By Nam Kiwanuka
James Mworia is an exceptional leader. Since taking the helm at Centum, the largest listed investment company in East Africa, the firm’s assets have grown by an outstanding 234 per cent. Centum’s holdings have jumped from 6.4 billion Kenyan shillings to 21.4 billion in just four years and the company’s goal is to increase that number to 30 billion Kenyan shillings by 2014.
As Centum’s chief executive officer, Mworia was named one of the ’10 Youngest Power Men in Africa’ by the world-renowned Forbes magazine and in 2011, he was selected as ‘Africa Young Business Leader of the Year’.
Adding to his already impressive resume, Mworia is disciplined in three fields; he’s a lawyer, a Chartered Financial Analyst and a Certified Public Accountant.
In 2012, he was named a Tutu Fellow by the prestigious African Leadership Institute and he was recognized on Al Jazeera’s Tutu’s Children, a four-part series that featured Mworia and the rest of the Fellows as they were mentored under the guidance of Archbishop Desmond Tutu.
In an exclusive interview TABJ had the opportunity to speak with Mworia about how he got his start in the financial industry. I asked him about Centum’s recent acquisition of another investment firm, Genesis, and how the decision by Kenya’s parliament to withdraw from the ICC would impact the region and Kenya specifically.
Centum has announced a 73 per cent acquisition of Genesis. What does this mean for Centum?
Centum is an investment company. But gradually we’ve managed our own capital more and we see value in managing equity funds and exposing some of that equity fund to present different opportunities that we see particularly in the alternative assets.
And earlier this year…a unique opportunity presented itself to acquire a controlling stake in Genesis, the 2nd largest asset manager in the country. We took up that opportunity. Genesis is a great fit. I think it has a very good set of clients and it makes our work a lot easier in terms of now supporting an established team with an accomplished track record to further diversify its products and also diversify its clients across the region. I think it’s an effective platform to build an asset management business.
How did you get into finance?
I got into finance by accident. I had always wanted to be a lawyer and when I was in secondary school, Strathmore University (a prestigious not-for-profit private university) came to interview at the secondary school for students. I was invited for the interview and my two options became accounting and computers. I picked accounting and I ended up going to Strathmore University for six years and that’s how I got into business and accounting. Eventually when I graduated with my degree in law I joined Centum but then it was called ICDC. I started off as an intern in the filing room and then I moved onto management accountant and through that I then got an interest in the core business of the company, which was investment. I studied finance and three or four years later I was appointed head of investments at Centum. That’s how I got into it. In the end I studied for my CFA and I actually taught the program at Strathmore.”
That was such a short period of time. You have already received many awards. What is your most treasured and which one took you by surprise?
(Laughing) I haven’t received that many awards. I really appreciated Africa Young Business Leader of the Year which I received in the inaugural year of the award. It’s geared to professionals under the age of 40 across the continent. That’s one of the awards I really treasure.
And when Forbes named you one of the top ten most powerful young people in Africa, what was your reaction?
I’m a very understated person. I’ll tell you a story. (It happened on) the day I graduated. I just took the morning off, ran from my graduation and came back to work. So my PA sent me the email and I carried on working. I do appreciate it but I don’t feel I am one of the top ten most powerful people. I wish I was.
That’s just me. I’m James Mworia; I don’t associate myself with power. So it was interesting to read that story.
(Nam) You are heading up one of the most powerful companies…
It was not always big. It is not quite where it’s going to be. It’s a journey and it’s been challenging and difficult so far, but I’m happy because we are making positive progress.
What is your strategy for investing in East Africa?
Our strategy for investing in East Africa is very simple. It’s essentially forecasting on areas where we’ve got the competitive advantage, where we can add value and matching opportunities with our foreseen and domestic consumer demands. And that’s what our entire strategy is. If you look at our strategy for real estate we are providing the basis for people to do business and to live in. That’s what we’re doing with our mixed-use developments. We are fulfilling the basic needs for quality places to do business and maintaining our competitive advantage in terms of navigating the local environment. That comes across in our private equity portfolio with our portfolio, informational services, beverages, manufacturing, and with our recent acquisitions, the need for financial security and investing in very basic needs. I believe we have a competitive advantage when it comes to investing in East Africa. So that’s our approach.
Do you specifically tailor it to attract international or regional investments?
Our focus from the investment side is sustainable businesses, in areas where we can have an influence within East Africa and for marketable securities eventually invested as far as West Africa. As far as our source of capital goes, the gap that we’ve seen is there is a lot of interest in sub-Saharan Africa, but with a shortage of high quality investment grade opportunities that can accept or that can absorb significant funds of capital. What we focus on is participating in the development end of the investment value to create such opportunities and then attract capital that is chasing opportunities that are at an investable stage. And that capital might come, locally, or it might be from international sources.
What do you think of the latest Global Competitiveness Report from the World Economic Forum? How do you think African countries ranked? Were there any surprises for you?
Let me tell you what is interesting with these rankings because I always study them. When you look at the metrics that are given by the private sector like financial sophistication, innovation, those sorts of metrics, African countries actually do very well. For example, financial sophistication, Kenya is in the top 25, but overall we are below number 100. Now where we have challenges are the public sector driven metrics of competitiveness, the institutions, infrastructure, basic health, education and to an extent, macroeconomic stability. So there has been some improvement over the last 10 years. Some slow improvements, but the point is that we are now operating in a globally competitive world so it’s not good enough to say we’ve improved relative to our neighbours. It’s important for us to focus on what we can do relative to the world because we are competing with them for capital, which is globally mobile and can be satisfied from any point on the globe.
Mauritius has been a country of interest to you. Were you surprised that Mauritius topped South Africa to be the most competitive in Africa for 2013?
No I’m not surprised because you know Mauritius is very open in terms of ease of doing business. It has a very open economy with very limited barriers to doing business. Africa has had its challenges which are well documented. I think countries like Mauritius and even Rwanda are evidence that you can actually thrive even in the absence of resources because these are not countries which are rich with resources.
What is the current state of investing in East Africa? From Kenya specifically, with the recent discoveries in Turkana, there must be a lot of economic activity.
I think there is a lot of interest in East Africa, and that interest is built within domestic capital. East Africa is very vibrant. When I drive around different East African capitals, there’s a lot of vibrancy. There’s a lot of local capital participating within the region but then there is also a lot of interest from international investors, both from the east and from the west who have been attracted to this market for all sorts of reasons. I think that is evidenced by the number of private equity funds and other funds that have set up focusing primarily on East Africa. So I think in the history of East Africa, post-independence, I think probably we are having the greatest degree of economic activity. You can see it in Rwanda, it’s in Entebbe and Kampala.
Recently Kenya’s parliament decided to revoke the country’s membership to the International Criminal Court. Did this have an impact on the economy? Will it?
The evidence so far is the market does not seem to have reacted positively or negatively to that development. I think the question is what happens in the medium to long term as far as the strengthening of the institutions because that’s the core, that’s really what is a productivity enhancer. Here, our own domestic institutions because we cannot develop on the back of foreign institutions. We need to develop our own institutions. And if this withdrawal leads to a strengthening of our domestic institutions, then I think it would be for the better. If however it leads to a weakening of our institutions and the de-evaluation of the rule of law, I think it will be for the worse but I think that will be an unlikely situation. So far we have not seen any impact.
What are your thoughts on Africa being called a young emerging market?
Africa accounts for about 20 percent of the land mass and about 15 percent of the population but only accounts for two percent of output and that…is mostly from South Africa and Egypt…So it is true that Africa is emerging and with a lot of potential. It has a population of 900 million people and an emerging middle class. We are developing a real estate project and in our primary catchment area we have a market potential for routine services of $50 million per month, which is comparable to any developed country. So you can imagine it is young and it should develop with significant potential with significant growth against the backdrop of the rest of the world where growth is slowing down.
To date what do you think is your greatest achievement?
I think my greatest achievement is the role I’ve played in the development of the company I’ve led for the last 5 years. Really since Centum developed from a small investment company to a company that is a significant player and a significant contributor to business and development of sizeable enterprises in East Africa, I think I’m very proud of that. In that process we’ve developed leaders who I’m very proud of and who have grown with the business and who are today CEOs of different businesses and doing very well. I’m proud of the impact that I’ve had on the people employed by the affiliate companies of Centum, the suppliers, the investors and members of my own team, many of whom I have seen blossom and grow over the last 5 years.
Who do you admire in the business world and who are the heroes in your own life?
For me, my heroes in the investment world are of course individuals like Warren Buffett, my own board, people who have mentored me, some of my directors like Dr. Chris Kirubi and my own chairman James Muguiyi; these are people who saw potential in me when I was very young in my early 20s and have guided me to who I am today.
Why Warren Buffett?
Warren Buffett because of the consistency of his track record and what he stands for; he stands for integrity, credibility, for consistency and that is critical in our world of investing.
How do you think your peers describe you?
I don’t know how they describe me but I hope they say I am consistent and credible and a trustworthy individual.
Not that I’m trying to get some free advice but seeing that I’m speaking to you, say I was looking to invest in East Africa,
what advice would you give me? Where should I invest?
(Laughing) I would send you straight to our Asset Managers at Centum. You can give them your money and carry on with your business and wait for your monthly report.