How Nelson Muguku Made Millions from Poultry

By Mwangi Maingi and Samwel Kumba (Financial Post)

Egged on by pride, his simple act of resignation as a carpentry teacher led one Nelson Muguku to explore what has turned to be a billion shilling venture. It all started as a hobby, keeping a few chicken in his teacher’s quarters, while pondering what to do next. He survived by selling a few eggs from the chicken. Today, the man owns and runs Muguku Poultry Farm in Kikuyu, Kiambu, estimated to be worth more than Ksh 3 billion. It is one of the largest hatcheries in the country with a capacity to hatch some 200,000 chicks per day. Besides, Muguku is the largest individual shareholder in Equity Bank. Currently he is holding 7,515,085 shares accounting 8.3 per cent of the bank’s stake. From Equity Bank’s paid up capital, Ksh 1.358 billion, Muguku’s share is worth Ksh 112.714 million. And if he were to sell all his shares today, Muguku would pocket about Ksh 3 billion.

The only other largest shareholder in the bank is British Investment Company (Britak) Limited, which is an institution, and owns 13,360,563 accounting for 14.75 per cent stake in the bank. This places Muguku second in shareholding.

Equity Building Society began business as a mortgage financing organization in Nairobi in 1984. The bank’s shares were listed on the Nairobi Stock Exchange (NSE) on August 7, last year. But what the world will be keen to know is how much worth, really, is Muguku. When The Financial Post (FP) posed the question to him, Muguku, who leads a modest lifestyle, gave a modest answer. “I am worth nothing. I am only a small farmer earning a living from poultry. But what I can tell you is that this type of business takes talent.”

It was evident that he did like to be pigeonholed as one of the richest people around. Indeed due to their simple lifestyle, Muguku can easily be mistaken for someone else’s driver in his own Mercedes Benz. Yet he himself is chauffeur driven. “Very few people can be in the shamba most of the time ensuring that all is going on well,” Muguku told FP last week upon inquiry about his worth. In addition to the poultry farm, Muguku also owns one of the largest hardware shops in the in Kikuyu division, Kiambu. He also boasts of a herd of more than 40 dairy cows and a flock of sheep.

Asked about dairy farming, he said: “These only give us some milk, but their main purpose is to trim the grass around the compound and destroy breeding grounds for mice and insects that would harm the poultry.”




Unlike the numerous technocrazy investors and CEOs who are minting money from the money market and plum jobs, Muguku made his wealth the old-fashioned way: He is recording huge earnings from Muguku Poultry farm, an enterprise he started way back in 1967.

For over 40 years, this septuagenarian father of six has remained the leading supplier of chicks in the country. Initially Muguku was banking with Barclays Bank, but when Equity started he felt the urge to support one of his own.




He explains: “I thought to himself, here is a Kenyan owned, Kenyan bred enterprise offering similar services like I am getting from a multinational. Although it was a risk venture, I opted to take the risk.” Muguku, who was born in 1932, began his life as a carpentry teacher. After his 4-year training in Thika Technical School

as a carpenter in 1953, Muguku was selected as one of the best pupils and posted to teach at Kapenguria. He stepped in for a teacher who was on leave.

Four months later, that teacher resumed and Muguku was posted to Kabianga Teacher’s College-currently Kabianga High School-in Kericho. But he was unhappy with his title-untrained teacher.

Having emerged the best pupil and with his teaching experience in carpentry, Muguku was convinced that was an inappropriate title for him. Furthermore, in 1957, when he stumbled on his younger brother, Muhia Njoroge’s pay slip, Muguku could not believe that Muhia, who did two years carpentry training and proceeded for teaching profession was earning more than him.

Muhia’s salary was Ksh 350 while Muguku was earning Ksh 280. Muguku unsuccessfully applied for a promotion before throwing in the towel.







“When I told the principal I was resigning, he thought I was crazy for my job was stable. But I was determined,” Muguku explains. He quit all the same and armed with only a bicycle and scanty furniture, the ambitious young bachelor left Kabianga by train for his Rukubi home in Kikuyu. His parents too’ thought some bolts in his head had gotten loose. They were almost convinced that somebody was misleading him. During his teaching period, his hobby was evident. Muguku had two chickens and a cock that he reared at a corner of his house. The school’s principal requested Muguku if he could bring some eggs for his hens to sit on. This was on condition that when they hatched they would share the chicks.




Muguku agreed, after all, it was his boss, and the principal brought in 13 eggs. Fortunately, all the eggs hatched and after the chicks matured, the principal took his share, but selected all the hens leaving Muguku with cocks only, which he considered a raw deal. But as fate would have it, a month later, the principal was transferred, leaving behind six hens and a Cock.




His successor asked Muguku to buy and take control of the strolling hens, left by the former principal. His conditions were that Muguku would pay by giving him eggs in return.

They agreed for Muguku to buy each chicken at Ksh 15. He was to supply eggs at a rate of 25 cents each to pay the debt since he did not have cash to pay.

Luckily, Muguku paid for the chicken in a record two months though he had thought it would take a year.




Impressed by the rate of return, he had made up his mind to go into the poultry business.

On telling his father, Njoroge told him of how he bought 200 chickens for rearing only for all of them to die in an epidemic. “Do you think yours will survive?” posed his dad. Without hesitation, Muguku responded with a convincing yes.




Turning point

In 1965, from his life’s savings of Ksh 2500, Muguku went full throttle into the Poultry business in Sigona, Kiambu. This capital was insufficient for he had to buy the chickens with which he started. He also used the same amount of money to build a chicken coop and feeding them for the first few days. “It is not an easy venture,” reveals Muguku, who was then supplying eggs to Nairobi. He supplied eggs for ten years then ventured into hatching chicks to supply other poultry farms. As his business grew, Muguku acquired a 22-acre farm at Limuru for Ksh 100,000 from a European veterinary doctor, a Mr. Whinier and then started a hatchery with a 9,000-egg incubator. Currently Chicken farming, occupies about three-quarters of the entire place.

“The doctor assisted me to applying for a loan at Agricultural Finance Corporation (AFC) to meet the cost. It had good infrastructure including telephone connections, electricity, bore holes and poultry housing structures,” says Muguku.

Market

By 1972, demand for chicks had increased forcing Muguku to buy a new hatchery with a capacity of 42, 000 eggs a week. The new incubator, first of its kind in Kenya and Africa, was officially launched by the then Assistant Minister for agriculture, Maina Wanjigi.

Further growth in demand forced him to set up a branch in Ngong near Nairobi. One of his sons runs this outfit. Muguku says he found egg-hatching more profitable than egg-trading. However, the cost of input in the former is high. For instance, it requires one to have a stand-by generator and the chicks need tender care. Layers, on the other hand, do not require much attention.

“But due to the unpredictability of the poultry market, there is no way one can focus on one area of business,” explains Muguku.

Competition

Having been the first African in commercial poultry farming in Kenya, Muguku says he has dominated the market over the years, though new players have come in especially due to the increasing demand for poultry products locally and internationally. Muguku believes competition is healthy. He argues that work accomplishes great achievements. Though he has experienced lots of challenges in life both as a teacher, trainer and a farmer, Muguku considers it better

for one to try and fail than fail to try. “Poultry keeping is a well paying venture. On the other hand, it requires a lot of experience and knowledge on facilities, caretaking and expansion initiative,” he says, adding, “I have come from far. The road has not been easy. Nothing comes easy in life. I am what I am because of hard work and God’s blessing.”




Muguku and his wife, Leah Njeri, had earlier spent most of their time on their 27-acre farm at Sigona, with Muguku overseeing the farm operations while his wife attended to customers, ‘who come from as far as Tanzania, Rwanda, Burundi and Congo’. The couple, both former teachers, do not regret having quit their profession. “We would never have been what we are today if we had remained as teachers,” says Muguku and his wife adding, “Not one moment.”




Name’s origin

Poultry in Gikuyu is called nguku, and many think the name Muguku may have something to do with chicken. But the entrepreneur says, “My name has nothing to do with poultry.”

His paternal grandfather, Kamenwa wa Rwathia, had a special horn from which he drank the traditional brew muratina. The horn had a natural depression (muguku) at the brim. His comrades-in-muratina nicknamed him Muguku. Rwathia first son, Stephen Njoroge, named his first son Muguku. It stuck up to date.