How Kenya Power raised Nyayo Car firm to profit after 10 years

A bumper deal with Kenya Power and a pipeline of business from firms such as Kenya Airways and Tata Chemicals, have been key in the turnaround of NMC to hit a Sh960,280 profit in the year to June 2024— the first time in more than 10 years.

The rare profit could upend State plans to dissolve the firm, threatening to end the 41-year old company that is best known for the first made in Kenya vehicle—the Nyayo Pioneer car.

“The deal with Kenya Power is one of the biggest we have ever gotten as NMC. I expect it will help drive our efforts of reviving NMC at a time when we posted a profit for the first time in many years,” said George Makateto, the acting managing director of NMC.

From what was initially meant to exclusively manufacture vehicles, NMC has over the years diversified to roll-out a product line that targets industries and households.

NMC is churning out bevel gears for Kenya Airways, brake blocks, foot valves, saddles and check blocks for Kenya Railways and friction dampers for Tata Chemicals.

The Mavuno Water Pump, which comes in three variants of varying capacity and targets households, is manufactured by NMC at its factory along Workshop Road in the capital.

NMC has also started undertaking tests on gear boxes for wind turbines owned by KenGen, on a pilot basis. KenGen currently ships gear boxes from its Ngong Wind Farm for testing abroad. NMC is now on the cusp of taking this deal in what will further add to its revenues.

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“They are bringing them (gear boxes) for tests to confirm if they are in optimal working conditions upon repairs by their (KenGen’s) engineers. If all goes well, we might land this deal to be the one’s undertaking the tests,” Mr Makateto says.

For a country keen to jumpstart its manufacturing sector and take it to the glory days of the past, NMC’s revival is a bright spark.

The contribution of manufacturing to Kenya’s Gross Domestic Product (GDP) has nearly halved in the last decade to seven percent last year, compared to 13 percent in 2004.

Key to NMC’s upturn in fortunes is a deal that has made the firm the sole recipient of tonnes of scrap metal, aluminum, copper and faulty transformers from Kenya Power.

Scrap metal and transformers that have been written off are now delivered to the factory, and used to churn out a range of products for Kenya Power like cross-arms, terminal straps and universal clamps.

Cross-arms are used to support and hold the electricity transmission and distribution lines in place, ensuring they are stable while terminal straps are used to connect wires to equipment like panels, making them critical components of Kenya Power’s network.

Universal clamps are used to attach cables and other equipment on poles, towers and other electrical infrastructure. Kenya Power says it will broaden the list of products it requires from NMC in the coming days.

Kenya Power has since August last year supplied NMC with 120 tonnes of scrap copper, in addition to hundreds of faulty transformers.

For a company that has been scrambling to source raw materials to manufacture a wide array of industrial parts, the deal with Kenya Power is set to significantly boost fortunes.

“We have given them products worth over Sh800 million and that brought a major change in Numerical Machinery, a company that was so silent with little activity, with all the capacity to do good, were unable to do it,” Kenya Power Chief Executive Officer Siror said on the deal with NMC.

“We have entered at a time when nobody had hopes for Numerical Machining Complex being able to do anything… Nobody could see the benefits coming from it.”

Mr Makateto is counting on such bumper deals in the coming months with Kenya Power to further lift NMC’s bottom line.

“This year, we might make better profit because there is additional engagement with used copper, aluminum and transformers, they (Kenya Power) are also giving us more work on transmission parts,” Mr Makateto said.

“We are hoping in the course of time we shall have more collaboration with them and also other players who will come on board.”

NMC has also spruced up its factories, reflecting the company’s change in fortunes as it slowly recovers from years of losses. The firm disclosed that it had spent Sh602 million to buy new machines and equipment and turn around the facilities, helping revamp its factories and foundry.

But besides the products destined to Kenya Power, NMC is also stepping up production of other industrial parts for factories, energy generation, aviation and domestic use.

NMC was in the 80s primed to be continental leader in the automobiles and industrial implements manufacturing, but this dream would soon be forgotten as the company suffered amid declining financial support from the government.

Its losses widened to Sh129.98 million in the financial year that ended June 2023, marking a spike of 119.6 percent from a loss of Sh59.1 million a year earlier.

NMC was originally a motor vehicle manufacturing company but the ambition of producing Nyayo Pioneer, did not get to see the light of day, thus NMC has had to diversify over the years in order to survive.

A visit to the company’s factory reveals the product diversification that NMC has taken over the years in a bid to arrest its freefall.

Sacks that are full of a raft of implements meant for Kenya Power, worm wheels for gearboxes and bull gears meant for Sony Sugar and Muhoroni Sugar and soil testing machines being produced for Kenyatta University are well arranged across the factory.

Majority of these products have been the result of product diversification after the company’s initial dream failed to take off.

A few metres from its foundry lies heaps of faulty and written-off transformers from Kenya Power, yet another priceless raw material for NMC. These transformers will be turned to billets and then be used to make a raft of implements for Kenya Power and other customers.

Started in 1984, NMC was primarily a motor vehicle manufacturing company and did a prototype of the car called Nyayo Pioneer but the challenges, mainly financial support from the National Treasury stopped the mass production of the 100 percent Kenyan-made car.

The four-seater car, which engineers at NMC say was to be the equivalent of what Peugeot is to France, is serviceable and is routinely driven inside the factory, especially when high profile figures visit the company.

NMC draws its establishment from the famous Kenyan Car Project where the late president Daniel Moi challenged the University of Nairobi to spearhead research and development of a Kenyan car in the late 1980s and 90s.

This challenge would later lead to the incorporation of NMC as Kenya sought to actualise its ambition of rolling out the Kenyan car, a dream that however flew into headwinds.

Mr Makateto says that NMC has not completely given up on the dream of a mass roll-out of the Nyayo Pioneer.

He however holds that taking Nyayo Pioneer from the NMC factory to Kenyan roads would require significant investment due to technological changes over the years and the global shift from fossil fuel-powered vehicles to ones running on electricity and other clean sources of energy.

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