NAIROBI, September 30 – East African companies have been urged to form joint ventures with their South African counterparts to enhance their competitiveness.
Haco Chairman Chris Kirubi said Tuesday that such economic and business mergers were one way of positioning a company to face competition and creating the much needed employment opportunities for the masses.
“The recent business news headlines about COMESA agreeing to an economic merger with Southern Africa captures the spirit of my point,” he observed.
Speaking at a cocktail to celebrate a 51 percent acquisition of Haco Industries by a South African Fast Moving Consumer Goods (FMCG) Company Tiger Brands, Kirubi noted that although many companies had for a long time fought-off the idea, such partnerships were inevitable.
“Personally, I have taken liberty in being a business unusual maverick seeking out a partner from a destination of economic strength, cultural and geographical proximity. I have no doubt our venture with Tiger Brands at Haco will showcase the way,” he added although he declined to reveal how much the deal was worth.
Haco is a leading player in the branded consumer goods such BIC Ball pen, BIC razors, hair care products, toilet cleaners and Ace Bleach. Tiger Brands is a food manufacturer and marketer and is listed on the Johannesburg Stock Exchange.
He added that the two companies would embark on heavy investment to prepare their factory for local value addition and the manufacture of many products locally.
This would help bolster Haco’s market share in the fast moving and lucrative personal and homecare consumer product market. He promised to deliver exceptional value and products to their customers while at the same time create jobs for many Kenyans.
“We are telling our customers to be on the look out for great things in the near future. We confidently declare that our partnership is a new dawn for branded, fast moving consumer goods business in Africa,” Kirubi boasted.
In order to be effectively competitive, he called on the East African governments to accelerate policy frameworks that would encourage mergers and venture partnerships. He noted that bilateral agreements were one way of fast tracking this.
“In frastructure, particularly ports, rail and road is also critical to ensure business profits by being able to reach customers and operate competitively,” the chairman recommended.
During the function, Tiger Brands Chief Executive Officer Peter Matlare said the venture with Haco was their first investment outside South Africa adding that they found the right partner in the Kenyan company that would catapult them into a pan African firm.
He disclosed that they intended to use Kenya as a platform to reach other East African countries.
“Kenya is the hub for East Africa. We have realized that if we can do well with our partners in Kenya, then we can grow within the region,” he affirmed.
Matlare said they would be investing millions of shillings in new areas particularly agro-processing where the government had really stressed on as well as training and development of their staff.
The management structure would not change as Kirubi and Polycarp Igathe would remain Haco’s Chairman and Managing Director respectively although several members of Tiger Brands officials will sit on the board.
Industrialization Assistant Minister Nderitu Mureithi called on the private sector to transform the way they do business. He said the government was working to improve the business climate and had developed several incentives to encourage the players to set up shop in the country.
“We are saying to the sector, step up your investments in Kenya and take advantage of what we have to offer,” he challenged.
Mureithi disclosed that the Joint Commission for Cooperation between Kenya and South Africa would be inaugurated in October and would create a platform for the two countries to engage.
He also added that the government was committed to enter into agreements that eliminate the issue of double taxation for its investors.