How Narendra Raval quietly secured exclusive iron ore deal in Uganda

Playing politics is becoming a second successful game for steel tycoon and fortune reader Narendra Raval.

Days after declaring President William Ruto should serve for 25 years, it has emerged Mr Raval quietly secured an exclusive deal in Uganda to export iron ore worth Sh15 billion every year after the Kenyan leader broke bread with his Ugandan counterpart Yoweri Museveni.

The deal will see Mr Raval, popularly known as Guru due to his priestly background, tighten his grip on the region’s cement and steel industries.

Before closing the Uganda deal, Kampala changed the law to accommodate Mr Raval and end a five-year freeze on exports of raw and semi-processed iron ore.

It is yet another win for Mr Raval, who has boasted of having the ears of four of Kenya’s five heads of State and the powerful Indian Prime Minister Narendra Modi. 

Uganda’s Minister of Energy and Mineral Development Ruth Nankabirwa Ssentamu has published regulations that have seen Narendra’s Devki Group of Companies given the exclusive permit for the export of raw and semi-processed iron ore from Uganda in a deal brokered by President Ruto.

The Mining and Minerals (Export of Raw and Semi-Processed Iron ore) 2023, which has recently been made public, will allow Mr Raval to export from Uganda up to one million tonnes of raw or semi-processed iron ore in a year to feed its Kenya operations.

Regulations giving Narendra Raval exclusive rights to export iron ore from Uganda. 

Iron ore is a key input for the manufacture of cement and steel, which are critical for the building and construction industry. 

“These regulations apply only to Devki Group of Companies (Devki Steel Mills Limited),” reads part of the regulations that demanded State ownership in the firm given the exclusive deal.

The Ugandan unit of Devki Steel Mills, where Kampala has an undisclosed stake, will pay a royalty of five percent of the gross value, notes the regulations.

Mr Raval did not respond to requests for comment.

Moratorium lifted

With a tonne of iron ore going at an average of $115, it means Mr Raval will ship out of Uganda iron ore valued at Sh15 billion annually.

President Museveni had since February 2015 imposed a moratorium or freeze on the export of unprocessed iron ore and other minerals to protect the country’s local industries.

But the moratorium was lifted in the wake of a meeting of Mr Raval with Presidents Museveni and Dr Ruto.

Mr Raval says he grew up dirt poor in India and arrived in Kenya over four decades ago to serve as a priest before planting the seeds of his steel empire through a hardware store in Nairobi’s Gikomba Market.

Since then, Mr Raval has put together a regional business empire that straddles the steel, cement, infrastructure and aviation sectors.

President William Ruto with Devki Group Chairman Narendra Raval

President William Ruto with Devki Group Chairman Narendra Raval (left) during the official opening of Devki Steel Mills Factory in Samburu, Kwale County on November 18,  2022.

Photo credit: Kevin Odit | Nation Media Group

But it is in the cement and steel industries that he has maintained a stranglehold on the back of multibillion-shilling buyouts.

His stable includes Devki Steel Mills, roofing sheets maker Maisha Mabati Mills, National Cement, which makes ‘Simba Cement’, and Northwood Agencies Ltd, a helicopter charter company.

The group has been on a multibillion-shilling expansion in recent years, including the construction of a Sh11.9 billion new roofing sheet manufacturing plant in Lukenya, outside Nairobi.

In 2018, his National Cement with its Simba Cement brand launched a Sh30.3 billion cement clinker plant in Merrueshi/Mbirikani in Kajiado County.

The following year, he acquired the Kenyan assets of bankrupt cement manufacturer Athi River Mining (ARM) for Sh5 billion and constructed two new cement factories in Njoro, Nakuru and Mariakani in Mombasa.

He recently bought Rwanda’s oldest cement manufacturer, Cimerwa Plc.

The investments are the product of Devki’s internal resources and bank loans.

In 1992, he took out a loan and started a roofing and fencing materials business while developing a small steel rolling mill near Athi River on the outskirts of Nairobi. That business morphed into the behemoth that is Devki Group.

Devki recently sold back a majority stake in a geothermal power plant, Sosian Menengai Geothermal Power, to Gideon Moi, son of Kenya’s second President and former Baringo Senator for an undisclosed sum.

Mr Raval had bought the majority stake in the geothermal venture through an entity called Sosian Energy in 2017.

His entry into the power-generating business underlined the lucrative nature of Kenya’s energy sector, which continues to attract deep-pocketed investors.

Mr Raval is now eyeing the virgin production of steel, the first in Kenya and one of the few in the continent where the bulk of firms use scrap metal to produce the commodity.

The iron ore from Uganda is expected to feed Mr Raval’s new factory in Kwale County, billed to be the second such plant in Africa.

The Sh45 billion plant was unveiled by President Ruto in late 2022 in his first major public assignment after clinching the presidency, underlining Mr Raval’s proximity to the head of State, who April 10 graced the opening of the tycoon’s clinker plant in West Pokot.

“I was with him (Raval) in Uganda during my recent travel to the country, and I talked to President Museveni for him to give us raw materials, and he accepted to give us five million tonnes of iron ore to be brought yearly to the Kwale factory,” said Dr Ruto on November 18 when he presided the launch of Devki Steel Plant in Kwale.

In an earlier interview, Mr Raval said the Kwale plant would utilise locally sourced iron ore.

Export ban

Kenya in 2022 introduced an export levy of $175 per tonne of the raw and semi-processed iron ores in what was aimed at protecting the local industry.

This has made it almost impossible for companies to export iron ore mined from Kenya, a big blow to companies that had started mining and exporting the commodity.

The tax has technically banned the export of iron ore from Kenya given the global price of $115 a tonne.

In the deal between Devki and the Ugandan government, the iron ore imported to Kenya from the neighbouring country cannot be re-exported. 

Virgin production of steel, however, requires a lot of power, which is why both cement and steel firms import a lot of coal.

To deal with the high cost of electricity, however, Mr Raval said in an earlier interview that the Kwale plant had begun to produce its own power.

Mr Raval through his Devki Steel Mills, which operates in Kenya, Uganda and Rwanda, is the dominant player in the steel industry.

Devki, which was among the nine companies that were penalised by the competition watchdog for engaging in cartel-like behaviour, says on its website that it enjoys over 50 percent of the steel market.

Despite the introduction of the export levy on iron ore, Kenya has continued to import iron ore from countries such as South Africa, India, the United Kingdom and China, mostly the less dense Hermetite that is used mostly by local cement manufacturers.

In 2023, Kenya’s imports of iron ore increased, reflecting increased demand for the commodity, which is also key for cement production.

According to the Kenya Ports Authority (KPA) database, iron ore imports were approximately 418,500 metric tonnes (excluding Uganda’s) between March 13, 2023, and March 3, 2024, valued at approximately Sh6.4 billion.

The KPA database further shows that there has been a significant increase in the import of steel coils between December 2023 and March 2024.

Last Monday, Mr Raval unveiled a Sh150 billion clinker plant in West Pokot as part of his plans to be the major supplier of local cement manufacturers with this raw material.

The plant will most likely rely on iron ore from Uganda, as it is the less dense type that is used by cement manufacturers to produce clinker.

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80pc of employed Kenyans poor as wages fail to cover basics

Economy

80pc of employed Kenyans poor as wages fail to cover basics


Executive Director and CEO Federation of Kenya Employers Jacqueline Mugo (right) addresses journalists on issues affecting employers during a press briefing at Waajiri House in Nairobi on November 24, 2023. PHOTO | NMG

About 15.3 million or 80 percent of employed Kenyans are living in poverty, implying that their incomes aren’t sufficient to afford them and their families a decent living.

The latest statistics on working poverty from the International Labour Organisation (ILO) show 26 percent of working Kenyans are ranked as extremely poor, while 29 percent and 25 percent are classified as moderately poor and near poor respectively.

The data ranks Kenya at number 30 out of the 120 in terms of economies in the world with the highest proportion of employed people whose jobs have failed to lift them out of poverty.

Kenya is tied with Zimbabwe and trails countries such as Mali, Burkina Faso, Haiti, Cambodia, and Ghana whose workers are better off despite their gross domestic product being smaller.

Read: Kenya’s wage bill to rise above Sh1.1 trillion on salaries review

This means that having a job in Kenya has not been enough to keep the majority of people and their families out of poverty, pointing to issues of job quality and the inadequacy of earnings in an economy where pay rises have been below inflation for three straight years.

“The statistics point to a labour market that is almost broken and does not create enough high-quality jobs. It also points to an economic model that is not generating prosperity,” said Ken Gichinga, the chief economist at Mentoria Economics.

“Unless we get our national tax policy right, it is going to be very difficult to create an environment that allows businesses to thrive and create high-quality jobs. A burdensome taxation system cannot generate prosperity.”

The ILO data, which shows only 20 percent of the working are out of poverty, also shines a spotlight on the quality of earnings for working Kenyans.

The economy employed 19.15 million people by the end of last year, with 15.96 million or 83.3 percent working in the informal sector where wages and working conditions are often not regulated by the government.

The ILO ranking uses the absolute international poverty line of $1.90 (Sh297.35) per person per day at purchasing power parity.

The cost of living in Kenya has risen, but the minimum wage has not increased at the same pace, reducing the real minimum wage. In 2022, the minimum wage increased by 12 percent— the first review since 2018— but the cost of the minimum wage basket increased by an average of 22 per cent, with food expenses being the key driver.

Read: Tough times for workers as payroll taxes rise slowest in seven years

Kenya National Bureau of Statistics data shows real wages— a measure of income after accounting for the cost of goods and services people buy—shrank by three percent in 2022, marking the third straight year of inflation-adjusted pay cuts.

The ILO data on working poverty corroborates findings by the Kenya Institute of Public Policy Research and Analysis (Kippra) in its Kenya Economic Report 2023, which showed the country is grappling with a rise in the number of people whose wages and salaries are far below the minimum required to meet the basic needs of food, shelter and clothing.

Kippra said the majority of workers in Kenya are paid below the minimum wage which varies by sector and location —covering about 45 separate categories— but has not benefited many people due to limited coverage and enforcement.

“Most workers still earn below minimum wage, accounting for 77 percent of total workers, out of which 29 and 71 percent are in the formal and informal sectors, respectively,” said Kippra.

“Enforcement of the minimum wage is limited by an inadequate number of enforcement officers and the complex system of minimum wage setting that varies based on occupation, skills level, and location.”

Additionally, Kippra noted, that the minimum wage allocated to workers was still lower than the amount required to achieve a decent living and was covering only about half of the total necessary expenses.

Compulsory monthly deductions such as Pay as You Earn, National Social Security Fund, National Health Insurance Fund and housing levy, added to personal deductions such as those towards servicing loans, have all eaten into workers’ take-home pay.

Eight Kenyans recently sued President William Ruto’s government for “wage slavery”, which they say has been orchestrated by too many taxes and levies introduced “with reckless abandon”.

Read: Why petitioners want Ruto taxes capped at 20pc of workers’ salaries

The petitioners, who approached the High Court under a certificate of urgency, want the court to cap the taxes and levies that can be imposed on an individual at 20 percent and 30 percent for corporate bodies.

“In its classical meaning, any person whose labour can only afford them the basic necessities of food, clothing and shelter is considered a slave or a wage slave. Over the last one year, many Kenyans have fallen into the wage slave bracket despite the fact that Article 30 of the Constitution absolutely prohibits slavery in Kenya,” they said in the petition.

Monthly deductions, including those towards loan repayment, healthcare and housing, have breached two thirds of the salary for thousands of workers, presenting a compliance headache for employers and financial institutions.

Jacqueline Mugo, the executive director and CEO of Federation of Kenya Employers (FKE), told the Business Daily there has been “quite an increase” in the level of breach with the Employment Act’s requirement.

“There is a need for the government to harmonise these deduction laws. What do we obey? Do we obey the Employment Act or others like for housing levy and pension? At the end of the day, all these are laws and none supersedes the other except the Constitution,” she said.

Compulsory monthly State deductions will start taking at least 20.5 percent from Kenyans earning Sh50,000 and above come next year if the government implements the proposal to increase deductions towards healthcare from the current range of Sh150 to Sh1,700 to a flat rate calculated at 2.75 percent of gross monthly earnings.

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Ruto ejects over 120 Uhuru allies in parastatal changes

Economy

Ruto ejects over 120 Uhuru allies in parastatal changes


President William Ruto (centre), Deputy Rigathi Gachagua, Chair of Governors, Ann Waiguru and other leaders during a consultative meeting with county governors in Naivasha, Nakuru County on February 10, 2023. PHOTO | JOHN NJOROGE | NMG

President William Ruto’s administration has made board changes in at least 58 parastatals, replacing more than 100 appointees tapped by his predecessor, Uhuru Kenyatta, as he seeks to assert his influence over State-backed firms and agencies.

Dr Ruto and his Cabinet secretaries have hired at least 119 chairs and directors in 58 parastatals, with the President directly appointing an estimated 53 directors, according to a review of Kenya Gazette notices since the appointments started in November.

The new administration which came to power in September has mostly fired directors appointed in the former president’s last days and populated the boards with losers in the August elections who supported his coalition.

Traditionally, a change in administration triggers shake-ups in parastatals as the new president and ministers move to assert their influence over government-managed firms that have previously been used as centres of patronage by their predecessors.

The next phase of hiring will seek to replace chief executives of top State-owned firms despite a majority of their contracts running up to 2024.

The terms of chief executives of the Rural Electrification Authority (REA), the Geothermal Development Corporation, the National Social Security Fund, the Kenya Railways Corporation, the National Health Insurance Fund (NHIF), Kenya Pipeline Corporation and KenGen have either expired or are expiring this year.

The top jobs at Kenya Power, the Kenya Ports Authority (KPA), KenGen and the Kenya Electricity Transmission Company will be low-hanging fruits for new ministers.

Currently, State-owned firms do not have substantive CEOs and the positions look set to attract jostling by political and business operatives for their preferred candidates.

The hiring of preferred top executives will require friendlier boards, triggering the shake-up of directorships in the parastatals.

Among the loyalists awarded parastatal jobs are former county governors Jack Ranguma (Kisumu), Cleophas Lagat (Nandi), and John Mruttu (Taita-Taveta).

Mr Ranguma was Friday appointed the chairman of Sacco Societies Regulatory Authority while Mr Langat will head the board of Rivatex East Africa.

More than 30 people appointed to boards by Mr Kenyatta were ousted on Friday.

Former MPs tapped to chair parastatals include Daniel Rono (Kenya Medical Supplies Authority), Charles Muriuki Njagagua (Consolidated Bank), Regina Ndambuki (Tanathi Water Works Development Agency), Yusuf Chanzu (National Housing Corporation), Moses Mabonga (Insurance Regulatory Authority) and Sakwa Bunyasi (Kenya Vision 2030 Delivery Board).

Read: Ruto fixes CBK legal hitch with deputy governor appointment

Before Friday’s appointments, a number of State corporation chairpersons perceived to be close to Mr Kenyatta had been replaced.

They include Francis Muthaura (Kenya Revenue Authority), Lewis Nguyai (National Health Insurance Fund), Rita Okuthe (Kenya Pipeline Company), Vienne Yeda (Kenya Power), and Gilbert Kibe (Communications Authority of Kenya).

John Ngumi also exited as chairman of Safaricom, the country’s leading telecoms company where the government holds a stake.

In 2003, then President Mwai Kibaki made radical changes on the board and C-suites of State-owned firms after ending Daniel arap Moi’s 24-year rule.

The Moi era had been characterised by the intimidation of opponents, the weakening of institutions meant to keep the government in check and rampant corruption.

Mr Kenyatta also made changes in the leadership of the parastatals after coming to power in 2013.

The ethnic composition of appointments under the new administration will also come under scrutiny amid a push to ensure that offices funded by taxpayers have a face of Kenya.

An earlier report showed that Kikuyu and Kalenjin communities dominated top jobs in government, embassies and chief executive positions in parastatals.

The Public Service Commission (PSC) said in the report that Kikuyus and Kalenjins account for 29 percent and 11 percent of the 417 top jobs in government, including directors and principal secretaries respectively.

Kikuyus accounted for 27 percent of Kenya’s 66 envoys and Kalenjins 14 percent.

On CEOs of parastatals, Kikuyus took 20 percent of the positions followed by Kalenjins at 19.4 percent, Luo (14.4 percent) and Luhya (10 percent).

The Constitution introduced the ethnic representation requirements to check a historical trend where tribesmen of those in power were favoured during recruitment.

Ethnic groups whose job representation surpasses their corresponding national population proportion are considered to be over-represented.

The Kikuyu and Kalenjin dominance mirrors the two tribes’ presence at the highest office in Kenya since Independence.

Mr Kenyatta succeeded Mr Kibaki, both Kikuyus. Mr Moi, who ruled for 24 years before Mr Kibaki, was a Kalenjin as is Dr Ruto.

On replacing parastatal CEOs, Cabinet secretaries face a legal hitch, with a majority of executives having their contracts running up to 2024.

The Cabinet secretaries will either have to wait longer to replace the CEOs or tear up their contracts in a move that could prompt lawsuits.

CEOs of cash rich-parastatals such as the Kenya Revenue Authority (KRA), the Kenya Airports Authority (KAA), the Communications Authority of Kenya (CA), the Energy and Petroleum Regulatory Authority (EPRA) and the Kenya National Highways Authority (KeNHA) have contracts running into 2024.

The law says that CEOs can only be removed from office due to absenteeism, being jailed for a term exceeding six months and prolonged sickness or mental illness.

Read: 30 plum parastatal jobs up for grabs in William Ruto government

Top executives can also resign under a rule that ministers have exploited before to force out CEOs of State-owned firms.

The fallouts have triggered lawsuits that have seen some chief executives get back their jobs and others receive compensation for unfair dismissal.

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Ruto’s big shots freed from Sh30 billion fraud, tax suits

Economy

Ruto’s big shots freed from Sh30 billion fraud, tax suits


Corruption cases against President William Ruto’s allies worth close to Sh30 billion have either been withdrawn or quashed. PHOTO | SILA KIPLAGAT | NMG

Corruption cases against President William Ruto’s allies worth close to Sh30 billion have either been withdrawn or quashed in the recent past, turning the spotlight on the prosecution and investigative agencies in the fight against graft.

The cases have fallen in quick succession, raising questions as to whether there was pressure to charge allies linked to Dr Ruto or whether there has been an interference with the role of the Director of Public Prosecutions (DPP) Noordin Haji.

During the campaigns ahead of the August 9 elections, Dr Ruto claimed that his close allies were targeted for political persecution or were being intimidated so that they could abandon him.

Deputy President Rigathi Gachagua’s Sh7.3 billion case has since been withdrawn, while businessman Humphrey Kariuki is a happy man after the Sh17 billion tax evasion charges against him and co-accused were quashed by the High Court.

Mr Kariuki’s factory, which had been shut down by the police, has also been reopened.

This week, the anti-corruption court acquitted former Kenya Pipeline Company managing director Joe Sang, who was facing charges related to the Sh1.9 billion Kisumu Oil Jetty for lack of evidence.

The DPP is also considering withdrawing Sh2.5 billion in tax evasion charges against Mary Wambui Muigai, another ally of President Ruto.

The President claimed that the State agencies that were being used to fight him included the Directorate of Criminal Investigations (DCI), the Assets Recovery Agency (ARA) and the Kenya Revenue Authority (KRA).

READ: State declares Gachagua owner of Sh1.5bn disputed land

Mr Gachagua, who was then serving as Mathira MP, was charged with corruption and money laundering and had more than Sh200 million forfeited to the State.

He was charged in July 2021 together with nine other people and companies.

At one of the political rallies held at Dr Ruto’s Karen office, Nakuru governor Susan Kihika, then serving as a senator, accused the DCI boss of “coming up with imaginary cases against those allied to Dr Ruto” to further political interests.

Dr Ruto then sought to assure his allies that things would be okay once his Kenya Kwanza coalition took the reins of power.

A number of those who stuck with him have since seen their cases collapse or withdrawn.

While withdrawing the Sh7.3 billion graft charges against Deputy President Gachagua, senior principal magistrate Victor Wakumile said the judicial system should never be used as a stop-gap measure or even a doormat.

“There is a need to respect institutions. Recommendations are necessary at whatever level; more so when a criminal process seems to overtly offend Article 50(2) of the Constitution of Kenya which provides that every accused person has a right to a fair trial,” the magistrate said while allowing the application to withdraw the charges.

The investigating officer Obadiah Kuria told the anti-corruption court magistrate that there were some areas in the case that were not adequately covered because he was not given sufficient time to complete the probe.

The charges stated that Mr Gachagua received Sh7.3 billion in his three bank accounts at Rafiki Microfinance Bank, which was allegedly deposited between 2013 and 2020.

The prosecution alleged that the transactions were meant to conceal the movements of the money believed to be proceeds of crime.

Mr Kariuki was facing tax evasion charges amounting to Sh17 billion. His premises were also shut down as the police accused him of being in possession of uncustomed goods.

The case was quashed by the High Court judge Anthony Mrima over the move by the DPP to allow the KRA to prosecute the businessman.

Section 107 of the Tax Procedures Act (TPA) allows the KRA Commissioner-General to appear in court personally or appoint any of his officers to appear on his behalf, subject to the directions of the DPP.

Justice Mrima ruled that whereas the KRA can investigate any offences relating to tax laws, it cannot prosecute the offences in court.

And this week, former Kenya Pipeline Company managing director Joe Sang and five other ex-managers were acquitted by an anti-corruption court saying there was no evidence to support the charges.

Mr Sang and his co-accused had been charged with abuse of office, engaging in a project without prior planning and wilful failure to comply with guidelines relating to the management of public funds over the Sh1.9 billion Kisumu Oil Jetty.

ALSO READ: Humphrey Kariuki gets back liquor factory after big State job

The court found that the procurement was not flawed as alleged and that the project was undertaken within the planned financial budget.

The magistrate said the project was planned in 2006 and the same was contained in KPC’s strategic plan for 2009/2010 and 2011.

“I find that all prosecution witnesses were unanimous that the construction of Kisumu Oil Jetty was indeed planned before construction and way back in 2006 before most of the accused persons were employed by Kenya Pipeline Company,” said the magistrate.

The DPP has also signalled the intention of the KRA to withdraw Sh2.5 billion tax evasion charges against Mary Wangui Mungai, who has since been appointed as the chairperson of the Communications Authority of Kenya.

Mr Haji asked for 30 days to review the KRA’s decision and evidence after telling the court that he received a letter on November 23, indicating that negotiations for an out-of-court settlement were being considered.

Other than the charges, Ms Wambui’s bank accounts had been frozen and her travel outside the country restricted.

Ms Mungai and her daughter Purity Njoki were charged with tax evasion in December together with their company Purma Holdings Ltd.

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