End Of Proxies In Company Ownership In Kenya

Brief Overview and Impact on Businesses in Kenya

The Statute Law (Miscellaneous Amendment Act) 2019 amended the Companies Act 2015 to require all companies to introduce a register of beneficial owners. To effect the amendment, the Government enacted the Companies (Beneficial Ownership Information) Regulations, 2020 as subsidiary legislation to the Companies Act on 18 February 2020. The Business Registration Service (BRS) issued a public notice notifying all officers of companies and authorized persons that the beneficial ownership E-Register had been operationalized with effect from 13 October 2020.

Every company in Kenya must now lodge a register of beneficial owners with the Registrar of Companies. A beneficial owner is defined in the Regulations as any natural person who ultimately owns or controls a legal person or whose behalf transactions are made. A beneficial owner can also be a person who directly or indirectly holds at least 10% of the issued shares in a company. It could also be a person who possesses the direct or indirect power to appoint or remove a director of the company or indirectly or directly exercises significant influence or control; and directly or indirectly exercises a minimum of 10% of the voting rights in a company. The register of beneficial owners should contain particulars of each beneficial owner, including the date when a natural person became a beneficial owner, the date on which a person ceased to be a beneficial owner, and any other relevant details the registrar may require.

The implications of the Regulations on the business environment in Kenya are that Companies in Kenya will now have more significant administrative burdens and costs associated with keeping a register of members and creating and maintaining a record of beneficial owners. The drafting of legal documents relating to ownership, such as shareholder agreements and, in particular, reserved matters, will need to consider concentrated shareholding structures and the definition of control. The operationalization of the E-Register is likely to impact a significant amount of ongoing transactions by tying other services offered on the BRS to beneficial ownership compliance. The positive impact of these regulations is that the established E-Register of beneficial owners will help create transparency in ownership of companies in Kenya hence reducing corruption through proxies, money laundering, and other syndicates committed behind the corporate veil. The regulation is still new; hence more time is needed to assess the implications of the disclosure obligation on companies.

Reverse Innovation – Vijay Govindarajan & amp; Chris Trimble

Create far from home win everywhere

Reverse innovation is the main subject to this exquisite book as the authors strongly believe it is the pathway to success, especially for emerging economies. History has it that multinationals would innovate in wealthy countries like the USA and then sell their products to poor countries like India; reverse innovation according to the two authors is working against that historical grain by doing the exact opposite. They believe it is time that innovation begins in developing economies as it trickles up to developed countries. Therefore, instead of exporting, why not innovate in emerging economies? In other terms, reverse innovation involves meeting the needs of developing nations by producing goods as inexpensive models and then repackaging the same as low cost innovative goods for developed nations to buy.

Dominant logic is a concept quite discouraged in this book as dated thinking inhibits reverse innovation. It challenges leaders and institutions to challenge their status quo and only work with past strategies with clear revision and critical analysis. This is in tandem with George Santayana’s quote that goes “those who do not remember the past are condemned to repeat it”. Reverse innovation begins by identifying need gaps in any space that one desires to see transformation. There are five need gaps discussed in the book: the performance gap, the infrastructure gap, the sustainability gap, the regulatory gap and the preferences gap. These gaps between emerging economies and the rich world are so substantial that emerging economy needs can only rarely be addressed simply by making adaptations to rich world products. This therefore calls for capturing opportunities in the poor world by starting from scratch (clean-slate innovation) in order to maximize trends that will close the gaps.

It is critical to remember that reverse innovations flow uphill in two ways: marginalized market which happens immediately and mainstream market which takes time. All innovation is about assessing needs and developing solutions hence the crucial integration of sales and marketing. Strategy, global organization and project organization too are good markers to always look at when innovating in reverse.

In conclusion, reverse innovation efforts test the commitment, resilience and passion of the Innovators. Equally they test the gumption and long term vision of whom the innovators report to and of the organization as a whole. The goal should always be “value for money to value for many” reverse innovation is not optional it is the oxygen!

Implementing A Triumphant Sales Plan

Hosted by Bemerc Consults on 13th January, 2022

This was a master class webinar to help any sales person increase their sales from what they’ve previously sold. The presenter was Mercy Maina Kimani, the Performance Coach and Team Leader at Bemerc Consults. In the Webinar, Mercy shared essential pillars necessary for the realization of any business vision, the first one being a consideration of where one is coming from and where they intend to go hence sales goal setting. The goals have to be SMART in that they are Specific in terms of the processes and resources, Measurable by objective data, Attainable in that they can be achieved, Relevant to the vision and Time-bound by a deadline.

Once goals are set, a goal road map for each objective ought to be established. In the road map for each goal, one should consider the obstacles that are likely to hinder the achievement of that goal. It is healthy to view the obstacles as hindrances within one’s capacity, not some external locus of control. That perspective of analyzing obstacles will pave the way to the solution step of how to overcome the obstacles so as to realize the goal(s). If coming up with a solution proves difficult, then consultation with a coach, mentor or counselor then comes in handy.

Another thing to consider is feedback parameters for one’s business. Reviews, whether done daily, weekly or monthly help a great deal in providing feedback. They provide a platform to analyze one’s plan(s) versus the reality of what they have been able to execute in that plan hence preparing better for tomorrow’s goals. Maximizing repeat sales is also a winning strategy for any serious salesperson. These are things customers buy in order to replace the same services or products they had bought and consumed previously. Customer loyalty, that is trust plus quality customer relationship spearheads repeat sales. If one’s business model does not allow repeat sales due to its nature, then strategies such as leads and referrals would help to keep the business going. In conclusion, the webinar attendees were also taught the proven ways to position themselves as trusted advisors (focus on mutual benefit) rather than as product pushers (focus on price) . A trusted advisor is characterized by their communication skills, optimistic attitude, self-control, professional competence, confidence, customer-focused service provision and value addition. These attributes need to be seen at all levels of interactions; personally, relationally and professionally.

Cooperatives In The Changing World

Over the years the International Cooperative Alliance (ICA) has acted as the voice of cooperatives worldwide. Established in 1895, ICA represents an estimate of three million cooperatives. It’s a platform for cooperatives to collaborate more effectively through networking and exchange of ideas. ICA has its presence in Africa and the continental headquarters are in Nairobi, Kenya.

A cooperative is a people-centered enterprise jointly owned and democratically controlled by and for its members (with a common bond) to realize their common economic, social, and cultural needs as well as aspirations. Even then, it is important to note that with changing times we have cooperative societies with an open bond (they might not be having the same background) but they have a common goal.

The bloodline of cooperatives is collaboration managed by its stakeholders who may include members, workers and associations. According to the world cooperative monitor, at least 12% of the world’s population are members of cooperatives. Labour statistics also indicate that cooperatives employ approximately 10% of the working population. The three hundred largest cooperatives mutual collectively generate $2.146 billion in revenue while providing the services and infrastructure that society requires to survive.

Poverty and food insecurity problems are better solved through cooperatives due to the strength in unity that comes with these movements. International Labour Organization (ILO) estimates that about half of the world’s rural agricultural produce is sold through cooperative societies. This increases revenues and local expertise by creating and passing on business experience because they are run by and for local people. Profits are reinvested in the cooperative, the local community, or distributed to the cooperative’s members. Strong cooperative networks allow practitioners from all over the world to share their knowledge and best practices. Cooperatives are also pivotal in creating decent jobs. They employ about 100 million people worldwide, and 3 billion rely on them for their livelihood.

Providing low-cost financing credit unions and other financial cooperatives provide long-term financing to persons who are unable to access traditional banks. Credit unions offer a safe approach to savings and loans because they are run by and for people in the community, and they lend cautiously. Cooperative businesses are based on the philosophy of mutual help. They aren’t just about uplifting the members economically, but also morally and socially. Membership instills a spirit of independence, cooperation and tolerance.

Do I Need An Accountant In My Business?

Bigger companies set up accounting departments which are fully supported to execute book keeping, recording of transactions, reconciliation of books and preparation of financial statements consistently and continuously. They also set up control mechanisms through policies that govern the management of resources, procedures for resource utilization and a calendar for performing functions such as budgeting, large scale purchasing, stock taking and reconciliation of bank statements. Internal audit teams are also key in helping the accounting department and other personnel involved in operations to adhere to policies of your business regarding financial management.

Regardless of size, the accountant for your business should be competent enough to understand the Generally Accepted Accounting Principles (GAAPs), International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and for public institutions and bodies; your accountant should have the full knowledge of International Public Sector Accounting Standards (IPSAS). These set of policies will help in creating a business whose financial reporting is of good quality and reliable for use in decision making by owners, managers, the tax man and the strategy team. 

While it is desirable to all entrepreneurs that they organize their books of accountants professionally, it is also important to note that hiring an accountant may not be affordable to many small and medium-sized entities. These implies that alternative routes to the Promised Land should be employed. The first route is installing accounting software in the computer of a staff member in charge of operations or administration where an accountant is absent. Accounting software such as QuickBooks, Sage, Tally and SAP are easy to use given proper training to your staff members. Second, train your staff to accurately capture data and to conduct librarianship for your accounting files for easy retrieval. You also need to train your staff on how to navigate the KRA itax portal, how to prepare budgets, how to do bank reconciliations and how to run ETR receipts. Training works well for a fairly big staff of at least five people. For smaller companies, the best option could be outsourcing a firm that can perform tax advisory, bookkeeping and financial management at a fee. iGrand Business Plans Limited is one such firm and your accountant is reachable via okinda.p@igrandbp.com.

Revisiting Performance With Purpose

Indra Nooyi

From being a young ambitious immigrant to rising to the World’s Most Powerful Women lists, Indra has seen it all. Yet despite the challenges she faced under the different labels she wears, she has somehow managed to rise graciously and leave her mark in the corporate world and beyond. But what exactly has her journey been like?

Sixty-six-year-old Indra Nooyi was born in Madras State in India. After her secondary school education, she attended the Madras Christian College and graduated with a Bachelor’s degree in Physics, Chemistry, and Mathematics in 1974. Two years later she got her Post Graduate Diploma from the Indian Institute of Management, Calcutta. Nooyi then moved to the United States in 1978 to pursue a Master’s degree in Public and Private Management from Yale School of Management.

Nooyi’s career started in India where she held product manager positions with two companies. While in the States, she worked with companies like Boston Consulting Group, Motorola, and Asea Brown Boveri before joining PepsiCo in 1994. She was the Senior Vice President, Strategic Planning at first, and then became the company’s President and CFO in 2001. Twelve years after joining Pepsi, she was named CEO, allowing her to shape a company she had come to personalize as her own. With Indra in charge, PepsiCo’s revenue moved from $35 billion to $63.5 billion, an 80% increase. In her own words, market capitalization rose by $57 billion whilst shareholders received about $79 billion in cash returns. Indra afterward resigned as CEO in 2018 and as Chairman in 2019, fulfilled and ready to venture into different fields.

Despite her various achievements as CEO, what is most notable about Indra’s leadership is the ‘Performance with Purpose’ strategy she used. She decided to not only think about the long-term growth of the company but also achieve it in a way that is friendly to society and the environment. Thus she began projects like using recyclable material and producing healthy snacks for consumers. She has also advocated for executives that are involved in a company head, heart, and hands. In modeling the heart aspect, she got to know employees’ families and built an environment that allowed young family builders to also be important contributors to work, without having to sacrifice either. This is well captured in her recently published memoir: My Life in Full: Work, Family, and Our Future, a must-read for executives and laymen alike!

Have You Gotten The Jab?

The economic viability of the COVID-19 vaccination program

The emergence of COVID-19 has posed an unprecedented challenge to the world’s economy and the healthcare delivery system. There has been an emphasis on the use of non-pharmaceutical measures such as physical distancing, hand washing, and wearing of masks to reduce the spread, but efforts have been made to produce vaccines that will play a role in reducing transmission.

At the peak of the pandemic, most countries worldwide resolved to a suspension of their economic activities, popularly known as “lockdown” with the aim of stopping the spread of Covid19. This led to severe economic losses as governments in sub-Saharan Africa were cut off from revenue due to freezes in economic activities and tax relief measures to enable businesses to survive. IMF data available up to December 2020 revealed that the pandemic caused a median 15% drop in the monthly tax revenues compared to the previous years.

What is the economic viability of the COVID-19 vaccination program? Currently, the statistics of the reported COVID-19 cases in Kenya are at 385000, with a death toll of 5621 since the onset of the pandemic. There has been an unequal distribution of COVID-19 vaccines worldwide. Wealthier countries have paid trillions in stimulus to prop up faltering economies. Now is the time to ensure vaccine doses are quickly distributed, all barriers to increasing vaccine manufacturing removed, and financial support is secured so that vaccines can be distributed equitably and a truly global economic recovery can occur. The government of Kenya has set up a strategy that aims at vaccinating the entire adult population by mid-2022. One of the drawbacks of this initiative is that the vaccines available are multi-dose vaccines that require a cold chain storage system to be viable by the time they get to the individuals. We are faced with the challenge of inadequate storage facilities.

Nevertheless, the government of Kenya has made efforts to ensure that vaccines are available to all. It is a good move as it will reduce the overall number of people who succumb to the infection. The economic benefit it will have is that there will be no lockdown because we have noted a decrease in the reported number of new cases since the start of the vaccination program. One fact remains: when we get the vaccine, we will still have to use non-pharmaceutical measures to protect ourselves until we all acquire herd immunity. A healthy nation is a wealthy nation.

Don’t Buy Deceits And Sabotage Your Weight Loss Plans

Have you been sipping green tea, lemon tea, been on fad diets, skipped some meals, or been practicing intermediate fasting in an attempt to cut down your weight? As mentioned previously, the basic premise to healthy living is eating a balanced diet while remaining physically active, and burning more calories than those consumed. The seemingly “simple” and healthy road to weight loss is actually an arduous and long-term process. Therefore, it becomes enticing to substitute sensible diets and exercise regimens with unhelpful ideologies such as fad, Paleo, Atkins, etcetera, that promise quick results, but have deleterious outcomes.

A popular myth on weight loss is taking hot or warm water mixed with lemon. Some believe that the water temperature will help burn body fats. This is not biologically possible. Water is important for our Hydration, and Healthy Kidneys, but no matter its temperature, it cannot burn body fats. Skipping meals and taking less than the recommended 3 meals a day can actually result to an increase in weight rather than the expected weight loss. The body needs energy for daily use. When denied, it switches to a coping mechanism. Taking the regular 3 meals a day ensures enough supply of energy from the carbohydrates we take while skipping meals makes the body preserve as much as it can from what we take in order to use it through gluconeogenesis as a source of energy. This facilitates weight gain.

Fad diets are clearly extreme and often irrational plans that lack valid evidence and scientific research. Aside from being unhealthy, they are ineffective. High-fat diets promote short term weight-loss, but most of the loss is caused by dehydration. As the kidneys try to destroy the excess waste products of fats and proteins, water is lost. High-fat diets are low in calories, causing the depletion of lean body mass with little fat loss. Drastic reduction in carbohydrates causes the body to believe that it is being starved. Continued practice of these extreme diets risks one to CVDs and may cause irrevocable damage to the liver and kidneys.

Seeking hotkey weight loss aids is ineffective however long you’ll persist. A proper diet should place long-term health before immediate results. Reducing caloric intake enables one to maintain the body weight, whilst physical activity enables one to burn the excess body fat and therefore, weight loss. This is a long-term journey that requires discipline. Don’t buy deceits!

Day Trading At The Nairobi Securities Exchange

The Nairobi Securities Exchange is one of the fastest developing bourses on the African continent attracting foreign investors looking to tap into emerging economies. The last decade saw several listings as well as roll-out of new products such as derivatives and the commissioning of a new trading system. In 2021, the bourse received authorization for launching day-trading. Simply put, Day-trading is the phenomenon whereby an investor/trader buys and sells their shares within the same day. Before, one had to wait for three working days for settlement of any trade. Day-trading is therefore poised to boost trading activity as well as attracting the youth into stock trading.

Despite the funfair on its launch and the 5% discount offered on the second leg of trading, day-trading transactions only accounted for 3.4% of the trades through January. In a market that trades about Kes.22bn worth of shares monthly, day-trading only saw Kes.784 million worth of shares traded. This investor apathy could be attributed to the following:

High transaction costs: When trading on the NSE, there are several fees levied by the broker, the regulators as well as the exchange. This translates to about 2% of the value transacted. With the NSE only offering a 5% discount on a day-trading transaction, the fees are seen to erode any little gains realized. To put this into perspective, the price of a stock has to gain by more than 5% within the day to incentive a trader to sell it within the day. This is a rare occurrence bearing in mind that only a handful of blue-chip stocks change hands daily thus a 5% gain hardly attainable.

Inactivity on some counters: in some of the listed companies, major shareholders control as much as 70% of the share leaving only 30% available to the public. Of the free float say half of it is held by institutional investors (funds) leaving a very small portion of the shares available to the public. As such, counters like WTK, Kapchorua, Kakuzi and Limuru Tea can go for days without their shares changing hands. The floor is therefore left with very few market movers such as Safaricom, Equity and KCB.

To ensure that day-trading takes off, the NSE has to lower the transaction costs by say 50% as it is in developed markets. Also, the bourse ought to ensure adequate free float as well as attracting new listings. This will see investors diversify their holdings and take up day trading which will boost the bourse’s revenues.