Carol Kariuki was a corporate banker who led the Savings & Loan Division when it was a subsidiary of Kenya Commercial Bank.
After three years, she left the banking industry and ventured into business, setting up East Africa’s first mortgage brokerage firm, The Mortgage Company, in 2011.
Then in 2014, Kariuki co-founded Greenpot Enterprises, Kenya’s first wholly integrated bamboo business. She shares her exciting business journey.
Let’s backtrack a little, why leave an established financial institution to start another?
My love affair with real estate actually started when I was in high school. I bought my first ‘plot’ for Sh17,000, money I had saved from the university personal expense fund that we used to call “boom.” I later sold the piece of land for Sh250,000 and that is how I paid the deposit for our future home. I learnt the lesson that in any endeavour, you can start small and grow up any hustle from that foundation. So I knew I was going to end up in real estate. I founded The Mortgage Company to increase the uptake of mortgages in Kenya. I realised that only 20 per cent of Kenyans own the houses they live in. The mortgage loans stood at roughly 22,000 then in a country of over 46 million people. On the other hand, Kenya’s urban population is expected to peak at 70 per cent by 2050, requiring 300,000 homes annually.
Then you went and began a business in bamboo. Why bamboo?
Kenya has over 150,000 hectares of natural bamboo that is currently not utilised for commercial use. The bamboo grown in private farms is what can be used for commercial purposes. The sector is at the nascent stage with great possibilities to transform communities. Each acre of bamboo can generate between Sh200,000 to Sh400,000 per annum after the fifth year. This compares favourably with tea or coffee. Bamboo business is also sustainable as it offers the biggest opportunities in green energy. About 70 per cent of people in Africa use firewood and charcoal as their principal source fuel. The growing cycle of many trees is between eight and 20 years. One would need to wait another eight years to harvest the trees. For bamboo, once maturity is achieved in five years, harvests are done annually. Like bananas, you harvest what is mature and leave the rest of the bamboo intact for subsequent harvests. You can never have too much bamboo as you can choose to manufacture a different product if the market for one product is saturated.
And so began the tide of gated forest communities?
Yes. There was this man with some idle land and he wanted to teach his children how to use their small savings in planting a forest with a projected harvest and a handsome profit in 10 years. The idea that one could invest in an environmentally friendly way and make good returns saw the birth of the gated community of forests in Kenya. With a background in real estate, it was easy for me to explain the concept of a “gated community” to potential investors, only this time it was investing in a forest as opposed to a house. Over the last five years, we have established over 1,500 acres of bamboo forest in Narok and another 1,200 acres under our outgrower programme. Our vision is to grow 35,000 acres of bamboo over the next 10 years.
How did you begin?
With a 64-acre farm in Narok in 2015. In fact, all of our current bamboo forests are in Narok. I firmed up the idea after an earlier visit to China where I was taken through the entire bamboo value chain. I thought bamboo presented a more transformative idea and had more impact on people than mortgage business. That is why I paused the mortgage business to focus on bamboo.
To plant on 64 acres must have been capital intensive…
Not really. I would say it was more self-funding. We sought individual investors who paid for the land and planting. Currently, we make some money from the sale of seedlings especially to outgrower farmers. And since the first crop is about to mature, more money will come from the value add, especially when we start processing the bamboo from our own factory.
What are the key challenges in the bamboo business?
We started growing bamboo expecting a straightforward and easy journey to wealth. But climate change is real. When we planted our forests, we experienced two years of drought, thus our projections for the bamboo maturity were not feasible. I learnt always to provide for contingencies and create a wider margin of error. I was also surprised at how difficult it is to access capital in the industry. We need ‘angel investors’ who are willing to take risks on innovators and support them even when their ideas are a little ahead of their time. Success of Silicon Valley stems from people who identified all these budding tech innovators. Most of all though, I have learnt to be patient, resilient, how to have a big vision and willing to start small.
Is it a get rich quick scheme?
No. Not at all. If you get into the bamboo business, know it is a long-term investment. The initial investment of growing bamboo is between Sh60,000 and Sh80,000 per acre in the first year and approximately Sh200,000 to maturity. This is a significant investment by a farmer because it takes five years to begin getting some returns. We encourage farmers to do intercropping in the first two years to reduce management costs. Once the farmers start having commercial returns, they will not find this initial investment prohibitive. Many Kenyans have idle land upcountry and planting bamboo would make handsome returns for over 40 years with a payback period of six to seven years.
How have lessons from former businesses came in handy in the bamboo industry?
Having worked in the banking sector most of my life, I found it useful to develop business structures. Professionalism and integrity are also key to building long term relationships. There are many people who I came across in my previous life that we continue to work with in current projects. Over the course of your career, always treat people well as you never know where you will find them along life’s journey.