Africans last year, said it was difficult for Africans to be involved in philanthropy because of their financial status and social burdens.

“Majority of Africans are supporters of their extended families as they look up to the poor working guy to support them,” he said, adding that he was involved mainly in education of poor students. His recent acts of charity include electricity connection to a hospital in Kiambu at Sh300,000.

Kenyan billionaires are following the path of Warren Buffett and Bill Gates who have been challenging the super-rich to commit at least half of their wealth to charity in an initiative dubbed Giving Pledge.

About 38 billionaires —  representing nearly 10 per cent of the Forbes 400 richest Americans – have signed on the Giving Pledge, promising to give at least half of their wealth to charity. The two drivers of the initiative are worth a combined $120 billion with Gates, holding a larger share of $67 billion.

Last year Buffett was the biggest giver to charity, dishing out $3 billion. In 2010, Facebook founder Mark Zuckerberg pledged $100 million to schools in Newark, New Jersey, during an appearance on Oprah Winfrey’s television chat show.

Charitable donations from Americans total 1.7 per cent of US GDP each year while the figure in Britain is only 0.7 per cent of UK’s gross domestic product.