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Profiles

Entrepreneur sworn to code of honesty

Thursday September 14 2023

David Muge is a serial entrepreneur who invests in Kenya and the United Kingdom. PHOTO | POOL

Serial entrepreneur David Muge has in the last decade made significant business ventures since his return from the United Kingdom.

Today, he owns Nandi Coffee Milling company, the largest factory in Nandi, and wants to invest in the next big thing.

He says business comes naturally to him, but he also enjoys the thrill of taking huge chances, and is fascinated by the idea of “Kenyanising everything.”

How do you intend to shift coffee production into areas not traditionally known for the crop?

The reason why I chose the coffee industry is because it’s lucrative. It brings money to the country and also to me as a person. I already had a head start because I had land, which was substantially big by all standards.

How much land did you start with?

A hundred acres and now we are at 800 acres. Half of it will be under coffee and the other half macadamia. I planted the coffee with the money I got from the UK and later when I came back with more money, opened a milling factory. However, looking back now, I should have used that money to do the farm first and then do the milling.

What was the thinking behind the milling?

I wanted to mill the local coffee because there was none around Eldoret, Nandi, Trans Nzoia, Kericho all the way up to North Rift, basically.

There was no proper milling factory, which was locally owned and proactive. So, I thought I would mop up all this coffee. I did not take the time to look at the coffee industry.

Having lived in the UK where everybody’s honest, I assumed everybody here would be honest. It was a rude awakening for me, I must say. So, it took me aback and I told myself there was no need to have this coffee mill. I should have done my own estate first.

Why didn’t it work? I’m interested.

When I came here, I thought, let me speak to the industry and solve their most pressing problem. Farmers’ cooperatives told us, “Oh, we don’t get a good price. We get cheated.” These cooperatives came from Bungoma. I wrote them a Sh2 million on condition that they would bring it for milling. We even entered into a contract.

But when it was ready, they took it to a mill in Central Kenya and here in Nairobi. When I went to them, they told me, “Oh, we sold the coffee. It wasn’t enough.” I asked them, “Why did you sell it?” “Oh, because we had a debt with the other mill the other year, so you wait for yours this year.”

They gave one excuse after the other. We also gave them seedlings to give to farmers with the view that when the coffee’s ready, they would give the coffee to us and we deduct the cost of the seedlings.

So, it was a rude awakening to me that you really cannot rely on some of the contracts that are entered with the farmers. So, we let that one go and we’ve progressed. Now, we give coffee seedlings knowing that we shall not get coffee in return.

What was the thing that flipped your understanding of the coffee sector and made you decide it is the best plan moving forward?

It was the realisation that you can never rely on cooperatives. You cannot rely on small-scale farmers. The best thing is to have your own nuclear farm.

For example, once we have up to 400 acres under coffee, which we aim to hit by next year, I will be able to go and sign a contract in the UK, in Korea, anywhere, knowing that I’ll deliver that coffee, the 400 acres coffee at a certain quality.

So, I can write a five-year contract with that company telling them, “You know, I’ll supply this quality of coffee for the next five years.” They’ve come to me. In fact, this morning somebody came and told me, “Can you supply us coffee?” I asked them how much they wanted, but told them I couldn’t supply that quantity. It is more important to be honest than to be dishonest.

People speak about dishonesty being a big part of business

Because most of them here have fallen short of that. I know of a company that went to Sweden and claimed it could supply a certain consignment of coffee only to later find out that it could not get it.

What I’ve decided to do is concentrate on our estate. We’ve got a few large-scale farmers as well, who are coming in so that we have up to 2,000 acres so that we work as a team and use the same milling factory and sell it so we are consistent. That is what I learned.

One of the reasons why I came to Kenya to do coffee is because of the quality. I think most Kenyans don’t realise what we have, hence don’t take coffee seriously.

Coffee as a cash crop has quite the history in Kenya

Coffee propelled Kenya economically during the Jomo Kenyatta era. Even now, if we take our coffee seriously, we can make a lot of money. Coffee production in Kenya has fallen from 140,000 tonnes to 40,000 tonnes.

And recently you may have seen people in Central Kenya cutting down their coffee trees. That is really because nobody has focused on coffee as a cash crop.

Two years ago, I went to Korea. When I stepped from the aeroplane, everywhere I looked I saw boards announcing, ” We are serving Kenyan coffee.”

One of the reasons why Kenya coffee is highly sought is because of the history we have, our volcanic soil gives it that acidic floral test, which is unique to Kenya.

Why isn’t Kenyan coffee marketed as the premium product that it is?

Coffee is graded in different ways. There was a debate on whether we should make Kenyan coffee its own grade and I don’t think anybody has taken it seriously.

They should, but you see, this is the international thing now, which the government should be pushing. Kenya has a jewel in coffee.

How much tonnage do you mill?

We do a lot, up to 20 tonnes per hour. The mill is big, but the coffee supply is not as much as we’d like. So, we’ve been investing heavily in coffee production hoping to improve the supply.

You talk about this belief in Kenya and Kenyaism, what does that actually mean?

Yeah, of course, there’s time for everything. As I said before, there’s time for everything. We were colonised for a very long time and then our forefathers and our fathers reached a time when they realised, ” No, this cannot continue.” So, they fought for independence and we’ve got to realise all that independence we were shortchanged. We didn’t have enough manpower to come in. And President Kenyatta was very wise. He kept them. He told them,” You stay, build the nation.”

But since then, Kenya has invested heavily in education, manpower, in everything. So, there’s nothing to hold us back. I believe this is the right time to come home and invest. There are so many of us who have gone to the UK to the US to study.

How many universities do we have? If you tell people today, “I want people with a Masters in IT”, there’ll be lots of applications. If you want engineers, if you want doctors, there are lots of them. So, we have to think about how to Kenyanise. We have to pay our taxes. We have to look inward. We have to make sure that in everything we are doing, Kenya has to come first.

What does a serial entrepreneur invest in times like this and a Kenya of today?

I would say that in another six months, if you came to me, probably I will have invested in ICT and one of them is the data centre, which I personally feel is a good thing because I’ve been following it up.  I know what ICT did to my company. I think I will invest in Starlink.

I don’t think Kenyans are aware of the effects that it will have in Kenya. They’re aware that the government is rolling out a hundred thousand kilometres of fibre. That is good, but if you go to a rural area in Mount Kenya, in western, in Kwale, in Kilifi, in Lamu, it’s so expensive to send that fibre there and that’s why we’ve not achieved it.

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