Kedong Ranch, SGR windfall and the battle for Naivasha dry port billions

The multi-billion shillings scramble for Kedong valley properties was brutal. It was vicious and had all the elements of swashbucklers staking a claim.

For starters, this is the controversial land where the Standard Gauge Railway (SGR) terminates. There was to be a dry port – and a commercial centre was starting to emerge.

Commercial plots around the dry port — and on the path of the SGR — were snapped quickly.

A three-star hotel emerged in the vicinity. Commercial houses started to mushroom. In short, Kedong became the valley of speculators, opportunists, wheeler-dealers and brokers. You could easily make money, get killed – or conned. 

Thanks to the dry port, both the nearby sleepy towns of Mai Mahiu and Naivasha got some new fillip.

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The cargo trains hauling containers to the edge of "nowhere" – as SGR critics dismissively described UhuRuto's pet project – were now transforming the windy plains into an inland port where the locally destined and export cargo would be picked.

In 1900, Nairobi had grown out of such a railway depot – and some investors saw Kedong as the next big thing.

Thus, they lined up to make an early landing – the same way the likes of Alibhai Jevanjee and Ewart Grogan made money in Nairobi in the British colonial era.

The only difference is that Kedong investments will end up in tears. It might be the tail-end of a white elephant.

Ruto directive

With President William Ruto ordering the dry port operations out of the plains of Longonot and back to Mombasa, the SGR depot is as good as dead if the directive is fully implemented – and so is the Kedong Valley dream.

Former Kenya Ports Authority managing director Daniel Manduku, now the ODM MP for Nyaribari Masaba, has said as much: That without the cargo aspect, the SGR will have to raid revenue from the National Treasury to pay its bill.

In essence, we have a new white elephant in town to maintain – in addition to the struggling KQ.

Minus a vibrant dry port, the story of Kedong ends before it starts. But it gives a sneak preview of how buccaneers operate.

Kedong Ranch has a long history since the eviction of the Maasai by Gabriel Colvile – who then registered the expansive land under Colvile Limited in the early years of the Kenya colony.

Under Colvile, Kedong was teeming with wildlife and cattle. With over 25,000 herds, Colvile was described as one of the most successful ranchers of his generation – though, in James Fox's ‘White Mischief’, he is described as a man who "dressed with conspicuous shabbiness and ...as the most boring man in the world." Then he lost his wife Diana to his next-door neighbour Lord Delamere.

After independence, the land was sold to new shareholders, including a Nyeri land-buying company whose membership came from Muhoya and Tetu divisions, thus Muhotetu Farmers Limited.

They had also brought on board a group of Jomo Kenyatta-era power-brokers who included Nyandarua North MP J.M Kariuki, the Lands and Settlement minister Jackson Angaine and some Kenyatta family members.

For years, as commercial ranching collapsed, the land was constantly under threat by the Maasai, who regarded the territory as ancestral land – and always asked for its restoration.

The main scramble for properties is seen in what happened within Kedong Ranch, which Muhotetu Farmers Limited owned.

The court records show that in September 2013, a month after President Uhuru Kenyatta visited China and signed a $5bn loan to build a 472.3km railway line from Mombasa to Nairobi – and which was to later extend towards Uganda, members of the giant Muhotetu Farmers Limited resolved to sell their 181,250 shares in Kedong Ranch.

But this was not a unanimous decision since some members filed a case seeking the appointment of a receiver manager and an injunction to stop the sale of the company shares.

Chairman gunned down

In between, on September 3, 2014, the chairman of the company, Imunyu Mwaniki – who supported the deal — was gunned down by "robbers" who raided his house.

Some shareholders thought the murder was connected to the sale of Kedong shares.

That October in Kampala, three heads of state for the Northern Corridor — Uganda, Rwanda, and South Sudan — witnessed Uganda launch its SGR from Malaba to Kampala.

Kenya was represented by Eng Michael Kamau, the Cabinet Secretary for Transport and Infrastructure, while Ethiopian Prime Minister Hailemariam Desalegn sent a special envoy.

However, the injunction sought was dismissed by a Nakuru court on November 28, 2014, just about the time that Uganda launched its own SGR after completing the feasibility study and designs of the railway line.

If Uganda went ahead with its line, then the Kedong Valley was worth speculators' dime. Interestingly, the Muhotetu shareholders did not appeal. The death of the chairman, perhaps, had brought fear.

Before Mwaniki was killed, he had told the local media that the members had agreed to sell their shareholding at Kedong Ranch for Sh360 million – a figure that was way below the amount which was later indicated as the payment.

In the official documents, Newell Holdings is shown to have bought Muhotetu's 181,250 shares for Sh2.1 billion in a transaction dated August 23, 2017.

With the SGR already launched and snaking its way towards Nairobi, and as East African nations got interested in the infrastructure, the Naivasha dry port was a port of gold.

In October 2016, President Kenyatta launched the construction of the second phase towards Naivasha and said that the government had set aside billions of shillings to compensate the owners.

With that, the battle for Kedong Ranch shares became a matter of life and death. On May 22, 2017, some of the Muhotetu shareholders wrote a letter to the registrar of companies seeking to hold an Extra-Ordinary Annual General Meeting on August 5, 2017, to discuss the intended sale of Kedong shares.

They also protested the intended sale of shares in a letter dated June 2017 and called for a forensic audit of the company.

But before the Annual General Meeting could happen, some of the 30 members who had signed the requisition notice or whose names appeared in the notice withdrew their signatures, forcing the Registrar of Companies to stop the AGM in a July 28, 2017 letter.

Interestingly, the registrar copied the letter to the police and the County Commissioner for Laikipia – where Muhotetu has an office.

Sh2.1bn fee

Three weeks later, the Muhotetu shares changed hands for Sh2.1 billion, with William Munuhe Mwaniki signing on behalf of the farmers.

Protesting shareholders thought it was not value for money. The timing for that sale took place at a crucial time in the history of SGR.

That purchase was made three months after the May 31, 2017, launch of the Mombasa-Nairobi SGR by President Kenyatta and, as it emerged, that Kenya Railways was putting in place billions of shillings to compensate land owners for the Naivasha line.

For the Mombasa line, Kenya Railways had paid over Sh30 billion, which reflects the exorbitant amount that land owners were receiving.

For the Naivasha phase, the railway had given the National Land Commission some Sh17 billion to pay out in the first tranche, which explains why the Kedong Ranch shares had become critical.

It also explains the capitalistic scramble for a piece of the Kedong valley pie.

A month after Muhotetu had parted with its shares and as officials asked members to go and pick their cheques, two members, David John Nderitu and Joseph Wagura Ng'ang'a tried for the last time to stop the sale terming it fraudulent.

They claimed that their company had not held an AGM for three consecutive years and that there were no audited accounts.

They also accused the registrar of "open bias" in handling the Muhotetu case and sought the court's intervention to stop the sale.

Finally, they accused the chairman of Muhotetu Farmers of having "schemed and manoeuvre to defeat the purpose of the said requisition by embarking on the fraudulent sale of the company shares."

On August 23, 2017, a stock transfer for 181,250 shares was done to Newell Holdings Limited, and the sale transfer was finalised on September 22, 2017.

Kedong Ranch Limited had asked all the shareholders to waive their pre-emptive rights to allow the sale. But only the estate of the late minister Angaine and the estate of JM Kariuki failed to respond.

Request dismissed

In Nakuru, in September 2018, Justice RE Aburili dismissed the Muhotetu shareholders' request to stop the sale and argued that it had been approved through an AGM.

Interestingly, it now seems that AGM was done by one of the factions. The court dismissed the other requests as "too verbose, too convoluted and overloaded with several compulsive prayers of mandamus designed, ostensibly, to evade payment of court fees."

Finally, it was the new shareholders who would receive the compensation for SGR and for the land where the dry port was built.

But with President Ruto ordering the dry port functions to be returned to Mombasa, some of the investors who thought Kedong would emerge as a city in the plains might be rethinking their gamble.

For, if the cargo business shrinks, the losers will be taxpayers for they compensated for land that is not utilised and the land gamblers who spent a fortune on Muhotetu shares.

Meanwhile, some locals say this was ancestral land, and during the campaign, President Ruto had promised to solve the matter.

[email protected], Twitter: @johnkamau1