Shaka Kariuki: Jamuhuri High alumni building businesses in Africa

Shaka Kariuki, a Jamhuri High School alumni who defied the hustle and bustle of Nairobi's busy streets to be admitted to Ivy League institutions and work for the world's prestigious firms is a 'mobile man'. 

A man of many hats, his title changes like the weather. They can change 10 times in a day, depending on his schedule. 

When he is not seated at his magnificent corner office that hosts Kuramo Capital on Nairobi's tallest and most exotic office building in Westlands, he is chairing the monitoring team at the Competition Authority of Kenya

He is the executive chairman of Nas Foods in Ethiopia and the chairperson of TranCentuary.

He sits on the board of Leon Business Solutions in Zimbabwe, Solo in Nigeria, Sepfluor in South Africa and the Marriott School of Management at Brigham Young University.

He is also the vice chair of GenAfrrica, Platcorp Holdings, and Sterling Capital.

The Star sat with the investment banker who is on a mission to ensure companies in Africa and beyond are well-managed and funded to move to the next level of growth. 

Briefly explain to us how  Kuramo Capital works

This is an independent investment management firm championing private commercial capital in Africa. We provide targeted global investment management services to institutional clients and ultra-high net worth individuals, focused on alternative assets in emerging and frontier markets.

Supported by a strong management team with robust local and global networks, Shaka has been instrumental in shaping the private equity landscape, overseeing nearly $500 million of investments, and catalyzing approximately $3 billion of investment capital for African private equity firms and businesses over the past decade.

The fund has invested in several big firms in the continent, including Central Securities, Crest Agro, Green Africa Airways, Leon Business, and DataGuard in Nigeria. 

In Kenya, the fund is working with Transecury, Starling Capital, Platinum Credit among others.

The fund has three operational offices, with CEO Wale Adeosun in Nigeria and another office in New York. I sit in the Kenyan office as the fund's Co-CEO.

You have interacted with businesses across the world. What is ailing those operating in Africa?

The business environment is almost similar globally as the prevailing microeconomics cuts across. While several have upscaled in recent times, others are struggling due to poor governance.  

The survival rate of most African family businesses beyond the first generation is extremely low.

It has been found that globally 33 per cent of family businesses have survived past the first generation (the founder) onto subsequent generations. However, in Africa, only two percent of family businesses last past the first generation.

Africa is not poor. At least Sh203 billion is leaving the continent. Some of this is direct, such as $68 billion in mainly dodged taxes.

Essentially multinational corporations loot much of this – legally – by pretending they are generating their wealth in tax havens.

These so-called illicit financial flows amount to around 6.1 per cent of the continent’s entire gross domestic product (GDP) – or three times what Africa receives in aid.

Then there’s the $30 billion that these corporations “repatriate” – profits they make in Africa but send back to their home country, or elsewhere, to enjoy their wealth. 

There are also more indirect means by which we pull wealth out of Africa. Today’s report estimates that $29 billion a year is being stolen from Africa in illegal logging, fishing and trade in wildlife.

At least $36 billion is owed to Africa as a result of the damage that climate change will cause to their societies and economies as they are unable to use fossil fuels to develop in the way that Europe did.

What makes it hard to fund African businesses?

The cost of capital to start and run a business in Africa is high relative to other regions. Bank loans often come with high interest rates due to the perceived risks of doing business in Africa.

Repaying these high interest rates limits companies' ability to reinvest in the business to fuel growth. That is the reason a lot of businesses in Africa cannot reach significant scale to expand globally.

Banks keep these rates high because they lack the resources to accurately prove a company or individual's creditworthiness.

Kuramo is bridging this gap and has come up with niche products targeting specific markets. 

Last year, we announced an ambitious plan to invest $150 million in supporting female-led startups throughout the African continent over the next decade.  

This significant investment is set to be channeled through the firm’s Moremi Platform, an initiative aimed at empowering the next generation of African women entrepreneurs and promoting gender-equitable fund management.

The Moremi Platform is a multifaceted initiative structured around three core pillars: an accelerator program, a warehousing/lending facility, and a fund of funds.

We have seen Kuramo intervene in the case of TransCentury and its subsidiaries. Any white smoke?

We not only fund but also guide governance to ensure the company stabilises.  Much of the work has happened at TransCentury, especially at the East Africa Cables. 

The proposed transaction entails Kuramo increasing its shareholding in the target to approximately 74 per cent.

This will enable TranCentuary to use the capital raised to settle part of its debt obligations and to unlock additional working capital financing for itself and its subsidiaries. This is in line with its recovery and growth strategy.

In March last year, Kuramo acquired additional shares in the Kenyan-based firm after pumping in Sh1.1 billion in the rights issue through the conversion of a shareholder loan to equity. 

This amounted to a Sh515.7 million investment in the cash call under normal entitlement, which will defend its stake in the company.