Wednesday, September 25, 2013
David Masika, who has been in the real estate sector for the past four
decades (he co-founded Lloyd Masika, a real estate valuation and
property management company 40 years ago). He says it is time he left it
to young blood and concentrated on cotton. PHOTO/FILE.
David Masika, fairly well known today for his
investments in real estate and hospitality industries, used to sell
cotton to Makueni Ginneries as a boy.
But in the early 1980s, the ginnery shut down and remained so for the next 20 years, prompting him to move to other ventures in the real estate and hospitality sectors.
In the 1980s, cotton production in the country had reached a high of 38,000 tonnes — by 1985.
Production
later dwindled to 14,000 tonnes by 1995 following the opening up of the
sector to private investors. The government also stopped providing
inputs and credit.
Under the structural adjustment programmes in the 1980s and early 1990s, the vertically integrated system for input supply, extension, and seed cotton buying collapsed.
Coupled with declining world prices, many cotton growers abandoned cotton for other crops.
When the government sought to revive the industry in the late 1990s, it put many cotton ginneries up for sale.
Mr Masika tendered his bid to purchase Makueni Ginneries, which he acquired at Sh10 million in 2000.
The first major challenge he faced was insufficient supply of cotton as farmers were no longer growing the crop.
“After a lot of struggle and convincing, we managed to get farmers to start planting cotton again,” Mr Masika said in an interview.
A grant from the World Bank, which evaluated the ginnery and provided assistance to acquire new machinery, was also used in training ginners.
“When you close a factory for 20 years, the people who used to work there would be retired or dead,” he said.
But, even with seeds as old as 30 years, the farmers struggled to get started. With the motivation of Makueni Ginnery, which had bellowed back to life, they began to bet on cotton growing again.
The first year, the ginnery produced less than 18,500 kgs, but output has been going up since.
“We are operating at about 740,000 kilos a year, but we are supposed to be doing three times that,” he said.
“We are operating at about 740,000 kilos a year, but we are supposed to be doing three times that,” he said.
A major motivation for the farmers was availability of a ready market for their produce. In the past two years, the ginnery has been procuring cotton supplies from farmers in Bura on contract.
In the past two years, too, Masika has been ginning cotton for farmers in Nyanza due to the collapse of ginneries in the region. Ginning fees are at Sh25 a kilo.
To increase efficiency, Mr Masika disposed of old machines, which cost four times more to gin cotton compared with the new machines he acquired with the help of the World Bank’s grant.
Each of the seven new machines, which he acquired in 2010, cost about Sh2.5 million.
The factory is now valued at over Sh30 million. In the pre-2012 years, the factory had accumulated losses of up to Sh40 million, but he says they are now operating in the profit zone.
Having seen the sector survive in the past decade, even without serious government commitment, he believes the sector has great potential.
“I am going to be in cotton forever,” he said, adding that it is high time he quit the real estate sector.
He
says that having been in the real estate sector for the past four
decades (he co-founded Lloyd Masika, a real estate valuation and
property management company 40 years ago), it is time he left it to
young blood and concentrated on cotton.
His new
passion caps his extensive experience in the civil service, having
worked as chairman of both Kenya Power and Tana and Athi River
Development Authority.
He also managed the National Social Security Fund (NSSF) for four years, besides being the first chairman of the Kenya Meat Commission
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