MARCH 2022 ISSUE

ALSO INSIDE Why Pension Funds Should Look at Forestry as an Asset Class

Forging Ahead: Braving The Post-pandemic World Resilience is flowing in every sector and industry

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CONTENTS March 2022 Issue

COVER STORY NBK Leans on Better Promises to Grow - Page 12

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SPECIAL REPORT Popularize ‘Options’ based on the ‘Reits’ in Kenya’s Financial Market - Page 18

SPECIAL REPORT Property Financing and Ownership in Kenya - Page 20

26 TECHNOLOGY Safer Internet Day: Internet Proliferation A Double-Edged Sword - Page 40

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March 2022 Management Magazine

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CONTENTS

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March 2022 Issue

BIG IDEA Using The 5 Whys To Solve Problems – Page 32

THE ENTREPRENEUR Why Potatoes are Quick Cash For Taita Farmers – Page 36

34 ENTERTAINMENT

38 March 2022 Management Magazine

BOOK REVIEW Stepping Up - Page 42

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  With the CPF Mwamba Trust Fund you can now rest easy knowing that you have a plan in place to help provide for the safe and accountable management of your assets and to direct their use in accordance with your wishes, goals and objectives.

Get in touch with us today for the best-in-class wealth management solutions CPF House 7th Floor, Haile Selassie Avenue P.O Box 28938 - 00200 Nairobi +254 111 114 000 +254 720 433 354 www.cpf.or.ke | [email protected]

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EDITOR’S NOTE

HEAD OF STRATEGIC BUSINESS UNITS: Brian Omengo ([email protected]) EDITOR: Mercy Gakii ([email protected]) DESIGN & PRODUCTION: Leonard Kibor ([email protected])

CONTRIBUTORS: Joseph G. Muthama, Nancy Marangu, Alexander Opicho, Goretti Kimani, Peter Wamalwa,Nickson Bukachi, Alex Owiti, Joseph Ngige, Brenda Inega. COVER PHOTO: COURTESY (Copyright Infringement not intended) PHOTOS: Shutterstock photos, Courtesy ADVERTISING SALES (KENYA): Elizabeth Mbinya ([email protected]), Justus Mwaniki ([email protected]) CIRCULATION ENQUIRIES [email protected] PUBLISHER THE KENYA INSTITUTE OF MANAGEMENT, Emperor, 1st Floor, Kenyatta Avenue, Opp. G.P.O. Box 43706 - 00100 Nairobi, Kenya. Tel: 020 244 5555 www.management-africa.co.ke

The views expressed in this Magazine are the authors’ and do not necessarily reflect the views of The Kenya Institute of Management. The Editor welcomes articles from readers on subjects of interest to the Institute. Reproduction of any articles or pictures without

Why We Must Get Used To The New Normal

W

hen we get on with our everyday lives, are able to get out of the house and successfully deliver on work tasks, we could be fooled to assume that it is the same for everyone. But life really drastically changed with the entry of the coronavirus pandemic into the world in 2020. Not only did it change whether we should show up to meet others physically, humans are now keener on how they associate, thanks to measures such as physical distance and wearing masks. Why do I reflect on the new normal now? I recently had an experience that informed me why we may never go back to pre-pandemic days. Travel, for instance, has to incorporate extra hours in procedures that have been introduced at ports of entry and departure. A traveller must produce their covid-19 test results to a port health official before being allowed to proceed. The test must have a negative result. The traveller is also required to show proof of having received the covid-19 vaccination, by producing a certificate before gaining entry back into the country. These procedures also include impromptu demands such as for one to take a test before being allowed to proceed on their travel. This could be in a situation where a traveller’s temperature is higher than normal, or if the particular transit port imposes mandatory testing. This again could mean extra costs on the part of a traveller. A worse scenario would be where the covid test turns positive while you are on transit. There are measures to quarantine the traveller among myriad other unexpected rules one may have

to contend with. Hence as the world hopes to get back to normalcy after two uncertain years, we cannot stop appreciating the heavy investment that is going into research to help humans get back to their normal lives. For instance, in the not distant future, there will be covid testing kits that do not need to come into contact with any part of your body. Such a breakthrough invention was recently launched in the island nation of Zanzibar, as a means to help the nation that is mainly dependent on tourism ensure that their guests have a seamless entry on their visits there. Such an invention, if introduced in Kenya, would help our public spaces such as malls and public transport service to keep everyone safe while carrying out their everyday tasks without undue interruptions. In this read, you will find out more about the covid-19 testing app. There are articles pursuing the real estate sector in the country and tons of advice on how you can get a piece of the pie. The property sector is among the industries that still thrived in the pandemic. Find out how you can invest wisely. Did you know, for example, that the global demand for peanuts is at more than 90 percent? What if you got your hands dirty and invested in groundnut farming? There are a few stories on agribusiness, and why younger people are showing an interest in farming. Read on and find out where the peanut butter that you use for your bread comes from. Happy reading! MERCY GAKII

permission is prohibited.

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KIM is an accredited HRMPEB study and examination centre offering CHRP in all its branches. Entry Requirements CHRP II

CHRP I • • •

KCSE minimum grade C+ with minimum grade of C in English and mathematics or Have equivalent qualifications subject to approval by the Examinations Board or Have another relevant qualifications recognized by the Examination Board

CHRP III • • • •

Hold CHRP 2 or Higher Diploma in Human Resources management from KNEC or its equivalent or Hold a Masters degree in Human Resource management from a recognized University or Hold an equivalent qualification recognized by the examinations board

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• • • •

Hold CHRP I or Hold Diploma in Human Resource management from recognized institution or Hold a Bachelors’ degree in Human Resource management from a recognized university or Hold equivalent qualifications recognized by the examinations board

Exemptions for KIM HRM Diploma holders: CHRP I

All subjects

CHRP II

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Examinations - May/June & November/December

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MANAGEMENT | PERSPECTIVE

Investing in Real Estate Property, Management and Finance can be Learned too DR. MURIITHI NDEGWA, PHD, OGW, HSC, FKIM

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n Kenya, it is almost a byword that one needs to own a piece of land and hopefully build something on it. This way, the streetwise say, one has a place to call their own. It is with this mindset that thousands have rushed to acquire land in areas they would have otherwise not thought about, thanks to persistent marketing tricks to woo investors. Others have also been left high and dry after the marketing gimmicks evaporated into thin air. A case that comes to mind is a certain Sacco in Kiambu whose thousands of investors put their life’s earnings in the hope that they would own plots of land.

The scenes at the DCI office in Kiambu Road as men and women lined up to record statements against the land seller could only be compared to those of voters waiting to cast their ballots. Interestingly, investment experts claim that there are a number of ways one can invest in the real estate sector without too much money. One way could be through leasing option. In this method, the owner of the property charges a buyer a higher rental payment whereby the excess rental fee gets channeled towards the purchase price of the property. Another method investment experts advise on is to look for investing funds

September March 2022 2021 Management Management Magazine Magazine

from groups or private individuals, and then use this money to invest in real estate. In this type of loan, there are not many corporate procedures in applying for the loan, and these loans also have fewer qualification requirements. This means it would be easier and faster to secure these loans. However, their interest can be expected to be higher due to the nature of the risk. These loans also have a shorter repayment period, mostly up to 12 months. Another interesting method prescribed by investment experts is to form an equity partnership. An equity partner is a person whom you bring into a transaction to help finance a property. The two parties must agree on a viable structure to proceed with the business. Trading houses, where one sells or trades their old asset for a new property enables one to avoid many of the processes that come with selling of a property.

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MANAGEMENT | PERSPECTIVE

It is advisable to invest in getting knowledge by reading some real estate investment content as well as attend seminars or conferences.”

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According to investment experts, another way is to own a Real Estate Investment Trust (REIT). The REITs are gaining ground in Kenya as investment options open up for savvy investors. When you own shares in a real estate trust, it is just like owning stocks, hence as a buyer, you can target REITs of those firms that invest in areas such as industrial parks, malls, inter alia. You can hold a diverse portfolio of REITS. A similar product is the real estate mutual fund. This is more liquid than the REIT shares, and can be diverse as well. More to that, it is advisable to in-

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vest in getting knowledge by reading some real estate investment content as well as attend seminars or conferences held by like-minded companies to learn more. Once one gets the right information, one will be in a position to invest wisely. It is important that one gets guidance from industry experts so that you get it right from the onset. Good luck with your venture! DR. MURIITHI NDEGWA, PHD, OGW, HSC, FKIM, is the Executive

Director/CEO, Kenya Institute of Management. Email: [email protected]

September March 2022 2021 Management Management Magazine Magazine

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MANAGEMENT | NEWS

Africa Heads of Competition Authorities Team Up on Regulation of Digital Markets Accordingly, as regulators on the continent, we are required to consider how digital markets impact on domestic participation in the local and global economy and the terms of that participation, beyond simply as a consumer of global tech firm services BY MANAGEMENT MAGAZINE TEAM

A

frica’s competition regulators have agreed to expand and deepen dialogue on digital markets amongst competition authorities on the continent. They also agreed to ease harmonization of notification frameworks and ease assessment of global, continental, and regional mergers and acquisitions in digital markets without prejudice to confidentiality, when the continental regulators met last month during the Digital Markets Dialogue in Johannesburg, South Africa. The heads of Competition Authorities including Egyptian Competition Authority (ECA), Competition Authority of Kenya (CAK), Competition Commission of Mauritius (Competition Commission), Federal Competition and Consumer Protection Commission (FCCPC) of Nigeria and Competition Commission of South Africa (CCSA), acknowledged that digital services are rapidly transforming the global economy through disrupting traditional markets as they open new economic opportunities, and provide substantial benefits to consumers and businesses. The meeting heard that the dig-

AGREED AREAS OF COLLABORATION Scoping the conduct in digital markets that have been the subject of investigation in other jurisdictions, on African consumers, businesses and economies with the purpose of fair regulation and enforcement in Africa (where applicable Researching barriers to emergence and expansion of African digital platforms and firms that may contribute to enhanced competition and inclusion in these markets for the benefit of African consumers and economies Co-operating in the assessment of global, continental, and regional mergers and acquisitions in digital markets, including harmonizing the notification framework; without prejudice to confidentiality commitments To share information in accordance with existing laws and applicable protocols Sharing knowledge and build capacity to deal with digital markets

March 2022 Management Magazine

ital markets present considerable challenges for competition law enforcement and policy in terms of the unique competition issues that arise. Policy makers and competition authorities in leading world economies are reviewing their approach to regulation and enforcement in digital markets to adequately address these competition issues. Accordingly, as watchdogs on the continent, the regulators agreed that they are required to consider how digital markets impact domestic participation in the local and global economy and the terms of that participation, beyond as a consumer of global tech firm services. Recognizing the greater shared regulatory challenges that digital markets pose for Africa necessitates the African jurisdictions to work more closely to share knowledge, develop capacity and mutual strategies and provide a stronger and collaborative approach with respect to the regulation of digital markets. They reaffirmed their commitment to strengthening the rules for open and fair markets in Africa, as well as intensifying enforcement of competition laws to ensure protection of consumers.

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MANAGEMENT | NEWS

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DIPLOMA AND CERTIFICATE COURSES The Kenya Institute of Management is a registered and licensed assessment centre by TVETA and CDACC.

Why KIM • • • •

The KIM Certificate is highly recognized at the workplace Our programmes are available both online and physically across our 14 branches countrywide We have a flexible timetable to accomodate working students (Day classes, Evening classes and Saturday classes) We have a highly qualified faculty 1.0 OFFICE ASSISTANT - LEVEL 4

ADMISSION CRITERIA

This course is intended to introduce the learner to the key concepts of management

KCSE Certificate Or Equivalent qualifications as determined by KNQA or Completion of level 2 or 3

MODULES: 4 MODULES; EACH 3 MONTHS Total Duration: 12 months 2.0 CERTIFICATE COURSES - LEVEL 5

This course is intended to introduce the learner with basic management skills applicable inall areas of management

ADMISSION CRITERIA

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K.C.S.E minimum mean grade D (plain) or Business Management Level 4 certificate with one year of continuous work experience or Equivalent qualifications as determined by (KNQA)

MODULES: 4 MODULES; EACH 3 MONTHS Total Duration: 12 months CERTIFICATE COURSES:

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Certificate in Business Management Certificate in Human Resource Management Certificate in Supply Chain Management Certificate in Office Management

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3. 0 DIPLOMA COURSES - LEVEL 6

Certificate in Project Management Certificate in Archives & Records Management Certificate in Marketing Management Certificate in Tours and Travel Management ADMISSION CRITERIA

This course is intended to introduce the learner with a wide range of management skills applicable in all areas of management

K.C.S.E minimum mean grade C- (minus) or Business Management Level 5 certificate with one year of continuous work experience or Equivalent qualifications as determined by KNQA

MODULES: 4 MODULES; EACH 6 MONTHS Total Duration: 24 months DILPOMA COURSES:

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Diploma in Business Management Diploma in Human Resource Management Diploma in Supply Chain Management Diploma in Office Management

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Diploma in Project Management Diploma in Archives & Records Management Diploma in Marketing Management Diploma in Tours and Travel Management

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MANAGEMENT | NEWS

Zanzibar Installs Africa’s First Covid Scanners As Tourist Numbers Rise

President Dr. Hussein Ali Mwinyi during the press conference on February 16, 2022 in Zanzibar State House. PHOTO: MERCY GAKII

BY MERCY GAKII

T

ourist destination of Zanzibar is now using a new non-invasive app to screen guests for the Covid-19 virus. The EDE scanner, installed in the mobile phone and used along with a portable device, was first used on passengers arriving at the Abeid Amani Karume International Airport. The PCR tests are still in use, where nose or mouth swabs are drawn to test for the disease and submit results within two hours while a passenger waits at the airport. However, the EDE scanner can predict with up to 93 percent accuracy whether a person is carrying the disease. “We adopted the EDE scanners in a partnership with United Arab

Emirate nations in efforts to improve guest arrivals to our nation,” Zanzibar President Dr. Hussein Ali Mwinyi told the media in a press conference at the State House. He said the island nation’s GDP which is heavily dependent on tourism, was dealt a heavy blow by the coronavirus pandemic in 2020, leaving the economy on its knees. Up to 30 per cent of the GDP comes from tourism, with up to 500,000 tourists visiting the island every year. However, the pandemic reduced numbers of tourists, with 2020 recording a low of approximately 170,000 tourists, he said. “We are looking forward to having more airlines from the UAE fly

March 2022 Management Magazine

to Zanzibar, including Emirates and Etihad. We already have FlyDubai back with two daily flights,” he told journalists. The EDE scanners, to be used in the airport and other public areas such as malls, are fruits of heavy investment in research, where the Abu Dhabi government sunk approximately $1 billion into studies on how to combat the virus. The devices are in use in the UAE nation, and are used to scan those accessing public areas such as malls. Zanzibar and Abu Dhabi have enjoyed a long-standing relationship, and the Tanzanian archipelago receives many visitors from the UAE. The UAE in the recent past expressed displeasure at the number of travellers reaching the Middle East nations with a negative covid test, only for the passengers to turn positive after taking another test at their airports. This technology will eliminate such disparities, and passengers entering Zanzibar from the UAE may not need to retest after being screened by the scanner. The app and scanner employs a technology to detect a possible COVID-19 infection by measuring electromagnetic waves, which change when the RNA particles of the virus are present in a person’s body, providing immediate results. The scanner is an app installed in smartphones, which works alongside its detector. The app scans a person’s chest at a distance of up to five metres. The detector, which is held together with the phone, can then read the magnetic waves, which give the report on whether the person is carrying the virus or not. Zanzibar has not reported any covid-19 case this year, and is looking to leverage on the low infection rates to revive the tourism industry.

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Coronavirus COVID/19

11 PROTECT YOURSELF & OTHERS

What it is? Coronaviruses are a large family of viruses that affect the respiratory system. Symptoms of COVID/19 infection range from respiratory problems, to cases of pneumonia, kidney failure and a buildup of fluid in the lungs.

Keep your distance from other people when talking or queuing

What are the symptoms?

Fever

shortness of breath & breathing difficulties

Severe Headaches

Coughs

Beware of misleading health advice Garlic - The WHO (world health organization) say that while it’s a healthy food that may have some antimicrobial properties, there’s no evidence that eating garlic can protect people from coronavirus Home-made hand sanitiser - For cleaning surfaces, the US Centers for Disease Control & Prevention (CDC) says most common household disinfectants should be effective

Ways to prevent infection Wash your hands regularly with soap

Use alcohol-based hand sanitizers often after touching surfaces Cover your cough or sneeze with a tissue or a handkerchief If your unwell and you have symptoms such as dry - cough, fever, shortness of breath and fatigue, contact a medical professional immediately Wear a mask if your unwell or taking care of a sick person

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Avoid crowds or gatherings and keep a distance

Drinking water every 15 mins - Infections like coronaviruses enter the body via the respiratory tract when you breathe in. Constantly drinking of water isn’t going to prevent virus Miracle minerals MMS - Health authorities in many countries have issued alerts about it. The FDA says “ it’s not aware of any research showing that these products are safe for treating illness Drinkable Silver - Colloidal silver is tiny particles of the metal suspended in liquid. The US health authorities advice that there’s no evidence this type of silver is effective for any health condition

Kenya Institute Of Management @kimkenya.ke March@kimkenya 2022 Management Magazine

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MANAGEMENT | COVER STORY

NBK Leans on Better Promises to Grow The bank is committed to offering an unmatched level of service, a beyond banking experience BY MERCY GAKII

T

he story of National Bank of Kenya (NBK) cannot be told without a great sense of pride and achievement. Like the proverbial phoenix, NBK has risen from the ashes of non-performing Loans to a profitable financial institution that is part of the strong and bigger KCB Group family. KCB Group Chief Executive Officer and Managing Director Joshua Oigara says the acquisition was a strategic move. The backing from the larger bank and the support of the government, plus his own ability to withstand adversity, gave the NBK Managing Director, Mr. Paul Russo the confidence to stare down the borrowers who had previously refused to pay. “Being part of the group bestows advantages of a bigger stronger family, particularly on the back end – in terms of synergies, innovation and technology and enhanced capital base and we are confirming that the acquisition was a right fit,” said Mr. Russo, who also doubles up as KCB Group’s regional business director. The acquisition by the KCB Group enabled cost-saving and efficient synergies. It, for example, enabled NBK to meet its capital adequacy require-

ment and bolstered its resources. The bank is actively investing in technology-backed platforms, having incorporated mobile phone, online and agency banking to scale up its presence across the markets. However, getting NBK back on its feet and repainting the public image was never going to be a walk in the park. It took Mr Russo much more than resilience to help the bank overcome poor management, meagre risk management practices, poor monitoring a n d evaluation systems, lack of managerial accountability for bad NBK Managing Director, Mr. Paul Russo. PHOTO: COURTESY

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COVER STORY | MANAGEMENT debts, lack of adequate credit policy guidelines and a diversified loan portfolio, as additional issues that bedeviled the bank. This, nevertheless, did not deter him. Mr. Russo knew that to get the bank back to its feet, he had to wade through the bad debtors who were the faces behind a mountain of bad loans, technically referred to as NonPerforming Loans (NPLs), that had been a challenge for long. “As a result of NPLs, we faced liquidity problems, low profitability, a bad public image, problems with debt collection; pressure from shareholders, problems with the regulator - Central Bank of Kenya - competitors and the stock exchange, bad publicity, and economic recession,” he said. But after a lot of hard work and sleepless nights, the profits, awards, stability and business growth are quite evident. Key to note is that NBK posted KShs. 1.1 billion in profit after tax for the nine months ending September 2021, representing a 1126% increase from KShs. 87M in a similar period of the previous year. This increase was driven by increased income from loan interest and foreign exchange trading coupled with lower loan loss provisions and benefit from change in corporation tax rate to 30%. “In a period of unprecedented challenges to our business, the banking sector and the economy at large, I am extremely proud of the excellent results that we delivered for Q3. I am particularly happy because of the actions we have taken to support our stakeholders during what has been a rapidly evolving business environment. Despite the ongoing economic impact of COVID-19, our operating income increased 14.4% to close Q3 at KShs. 7.6 billion. The low levels of

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Billion NBK’s profit after tax for the nine months ending September 2021

credit provisions also resulted in an increase in profit after tax of 1126%,” said Mr. Russo. The bank put in measures to cushion its customers against the impact of the pandemic by restructuring customer loans, moratoriums, in addition to suspending listing on the credit reference bureau and waiver of fees charged on digital channels. Further to this, the bank is also involved in community efforts to curb the spread of Covid-19 by donating masks to various groups such as the National Police Service, where 4,000 masks were donated. These were presented to the Cabinet Secretary in the Ministry of Interior and Coordination of National Government,

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and the Inspector-General of the National Police Service. The bank also donated PPEs to the Teachers Service Commission (TSC). On the brighter side, the pandemic fast-tracked digitization and this has seen the bank’s digitization efforts yield positive results. “Today, about 98 per cent of the transactions are conducted outside branches; with mobile transactions accounting for 77 per cent of these; and another 17 per cent through agency and online banking, or at points of sale,” says the MD. Exceptional customer service is at the core of the bank’s DNA. This is the reason superior customer service is one of the things that NBK is best known. The bank is constantly innovating to delight our customers by listening to their feedback, simplifying their journeys and revamping our delivery channels, while still remaining a human bank. Listening to our customers also helps the bank to develop top-notch banking services that are tailored to the needs of any particular industry. Last year, NBK won three major global awards for Best Bank in Customer Service Kenya, Best Islamic Window Kenya and Best SME Bank in Kenya. The awards in the International Business Magazine Awards 2021 seeks to recognize brands achieving excellence in performance across a broad range of sectors including the financial sphere. International Business Magazine also awarded NBK as the best bank in Customer Service in Kenya for the second year running. As part of the bank’s recovery journey, NBK has had unrelenting focus on delighting their customers by innovatively delivering value to them and their efforts have been appreciated through several awards.

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MANAGEMENT | COVER STORY

Among the most assuring moments for NBK is being part of the KCB Group during the tough economic times. The bank has accepted that indeed, they could not have stood alone during the volatile period. The strength and stability of being part of the Group has strategically positioned NBK and as a result, the bank portfolio has grown, while they continue to register an increase in customer base. The customer base has grown so much so that, NBK now has a network of 85 branches across the country and more than 1,500 ATMs and electronic channels for mobile and internet banking. The acquisition has given NBK a new lifeline as a business and fits well within KCB’s expansion strategy. “Strategic partnerships are key to economic growth and development. We look forward to establishing more alliances this year in order to add more value for our stakeholders, shareholders and the community we serve,” says Mr Russo. The bank has also forged strategic partnerships bringing out the best of the Beyond Banking strategy by offering marrying niches, relationships, ecosystems, competencies and capabilities. With the General Election coming in a few months, the bank is employing a more optimistic outlook citing the IMF projections that the electoral period will not disrupt business. Historically, election cycles are considered a lull period for businesses and companies have to come up with ways to cope in the uncertain times. For NBK, one of the most important things is aligning its aspirations with the government’s priorities. This will include awareness campaigns to educate and sensitize the masses on the importance of maintaining peace

Policy responses will need to strike a balance between the immediate protection of vulnerable groups and ensuring that our pension systems can deliver retirement income in the future.

prior to and after the voting day. This can be done through messages on the company’s website, social media platforms, mainstream media as well as press releases. The bank plans to maximize on the first half of the year by meeting its set goals and objectives. Additionally, through deliberate efforts to diversify the bank’s portfolio, there will still be great opportunities during and around the election period for the financier to grab. Diversification of the bank’s portfolio has also seen growth in customer numbers as well as deposits and re-emergence of the

March 2022 Management Magazine

sectors that were hard hit by the pandemic such as hospitality. Among the unique offerings the bank will use to enhance business resilience is start providing innovative, value-added and cost-effective financial solutions that exceed the expectations of all customers across the network. This can only be achieved with a stable macro-economic environment and steady economic growth in the country. As part of the laser focus on the 3Ps of People, Planet and Profit, the bank is embedding sustainability in business operations to ensure that NBK positively contributes to the environment and community within which it operates. For climate-related risks, the bank has plans to swing back and is banking on the issuance of climate-related risk disclosures by the CBK, where they will identify challenges that they expect to face and explore mitigation measures. National Bank was founded with the objective of providing financial solutions to all Kenyans. Under their ‘Bank on Better’ promise and even more as part of the KCB Group, the bank is committed to offering an unmatched level of service to our customers – a Beyond Banking experience. “By ensuring customers are at the core of what we do, we are improving our processes, tailoring our products, creating key partnerships and digitizing our systems. We target to have our customers served in the best and most convenient way and within the shortest time possible,” concluded the managing director. MERCY GAKII

is the Editor, Management Magazine. Email: [email protected]

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MANAGEMENT | COVER STORY

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Accredited in Kenya by the TVET Authority

ABOUT ICDL

Now offered at The Kenya Institute of Management (KIM)

International Computer Driving Licence (ICDL) is the digital skills standard. Across the world, education and training institutions, and public and private sector employers use ICDL to provide the current and future workforce with the digital skills necessary to perform effectively in the modern workplace.

BASE MODULE

INTERMEDIATE MODULES

1. 2. 3. 4.

1. Online Collaborations 2. Presentations using MS PowerPoint 3. Databases using MS Access

Computer Essentials Online Essentials Word processing Spreadsheets

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MANAGEMENT | SPECIAL REPORT

Richard Muthiani, left, teams up with his friends to tend to his groundnut crop in Chumvinig, Taveta Subcounty

Meet the Farmers Growing your Peanut Butter Although farming of the groundnut is still gaining foot in Taveta, the mostly youthful farmers are eyeing millions in returns as demand for groundnut remains the highest globally at more than 90 percent BY MERCY GAKII

N

ested serenely at the foothills of Mt Kilimanjaro, up the vast farmlands of Chumvini in Taveta sub county are acres upon acres of land, some in good use under crop coverage, while big chunks lie unused.

The area grows green grams, tomatoes, water melon and maize. But of late, farmers are warming up to groundnut farming too. The soils are very fertile, and water is sufficient, owing to the area’s proximity to the

March 2022 Management Magazine

tallest mountain in Africa. With the new fortunes, they will not need to import the snacky nuts from Tanzania, which is actually just a stone’s throw away. “We do not have to dig deep before water comes gushing out,” 26-yearold Agnes Waithera Ngaruiya quips as she browses through her six-acre ground nut farm. She has been farming for the past two years in her family land, though her passion for agribusiness has set her apart.

Plenty of water for farming

Groundnuts are easy to grow because they do not need much labour, while other costs such as spraying and adding fertiliser, or managing aflatoxin in the soil are very low. Better still, within three months of growing the crop, the company which has contracted farmers in the area will be coming to fetch tonnes of the nuts. For her love of farming, she has taken up training opportunities provided by organisations in the area. She has been farming for the past two years, and says she expects to harvest up to a

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SPECIAL REPORT | MANAGEMENT tonne per acre of groundnuts. The upside is that the nuts are bought from the farm as peanut butter makers scout for raw material in the area. The farmers’ fortunes took a turn for the better when in 2019 the International Crops Research Institute for Semi-Arid Tropics (ICRISAT), together with Accelerated Value Chain Development (AVCD Kenya), introduced the crop in Taveta, taking interested farmers through training opportunities. ICRISAT and partners, through the Accelerated Value Chain Development (AVCD), have over the years released new improved varieties of sorghum, millets, pigeon pea, and groundnuts that have the potential to increase productivity and nutrition. The farmers are trained on various agriculture practises, such as how to mix fertiliser with soil, when to spray the crop, how to space the crop and other important measures such as pest control.

Mouth-watering contract

The farmers recently clinched a

Davis Mwangoma, Taita Taveta County Agriculture CEC.

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It is important to start saving as early as possible, during your youthful years or immediately after gainful employment. Planning for your retirement requires sound financial planning”

deal with a peanut making company, who had only come across their farming ventures in a newspaper article. “Some months back, one company based in Nairobi called me on phone. They said they would want to visit the groundnut farmers,” said Davis Mwangoma, the county executive member for agriculture, livestock and fisheries. They said that they had read about the promising groundnut farming in Taveta. I pointed them in the direction of the Taveta Nafaka Cooperative.” The farmers will sign yet another longer-term deal after the initial fivemonth contract ends. In the deal, they are expected to supply 100 tonnes of groundnuts to the peanut butter maker, in an arrangement that will see the company fetch the nuts from Taveta,

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and use for producing the bread spread for its Kenyan consumers. Richard Muthiani, another groundnut farmer who has also been signed on to supply the harvest, says all marketing costs have been catered for. A kilo of the nuts is selling at Ksh87 at the farm, which is Ksh85 while the county boosts the farmer with a bonus of two shillings to make a total of Ksh87. He says for an acre, he expects to harvest about a tonne, to a tonne and a half of the crop.

Why nut farming has huge global demand

“The global demand for groundnuts is at 99.5 percent. We cannot say that Taveta will meet this demand, because even locally, the supply is still very low compared to the market needs,” comments Peter Munyi, the manager of the Taveta Nafaka Co-operative Society, which brings together farmers in Taveta. Nafaka Sacco helps farmers get certified seed for planting in the area. Since the group is now a fully fledged seed merchant, registered by Kenya Plant Health Inspectorate Service (Kephis) they do not need to go all the way to Egerton University in the Rift Valley to source for seeds. The cooperative is now seeking to open a seed bulker just within Taveta Town to enable farmers get seamless supply of seeds throughout the year. Munyi reveals that Kenya’s groundnut needs have seen the country import the nut from southern African nations and Brazil, with an import bill of Ksh1 billion. This is against its production capacity of only Ksh110 million. MERCY GAKII

is the Editor, Management Magazine. Email: [email protected]

March 2022 Management Magazine

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MANAGEMENT | SPECIAL REPORT

Popularize ‘Options’ based on the ‘Reits’ in Kenya’s Financial Market The REITS as a post-modern real estate funding innovation are beneficial in that they have competitive long-term returns. BY ALEXANDER OPICHO

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he last three decades have been so optimistic for Kenya as the real estate and property market witnessed significant growth. However, in 2020, the real estate sector that had started on a rather high note was hit by the Covid-19 pandemic, to goof in the performance, especially in terms of access to funding and sourcing of finances. This was so due to lack of access to funds for development because of the pandemic. This has been a lesson enough that

financing real estates in Kenya is still a challenge. It is with the above knowledge that innovations in finance engineering and finance instrumentation in relation to financing real estate Kenya is called for. As a response, the Capital Markets Authority, made an attempt to come up with some new regulations about real estate investment trust (REITs). Traditionally, REITs are regulated collective investment vehicles which invests in real estate. In most

March 2022 Management Magazine

cases REITs promoters source funds to build or acquire real estate assets, which they sell or rent to generate income. The income generated is then distributed to the investors as returns in investing in REITs. The property is held by a trustee on behalf of unit holders and professionally managed by a REIT manager. To help improve accountability and transparency within the REIT structure, there are four key parties who all work together to ensure that REITs interests are fully

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If an option is based on a trust of real estate, it can then be called REITS based option”

protected. These parties include the promoter, REIT manager, the trustee and, project/property manager. So far, Kenya’s real estate market has three types of REITS, the Income Real Estate Investment Trusts (I-REITs), Development Real Estate Investment Trust (D-REIT) and, Islamic Real Estate Investment Trusts

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which only undertakes Shari’ah compliant activities. For Islamic REITs, a fund manager is usually required to do a compliance test before making an investment in this type of REIT to ensure it is Shari’ah compliant. The REITS as a post-modern real estate funding innovation are beneficial in that they have competitive long-term returns. They boost diversification and are a flexible asset class which assures for liquidity due to the direct nature of investments in real estate assets and hence stable and consistent income stream with high level of taxation benefits and management transparency. However, there are also some challenges facing the adaptation of REITs in Kenya. The major one is lack of predictability in prices, and hence this a point it which will call for further innovativeness on the financial market that can link up price stability of REITS to mixing with options. An option is also called a derivative investment or a future contract to sell or buy but without obligation. Thus, an option is futures contract or an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. An option has a prize known as a premium. For example, the call option con-

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tract gives the buyer the right to buy the asset at a fixed price. However, there is no obligation on the part of the buyer to go through with the purchase. An option must be based on an asset known as an underlying asset. If an option is based on a trust of real estate, it can then be called REITS based option. It can be an option to buy also known as a call option or an option to sell also known as put option. An option having fixed maturity is known as European option, and the one with flexible maturity is known as American option. Unfortunately, we don’t have African Option, Asian Option nor even Australian Option. An option is called in-money option if it is beneficial when related to the agreed future price also known as strike price. It is at-Money option if it only breaks-even, but it is known as out-of-money option if it is not beneficial to strike (transact) at the striking price. One can also use straddle approach or spread approach to manage profitability and stability of the options. In a nutshell, REITS and options are very effective blend of investment in the real estate industry, they can effectively eliminate all risks and negative deviations form financial goals. Knowledge of options and REITS is compulsory for all investors, managers and policy makers in the real estate market. If one is interested and wants to know more about options and Reits, then it is good to consult an investment banker or Join Kenya Institute of Management (KIM) for a short course in Options as derivatives of REITS having real estate property as underlying assets.

ALEXANDER OPICHO is an

essayist based in Lodwar. E-mail: [email protected]

March 2022 Management Magazine

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MANAGEMENT | SPECIAL REPORT

Property Financing and Ownership in Kenya A title deed is used as security to land ownership and to acquire loan. It also encourages the owner to carry out long term investment projects on land as well as minimize land disputes

BY JOSEPH MUTHAMA

I

n recent years, Africa has experienced exponential increase of population both in rural and urban areas. High population growth coupled with rural-urban influx has profoundly increased demand for land and houses countrywide hence a crisis of unprecedented proportion. According to the 2019 Census, out of 47.6 million Kenyans, only 7.4 mil-

lion (15.4 per cent) own houses. This means 84.6 per cent of Kenyans rent houses in either urban or rural areas. Little wonder, then, that the mushrooming of slums in major cities and the upsurge of street families speaks volumes about the lack of affordable houses in the midst of economic recession. The Covid-19 pandemic can be

September March 20222021 Management Management Magazine Magazine

termed as the straw that broke the camel’s back. Imposition of lockdowns and travel restrictions brought the global economy to its knees. However, despite the fact that millions of people have been vaccinated against the Coronavirus and shutdowns have been revoked, the devastating effects of economic depression continue to reverberate across the real

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SPECIAL REPORT | MANAGEMENT property market. The pandemic triggered a fall in the value of real estate due to low demand occasioned by economic and financial depression. Put simply, the pandemic is another nail in the coffin of the Kenyans’ finances. Data from the Kenya National Bureau of Statistics shows that, 51.5 per cent of the working population earns below Ksh 23,670 per month. Middle income earners take home between Ksh 23,670 and Ksh 200,000 and comprise 44.9 per cent of the workers. Upper class income earners comprise only 3.6 per cent and earn Ksh 200,000 and above. Lack of financial resources makes it next to impossible for many Kenyans to own properties and hence they are forced by circumstances beyond their control to live in dilapidated houses and subhuman existence.

Property Ownership

According to the 2011 World Bank report, demands of new housing units are higher in urban areas than in rural areas. More often than not, property prices in urban areas are fabulously expensive. Many Kenyans are low-income earners hence they cannot afford to own property leave alone put food on the table. In other words, the majority of Kenyans live from hand to mouth and vicious cycle of poverty is the norm making it a herculean task to invest in the property industry. Due to high demand for real estate in the country, especially houses and land, there has been a proliferation of unscrupulous real estate agents who has swindled prospective and innocent buyers millions of shillings in the name of selling them prime plots and cheap houses in urban and rural areas. Others have solicited money from buyers and thereafter disappeared. As if that is not bad enough, some contractors lack vital documents like a certificate of incorporation, tax

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compliance certificate, a valid certificate of registration with the National Construction Authority, key site management and technical personnel and equipment to do the work among others. Before a buyer invests in real estate, it is important to do due diligence by involving professionals such as lawyers, financial advisors, valuers, engineers, architects and quantity surveyors. For donkey years, due to lack of compliance on building code, collapsing buildings have killed several people while others have permanently or partially injured. Thankfully, NCA Act, 2011 section 23(2)(c) gives the authority powers to suspend a construc-

51.5% Percentage of Kenya’s working population earning below Ksh 23,670 per month. Source: Kenya National Bureau of Statistics

tion site for non-compliance while section 23(3A) grants investigation officers the power to penalize persons who fail to comply with an order by an investigating officer. According to the 2019 Central Bank of Kenya report, the number of mortgage accounts stood at 27,993 representing a 5.6 per cent rise from 26,504 accounts recorded in 2018. When it comes to property financing, many people depend on short-term funds like savings, bank loans or disposing movable assets like vehicles and other non-movable assets. Other sources of short-term funds are sales and lease back of an asset/inventory finance,

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short-term borrowing from Saccos, trade credits, debt capital, invoice discounting, retained earnings, bill of exchange, factoring, and hire purchase while long-term sources of finances encompass common shares, debts instruments (bonds, dentures), mortgages, term loans, preferences shares, warrants and convertible. According to HF Group Kenya, real estate property financing especially for commercial purposes include securing financing from commercial banks where the land owner approaches the bank with details of the project to be financed. Secondly, are joint ventures with capital investors where the capital investors are usually individuals or firms with funds and always looking for projects with good returns for their money. Lastly, is pooling of resources by individual investors where it is done by individual investors with common investment goods mainly in real estate.

Light at the end of the tunnel

It is an undeniable fact that the Kenyan government is in the midst of a major economic and financial crisis. However, all said and done, there is light at the end of the tunnel. During 2021/2022, housing, urban development and public works were allocated a total of Ksh 21.8 billion, which is an increase of 33.9 per cent in comparison to 2020/21. Construction of affordable housing units, urban housing units and Kenya informal settlement improvement Phase II received a financial allocation of Ksh 8.2Billion, Ksh 0.7Billion and Ksh 3.5Billion respectively. JOSEPH G. MUTHAMA is a Full Member of KIM, and the author of ‘Leadership Defined’ and ‘Excellence in Leadership’ books. Email: josephmuthama05gmail.com

September March 2022 2021Management ManagementMagazine Magazine

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MANAGEMENT | SPECIAL FEATURE

Role of Professionals in Property Development Enhanced vigilance from government enforcement agencies and professional bodies would be significant in forestalling most of negative outcomes in property sector. PETER WAMALWA

F

lipping through classified pages of the local dailies, one encounters freshly done property advertised in colour, looking plush and inviting to potential buyers. Every property purchased or constructed may equate to actualized dreams of owning residential property, commercial building, industrial property or land for future investment. Equally the same dailies dedicate space to advertisements by auctioneers, announcing diverse property, from land to buildings of varied shape and size. This is an indicator of lost opportunity, missteps, failed investment, loss of finances and other negative ripple effects to the would-be property owners and their associates. These events give one a glance at the goings-on in real estate development, a sector of the economy with many professions at play. Professionals in the sector have a stake in the manifestation of these advertisements in our local dailies. Sequentially, from firming up on a project idea and sourcing for funds as a builder or developer then proceeding to buy land, getting into the project cycle by acquiring designs of the

proposed project, implementing the project, project monitoring &control and the eventual project closure; there is a lot of input that requires professional intervention and guidance for the realization of a construction project endeavour.

Lawyers

Conveyancing lawyers are critical in the process of property acquisition. They carry out research and gather information about the property in question. They conduct searches with various agencies to ascertain the true ownership and status of a property, by liaising with valuers, surveyors, government agencies and local authorities. Once all the information required has been accessed, lawyers advise the prospective buyers/investors on the pros and cons of the impending transaction and guide them through the transfer process by generating contract documents that meet the threshold of the law.

Land Surveyors

Once the property has been identified and before purchasing, land sur-

March 2022 Management Magazine

veyors perform boundary definition of the property and engage government entities charged with land matters to ensure successful land subdivision and demarcation. Boundary definition helps one to know the exact size of the property to be purchased, protect it from encroachment and perhaps visualize the type of development that best fits the location. They also generate the required data and maps that help when processing title deeds. In the construction phase, they perform setting out works and control lines and levels to the specifications and standards.

Land and Property Valuers

They determine the worth of the

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property in question. The information they generate is beneficial to their clients to make informed decisions when getting into contractual obligations. One gets to know if they would maximize on profits or get value for money as a seller or buyer respectively from the envisaged transaction.

Environmental Experts

Environmental consultants carry out surveys to ascertain the sustainability of the proposed project concerning environmental safety. They assess, map and advice on pre-existing and future liabilities to the environment emanating from the envisioned property development. They help in reducing the environmental impact of pollution and ensure sustainable waste management. Their understanding of statutory requirements helps builders or property developers steer clear of litigations, fines and dubious transactions. The professionals listed above majorly per-

Professionals in the sector have a stake in the manifestation of these advertisements in our local dailies.

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MANAGEMENT | SPECIAL FEATURE

form their functions in the pre-construction phase. At times their roles overlap into the construction phase or are relevant in a situation where a developer is acquiring a completed structure. In the construction phase which is principally the project management phase, there are other key professionals.

Architects

These are experts mandated with design and project planning. They also have a responsibility for the optical appearance of structures and buildings. Architects engage developers or clients to gather the project needs and requirements then proceed to generate design concepts that best fit the client’s needs. Working together with engineers, they create detailed drawings and test the project’s feasibility. In the performance of their duties, they offer guidance to the client, manage the budget and meet all the regulatory requirements. Architects stay on to project closure to coordinate smooth interactions between different trades on a construction site, manage ensuing revisions in the project scope and contract, control the budget, resolve disputes, keep project records, etc. In a nutshell, they are project managers in building projects and ensure that the outcome fits the purpose.

Engineers

Several specialties of engineering are a prerequisite in a construction project but the key ones include: Civil & structural engineers They perform detailed designing and analysis of the structural integrity of a structure to have sustainable functionality. They are tasked with ensuring that the envisioned structure can withstand any forces and loads e.g. dynamic loads like winds,

earthquakes, traffic, blasts, human movement, etc. Structural engineers also perform site investigations to ascertain the ground conditions. They then work closely with the architects to produce workable designs and perform supervision during project implementation. Other specialties providing services include electrical engineers, mechanical engineers, etc.

Quantity Surveyors

At times they are referred to as Construction Cost Consultants. They are the construction industry “accountants” because of their role in measuring, quantifying, calculating and advising on construction-related costs. They also have a role in cost planning and commercial management which are crucial in tracking budgets and project financial performance. Quantity surveyors take inventory of all building material and labour utilized in a project and give cost projections on ongoing works.

Building Contractors

These are entities with diverse tradesmen who oversee and manage the construction of the proposed property to completion by following the architects and engineers designs and specifications. They are registered firms with government agencies and must have met specified requirements to be given the licensure. Contractors work under contractual obligations with the clients. In addition, they are selected through competitive bidding processes or negotiations before commencing construction work. In exercising their responsibilities these professionals are accountable for the actions within their purview; the laid down terms and conditions. Ignorance, disregard of professionals

March 2022 Management Magazine

and ‘copy pasting’ approach have been witnessed in the construction industry without considering the varying factors at play from site accessibility, soil conditions, material costs and availability, cost of labour, weather conditions, security, design matching user needs, existing legal framework, etc. These happenings are also attributed to corruption. Among other reasons, this is why society has witnessed and continues to witness buildings tumbling down while still under construction. It is the reason that we have white elephants spread far and wide. The listed professionals are a fraction of a larger group that forms a construction project team. Having a competent project team on-site comes at a necessary cost compared to the risk at hand when quacks are on board. Individuals or upcoming developers need to be sensitized on the need for engaging professionals and the benefits associated with it. This can be achieved by prospective lending institutions or financiers engaging experts to conduct sensitization seminars for their clients before commencing spending on the proposed projects. Established developers need a constant reminder of their role in safeguarding the reputation of the industry by adhering to ethical standards. Lastly, enhanced vigilance from government enforcement agencies and professional bodies would be significant in forestalling most of these negative outcomes.

PETER WAMALWA is a project management professional with over 15 years’ experience in the construction and oil &gas industries. He is a registered KIM member and a writing enthusiast. Email pmwamalwa@gmail. com

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MANAGEMENT | CORPORATE STRATEGY

Why Pension Funds Should Look at Forestry as an Asset Class BY HOSEA KILI, OGW

I

was honoured to be a delegate and to share my thoughts on climate action at last year’s annual Devolution Conference which sought to unlock the full potential of climate action at a national level, at the back of the COP 26. In my speech, I highlighted how pension funds can play a critical role in combating climate change by providing the much-needed long-term investment to combat this challenge.

According to The Organization for Economic Co-operation and Development (OECD), globally, an estimated USD 47 trillion is invested by the world’s pension funds. This is approximately 50% of all the money invested in the global financial system. This means that pension funds have enormous leverage within the global economy, and the choices made on where they are invested have a signif-

March 2022 Management Magazine

icant impact on many aspects of life, including on climate change. The truth is that there has been limited participation by retirement funds in inclusive green investments to date, even though there are no macro-regulatory barriers hindering their participation. According to the IFC’s Aligning Kenya’s Financial System with Inclusive Green Investment Report, the Retirement Benefits Authority’s investment policy guidelines allow for broad asset allocation/ diversification, including investment in alternative asset classes such as private equity, asset-backed securities, real estate investment trusts, collective investment schemes, and green bonds. These investments are already incentivized through capital market guidelines and tax breaks. The advantages of investing in forests are many. Forestry investment can offer financial as well as environmental, social, and governance (ESG)

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CORPORATE STRATEGY | MANAGEMENT

Hosea Kili, Group Managing Director/ CEO - Laptrust. PHOTO: COURTESY

benefits. Investments in sustainably managed forests can support rural economic livelihoods, produce multiple environmental benefits, and create attractive risk-adjusted returns for investors. Most forests have rela-

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tively long production periods, which can provide for investments of long financial durations. As a result, forestry investment s can be attractive to pension plans, which have long-dated liabilities and social and environmental objectives, along with their financial obligations. Despite these generally favorable characteristics, pension schemes’ investment in forestry has mostly been limited to OECD countries. These include: the United States, Canada, Sweden, Germany, Denmark, Finland, Germany, France, Spain, Australia, New Zealand, Korea, the UK, Brazil, and Uruguay. According to a 2019 study by TimberLink, total institutional investment in forestry investments totaled USD48 billion, of which public pension plans held USD 23 billion and sovereign wealth funds another $3 billion. With pension funds increasingly looking at the impact of their investments, as well as the financial returns needed to pay out pensions, the time is right to take another look at forestry as an asset class. Barriers to entry can be addressed through capacity-building and partnerships between experienced, international pension funds and their domestic counterparts in emerging markets. Based on sufficiently supportive country and market enabling conditions, forest restoration pledges, and the size of domestic pension assets, there are most certainly several countries offering potential investment opportunities for international and domestic investors to explore. Initially, over 90% of forest investments by institutions were in the U.S; however, as this market has matured, increased competition for assets and a decline in returns have occurred. As a consequence, investors have increasingly sought new investment opportunities in non-U.S. markets, especial-

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ly Latin America, Australia, and New Zealand, as well as modest interest in Asia, Africa, and Europe. According to the Kenya Forestry Research Institute, forestry contributes 3.6 percent of Kenya’s GDP, excluding charcoal and direct subsistence uses. The research indicates that forest and tree resources support the country’s most productive sectors, particularly agriculture, fisheries, livestock, energy, wildlife, water, tourism and trade. However, as the country’s population grows, the future of wood has been grim with increasing demand for various wood products against a diminishing resource base. Wood deficit in Kenya stands at 10.3 million cubic meters. Kenya can only meet 70 percent of its demand through sustainable supply meaning, small and medium-sized enterprises are forced to operate below capacity. Meeting this deficit has led to unsustainable extraction of wood from natural forests and informal imports. In this regard, commercial forestry has the potential to bridge the wood deficit in the country and increase forest cover. Success lies in extending commercial forestry to private, community lands and arid and semi-arid lands that constitute over 80 percent of the total land in Kenya. Investing in forests provides a significant opportunity for pension funds seeking to address climate change, protect nature and create jobs, in a single intervention. Additionally, forests have a net carbon absorption of around 7.6 billion tonnes of carbon per year. Responsible forest conservation and restoration can be a cost-effective solution to help remove atmospheric carbon and build climate resilience. As forests are also home to 80 percent of the world’s terrestrial biodiversity,

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MANAGEMENT | CORPORATE STRATEGY

they are an essential landscape in our efforts to preserve habitats and protect natural heritage. In addition, the sustainable management of forests, tree farming could create $230 billion in business opportunities and 16 million jobs worldwide by 2030. Furthermore, investments in forestry are an effective hedge against inflation. Returns from the asset class have a positive correlation with inflation, largely due to biological growth and how timber prices and land values track prices in the overall economy. Moreover, by investing direct equity in forest conservation and restoration projects, pension funds in developed markets generate carbon credits, which are bought and sold through regulatory compliance markets or voluntary carbon markets. As the market architecture for the carbon markets is strengthened and stronger standards are introduced to ensure demand and supply integrity, carbon finance can pay for conservation and forest protection. Many investors in the carbon and timberland space are predicting that the price of carbon will soon stabilize, creating a new revenue stream to fund forest conservation and restoration projects globally, while also delivering market returns on these investments. East Africa, and indeed most of sub-Saharan Africa, offers great potential for forest-sector development based on greenfield plantations. Advantages include: considerable land not currently used for food production is apparently available; the high innate productivity of this land; population and economic growth driving strong growth in domestic demand; much of Africa’s energy needs are met by wood and many countries import considerable amounts of wood products. Between 1995 and 2008 three pri-

vately funded entities gained assess to 355,000 ha of nominally vacant, productive and plantable land in Mozambique with the intention of establishing high-yield plantations of pines and eucalypts both for domestic consumption and export. The entities include: Green Resources, a Norwegian company headquartered in Tanzania and first financed primarily by Norwegian investors; Global Solidarity Forestry Fund, an investment entity started by the Swedish Church, Diocese of Vasteras. Other investors included the large Dutch pension plan APG, the Harvard University endowment, and a Danish pension plan advised by

47 Trillion Estimated amount in USD invested by the world’s pension funds

According to The Organization for Economic Co-operation and Development (OECD)

the International Woodland Group, a well-experienced Danish timberland investment advisor. Closer home, the Maris Group - an investment holding company, diversified across five key economic sectors in nine countries, has invested in forestry in South Sudan. It is the country’s only sustainable forestry plantation and is Africa’s second largest teak grower with 2,000 hectares of planted teak. In 2016, the Maris Group also set up Equatorial Teak Products, Kenya’s leading supplier and manufacturer of high quality, finely crafted teak prod-

March 2022 Management Magazine

ucts. These includes flooring, decking, doors and windows, outdoor furniture and treated teak. Hailing from the 10-point charter, adopted as part of COP 26, Kenya private sector commitment to climate action; commercial forestry presents an ideal space to take action. Helping stakeholders catalyze the growth of the Kenyan commercial forestry sector could have a significant impact. It would create jobs, raise incomes and increase tax revenue while achieving the climate action objectives. As the Chairman of APTAK (Association of Pension Trustees and Administrators of Kenya), my proposal is that the government leases huge chunks of its land to pension funds at nominal rentals to plant forest plantations as an investment on long term basis as a contribution to greening Kenya and achieving the target of 10% forest cover. I would also like to urge Kenya’s Development partners to take a lead role in taking the Greening Agenda to the grassroots; by working directly with Women and Youth groups. County Governments on their part should consider passing a law to motivate ‘Tree Farming’ along all roads in Kenya. This will provide a great Green Belt, which will be very useful in dealing with motor vehicle emissions and combat heating of the atmosphere. The individual land owners will then be granted permission to harvest the trees and re-plant more, creating a source of income for them in addition to the positive environmental impact.

The Writer is the Group Managing Director/ CEO of the CPF Group – a group of companies offering a dynamic pool of services in Retirement Benefits Administration, Insurance, ICT and Property Services.

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29 KIM is accredited by the Council of Legal Education (CLE)

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YEAR I MODULE II Item Kshs Tuition 35,000 @ 5,000 per unit Administration 4,500 Examinations 8,000 Membership 1,500 Attachment 3,000 Total 52,000 YEAR II MODULE I Item Kshs Tuition 35,000 @ 5,000 per unit Administration 4,500 Examinations 8,000 Membership 1,500 Attachment 3,000 Total 52,000 YEAR II, MODULE II Item Kshs Convocation 4,000 Research Fee 6,000 Total 10,000

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MANAGEMENT | SPECIAL REPORT

BY GORETTI KIMANI

Creating Wealth Through Real Estate Investment Real estate is profitable even during recession, this is why financial advisors consider it as one of the safest investments BY GORETTI KIMANI

W

hile there are myriads of investment options in any economy, the real estate industry is one of the key economic drivers making real estate investors’ quest for wealth creation a more tenable bet than investor from other industries. Real estate is generally understood as property that consists of land and buildings where the investors evaluate the market to build long-term wealth by combining the appreciation of housing prices plus rental income.

It includes purchase of properties such as land, building, infrastructure and other tangible properties which are immovable but transferrable as an investment to generate income. Indeed, the real estate investors tailor investment strategies according to their respective objectives and the risk-return trade-off. According to an article authored by Marco Santarelli dated July 2021, there is no shortcut to getting rich or amassing wealth quickly in real estate but an

March 2022 Management Magazine

intelligent strategy coupled with the right advice, systems, dwarfed risk averseness and determination to succeed will undoubtedly birth financial affluence. There are about four main types of real estate investments. They include residential real estate which refers to real property i.e., land and any buildings on it that is used for residential purposes. Examples of residential real estate are single-family homes that are standalone, townhouses, condomini-

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SPECIAL REPORT | MANAGEMENT ums as well as multi-family houses that include duplexes and fourplexes for residential purposes. A real estate investor can rent out the residential property and generate rental income. Second is commercial real estate which refers to land and buildings specifically zoned for business purposes only and includes office buildings, hotels etc. Third is industrial real estate where the properties are utilized for industrial activities such as production, manufacturing, assembly, warehousing, storage and even distribution. Fourth is land real estate which refers to vacant or raw land purchased for future development and also for natural resources e.g. minerals and water. As an investor with the dream of gaining handsome returns on investments, you must be cognizant of the various unique characteristics of real estate and leverage on them to take your venture to the desired direction and profitability. These include acceptability as a universal collateral where any financier like banks and other institutions readily accepts real estate as a collateral. Second is tangibility of real estate and it has physical existence. Third is the value enhancement of real estate where an investor benefits from both rental income as well as the appreciation of the property. Real estate allows for leveraging for investors since financiers have a higher appetite to finance real estate compared to other investment options. Real estate is profitable even during recession, this is why financial advisors consider it as one of the safest investments because done strategically and wisely, they yield profit or generate income even at the time of recession. On the flipside, real estate has no

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working, direct mail to the sellers, public records, expired listings as well as contractors and builders. House-hacking: This refers to a real estate investor creating a way to generate income from his or her home. An investor can buy a multifamily property to reside in while renting out the others so that tenants pay the mortgage while the owner build equity while maintaining the property. . Single family rentals: This is where single-family homes are rented out to tenants who gets attracted to them because they are generally larger than multifamily units, are located in more suburban areas and also have access to outdoor space. Both retail and institutional investors are attracted to single family rentals as their demand is significantly higher where they buy the houses, rent them out then sell the properties later. Commercial properties: This refers to real estate that is used for business activities i.e. either buildings that houses businesses or land used to generate profits as well as large residential rental properties. Examples of commercial properties include malls, grocery stores, offices, industrial estates, manufacturing shops etc Holding mortgage: This is an agreement by the current owner to extend credit to a willing buyer purchasing their home, land or other real property. The seller in this case earns interest on the loan as the buyer pays agreed monthly instalments to the seller and not the bank.

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There is no shortcut to getting rich or amassing wealth quickly in real estate but an intelligent strategy coupled with the right advice, systems Marco Santarelli guaranteed or fixed maturity period, leaving the owner with the task to speculate and resolve to hold or sell the property meaning that the investor should be well versed with real market dynamics. Again, real estate has low liquidity as it is a capital asset hence the investor cannot use it to urgently raise cash like in the case of stocks and equity. Selecting and delving into the real estate as the investment option and wealth building vehicle also calls for equipping oneself with the industry sector’s knowledge and systems of generating revenue streams to both save money while increasing cash flow as ‘cash is always the king’ in any business venture. Below are some of the techniques employed by real estate investors to generate income: . Flipping and fixing: This is where a real estate investor purchases an investment property, rehabilitate it and sell it for a profit. Ideal fix and flip deals can be sourced by employing astute strategies in order to attract increased profitability which include among others; Multiple Listing Services (MLS), net-

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GORETTI KIMANI is a full member KIM, IHRM, Women On Board Network(WOBN), Women In Business Network, Author and a HR practitioner. [email protected]

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MANAGEMENT | BIG IDEA

Using The 5 Whys To Solve Problems There comes a point where we need to stop just pulling people out of the river. We need to go upstream and find out why they’re falling in BY JOSEPH NGIGE

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n many studies and reports on soft skills needed for the 21st Century, the two vital skills that are often needed are problem solving and critical thinking. In the 2020 World Economic Forum’s Future of Jobs Report, critical thinking and problem solving are listed among the top skills that employers believe will grow in prominence by 2025. It is noteworthy that the listing of the two skills have been consistent since the first report was published in 2016. Effective problem solving is one of the key attributes of good leaders and organizations. Problem solving is not

a straightforward process and it calls for hard work and attention to details in defining the root cause of the problem at hand. Understanding the problem is the first step of any problem-solving activity. Consequently, the effectiveness in solving the problem is achieved or lost at the point of defining the problem. The quote “A problem well stated is half solved”, which is usually attributed to Charles Kettering, brings this point home. Kettering, an American inventor and engineer was head of research at General Motors, USA from 1920 to 1947 and he was a holder of close to two hundred patents, and

March 2022 Management Magazine

thus he must have made this quote from a point of knowledge. Recently, we had several incidents of nationwide electrical power outage due to collapse of a number of transmission towers. In a statement, Kenya Power, the national power distributor said four pylons supporting the power line, which connects Nairobi to the Kiambere hydroelectric station had collapsed due to vandalism that had weakened the structures. Some former classmates and I engaged in an online discussion on what each of us thought should be the solution to these nationwide power outages. The proposed solutions were many and varied, some bordering on the absurd. On the face of it, any of the above solutions can address some of the symptoms but not the root cause of the problem. For example, replacing the steel infrastructure with concrete systems will eliminate vandalism, but this will be at an uneconomical high but avoidable cost. In fact, such a response would be equivalent to what Professor PLO Lumumba refers to as responding to a mosquito bite with a hammer. While use of steel infrastructure exposes the towers to the risk of vandalism, there are possible solutions to the vandalism problem. As the former Anglican Archbishop Desmond Tutu said, “There comes a point where we need to stop just pulling people out of the river. We need to go upstream and find out why they’re falling in”. Going upstream and finding out why they are falling in means that we are addressing the root cause which, when addressed, will eliminate the problem for good. In the case of power outages due to collapsed towers, we need to establish the root

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MANAGEMENT | BIG IDEA SOME SUGGESTED THE SOLUTIONS TO NATIONWIDE POWER OUTAGES • • • • • • • •

Banning scrap metal business in Kenya so that there is no incentive for vandalism of steel items Replacing the steel towers with alternative solutions such as concrete towers Using underground high voltage transmission lines instead of overhead ones Creating adequate power redundancies similar to what is used in internet and other telecommunication infrastructure Transferring responsibility for the transmission lines from KETRACO (Kenya Electricity Transmission Company) back to Kenya Power Electrocuting anyone who tries to vandalize the steel parts from the towers Installing close circuit television (CCTV) cameras in the built-up areas and having them manned on 24 hour basis by a rapid response team Deploying the Army to guard these transmission lines and shooting vandals on sight since power is a matter of national security.

cause of vandalism of the steel parts. One way to do this is by using the 5-Whys analysis. All of us can possibly remember times when we assumed we had identified the cause of a problem and solved it, only to have the problem arise again. The recurrence of the problem is enough evidence that we had actually not established the “true” root cause of the problem, but that we had only dealt with some symptoms. The 5 Whys (also called the whywhy) method can be used to prevent these errors in root cause analysis and therefore assist us to solve the problems once and for all. The 5 Whys method allows to dig deeper into the causes of the problem until you establish the root cause, which when addressed will eliminate the problem effectively. The method involves asking “why” repeatedly to uncover successive layers of the problem, presented as symptoms, until you cannot ask

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any more questions. You begin the process by looking at the problem and asking why it happened. Once you answer this question, you ask why that (that is, the answer to the first why question) happened, then repeat this process until you can’t ask any further questions (whys). Typically, by the time you ask why five times, you will have established the root cause. However, the number 5 is just a rule of thumb. In practice, simpler problems will be solved by asking “why” less than 5 times while more complicated problems will be solved by asking “why” more than 5 times. The 5 Whys method is only applicable to problems that do not require the use of advanced data analysis. For complicated problems, especially in operations and quality management, use should be made of other applicable tools such as pareto charts, fish-

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bone diagram, scatter diagram and failure mode and effects analysis (FMEA). The good news is that most of the problems that we encounter on regular basis can be solved using the 5 Whys method. Albert Einstein, an American inventor said, “Given one hour to save the world, I would spend 55 minutes defining the problem and 5 minutes finding the solution”. In addition, Russell L. Ackoff stated that “We fail more often because we solve the wrong problem than because we get the wrong solution to the right problem”. The lesson we draw from the above quotes by Einstein and Ackoff is that even if you get the right answer to the wrong question as a result of wrongly defining the problem, the right answer is still a wrong answer in the context of the problem being solved. It is akin to sitting and passing an exam paper in a unit that does not belong to the course that you are pursuing. It is imperative, therefore, that even as you ask the “why” questions that you ensure they are the right questions for the right problem. That is indeed where you should focus the most effort. More importantly, simplify complicated problems by breaking them down into simpler questions. After all, as Leonardo Da Vinci stated, “Simplicity is the ultimate sophistication” while recognizing as Albert Einstein did that in solving problems, “Everything should be made as simple as possible, but not simpler”.

The author is a full Member of KIM and the CEO of an integrated agribusiness company who is passionate about operations management Email:[email protected]

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MANAGEMENT | SMART SOLUTIONS

Imagine Digitally Driven Real Estates Innovative design and construction techniques can help lower upfront development and retrofit costs, supporting the affordability agenda. BY NANCY MARANGU

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he Oxford Economic databank estimates that real estate is a major investment asset that accounts for 10% of global Gross Domestic Product (GDP). This has been propelled by the uptake of emerging digital

technologies. The World Economic Forum report on the Framework for the Future of Real Estate 2021, underlines the future vision of cities and buildings based on four pillars: liveability, sustainability, resilience and affordability. Technology and

March 2022 Management Magazine

digital solutions are among the most critical enablers driving the new era of real estate, allowing not only customization of spaces according to occupant needs e.g. temperature, humidity but also taking building operations to the next level and addressing sustainability and affordability. Data-driven and autonomous buildings continuously learn, adapt and respond to needs of people and environment. This is made possible through continuous feedback of rich data made available by the buildings’ digital infrastructure. It provides lessons about how buildings’ spaces, places and services are being consumed to continuously improve products and design decisions for the benefit of people. It also resolves the challenge of lack of systematic and consistent ways to track data and the text-heavy nature of the data, whether in the form of property

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MANAGEMENT | SMART SOLUTIONS

Business leaders need to act fast to take away the pressure on their companies’ liquidity position”

descriptors or deal terms, such as lease terms or construction contracts. Investing in digital capabilities can yield significant savings on each project phase. While the industry has tried to incorporate building information modelling (BIM), the anticipated savings and efficiencies

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have not fully met expectations, resulting in a move towards digital twins, design automation, physicsbased modelling and simulation technologies. Furthermore, during construction, digital tools may be used to develop and simulate variations of construction planning, scheduling options and then evaluate the trade-offs between those options in digital form, prior to executing them in the field. Innovative design and construction techniques can help lower upfront development and retrofit costs, supporting the affordability agenda. With respect to the portfolio approach, focus should be on optimized regions addressing local markets, not on individual locations. Machine learning techniques enable retailers to identify addressable consumer demand, project store and digital performance, and anticipate the operational benefits and costs of legacy decisions. While visualization tools facilitate real estate professionals to build and vividly portray revenue and margin scenarios involving store openings, relocations and closings in a market in real time. The digital capabilities enable digital asset management. Simulations can help address sustainability by maximizing asset efficiency, decreasing energy and utility costs, and facilitate predictive maintenance use cases, which can result in savings on maintenance costs. As such, advanced modular telecommunications solutions (connectivity) provide speed to manage great volumes of information and can also be upgraded as technology evolves. In addition, power capacity requirements may increase from 1.5 to four times depending on the level and type of automation that the site integrates, increasing the importance of sourcing

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clean energy. Critically, industrial and retail real estate have been upended by e-commerce, and both asset classes will require design features and improved digital capabilities to respond to shifting consumer behaviour. This necessitates stakeholders within the real estate community (policy-makers, lenders, investors, tenants, contractors) to actively collaborate so as to ensure the design and development of more effective solutions to industry challenges. The role of policy-makers ought to focus on industry needs and concerns to ensure policy is actionable for implementation. The policy-makers are the pen holders to ensure that the rights and provision of persons with disabilities (PWDs) are also put into consideration. Importantly, partnerships with tenants, operators and asset managers to define cost-sharing mechanisms could encourage the implementation of new solutions that improve operations while reducing costs. Subsequently, tangible collaborations with academia and civil society are also fundamental. Cooperation with academia can provide businesses with the latest research, innovation and technology information, which can be incorporated into developments. The place of academia also ought to be keen to be more deliberate to provide explanations and possible that provide accessibility for PWDs. Whereas, collaboration with civil society ensures that citizen needs are fully understood, resulting in humancentric developments that encounter fewer obstacles during the urban NANCY MARANGU is a communication & public policy analyst based in Nairobi. Email: [email protected]

March 2022 Management Magazine

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MANAGEMENT | THE ENTREPRENEUR

Why Potatoes are Quick Cash For Taita Farmers Venturing into potato farming for the youth of Taita Taveta County is proving to be a profitable challenge BY MERCY GAKII

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he young generation has shied away from agricultural activities, instead shifting to urban areas in search of jobs and an alternative livelihood. But the narrative is changing for residents of Werugha Ward, in Wundanyi Constituency, in Taita Taveta County. A visit to the otherwise small size farms in the area is sure proof, as farming land is expensive to rent, while the land sizes have been cut to the smallest sizes, eighths of an acre for many homesteads. The farms, found in the highland areas of Wundanyi, are very small in size due to continual land subdivision over years. The land is usually divided into an eighth of an acre, and renting an acre for a year costs Kenya Shillings 20,000. This is quite an expensive price, but it is occasioned by the lack of land. “More young people are willing to try potato farming because within three months, they have their harvest and cash in their pockets,” comments Anthony Kariku, Taita Taveta County Potato Coordinator. The demand is so high, he says, that farmers sell their produce from the farm to the co-operative society, which then sells to farmers. Martha Mwakina is the secretary

of the Mbang’amboi Farmers’ SelfHelp Group. She also represents the youth, whom she encourages to rethink farming as a business. Her group is among 80 Common Interest Groups (CIGs) in Taita. Started in 2018, it is made up of 20 members, who are all farming potatoes on their farms. The group began by planting snow peas, French beans among other horticultural crops. In 2020, they were certified by Kenyan regulator Kenya Plant Health Inspectorate Services (KEPHIS) as a

March 2022 Management Magazine

seed bulker, or producer. They planted the Unica potato variety, and harvested 70 bags of potatoes in the first season making a cool Ksh237,000. In the second season, the group borrowed Ksh30,000 to boost their farming, planting seed on 1.25 acres of land. From this portion, potato seed production reached 29 bags, bringing the self help group some Ksh54,000 in the second season. This enabled them to clear their outstanding debt and remain with some income. Farmers have to contend with a

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THE ENTREPRENEUR | MANAGEMENT number of challenges, key among them erratic rains, cost of fertiliser, and growing the seed. Though farming is promising good returns, farmers have to contend with a number of challenges, key among them erratic rains, cost of fertiliser, fees and levies paid for continued certification processes, and challenges of keeping up with the standards set by KEPHIS. They are contending with low soil fertility in the area, hence they must buy and apply additional fertilizer whenever they are farming. Cost of fertilizer has risen by a notable margin, and this could put pressure on the farmers this year, according to Reuben Kamau, the CIP field officer in Taita. The farmers are using crop rotation so as to improve soil health before they replant potatoes later in the year. They must pay for soil testing before planting every season, which costs Ksh4,000 per sample. Bringing in specialists from KEPHIS to visit their farms will further cause a dent in their pockets because the farmers must foot their fuel bill, which is charged at Ksh

Martha Mwakina is joined by other farmers on her farm in February 2022. PHOTO: Mercy Gakii

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Anthony Kariku, Taita Taveta County Potato Coordinator. PHOTO: Mercy Gakii

58 per kilometre. As climate change effects continue to bite, rain shortage is another problem that they must cope with by using irrigation as an alternative in order to keep farming. They however need irrigation equipment to enable more land to be farmed. “When the rains are good, we use them in our farming. However, when the rains are low, we look for alternatives, including irrigation,” comments Renson Kifumbo, the group chairman. He decries the continued deforestation which has affected rainfall patterns over the past decade. The few remaining forests, some as small as two square metres, are under government protection A good challenge for the group is that they are still unable to meet the demand for seed within their county, hence they are working hard to get more land to plant more seed for their farmers. Before the group was certified, costs of buying seed and transport were also quite high, but since certification, they have cut those costs by up to 90

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percent, Kifumbo, who doubles as the marketing officer, adds. The group has benefited from a lot of agronomy training from the potato international centre (CIP) in 2019 which helped with their first certification by Kenya Agriculture & Livestock Research Organisation, KALRO. Demand for potatoes is very high in the county, driven by changing preferences in diets and the growth of snacks as an eating habit. Younger people prefer tastier meals as compared to traditional foods such as Githeri or cassava, hence consumption of potato-based meals is on the rise, comments Reuben Kamau, the CIP field extension officer with the AIFSD project in the county. Fried foods, such as chips, crisps and other snacks have continued to attract the interest of younger consumers. “People’s lifestyles are changing over time. There is preference for food that does not take long to cook, such as French fries, mashed potatoes, Viazi karai and other potato-based meals. Population is also on the rise, hence feeding these numbers exerts demand for potatoes,” he says. The crop is also proving popular with younger populations because it only takes between two and three months between planting and harvesting. So far, by end of 2021, there were 3,200 farmers doing potato seed production in the county, taking a total of 500 hectares, up from 50 hectares two years ago when they started, commented Davis Mwangoma, the county executive member for Agriculture, Livestock, Fisheries and Irrigation.

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MANAGEMENT | NEW KNOWLEDGE

How your Electric Appliances Affect your Power Bill BY NICKSON BUKACHI

The amount of electricity you use in your house is first determined when you purchase that television set, iron box, electric heater or bulb.

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magine how life would be without electricity. Picture the life our great grandfathers lived; dark and largely manual. Gloomy perhaps? We rely on electricity to power nearly everything – industries, homes, computers, fridges, among others. Simply put, without electricity, we will have to roll our lives back more than 100 years where households relied on kerosene lamps, candles, sun drying and ice boxes to store food and

open fires for space heating. Most of these services are currently achieved “at the flick of a switch”. Simple, right? But at what cost? In Covid-19 times, we find ourselves spending more time at home than anywhere else. We are therefore consuming more electricity than before – studying online, working from home, watching TV more, cooking more, among others. All these activities require access and

March 2022 Management Magazine

use of electricity. In Kenya, electricity is mainly supplied by Kenya Power. The Energy and Petroleum Regulatory Authority (EPRA) approves the tariff structure for a three-year period. The tariff structure for domestic consumers defines households that consume less than 100 units (kWh) and those that consume above 100 units (kWh) per month. The former category is called lifeline customers. The two categories have their bills in three main components: energy charge, taxes, and levies. What is the tariff difference between the above categories? Customers who consume more than 100 units pay a higher energy charge than those that consume less than 100 units in a month. To illustrate this, see Table 1 for a typical purchase of electricity for the same customer who purchased tokens for Ksh. 2,000 but was billed in the two categories for different months. From Table 1, we can see that the energy charge, which is the actual

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MANAGEMENT | NEW KNOWLEDGE Lifeline customer - Ksh. 2000 Component Amount (Ksh)

Energy Charge (110 kWh) 1106.30 VAT 267.51 Fuel Energy Charge 429.22 Forex Charge 84.59 EPRA Charge 3.31 WARMA Charge 1.77 REP Charge 55.31 Inflation Adjustment 51.99 Table 1

Consumption more than 100 units a month – Ksh. 2000 Component Amount (Ksh)

Energy Charge (78.37 kWh) 1238.29 VAT 266.82 Fuel Energy Charge 311.13 Forex Charge 81.44 EPRA Charge 2.35 WARMA Charge 1.23 REP Charge 61.91 Inflation Adjustment 36.83 Table 2

energy that we use to run our electric appliances, makes up the lion’s share of our electricity bills. A household consuming less than 100 units of electricity a month gets 110 units as opposed to the one that consumes more than 100 units which gets 78.37 units. Just by reducing one’s consumption to below 100 kWh a month one can get 30 units more a month. To understand how to manage these bills, it is important to understand the concept of a unit or a kWh. An electricity unit or kWh is a function of the power rating of the electric appliance in watts (W) and the time you use the electric appliance. Let us consider the electric appliance rating to be the size of a bucket and the time of use, the number of times you use a bucket to draw water from a storage tank. If you use a 10-litre bucket to draw water once per day

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from a 100-litre tank, you will draw the water for 10 days. However, if we increase the size of the bucket to 20 litres per day, you will need 5 days to draw the same water from the same 100 litre tank. What if you increase the frequency of drawing the water per day, that is, the number of hours you use your fridge or bulb or television? It basically means, the bigger the size of the bucket (rating of the electric appliance) the more water you draw to use. The higher the frequency of drawing (hours of use of the electric appliance) the more the units (kWh) you consume and hence the higher the electricity bills. The amount of electricity you use in your house is first determined when you purchase that television, iron box, electric heater or bulb. These electric appliances are necessary for our comfort, but we do not necessarily

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need to buy a 20 litres bucket, if a 10 litres bucket is sufficient. When purchasing a bulb for instance, you will find that one works with a 3W LED bulb instead of a 50W incandescent lamp to light a bathroom. The bigger 50W bulb will be drawing more power (water) and wasting it for work that can be done with a 3W bulb. The next time you purchase that television or bulb check the figure that is labelled power rating in W on the nameplate and consider if a lower rated appliance can still work. In 2016, EPRA introduced a labelling programme to educate customers on energy efficiency - refrigerators, air conditioners, lighting bulbs and tubes are labelled using stars. The appliances labelled with more stars for the same size and function use lesser energy (the more the stars, the more the savings). The use of appliances is associated with our behaviour. How frequently do we open our fridges in a day or leave our lights/television running in an unoccupied room or use your oven to boil water? Every time you open the fridge door, you let in warm air. It means the compressor must work harder to cool this air to the fridge operating temperature. Good practice would require that a household identifies what they need for a day, open the fridge in the morning, remove it and have it closed for the rest of the day. This will save you some units at the end of the month. To manage household electricity bills we need to procure energy efficient appliances and reduce the idling time of electricity using appliances.

The author is a Senior Renewable Energy Officer at the Energy and Petroleum Regulatory Authority (EPRA)

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MANAGEMENT | TECHNOLOGY

Safer Internet Day: Internet Proliferation A DoubleEdged Sword According to KNBS data, 20.6 million Kenyans aged between three and 34 years own a mobile phone. 6.1 million handsets are in the hands of youth aged between 25-34 years. 4.6 million mobile phones belong to those between 18-24 years while 44,777 mobile phones are in the hands of children aged between three and four. BY ALEX OWITI

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his is the age of the Internet, and safety is critical. We enjoy benefits of the Internet, including communication, doing business, and entertainment, but the risk of being on the Internet has increased in the last decade. Today most businesses and individuals are more vulnerable in cyberspace because of the insecurities that come with the loopholes on the Internet. From a business perspective, most businesses today are trading online. As a result, cyber-criminals continue to target them with more

Kenyan cyberlaws should intensify jail terms and fines to make it prohibitive to cyberbully online users

March 2022 Management Magazine

sophisticated tools and ransomware, stealing passwords from payment platforms. On the other hand, cybercriminals are also using emails through phishing to con people and using social media platforms to impersonate people and steal from them. An Interpol assessment of the cybercrime landscape with the COVID-19 pandemic has ranked phishing as the top global threat to businesses during this pandemic. The assessment report also notes that cybercrimes affect all countries, but weak networks and security make countries in Africa particularly vulnerable.

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MANAGEMENT | TECHNOLOGY While Africa has an estimated 500 million Internet users, this equates to just 38 percent of the population, leaving huge potential for growth. Africa has the fastest-growing telephone and Internet networks globally and makes the broadest use of mobile banking services. This digital demand, coupled with a lack of cybersecurity policies and standards, exposes online services to significant risks. As African countries move to incorporate digital infrastructure into all aspects of society – including government, banking, business, and critical infrastructure – it is crucial to put a robust cybersecurity framework into place. The INTERPOL report also identifies the most prominent threats in Africa, based on input from INTERPOL member countries and data drawn from private sector partners. Worst is that children are more vulnerable on the Internet than ever before. Sex pests and paedophiles are now hunting for children on social media platforms, especially those with access to mobile phones. This is done through Internet trolling and cyberstalking, which are common tactics in cyberbullying. According to the Kenya National Bureau of Statistics (KNBS) data, 20.6 million Kenyans aged three and above own a mobile phone. Most of these gadgets are in the hands of youth aged between 25-34 years, holding 6.1 million handsets. They are followed by those between 18-24 with 4.6 million mobile phones, while another 44,777 mobile phones are in the hands of children aged between three and four. It has become rampant because of the COVID-19 pandemic lockdowns, as people worldwide, including kids,

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spend 20 percent more time on social media than they were pre-pandemic. According to the International Telecommunications Union (ITU), while 94 percent of young people aged 15-24 in developed countries are online, more than 65 percent of young people in developing countries are online. UNICEF reports that one in three young people in 30 countries said they had been a victim of online bullying, with one in five reporting having skipped school due to cyberbullying and violence. Safety online, therefore, cannot be ignored. We must protect ourselves and the children from cyber-attacks and bullying. Initiatives such as developing

THE TOP FIVE CYBER THREATS ACCORDING TO INTERPOL •

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Online scams: fake emails or text messages claiming to be from a legitimate source are used to trick individuals into revealing personal or financial information; Digital extortion: victims are tricked into sharing sexually compromising images which are used for blackmail; Business email compromise: criminals hack into email systems to gain information about corporate payment systems, then deceive company employees into transferring money into their bank account; Ransomware: cybercriminals block the computer systems of hospitals and public institutions, then demand money to restore functionality; Botnets: networks of compromised machines are used as a tool to automate largescale cyberattacks.

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games that educate the children on detecting and preventing themselves from online dangers are good in the right direction. Recently, Communication Authority launched a game developed by Usiku Games dubbed Cyber Soljas. Cyber Soljas is a game that teaches children, young and old, how to recognize threats and how to fight them. The game is an action-packed fighting game like typical Superhero Games, almost similar to the Game Version of Lupita’s new animated girl superhero - Super Sema. The game deals with dangers presented through simple language with real kid heroes and dangerous imaginary bad-guy characters; for example, a big, bad ape might be the Identity Thief who carries around a backpack full of people’s names. Some of these dangers include Identity Theft (through password and image scamming), Catfishing (Pedophiles), Cybercrime (Stealing Cash through scamming on payments and account details), and Fake News (Knowledge on misinformation by pseudo-accounts and fake sites). Meanwhile, cyber laws in Kenya should intensify jail terms and fines to make it prohibitive to participate in cyberbullying and other dangerous online activities that involve fraud. Parents should also monitor their children on who they are interacting with online and use cyber security tools to prevent cyber-attacks from both within and without. The Internet is a double-edged sword, and we have to utilize it carefully as we monitor the dangers it comes with it.

The author is director of communications at Usiku Games Email: [email protected]

March 2022 Management Magazine

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MANAGEMENT | ENTERTAINMENT

BOOK REVIEW

STEPPING UP

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saw this quote in a bus shuttle: “You are so busy doubting yourself while so many others are intimidated by your potential.” This triggered the curiosity to dig deep into my capabilities. At that point in my life, I knew so well that I was operating below my potential. I was not fully utilizing my capacities. First, I had no idea how or where to start.so, I began journaling over a decade ago my journey to maximis-

September March 2022 2021 Management Management Magazine Magazine

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MANAGEMENT | ENTERTAINMENT ing my potential and, some of the lessons are what this guide is on. Secondly, I was inspired by my mother’s questions. Born in central Kenya, where we have our family farm, there are two agricultural seasons in a calendar year. During the harvest period, my mother always calls me to report that she is harvesting fruits and vegetables. Mum does not end the conversation without asking me “Are you harvesting as well? What have you harvested?” My answer was always, yes, my harvest is in form of salary or fees or sometimes nothing. She then asks, “What else have you harvested in addition to the fees/ salary?” Like most of us, my answer was always, “Nothing more but I’m planning to expand my streams of the harvest.” These are the kinds of questions that have helped me become aware of the seasons and have a keen eye on the streams of harvest available for me in each season. You only get a salary when you are employed, fees when you consu lt or profit when you engage in business activities. It is upon us to create structures through which the harvest can be received. The most miserable situation for one to be in, is knowing you can tackle more than you are doing, yet you have zero idea on what, when and how to start. This situation becomes worse if you have no energy to go the extra mile. It keeps getting worse if prolonged and, births hopelessness. If you are in this situation, it means you are consistently operating below your potential and your whole person appears to have adapted to

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The most miserable situation for one to be in, is knowing you can tackle more than you are doing, yet you have zero idea on what, when and how to start

that low level. Change thus, calls for hard work and discipline on one’s part. This guide gives the reader an exciting journey of selfdiscovery. Stepping up gives the reader the starting point. Employ tested practices that allow you to reinvent yourself- commit time to internalize the content, complete the assignments and, act! The book is written for someone who knows they are capable of doing so much more than they are doing. It is for someone who is ready to do what they were created to do. It

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is for the person who does not know where and how to start living at their full capacity. I wrote this book for someone who is tired of the status quo and is ready for a challenge. Each chapter is designed into three sections: The first section gives the information about the key concept: The second gives reflective questions that allow the reader to self-search. This section, has writing spaces to allow you to put down key thoughts and ideas. The third section has declarations which help the readers affirm themselves. Concurrently, the guide starts by assisting the reader identify their potential. Identify the latent or dormant capabilities that if put to work then one can be propelled to greater levels. You then learn how to use your habits to influence and enhance your operational capacity. The principles in this guide will challenge you to get out of your comfort space and step up to the reality of your ideal space. To get most out of this book, you need to invest your time and resources. Set aside time daily to read a chapter. You will need positive energy (if studying alone) and relational energy (if you are studying in a group) and, make every effort to complete the assignments on the spaces provided.

JENIFFER NYAMBURA is a mission-driven Operations expert and entrepreneur. She has over a decade of experience in Governance, Finance, Leadership, Training and Mentorship. She has worked in the development sector in several countries and served in multiple boards.

September March 2022 2021 Management Management Magazine Magazine

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MANAGEMENT | OFFICE DIARY

Know Thyself, But Know Others Too Key in ensuring personal peace at the workplace is understanding that people are different, work differently, approach problems differently

BY JACKIE MUKAMI

BY BRENDA INEGA

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n my secret place, I admire matatu drivers. I admire how they weave in and out of traffic unperturbed, make up new routes where none existed, speed off on the wrong lane as if they own the world, never held up if they can help it. Great matatu drivers must be choleric. And my usual driving partner must be phlegmatic. Because he is never fazed by traffic. Phlegs survive on energy conservation. Overlapping and interweaving through lanes and searching for alternative routes on Google Maps takes energy. So my phleg just chillaxes and moves with the traffic flow. I used to get irritated. I’m impatient. I thrive on efficiency. But now I realise he’s no matatu driver. I anticipate he will not overlap or chase the moving queue. I got some peace. Our work colleagues are the same. There’s one who will irritate you because they wait for the last possible moment to submit or start doing their report. Or they are the other extreme who start out so early they become a thorn in the flesh for the procrastinators. Some like efficiency. Others will find the longest way to achieve results. Key in ensuring personal peace at the workplace is understanding that people are different, work differently,

March 2022 Management Magazine

approach problems differently. As long as everyone’s goals are clear, there is so much more peace in allowing people to be themselves. Not everyone enjoys racing after an ambulance to beat traffic. Some people process information by talking. And they may sit next to a person who ruminates over everything they say. God made them all and he said, “It is good”. Another way to peacefully coexist with people is to understand their goals. Some people are in it for the money, others for titles, others for passion. Those in for money will do the bare minimum to earn their dough. The passionate ones meanwhile are killing themselves with work while the ambitious ones are screwing everyone over. One of my employees quit abruptly in the middle of January and someone commented, “That one doesn’t have bills to pay.” And it was true. Finally try and understand people’s circumstances. Someone might be going through a difficult marriage. The office can be their place of refuge or where they relieve their stress. Someone else could be nursing a sickly relative or newborn. Someone could be battling a chronic condition. Being aware of some of these helps us extend grace, be helpful.

The author is a content creator and a blogger

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