Grappling with changing fortunes: The case of the Matiba family business

One of the Hillcrest schools that were recently sold  by the Kenneth Matiba family. File
One of the Hillcrest schools that were recently sold by the Kenneth Matiba family. File 

If there was ever a testament to the futility of mixing family business with politics, it must be the recent sale of Hillcrest School by the Matiba family last month.

Recently, the Matiba family lost control of one of their flagship businesses, the Hillcrest School to a group of private investors. This school was established in 1974 with the lofty ambition of being Africa’s Eton. I know from the personal testimony of a friend who taught in the school that even though it was a high cost school, it was a great place to work and offers great value to the students and parents, truly living out it’s stated values. Their effort was well rewarded; it was a cash cow generating more than Sh600m turnover. The new owners must be proud of their catch.

The sale of Hillcrest followed the loss of a block of shares in Carbacid in 2009, all in a bid to return the family business to solvency. The future of their other investments hangs in the balance with all the hotels in the Alliance Group of Hotels currently closed with the exception of Naro Moru Lodge.

One must admire Kenneth Matiba for his industry and excellent use of entrepreneurial opportunities when he was younger. He was a prodigy of sorts; permanent secretary at 31 years of age, chairman of East African Breweries and one of Africa’s youngest millionaires at the age of 46.

Matiba’s empire grew quickly so long as he was in political good books. When the political fall-out happened in 1988, as it is inevitably wont to do in any country, the slow but steady decline of the family business began. The fate of his business was sealed when Matiba went into multiparty activism in 1990. Poor health arising from his detention has proved a further setback.

Lessons to learn

This saga offers many valuable lessons for Leaders of Family business, especially those who harbour ambitions for political office.

The first lesson is the importance of separating politics from the family business by establishing clear boundaries about what the business can and cannot do to further political interests. The best practitioner of this cardinal rule must be one Oginga Odinga and the case of his company East Africa Spectre. Oginga invented indigenous Kenyan opposition, incurring the wrath of Presidents Kenyatta and later Moi with his incessant political demands.

There was absolutely no love lost between him and Kenya’s top leadership. However, in all this acrimony, East Africa Spectre continued to thrive even though the Odingas remain primary shareholders. Even today, it is evident that the business is relatively free of
family interference especially as far as campaign financing is concerned.

The second lesson is the importance of appointing competent , focused leaders and letting go of day to day operations. In earlier days, Matiba engaged passionate experts to help him run his businesses. The businesses were profitable and competed with the best in the industry. Which begs the question; where is Raymond Matiba in all this?

Why was it necessary for Matiba to personally take charge of family business affairs even though he was obviously in poor health? The family must go back to what worked for them in the past, put aside personal differences where necessary and quickly put in place an enterprise recovery plan.

The third and final lesson is the importance of accepting reality as it is. Matiba’s empire will never be the same again. Longing for the good old days or planning for a spectacular come-back is not productive. The clearer that becomes to the family, the quicker they will be to recoup their losses and re-strategise their reentry into the same or other industries.

The family must use the breathing space accorded by this latest sale to consolidate their interests, keep what they can sustain and quickly sell what is beyond salvage regardless of their sentimental attachment to any particular assets. They should not wait until they are under duress from creditors or government agencies to dispose of more assets.

Lessons in this should be taken a dairy farmer I know who, upon realising that he will fall short of feed resources for his large herd will immediately hold an auction to sell off many of his cows. Even though he is left with a smaller number, it is a manageable herd that he can sustain through a lean season.

A triumphant example is S.K. Macharia whose Madhupaper Ltd overcame political setbacks instigated in 1981 to become a veritable media powerhouse today.