FORBES/FOCUS East African Community R B E S A F RICA R FO h aria FO sbo rne Mac PHOTOS BY O BY PHOTOS

28 | FORBES AFRICA DECEMBER 2011 - JANUARY 2012 Hope Springs Eternal For The EU Of East Africa At a time in life when many are in quiet retirement, canny businessman Manu Chandaria has taken up the sword in the fight for economic unity.

BY LUKE MULUNDA

anu Chandaria is The business community views a “Although the East African no spring chicken, robust regional economy as a trigger Monetary Union (EAMU) has been but he has a for productivity, economies of scale patterned on the Euro Monetary spring in his step. and competitiveness. It is a wonder Union, lessons drawn from the The 82-year-old why some Kenyan bureaucrats, legend ongoing crisis and also the 2008 world Mchairman of the Comcraft Group has it, toasted the collapse of the idea financial crisis will ultimately shape has been on the regional economic with champagne more than 40 years it,” he says. radar screen for 10 years through ago. Chandaria, like Sezibera, is his unflinching support for the East The 21st century version of the stubbornly optimistic, even if the African Community—a common EAC is fashioned along the lines of the dream of union remains about as market with a combined population European Union, which has monetary elusive as democracy in some of the of more than 130 million and a GDP of East African states. $75 billion. He “We are finding it very difficult,” he reasons—like free trade proponents— “You have to know your says with zeal. “Will it really work? that pooling populations, skills, That’s the question we were discussing expertize and production can create business and how to at our regional forums. People are still the economies of scale and the huge tackle the differences… Kenyan, Tanzanian or Ugandan. It markets that business craves. There’s can’t work like that. We need to get to even talk of the fledgling state, South Otherwise, you will a level where we are East African first, Sudan, joining the EAC. be killed.” East African second, East African third “Politics doesn’t put food on the and the rest can follow… You have to table,” says Chandaria, touching the know your business and how to tackle raw nerve that threatens the pace of union of 27 member countries and the differences… Otherwise, you will EAC integration. Politics killed the one central bank. The EU is currently be killed.” first attempt in 1977, when ’s battling debt troubles among its key There are plenty of flies in the then president, Jomo Kenyatta, fell economies, like Greece, Italy and ointment. Chandaria says Tanzania out with his Tanzanian counterpart, Spain, pushing analysts to speculate wants to be in the Southern Africa Julius Nyerere, over whether to that EAC monetary union may mean Development Community (SADC) and adopt capitalist or socialist policies. more of the same trouble in Africa. EAC at the same time, while Chandaria has no such doubts. Richard Sezibera, the Rwanda- is fiercely protective of its markets “We need to help our people to based secretary general of the EAC, against bigger and ferocious business better their lives. That can only be says uncertainties created by the rivals from Kenya. Kenya and Uganda done if businesses have enough space financial crisis in the EU—the biggest are in COMESA, from which Tanzania to grow and expand. That’s how jobs financier of the protocol in terms of pulled out a few years ago. Not so good are created, incomes improved and funds and technical assistance—won’t for a budding economic bloc. GDPs grown,” he says. affect the EAC. “It is not working the way we

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wanted. We are just creating entrepreneur who returned from unnecessary jobs for so many people studies abroad to take charge of the instead of building institutions and family business, Chandaria has worked teaching the people to get the best in Uganda, Tanzania and Kenya. In the out of it, so we can get better GDP,” past 50 years, the Chandaria family says Chandaria. has transformed a scrappy medium- The EAC aims to improve earnings ranked business into a major global for member countries, but every player with some of the most coveted country differs—politically, legally brands, including roofing iron sheets, and culturally—making it hard for electronics, software, kitchenware, companies to operate cross-border pots and pans. He won’t give figures businesses. about the net worth—the businesses Even the EAC secretariat are jealously private—but simple acknowledges this. “Following the calculation points to a conglomerate Rock solid advice completion of the ratification of the worth millions of dollars. you can be sure of protocol on the common market, the Comcraft has invested in steel complex and long march towards rolling, aluminizing, galvanizing, color transforming the EAC region into coating and profiling. The companies Sometimes the right legal a common or single market begins include Mabati Rolling Mills Ltd in advice may not be what you with resolve and fervor,” said EAC Kenya, Aluminium Africa Ltd (Alaf want to hear – but we’ll give it secretary general Juma Mwapachu Ltd) in Tanzania, Uganda Baati, to you anyway. Having explored during the launch on July 1, 2010. “It Safintra Steel in , Safintra Steel all the options and given you all is important to underline the words in Mozambique and Safintra Steel the angles, to serve your best ‘complex and long march’.” in Malawi. The others are Safintra interests, we’ll tell it like it is. The process is complex in terms Johannesburg, Safintra Durban, Enlightening, don’t you think? of what is required to be undertaken Safintra Cape Town, Safal Steel in at the levels of the partner states and Cato Ridge near Durban and Midget in certain respects, at the level of the Steel in . The group also has EAC itself. All five countries have a a presence in the pipe and section common external tariff; an identical manufacturing division in Insteel Ltd tax applied to imports from outside in Kenya, Alaf Ltd Tanzania, Uganda the bloc, and they allow duty-free Baati and Hoech Pipe in Nigeria. regional trade with the exception of Chandaria, who steered Mabati Kenya, the largest and most advanced Rolling Mills to one of the most economy of the five. The common successful companies in the market aims to build on this and Comcraft stable, says success has enable the free movement of people, taken a concerted effort of family, capital and services, and abolish understanding, higher education import duties. and vision in entrepreneurship. “It’s The EAC’s ambitions go beyond basically the principle of joint family,” pure economics. The plan is for the he says, sipping herbal tea at his common currency in 2012 to set palatial home. “Zero multiplied by up the groundwork for a political zero is zero, one multiplied by one is federation by 2020. Yet the other one; until you reach two, where two member states worry that Kenya, times two is four, which gives you a which is the economic powerhouse base for linear multiplicity of four of the five, could end up being the times four to get sixteen and so on. We dominant player. decided we want multiplicity.” It’s easy to understand why That’s his mathematical way of Keep us close Chandaria, the son of a former explaining how his family teamed,

THE CORPORATE & COMMERCIAL LAW FIRM shop attendant who built the with his in-laws, to build a business business empire, is so passionate empire—from the pots and pans JOHANNESBURG +27 (0)11 535 8000 CAPE TOWN +27 (0)21 405 5100 about integration. A Kenyan-born to iron sheets to manufacturing, www.werksmans.com

A member of the Lex Africa legal network 30 | FORBES AFRICA DECEMBER 2011 - JANUARY 2012 electronics and software. Not very many people manage such a feat. This Indian family from Savrashtra, Gurjarat, has proved that blood relations can also build a strong bond for business. This is a big lesson for African entrepreneurs who often go it alone in business and fizzle out, or at best, start small and remain so. In Kenya, the Indian community dominates businesses: in retail, think Nakumatt Holdings owned by the Atul Shah family; in manufacturing, think edible oil maker Bidco, owned by Vimal Shah, who controls virtually the whole of Kenya’s industrial area portfolio in and major towns. When Manu Chandaria’s illiterate father came to Kenya 96 years ago, he had a simple mission: to earn 4,000 rupees and return to Gurjarat. But after a period of super-high growth, almost all the low-hanging fruit is gone. Now the group is left with Chandaria with Aruna, his wife of 56 years expanding its existing business lines and scouting for opportunities in emerging sectors like ICT. Chandaria joined Kaluworks in 1951, alongside his is not always able to attend to difficult situations in time, brother, a food technologist, and two other siblings—a leading to losses or lost opportunities. The company has civil engineer and campus graduate. Then Kaluworks had also been slow in training enough numbers of management 40 workers and a grocery supply business. “We decided teams for existing and future expansion. that everybody was going to work hard, from Monday to In 1953, Chandaria proposed a charity foundation, but Saturday, and if there was maintenance on Sunday, we his father initially rejected the idea. “You lived too much in worked on Sunday. From 40 people, in five years’ time, America; we are not Ford Foundation or Chrysler,” said his we had 500 people. That cooperation planted the seeds of father. partnership that expanded the workforce to 800 people by Today, Chandaria’s foundation is easily the biggest and 1960.” one of the oldest charity organizations in the country. Some of its notable contributions in Kenya include Chandaria School of Business at United States International University “If you can’t give what you have— (USIU); Chandaria Business Innovation and Incubation Centre, recently launched at Kenyatta University; and experience, knowledge, philosophy, I the Chandaria Emergency Centre at Nairobi Hospital, don’t know what else you can give.” to mention but three. The foundation has done lots in helping the poor, in rebuilding houses and schools of those displaced in the post-election violence, and in educating Chandaria was sent to Uganda, the only country that was bright children from poor families. known to be rich in those days. There was a joke in town Philanthropy is the in-thing for the super-rich these that Uganda would earn, and Kenya would spend, by selling days, with US investment guru Warren Buffet urging fellow them products. So he opened an office there and undercut billionaires to give at least half of their wealth to charity. In the competition. most of Africa, it is manifested mainly in corporate social The dawn of independence in the early sixties opened responsibility—planting a tree here or donating a cheque new investment opportunities in newly autonomous states, there. and Comcraft went on a spree. It ventured its iron sheet “If you can’t give what you have—experience, business in Tanzania (Mabati Ltd), Zambia (Galco), Uganda knowledge, philosophy,” Chandaria says, “I don’t know (Bati Ltd) and Ethiopia (Ethiopian Steel), making it a what else you can give. I can make a swimming pool of pan-African business in just five years. “What we knew we whisky, but I don’t drink. I have compassion for others. duplicated, triplicated, four times, five times…” he says. I have no hobbies because my game is to serve. I walk in The group’s strength is in teamwork and building slums and children come to play in my compound.” multiple plants in various markets. This is then boosted As politicians struggle to fit their interests in the East by Chandaria’s shrewdness in creating strong and loyal African frame, it is clear that to achieve integration, and management teams. But he admits the group’s leadership urgently so, the region could need more Chandarias.

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