From humble beginnings to World Entrepreneur, the story of
equity banker James Mwangi reveals the underlying truths of any
successful business (large or small)
Salle des Etoiles, Monte Carlo, Monaco – playground of the world’s
rich and glamorous. The tiny state of Monaco, tucked between the Alps
and the Mediterranean, has the world’s largest collection of
millionaires and billionaires per square foot. It is home to some of the
best known film, music and sports stars, while the annual Monaco Grand
Prix is considered the glittering apex of the motor racing calendar.
For the last 12 years, another annual event has sent pulses racing in
this city state where the average per capita income is over 180,000
euros. The Ernst & Young World Entrepreneur of the Year Award is the
world championship of entrepreneurial talent.
This year, 59 business champions, all winners of the Ernst &
Young Entrepreneur of the Year Award in their own countries or regions,
gathered at the fabulous Salle des Etoiles to witness the crowning of
the champion of champions, the World Entrepreneur of the Year.
The stakes were high. Who would win the world’s most coveted business
award? Names were bandied about. But as the envelope was opened, a
pin-drop silence descended. “The winner is Dr James Mwangi of Equity
Bank, Kenya!”
For a few seconds, the hush continued, then the assembly broke into
loud cheering and James Mwangi was given a standing ovation as he went
up to collect the most prestigious award for enterprise the globe has to
offer.
This was an astounding victory, not only for Mwangi, or Kenya; not
only for the banking sector, or Africa, but for all black entrepreneurs
everywhere. It marked a first in every category.
It also marked the apex of an extraordinary journey that began 50
years ago in a small village on the slopes of the Aberdares in central
Kenya – a universe away from the glitter, wealth and glamour of Monaco.
Foundations of success
The Aberdares and Mt Kenya – considered by many as the spiritual
heart of Kenya – was also where Kenya’s pre-independence freedom
fighters, the Mau Mau, were locked in battle with colonial armies.
“My father fell victim to the struggle,” James Mwangi told me when I
interviewed him in London shortly after he had received his award.
Mwangi is the sixth of seven children. “My widowed mother had to find
ways and means to feed and raise us in a deeply rural setting.”
There was no time for childish games – everyone had to pitch in to
keep the home fires burning. Mwangi, like the rest of his siblings, had
to do his share of chores – tending to livestock, making charcoal,
selling fruits and other produce for small margins.
Although the family was poor, “my mother ensured that we were
disciplined and she laid out a set of values which became anchors in our
lives,” Mwangi recalled. “There was one point on which she was not
prepared to back down or compromise one iota – education. Her children,
all her children, would be educated – no matter what it took.”
As Mwangi talked, a picture of his mother, Grace Wairimu, began to
emerge. Here was a woman, well past the first flush of youth, who was
straining every sinew and using all her ingenuity not only to feed and
clothe her children, but adamant that they go to school, and learn.
When she insisted that her daughters also attend school, a shudder of
apprehension went through the village of Kangema, their home.
“Girls who go to school ended up as prostitutes!” her neighbours
warned. “Maybe so,” she quipped, “but they will be educated prostitutes
and will be able to negotiate better terms.” People smiled at her sense
of humour but there was a lot of shaking of heads. Her daughters went to
school, and were among the first African-trained teachers from the
region. Perhaps this inured the young Mwangi and allowed him to ignore a
lot of head- shaking later in life when he was trying to reinvigorate a
defunct organisation.
Despite enormous social and financial problems, Grace Wairimu ensured
that all her children were educated. “Much later,” Mwangi recounted,
“when I had my own four sons, their granny supervised their education
and kept them away from harmful teenage activities going around. When
they got their school reports, they went first to their granny, rather
than me, their father. She passed on a wealth of wisdom through
storytelling and, in many ways, moulded my family.”
Mwangi’s children have attended the famous Ivy League institutions in
the US – Yale, Cornell and Brown – and Carnegie Mellon. “When she had
placed the last one in university in the US,” he said, “she rested.”
Grace died last year at the age of 98. Given the enormous role she
had played in his life, I glanced at Mwangi to look for signs of
sadness. But I only saw pride for his late mother shining in his eyes.
Somehow I knew that when he received his award, he had raised it in
silent tribute to her.
James Mwangi attended Nyagatugu Primary School in Kangema village.
But money was short and the family teamed up to supplement their income
by engaging in ‘small business’. While this may have been humbling for
the boy, he was nevertheless absorbing invaluable business lessons that
would stand him in good stead for his future.
He was learning, without consciously doing so, the basics of business
– what people needed, what they were prepared to pay, how to add value
to mundane articles, how to negotiate, how to make a sale and turn a
profit. With no role models to emulate, he and his family were, in
effect, discovering the basics of business all by themselves, based on
observation of what worked and what didn’t.
He obtained outstanding results at the end of his primary schooling
and this led to a government scholarship at Ichagaki Secondary School.
Here he was introduced, for the first time, to accountancy and commerce.
“This was an important discovery,” he recollected. “I could see how the
systems related to the small businesses we had been doing. We had been
going about business in a haphazard way, but here was a systematic
method of doing the same things with far better results. It was an
eye-opener.”
Mwangi obtained outstanding O-Level results and went to Kagumo High
School to study for A-Levels in economics, literature and geography.
Whatever he was picking up in theory, he was mentally applying to
real-life situations and his earlier, unformed brushes with commerce. He
obtained a bachelor’s degree in commerce from the University of
Nairobi, passed a Certified Public Accountancy course and was ready to
face the daunting and mysterious world of work.
The Equity Saga
At the age of 28, although he didn’t know it himself, Mwangi was
primed, in terms of character, values and down-to-earth business savvy
for the major role he was about to play in the nation’s commercial life.
Kenya was going through an uncomfortable transition phase from the
old colonial structures to the needs of a relatively new nation.
Although there was a huge demand for banking and credit services, the
industry remained more or less a closed shop. It was largely shut out of
the financial system. The international banks turned their noses up at
the prospect of catering to the masses. This led to the growth of
numerous indigenous mutual societies.
Many of those who started these savings societies did so with the
best will in the world, but lack of expertise meant they were trying to
learn the ropes while on the run. The result was a series of crashes
involving hard-earned money from depositors – many of them small-scale
rural farmers – vanishing at an astonishing rate.
One of these mutual societies, which had remained standing but was severely battered, was the Equity Building Society.
In 1993, the chairman, Peter Munga, and the CEO, John Mwangi, turned
to James Mwangi, who had established a reputation for honesty during a
period when that commodity was in very short supply, to help wind up the
business. It had already been declared technically insolvent.
“That was an understatement,” Mwangi told me. “To cut a long story
short, the building society had been making losses of Ksh 5 million
every year and was now facing a cumulative loss of Ksh 33 million, the
staff had not been paid salaries, morale was at rock bottom and
membership was dwindling by the hour.”
But rather than throw in the towel, Mwangi wondered if he could
intervene and “reinvent the organisation, transform it completely.”
He became the strategy and finance director. At the time, Equity had
27 employees, 27,000 customers, five branches and stood at number 66 out
of 66 in the financial sector rankings.
“I accepted the challenge because I could see clearly how important a
properly functioning society was to the mass of the people. It was
their only avenue out of poverty. I felt I had to do something – somehow
square the circle.”
But he had no resources, no money, no way of raising capital. A
banking licence, which might have provided some leeway, was not
forthcoming. Public confidence in indigenous organisations was at rock
bottom.
“How could I entice people to come to Equity? What could I provide
that was needed but not available? I decided to look inside the
organisation. If I could change the culture internally, I would have, in
effect, succeeded in reinventing Equity.”
Mwangi set about retraining the staff. He introduced a concept which
at the time was practically unknown – customer care. “Put the customer
and his or her needs first – he is the most important person in the
world. Treat people with dignity and respect. Serve to the best of your
ability.”
He encouraged his staff to use their own networks – as he did his –
to persuade people to join the society. “I told them, ‘trust me’. They
believed me because I believed it myself. If you expect anyone else to
follow you, you must have absolute confidence in yourself.”
What he felt most at this time was a heavy sense of responsibility.
“I knew I could not let down the chairman and CEO and, above all, I
could not let down the customers. When I said ‘trust me’, I meant to
keep my word.”
The first sign of success, he said, was a complete change in the
attitude of the staff. They were now motivated, they had a direction to
follow and what they were doing was bearing fruit. “We were able to give
them their first raise in eight years. I also persuaded them to use 25%
of their salaries to buy shares in the company. Now they were involved.
It was as much their company as anybody else’s. They knew that if they
succeeded, they had a lot to gain.”
Slowly but surely, like a ship that was almost sunk, the company
began to right itself. Customers, many of them peasant farmers, were
given red carpet treatment. Accounts were kept meticulously. Confidence
blossomed.
In Bangladesh, Muhammed Yunus had demonstrated that the Grameen
system of microfinance was transform-ing the lives of millions who had
been shunned by the mainstream banking industry. It was also helping the
impoverished nation to lift its economy by its bootstraps. But
elsewhere, micro finance was seen as something of a charity case –
throwing away good money for bad.
Mwangi was convinced that microfinance could not only transform the
lives of the masses, it could also turn a profit. Equity’s growing
customer base and a healthier sheen to the company’s balance sheet was
the proof he needed that the venture was on the right track. Despite the
headshaking within the industry, he and his team ploughed on.
“By 1997, we were ready to expand. We invited customers to buy shares
in the company and we started to pay them dividends. The word began to
spread – Equity was different; Equity could be trusted.”
Mwangi had witnessed how computer technology was altering business
out of all recognition. But it was commonly felt that such advanced
technologies were expensive and that the masses were ‘too backward’ for
such sophistication. He begged to differ. In 2000, he persuaded the
European Union to support a computerisation programme. The impact was
immediate.
“Transaction times dropped from 30 minutes to five; queues moved
faster and customer service improved. The whole process, including
signatures, was automated. Equity was now on a rapid, but solid, growth
path.”
But expansion needed an injection of capital that was still very
difficult to come by for indigenous companies. Approaches were made to
Africap, a funding organisation set up by the International Finance
Organisation (IFC) and other partners. Africap provided $1.6 million and
acquired 16% of the whole enterprise. This led to a second wave of
computerisation and further expansion. But in 2004 the company ran out
of capital and invited private placements – $10 million was raised in
two weeks. “On the last day of August, 2004, we made our biggest and
boldest step. We became a bank,” Mwangi said. “We could now roll out a
full range of products and services.”
In 2006, Equity Bank listed on the established Nairobi Stock Exchange
(NSE). More capital – this time from the giant Helios fund, supported
by IFC, CDC, George Soros and Opic, who bought 25% at $185 million –
allowed the bank to become the most highly capitalised in East and
Central Africa.
“Now, building on the IT platform, we launched an aggressive growth
campaign. In seven years, we increased our branches from 36 to 200, with
over 5000 agencies, and the customer base rose to eight million, nearly
half of all bank accounts in Kenya,” Mwangi told me.
The figures are mind-boggling. From a loss of Ksh 5 million in 1993,
the bank registered a profit of Ksh 12 billion in 2011. Equity now has
the largest banking customer base in Africa. It is the biggest
majority-African owned bank and the most profitable in East and Central
Africa. Since listing on the NSE in 2006, shareholder value has grown
900%, turning a large slice of shareholders into millionaires.
Mwangi expects profits to rise to nearly Ksh 16 billion this year,
making it the most profitable company in the region. The compounded
annual growth rate over the past 10 years has been an incredible 78% and
the bank has been growing ten-fold every five years for the last 20
years. From a staff level of 27, Equity today employs just under 8,000
people, it now has a presence in Uganda, Tanzania and Rwanda, and was
among the first financial institutions to open a branch in South Sudan.
Its balance sheet of Ksh 250 billion is equal to 20% of Kenya’s budget.
Innovations such as mobile banking – taking the bank to the people in
remote areas – and agency banking, where customers can carry out
transactions in shops, has made this once given-up-for-dead institution
one of the most progressive on the continent.
Stranger than fiction
The story of James Mwangi and Equity Bank – from a young boy selling
charcoal on the slopes of the Aberdares to becoming the most successful
banker in modern Africa – is so incredible that it almost belongs in the
realms of fiction. In this case, fact is far stranger than fiction –
and a thousand times more inspiring. But Mwangi remains humble and
cheerful, ready to make a joke at the first opportunity. He has never
forgotten the struggles of his childhood days and has set up the Equity
Group Foundation and sought partnerships to ensure that no deserving
youth will miss out on education, nor will anyone forego opportunities
through lack of financial knowledge. He spends half an hour every day
running on the treadmill and is a voracious reader. “I am up at 3.00 am
every day and I read – mostly business and management books and
biographies,” he said.
His role models?
“Nelson Mandela. The way he has changed people’s lives inspires me
every day. That is what drives me – the feeling that I am changing lives
for the better, being an agent of social-economic transformation in
Africa.”
Among his business gurus he counts Jack Welch, the former CEO of
General Electric, Bill Gates (who he says showed him how to think more
broadly about society), Bill and Melinda Gates for their contribution to
the disadvantaged in Africa, and Steve Jobs for his technological
genius. What makes him most happy?
“Whenever I can bring a smile to someone’s face, I am amply rewarded.”
James Mwangi’s top tips for business success
Be a dream maker. An entrepreneur is someone who
identifies gaps in products or services and is willing to take risks to
make the dream come true.
Do not go it alone. An entrepreneur is dependent on,
and relies on, the skills and knowledge of others. But he must be the
leader who can bring these people, their skills and their attributes
together to create something new and useful.
Clothe yourself in values. Your values are what will
attract all the other components you need – capital, expertise,
partnerships – to help you make your vision come to life.
Ask yourself what you can do. “What can I do that
will be most useful to most people? How can I change the situation so
that what is needed is made available to those who need it most?” Make
that your vision and goal and go for it.
Be dependable. If people trust you and you deliver time after time, then when you ask them to jump, they will not ask “why?” but “how high?”
Convince yourself. If you cannot convince yourself
that your goal will come to pass, you won’t convince anyone else either.
Convince yourself first, with good reason, and others will follow.
Be enthusiastic. Your enthusiasm will infect others and set off a chain reaction that makes even the impossible possible.
Be patient. Equity Bank is showing its best colours after 20 years of hard work.
Never stop learning. Learn something new every day and try to apply it to your life and business.
Be humble. Many factors, and many people, come together to make success of an enterprise.
Learning to fly
Under its Wings to Fly programme, Equity Bank has secured a Ksh 6
billion scholarship fund in partnership with The MasterCard Foundation
and with financial support from UKAID, USAID and KFW to provide 10,000
academically gifted but financially disadvantaged children with
comprehensive secondary scholarships.
The Equity Bank University Sponsorship and Leadership Programme extends a
sponsorship to the best boy and best girl in the Kenya Certificate of
Secondary Education (KCSE) from the districts where the bank operates.
So far, 1,290 students have benefited, with over 65 now pursuing higher
education in some of the best universities in the world, including Ivy
League schools in the US.
The Equity Group Foundation, in partnership with The MasterCard
Foundation, has implemented a financial literacy programme in Kenya,
aimed at training one million youth and women. Some 400,000 have already
completed the course.
Under its Kilimo Biashara initiative, the Foundation has been deeply
involved in the agricultural transformation of Kenya in partnership with
AGRA, the government of Kenya and IFAD.
Oto with Kimisho Team Leaders in Makadara on Saturday June the 29th 2013 
Oto with Kimisho Team Leaders in Makadara on Saturday June the 29th 2013 
Oto adressing the Launch of Eldoret Clean-up Campaign at Hurumu Estate in Eldoret in May 2011. The Clean-up was launched by HE Hon William Ruto- our Deputy President
Ms Betty Nzioka- Deputy Director- Environmental Awareness and Public Participation at NEMA Chairing a meeting at the NEMA Boardroom today in preparation for the Re-launch of The Monthly Clean-up Campaign in Nairobi on Saturday the 29th June 2013. She is flanked by Odhiambo T Oketch and other Partners 
Other Partners during the Consultative Meeting at NEMA
Oto, Banja, Mary, Philemon and other Kimisho Members in a Group Photo
Odhiambo T Oketch addresses our Team Members at Huruma in Eldoret. The function was also attended by Hon Ruto as our Guest of Honour, the Eledoret North DC, Eldoret Mayor, Town Clerk and many more Leaders
Odhiambo T Oketch with Sen Prof Peter Anyang' Nyong'o when he was the Minister for Mediccal Services
Oto joins in a Clean-up Campaign at Kongowea in Mombasa in 2012. Can we all work for a Clean Siaya where waste is viewed as a Resource?
Dr Ekuru Aukot giving his presentation during the Devolution Workshop at Internews in Nairobi. He is flanked by Odhiambo T Oketch 
Group Photo after the Devolution Workshop at Internews today.
A Meeting with Officers from the Kenya Commercial Bank this afternoon
The Dirty Landhis Road in Nairobi
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