Matiba: How State can protect enterprise

The late Kenneth Matiba. FILE PHOTO | NMG
The late Kenneth Matiba. FILE PHOTO | NMG 

Every generation produces its own captains of industry and super star CEOs.

Mr Kenneth Matiba who passed recently will go down in history as one of most charismatic and inspirational corporate figures of his generation.

If you asked for a description of the qualities of a good CEO in Kenya today, you are likely to hear attributes such deep domain knowledge of the industry, strategic thinking, talent and experience.

Indeed, your typical CEO today is a man who has worked his way up the corporate ladder but no better known to the public than the local MCA.

In his heyday as CEO of East African Breweries Ltd #ticker:EABL, at that time the most valuable business in country on the Nairobi Stock Exchange, Mr Matiba enjoyed the image of a charismatic corporate figure and leader.

Like most charismatic leaders, all manner of myths were spun to describe his perceived personal wealth and to project larger than life public image.

There was a time the bar wisdom within Nairobi’s tippling community was that the man’s personal stake and shareholding in EABL was so huge and that he earned one shilling from every bottle of beer on the clutches of an imbiber at any time and place.

Unfortunately, you don’t see corporate leaders of Mr Matiba’s stature and influence in this day and age.

Mr Matiba belongs to the age of the self-made billionaires. In his generation, the majority of your typical businessman were risk-averse types who, blinded by big salaries and perks offered by multinationals, held on to executive jobs until retirement.

He quit EABL early enough to go into big business where he rose to own a big empire controlling prized assets in several sectors, including hotels and tourism, horticulture, and schools. Just before he went into political detention, Mr Matiba had agreed to sell shares of the Alliance Group Ltd through a public listing.

As a matter of fact, the group was just about to appoint a transaction adviser to take the company to the market when the man fell into political trouble. In truth, Mr Matiba’s business empire did not collapse because he was a bad manager.

The biggest contributory factor to the fall in his fortunes was the hostile political regime he found himself in after he ran for presidential elections in 1992.

Worse, problems for Mr Matiba’s empire were happening in a context where systems created by the post-Independence government to support entry of locals into big business had more or less collapsed having been mismanaged and looted by the regime of former President Daniel arap Moi.

I refer to institutions such ICDC, KTDC, AFC, IDB that had been created by the immediate post-Independence government to provide long-term money and to local entrepreneurs and businesses.

In those days, even the defunct Housing Finance Company of Kenya used to get support from the government in the form of long- term notes that made it possible for the company to extend long term money to local entrepreneurs.

By the time creditors and other vultures were pouncing on Mr Matiba’s empire these support systems had collapsed. How can you survive when you have to pay interest on interest and especially under a high interest regime?

In my view, a business like Hillcrest Schools only left Mr Matiba’s hands because we as a country are yet to address the question of how to give the right type of money to local businesses.

It is a pertinent issue because many of our local entrepreneurs are investing heavily in private schools, universities and hospitals. We have to find ways of channelling long-term money in investment in schools, universities and hospitals.

We forget that when it comes to running a school business, you have to repay the money you borrowed for putting up classrooms and buildings and at the same time repay overdrafts you have borrowed for working capital.

Mr Matiba’s empire collapsed in the context of archaic bankruptcy laws that allow a creditor to raid your premises at the slightest whiff of cash flow problems.

With political will, Matiba’s businesses should have been salvaged.