Interview: A well respected voice

12 September 2011

In 2007, Kenya was shaken to the core. The violence that erupted in the wake of the disputed presidential elections left more than 1000 people dead, left hundreds of thousands displaced and brought the country to the brink of anarchy. In 2010, Kenyans voted en masse for a new constitution, which many believed would bring an end to the corruption, clientelism and politically instigated violence that has marred much of Kenyan politics since independence.

Economically, a more positive spirit is emerging too. According to Kenya Vision 2030 – the country’s development blueprint for the next 20 years – Kenya aims to become a ‘middle-income country providing a high quality life to all its citizens’. One of the strategies for making this happen is to boost manufacturing for the regional market. And that is already underway. In 2009, Kenya’s manufacturing sector still recorded negative growth. But in 2010, industrialists motivated by the ongoing recovery of the economy, borrowed nearly 30 times as much as they had the previous year. These borrowings enabled them to expand their operations.

Whether Kenyan industrialists will be able to fulfil their role as an engine of economic growth will depend on how successful they are in persuading the political powers to establish a stable and favourable business environment.

Betty Maina is chief executive of the Kenya Association of Manufacturers (KAM) and a spokesperson for Kenyan industrialists. She spoke to Capacity.org about KAM and how it has developed its capacity over the years to serve as the voice of industry and business in Kenya.

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Betty Maina, KAM’s membership is impressive, both numerically and in the types of company it attracts. What motivates these companies to become members? And what does KAM have to offer them?

The main reason manufacturing companies become members of KAM is because of our influential and results-focused advocacy. Members want to lobby the government to bring about an environment that is conducive to the development of business. Much of our lobbying focuses on the types of policy needed to benefit business, on legal changes needed by business and on implementing administrative procedures that make transport more efficient. A company can lobby on its own, but it carries more weight if it lobbies as part of an influential group. As well as making sure that the voice of business is heard, KAM membership is also about creating opportunities for high-level interaction with decision makers. KAM membership can help companies to get a foot in the door, and also to get results.

The second reason companies seek membership is to avail of services that can help them to improve their business. For example, members have access to information on export markets, product sourcing, business partners in other countries and ideas that help them to improve how they operate or engage in business-to-business partnerships.

And the third reason companies join KAM is to take advantage of our business networks to meet like-minded business people and to learn from each other.

KAM celebrated its fiftieth anniversary last year. How has its capacity evolved over time?

KAM has always been owned and run by its members, who are very committed to the association. Just after I was appointed chief executive, I discovered that members of the executive committee did not expect a daily allowance or to have their hotel bills covered if they were attending KAM events. They own KAM and they feel responsible for its financial well-being. This is commitment.

This sense of ownership is also reflected in the way KAM is organised. The annual general meeting is the highest decision-making body. It appoints an executive committee to run the organisation on a day-to-day basis. This committee is made up of 17 leading entrepreneurs in Kenyan industry. They don’t really have a lot of time to run the organisation, so they appoint a chief executive and a secretariat to deliver services in partnership with the committee and the members. Our secretariat now has 33 people with offices in six locations including the capital, Nairobi, and all the major industrial towns such as Mombasa, Kisumu, Nakuru, Eldoret and Athi River. Soon we will also have one in Thika.

About ten years ago, KAM made major changes in how the organisation was run. Up to then, it had depended on the voluntary efforts of its directors. This meant that the capacity of the organisation was very limited and the organisational culture was very ‘clubbish’. The income did not cover the running costs of a fully fledged secretariat. Members had their own businesses to run, so their time was limited. The most they could do was to run a couple of seminars or workshops a year and organise a few trips to represent KAM at meetings in the region. That was not satisfactory, and in early 2000 it was decided to adopt a more professional approach.

We also wanted to know how a professional business association should be managed. So we made contact with the Confederation of Danish Industry (DI), which is the largest business lobby group in Denmark. With the support of the DI we applied for and secured financial support from the Danish International Development Agency (DANIDA). DANIDA runs a private sector development fund aimed at building the capacity of business associations in Africa.

We designed a strategy for the period from 2002 to 2005 and concentrated on giving a real boost to KAM's capacity. One of the key issues addressed in the project implementation plan was membership growth – we were struggling at that point to recruit members. Membership was vital because a large part of KAM’s income comes from subscriptions. So attracting new members requires constant attention. New businesses are starting all the time and it is important to have a critical mass of companies within your membership. This gives your advocacy legitimacy. We designed a strategy for recruiting new members, and retaining existing ones. Our target was to increase membership by 20% a year between 2002 and 2005. We met these targets and we still maintain a target of increasing membership by 15% each year.

We also planned to improve our research capacity and to strengthen communication. We worked closely with the DI on this. We also kept track of how staff members were doing in their jobs.

Support from the DI and DANIDA helped us to strengthen our information system infrastructure by investing in computers, a local area network system and a telephone system. This helped KAM to become more confident and deliver services a lot faster. We persuaded DANIDA to provide salary support that would allow us to increase our staff numbers. They agreed on condition that over the three years of the project, the support would be phased out and the additional staff would be fully supported by KAM by 2005. We put the new staff at a salary level that we could afford, and within two years, we had generated sufficient income to pay their salaries ourselves.

The total grant we received between 2002 and 2005 amounted to about US$800,000. It paid for us to employ DI staff as consultants. But these were not consultants who just popped in and out. We still have a close relationship with the DI. This benefits them too because it allows them to establish business contacts with organisations outside Denmark to help Danish businesses who want to make international contacts. For us, the DI is still a key resource for exchanging knowledge about Europe’s common markets.

When the project came to an end in 2005, we came to the conclusion that sufficient capacity had been built up within KAM. Our communications are much better now, and members can see our work and the results we have achieved. Because we are stronger, we are able to advocate much more effectively. And we are bigger. Our membership grew from 330 in 2001 to about 700 this year.

What are your main sources of income, and how successful have you been in establishing a solid funding base for your expanded operations?

Most of our income comes from member subscriptions and from fees for services that we deliver to our members. Combined, these cover up to 80% of our budget. The rest comes from project-related grants from the Kenyan government and from donor organisations. We charge 16% to cover our overhead costs when we implement a project.

One important aspect of DANIDA’s support is that it enabled us to establish a relationship of trust. We are seen as an organisation that can be entrusted to manage resources. In the beginning, the DI was managing the resources, but now we receive the funds directly and we can buy services from the DI. Also with project funds from the EU, we are now the main grant recipients.

What has KAM achieved for its members and for Kenyan society as a whole over the last ten years?

Kenya has signed up to the East African Community Customs Union (EAC-CU). Now all goods that are traded across the region are duty free. KAM was instrumental in achieving a much simpler, three-band structure for the common external tariff (CET) that is imposed on goods imported from outside the EAC-CU. The CET is now 0% for raw materials and capital goods, 10% for semi-processed goods and 25% for finished products. The previous system had about 16 tariff bands – which made it so complicated that it was unworkable. The EAC-CU will boost trade both within the region, and between the region and the rest of the world.

KAM’s second achievement concerns Kenya’s infrastructural policy, especially with regard to the type of energy mix that we would like to have as a country. KAM is in favour of renewable and cheaper resources, such as geothermal energy for example. We have successfully influenced decision making in this area.

Third, KAM promotes energy efficiency. This is a programme that we have been running for eight years now. We assessed a number of companies that have undertaken energy audits and invested in energy-saving equipment and processes. These companies alone have saved the country 200 megawatts per year – the equivalent of a medium-size energy plant.

In 2010, we concentrated on getting the Kenyan business community’s views on the new constitution across to the public in general. We protested against the post-election violence that erupted in December 2007 and spoke out in favour of a power-sharing deal between the rival political parties. Our voice, speaking out on behalf of Kenyan business is now very audible and well respected, both in Kenya and in the greater EAC and COMESA (Common Market for Eastern and Southern Africa) regions.

The Kenya Association of Manufacturers (KAM) KAM represents manufacturing industries in Kenya. It was established in 1959 as the Association of Industry of East Africa when Kenya was still under colonial rule. At that time there was already a vibrant industrial sector in East Africa. After independence in 1963, the name was changed to KAM. During its early years, membership consisted mainly of British companies. Gradually the number of Kenyan-owned companies grew. In the sixties, many Kenyan companies were owned or partially owned by the Kenyan government. Most of these are now privatised. These days, over 85% of the 700 KAM members are Kenyan-owned companies and the remaining 15% are foreign-owned, often multinationals. KAM aspires to be ‘a World Class Business Membership Organisation that effectively delivers services to its members wherever they operate’.

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Interview conducted by Heinz Greijn, Editor-in-chief, Capacity.org

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