Tuesday, August 9, 2022

Family Business: How Enashipai Resort Siblings Do It

The death of Equity Bank’s former CEO John Kagema Mwangi in 2018 marked the end of an era. He held properties, land and businesses around the country, chief among them the Enashipai Resort and Spa in Naivasha, Nakuru County.

At the time of his passing, Nakuru Governor Lee Kinyanjui credited him with “changing the face of Naivasha” as more tributes citing his business acumen poured in.

Enashipai is one of the biggest luxury resorts in Kenya, and regularly welcomes guests in town for high-profile meetings, get-aways, vacations and other events. For example, the resort was one of the big beneficiaries of the tourism boom in Naivasha during the World Rally Championship (WRC) Safari Rally. It is currently run by Kagema’s children, with his son James K. Mwangi serving as Executive Director.

James and his siblings sit on an advisory board for the business alongside their mother and three independent members.  James disclosed that they had been keen on adopting the best corporate governance practices to avoid falling by the wayside as is common with family businesses – particularly when the larger-than-life patriarch exits the stage.

They all signed up for the Family Business program at Strathmore University after their father’s death putting them in a better position to run the firms as they learn about structures, corporate governance and mechanisms to resolve issues.

The board was only created in 2020. According to James, they had began the process of outlining their roles as family members before their father succumbed to illness. They are yet to fill two more positions on the board.

“Before the passing of my father in late 2018, we had started the process of establishing a board and defining the roles we would each play in the business. Unfortunately, we did not close out on that process then. After his demise, we needed to define a new reality.”

“We needed someone to oversight us, and we therefore opted to start with an advisory board. Our board chair has been quite instrumental in helping us lay this critical foundation of the board. ,” he told Carol Musyoka.

James noted that the presence of a board offering oversight had made them better leaders as they were aware of the scrutiny they face. He urged other family businesses to create boards with independent members as a way of inculcating professionalism.

“With the feedback we receive from the independent directors, we find that we are refining the quality and type of information we consume for purposes of decision making. The board is clear on what it wants and how it is measuring our progress. It has been quite a demanding process but a beneficial one nonetheless. Everybody has benefitted including our staff.  I would encourage any other family business to establish a board if they do not already have one,” he stated.

As family members, they also meet every month to discuss the various family businesses. James’ brother, for instance, is the Executive Director at Fone Solutions Limited. A board secretary who isn’t part of the family organizes the meetings and takes minutes despite the informal nature of family meetings.

I have two brothers and a sister. The elder of the two brothers [they are both younger than me] leads a separate family business. My youngest brother is in sales and is now starting to learn how the businesses work. My sister has decided to focus broadly on real estate, marketing and communication for all of our family businesses,” he explained.

They are also working to create a family constitution which Mwangi hopes all family members will have signed off on by the end of 2021. Observing that informality was a key issue in many family businesses, he hopes to put structures in place that will secure the future of the businesses for generations to come.

Mwangi was roped into the family business after his father retired. Having studied Engineering, he left formal employment to team up with his father on business ideas the senior Kagema was keen on executing.

Interestingly, he too is roping in more members of the extended family into the businesses. He noted that one way of avoiding the woes that come with succession planning is to empower family members with the knowledge and tools they need to take an active role in running the businesses.

“This year in 2021 we held our first Annual General Meeting (AGM) where we invited our spouses to attend. We also made the conscious decision that children who were 16 and above could attend future AGMs so that even though they’re not actively involved in the business they can begin to understand how things work,” he stated.

Mwangi also noted that transparency was key to building trust and moving the family business forward.

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