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The many agendas of Kenyan business

May 29, 2005 Management, Sunday Nation

The news that East African Breweries Limited became East Africa’s first billion-dollar company is indeed noteworthy. It is a milestone that reflects the company’s relentless march to levels of market capitalisation, turnover and profit not seen before in this part of the world. EABL is a path-breaker: it is a great engine in the economy, supporting farmers, suppliers, employees, customers and shareholders, not to mention the exchequer.

But we must also mark this milestone by asking ourselves: why have we not produced more EABLs? We certainly have world-class outfits in our midst; but they are needles in the corporate haystack. There are a few corporations who produce goods and services of stellar quality, are good to their employees, run a very efficient operation, and generate consistent value for their shareholders. But there are not many. Why so, when we are an unabashedly capitalist nation steeped in entrepreneurial spirit?

Many business leaders will rush forward at this point to shout about the costs of doing business, the state of the infrastructure, corruption in high places, violence in low places and the general uselessness of our politicians. Um, yes. Maybe. But that does not explain the whole picture. I think much of the blame must fall at the feet of business leaders, managers and executives. Many of those who lead us in the business world are simply too distracted to do a good job.

The outspoken economist Milton Friedman proclaimed 35 years ago: “The business of business is business”. What he meant is this: that success in business demands a single-minded and relentless focus on the task of turning a profit. Businesses exist to generate wealth for their owners; that must be their primary focus. If they do this well, the business will perform well. It will reward employees who generate value; it will create robust demand for inputs; it will supply products or services needed in the economy; and it will do all these things, in its own interest, on a sustainable, long-term basis. When businesses perform, the economy performs.

Very good. But does this happen in Kenya? I fear not. Business is used by many executives as a platform from which to do other things. There are many agendas in Kenyan business; the agenda of superior business performance is only one of them. We see this lack of focus all around us in the business world: in state corporations, in family-owned firms; even in publicly listed companies.

So what are these additional agendas that so burden Kenyan business? You know them well. Let’s begin with the Politics Agenda. Many businesses are, to their great cost, inextricably entwined with politics. Their boards are stacked with political operators; their bosses are associated with particular parties; the MD might be eyeing a parliamentary seat himself. So what happens? Funds and resources get diverted, particularly at campaign time. Large donations must be made; the company’s vehicles, computers, telephones and photocopiers must be diverted for campaign use. Thriving corporations have been brought down this way.

The second distraction is the Tribal Agenda. A Kenyan executive is not just a business professional; he or she is also a high-profile representative of a tribe. The tribe, however, does not just view the executive’s career from afar with pride and benevolence. Oh, no. It’s payback time! A large number of village kinsmen and idlers will bedevil this executive, seeking favours, employment, donations, introductions etc. Long queues will form in the company’s reception room. The executive’s prestige in the clan is linked to the number of such favours given to tribespeople, so the pressure is intense. In return, the tribe will “protect” the executive when “political forces” try to “finish” him. Nothing to do with business: except for the cost in lost performance.

A third one: the Family Agenda. Many Kenyan businesses originate as family concerns. Nothing wrong with that; it’s the nature of business all over the world. The problem comes when people fail to distinguish between the family’s interests and those of the business. It may well be to the family’s benefit that all its members are kept gainfully employed; the business, however, must select its employees on merit and for their ability to deliver bottom-line performance. So when dissolute uncles and unemployable cousins are given senior positions, there is only going to be one outcome for the business: bankruptcy.

Here’s another: the Perks Agenda. Many business leaders give you the impression that they are not employed to deliver results: merely to enjoy the trappings of office. Their typical activities, therefore, consist of the following: attendance at every high-level seminar in town; endless cocktail parties; rounds on the golf course “networking” with well-connected peers; conferences on unlikely subjects in far-flung lands which allow the spouse to shop and the air-miles to accumulate nicely. All these things have only the vaguest connection to the business’s performance; yet many leaders do little else. The tedious work of running the company to turn a profit is delegated to lesser mortals. The job of the leader is to hobnob with the high and mighty.

And finally, and most perilously, there is the Fraud Agenda. Many Kenyan executives are not in business for business at all; they are there to seek opportunities to fleece shareholders and achieve overnight personal enrichment. Offshore procurement contracts, dubious tender awards, financial fiddles and the like offer ample opportunity for this. Sadly, this is not an isolated tendency. How many household business names have we seen brought down to their knees in recent years, crippled by executive greed and malpractice? How many “abuse of office” cases keep emerging in the public sector?

The one external agenda that business leaders in a poor country could legitimately preoccupy themselves with is that of social responsibility and capacity building. That one is necessary in the face of government abdication; it is even in the long-term interests of shareholders, as this column has argued in recent weeks. Yet that is the one agenda that is most neglected, least interesting for the very busy (see above) business leader.

So is it a surprise that we struggle to produce world-beating companies? We’re not really running businesses; we’re running tribes, families, political campaigns, personal empires and feeding troughs. That is not the stuff of which top corporations are made. Our leading firms distinguish themselves by focusing relentlessly on operations, markets, and customers. They are immersed in the task of being better then their competitors. They are wholly absorbed in the process of delivering measurable improvement in key indicators. They don’t have the time or the inclination to mess about with ulterior and extraneous agendas.

We have to get serious about business performance. Great economies are built through a very simple mechanism: putting the right people in the right place to do the right job at the right time. We are too tolerant – as shareholders, directors, employees, citizens and observers – of superfluous agendas. Ethnicity, kinship, politics and merrymaking must be taken off the business plan once and for all.

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