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Why West won’t let Kenya go China

kqEven as Kenya forges closer economic links with China and other eastern countries, multinationals from the US and western Europe not only dominate ownership of wealth in key sectors of the economy, but recently have acquired majority shareholding in institutions that are key in the economy such as Equity Bank, Kenya Airways and Kenya Commercial Bank.

A survey by The People Saturday indicates that from tourism to agriculture, banking, financial services, telecommunication and mining, the entire Kenyan economy is the field of play for Western interests, mainly the British, French, Dutch, Americans and the Germans. Unknown to many, a British-American-owned fund manager, Helios EB, is the single largest shareholder in Equity Bank with a 24.4 per cent share portfolio.

The two leading investors in Helios EB are the UK government-owned Commonwealth Development Corporation (CDC), and US government-owned Overseas Private Investment Corporation (OPIC). In total, Western investors own close to 40 per cent shareholding in Equity Bank. Yet, Equity is viewed as a leading success story of indigenous investment, having risen from a village building society in Murang’a County to become the biggest local bank in terms of customer base. It is the same story in the largest local bank in terms of capital base, the Kenya Commercial Bank (KCB).

Though regarded as a Kenyan bank because of the government’s majority shareholding, European and American investors hold over a fifth of its shareholding at 22.03 per cent. Also, British investors own 68.5 per cent and 73.89 per cent in Barclays Bank and Standard Chartered respectively, through Barclays Bank Plc and Standard Chartered Holding BV while Citibank is American-owned. In the last five years, European and American firms have been the biggest drivers of business at the Nairobi Securities Exchange (NSE), snapping up shares in the most vibrant Kenyan blue-chip companies.

That is how firms that Kenyans have attached sentimental value to such as Equity Bank and KCB are on their way to becoming Western-owned. To understand the stranglehold of Western interests in the economy, you only need to look at agriculture. Billed as the prime mover of the economy and the largest foreign exchange earner, the sector is largely controlled by about 30 companies with headquarters in Western Europe, or owned by local-based foreigners. The 30 dominate coffee, tea and horticulture.

While small-scale farmers produce the bulk of coffee and tea, the best value of the two crops is harvested by companies with British ownership. The largest agriculture enterprise in the country, Kakuzi Limited, is 70 per cent owned by a British firm, Carmelia Plc. Though listed in the London Securities Exchange, the firm is registered in the tax paradise of Bermuda Island. Carmelia shares in Kakuzi are held through Bordure Ltd and Lintak Ltd.

Other foreign owners of Kakuzi are masked through nominee accounts registered under CFC Stanbic and HSBC Custody. Williamson Tea, which owns huge tea plantations and factories in Kenya, is 56 per cent owned by foreigners, led by UK-registered Ngong Hills Tea. Williamson Tea also owns Choreograph Tea, which is also listed at the NSE. Rea Vipingo, which owns over 13,000 hectares of land in Kenya, is controlled by Western interests with shareholding in the company through London-based Rea Holdings and Rea Trading.

Other major players in the Kenyan tea and coffee sectors include British Unilever with its vast tea estates trading under the Brooke Bond label, as well as Scottish owned Finlay, a company founded over 300 years ago by the reputed leading capitalist of Scotland, James Finlay. Western interests, too, dominate the cut flower industry, the country’s second biggest income earner after tea at about Sh21.2 billion a year.

The country has about 5,000 flower farms. However, over three quarters of earnings from the sector go only to 25 flower farms owned by Western companies. The rest of the 4,975 flower farms, largely owned by Kenyans, share only a quarter of the total earnings from the industry. The big names in flower export include Finlay. Grown on 800 acres of land, Finlay exports over 480 million stems every year in farms located in central Kenya, Naivasha and Kericho.

The next big name in the sector is Oserian. Founded in the 1960s by a Dutch soldier who fought in World War II, Oserian exports 400 million stems annually. The manufacturing sector in Kenya is another playground of Western interests. British brewing multinational Diageo owns East African Breweries, while tobacco giant BAT is a British-American affair. In transport, the Kenya Airways, whose logo is “The Pride of Africa” has a Dutch firm, KLM, as majority shareholder.

The French dominate local logistics business, the entire transport value chain from shipping, airlifting, land transport as well as port clearing, through Bollores Ltd, formerly called as Transami. Mining too is largely a Western affair. Kenya has six cement makers, the biggest player being a French firm, Lafarge, which has majority shareholding in Bamburi and East Africa Portland. Even the little gold that has been discovered in Kenya is firmly in British hands through Goldplat Ltd, which runs Kilimapesa gold mine.

Giant controls In the energy sector, both downstream and upstream oil and gas business is in the hands of the British and the French. Total, the French oil giant controls the oil and gas distribution, while the British oil explorer, Tullow, is in control of the most lucrative oil blocks. In tourism, hotels owned by Western interests in Kenya gobble up 70 per cent of the tourism income.

Among the big hotel brands in Kenya include the Inter continental Hotels Group, which owns the five star business hotels, Intercontinental and Crowne Plaza. Intercontinental Hotel Group, which hosts most of the business travellers to Kenya is majority owned by British nationals who control 51 per cent shareholding. The old time Nairobi landmark, Hilton Hotel, was part of the Hilton Hotel Group founded by American investor Conrad Hilton in 1919.

The mother company of the hotel has since changed hands many times over and is and is currently owned by Blackstone Group LP. Blackstone is an American private equity investment firm founded and owned by Peter Peterson and Stephen Schwarzman, who were former executives in US investment banking giant, Lehman Brothers.

Malindi, one of the major epicentres of Kenya’s tourism, is largely an Italian territory, while British and German interests compete for ownership of largest hotels in Mombasa, Kwale, and Taita-Taveta counties. Westerners also control hotel industry in other tourist havens of Naivasha, Laikipia and Mount Kenya.

-The People

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