Tuesday, December 16, 2008

Kenyan bets KSh100m on digital printing!

By JUSTUS ONDARI Posted Monday, December 15 2008 at 16:37
Ensconced on the right wing of the second floor of Rehani House on Nairobi’s Koinange Street is an innocuous sign announcing the address as the home of Liberty Graphics and Print Ltd.

No big deal. In any case, what would be so special about a graphics design and printing press in a country where every nook and cranny is teeming with all manner of printing outfits?

Nothing could be further from the truth. Liberty Graphics and Print Ltd is no ordinary printer. If anything, it is the nerve centre of what promises to be the first phase of a multimillion investment by a Kenyan, Mr Wilfred Saroni, returning from the Diaspora.

“We are bringing the very latest in cutting age digital and online on demand printing technology to Kenyans. Unlike other printers, we are not using plates,” says Mr Saroni, who is seeking to replicate a model perfected by American giant, FedEx Office, formerly FedEx Kinko’s.

Vice President Kalonzo Musyoka is expected to officially open the business tomorrow. The 2005 New Hampshire Businessman of the Year says he is going for the high-end printing market, which is currently served by printers based in South Africa and China.

The investment, in which the entrepreneur has already pumped Sh100 million, could have been a franchise of FedEx Office if things had worked out as planned.
Impressed by the success of the seventh largest printing company in North America, Mr Saroni dreamt of being allowed to establish a franchise of the chain store in Nairobi.

However, as it turned out, his was just that — a dream. The chain store’s management rejected his proposal, saying Kenya was a small market.
They politely informed him that they were already operating in Africa’s biggest economy, South Africa, providing printing, photocopying and binding services as well as video conference facilities.

It was then that it dawned on the Caplan University, USA, MBA graduate that he could go it alone.

“It has always been my plan to invest in Kenya and East Africa after doing business in the US for ten years,” says Mr Saroni, who was awarded the Ronald Reagan Republican Gold Medal in 2006 by senior members of the US Congress for his hard work and entrepreneurial acumen.

At a time when the Government is making every effort to attract foreign investors, including offering them incentives such as tax waivers, Mr Saroni feels the same should be extended to Kenyans in the Diaspora.

His call for the support of Kenyans in the Diaspora and the decision to return to the country coincides with the release of government statistics showing that local investors are more effective in fighting high rate of unemployment in the country compared to the much sought-after foreign investors.

Official statistics show that whereas the locals invest less than the foreign counterparts in the economy, they create more jobs.

According to the latest Kenya Investment Authority statistics, local investors pumped about Sh9.1 billion into the economy in the first three months of the current fiscal year compared to Sh27.6 billion in foreign investments.

This saw the country attract investments worth Sh36.7 billion against a target of Sh23.5 billion as KenInvest issued 34 investment certificates out of the 37 investors who applied over the period.

The locals created 1,343 jobs compared to 95 jobs by their foreign counterparts during the period, which ran between July and September this year. Mr Saroni already has 25 employees on his payroll.

“It shows that, if well promoted, local investors cannot only contribute to the fight against employment, but also spur economic growth,” says Ms Susan Kikwai, the KIA managing director.

Mr Saroni, who has every reason to understand what it takes to not only run but sustain a business having seen one of his business in the US go bust, says the cost of doing business in the region is much lower than in the US.

The New Hampshire Board of Nursing withdrew the operating licence of his Nashua Nursing School in New Hampshire mid this year after it ran into financial problems, a development that he attributes to the turmoil that is facing the US economy.

“It was a painful experience but big multinational companies like AIG, Ford, Crystler and GM are facing problems and Wall Street is crumbling. My business was not an exception,” says Mr Saroni whose other two other schools – Holden Medical Institute – are still operating.

Mr Saroni, who went to Kimana primary and secondary schools, does not rule out divesting from the business, saying that when the right time comes, he will consider an “appropriate exit strategy”.

He is currently liquidating his equity and interest in one of the investments, Holden Centre, a 300,000 square feet property. Since the past sometimes determines the future, how sure can one be that Liberty Graphics and Print will survive?
“My business approach is never to look back on lost business but to focus on the success of new and ongoing ventures,” he says, adding that, “The closed school is only relevant to the extent that it taught me a lesson on business management.”
Using funds from minority partners and personal savings, he is in the process of setting up four retail outlets around the city centre at a cost of between Sh40 million and Sh50 million each.

“We expect our state-of-the-art printing press on Mombasa Road to be up and running at a cost of Sh100 million,” he says, adding that already he has sealed a number deals for the two months old business.

Using his networks, the entrepreneur aims to tap into the fast growing graphics outsourcing business in the US market where the company is also registered to operate.

With the proposed fibre optic cables expected to reach the country by mid next year, the entrepreneur who received the Head of State Commendation from President Kibaki this year says the cost of communication will go down significantly.

“This will enable us to link up with our clients abroad at a cheaper rate and faster,” he says, while urging the country to adopt appropriate technology.
“It is easier for Kenyans to adopt, say, wireless technology communication than the US, which had to grapple with what to do with thousands of landline telephone cables already laid in the ground,” he adds.

Another bolster to businesses like Mr Saroni’s is a bandwidth subsidy that the government initiated this year and which is being administered by the ICT Board.
Maintaining that the country’s business environment has improved, he calls for a reduction in the amount of paperwork involved in registration of a business.
For instance, in line with the proposed reforms being pursued by the Kenya Revenue Authority, only one form should be used in the registration for things like the PIN and VAT (Value Added Tax).

Similarly, he feels the proposed amendment of the Companies Act to allow for an individual to set up a business will make the country a better investment destination.

Yet, like a sore thump, infrastructure remains a major challenge and he cites the port of Mombasa, the road network and power supply as some of the areas that need immediate attention.

“It is time we amended our laws to allow dual citizenship,” says Mr Saroni, whose ambition is to expand the business across the East African region and take it to the public by listing at the Nairobi Stock Exchange in five years.

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