It was the proverbial leap of faith when Eng. Peter Njeru resigned from his civil service job 20 years ago to venture into a business line he knew almost nothing about. Growing up, he had always known that one day he would go into business and after working in the civil service for slightly over a decade – the system was taking a toll on him. Eng. Njeru knew he had to take a leap pf faith if he was ever going to have the stability he desired for his family. He was first stationed in Nyeri as a Government roads engineer but by the time he was making the decision to leave employment, he had been posted to another eight departments to oversee different projects around the country. “This was very stressful for my family,” says Eng. Njeru. “My wife, who is a paediatrician, was following me through transfers and it wasn’t working well.”
The strain of constantly relocating with his family gave him the final push to go into business earlier than he had planned. His first stop when he started off was the Ufundi Cooperative Sacco, where he was a member. “I started as a small-time businessman,” he says. He borrowed Ksh45,000 and started a part-time briefcase outfit selling hardware tools to construction sites. He seemed to have a hand for business because in three years, his working capital had grown to about Ksh8 million. He decided then to venture into the petroleum business. He had saved some money over the years in business but his available funds paled in comparison to the capital-intensive demands of the petroleum industry. When he approached his bank at the time, it declined his request for financing against his savings. “I needed a bank guarantee of Ksh6 million and I needed to buy stock and some vehicles,” he says “I didn’t have much security and had no previous experience in the industry,” he says of the shortcoming his then bank identified. However, there was hope around the corner. “I met this KCB Bank manager who was based in Nakuru, and he thought I had a good idea which the bank was willing to finance.” All he had to do was move his account to KCB Bank so that the necessary arrangements could be made.
The bank also told him that he had to give the business his full attention, and that as part of this arrangement, he should prepare to leave whatever else he was doing. He chose to resign from the civil service and go into business full-time. “That is how Riva was born, and that’s how my relationship with KCB Bank began,” says Eng. Njeru “It was a true leap of faith.” He had a lot of support from the multi-national company he was working for as a distributor but he estimated that he needed to double his financial base in order to grow and become a serious player in the reseller business. “I was required to have tankers and didn’t know how they are partitioned. I also started selling lubricants despite not knowing much about them.
As the business grew, I needed to recruit customers. I didn’t know that I would even develop into a fully-fledged company,” he says. That was 20 years ago. The prices of fuel products were far less than they are today. A litre of super petrol sold for Ksh36, a litre of kerosene was Ksh16, and diesel was Ksh26. Today, a litre of super petrol is in the region of Ksh100, diesel Ksh87 and kerosene Ksh63. “We grew very fast. In the first year we had a turnover of Ksh60 million. In the second year it was up to around Ksh800 million, and in a few years we were dealing in the range of several billions,” says Eng. Njeru. The business also grew from what is known in the petroleum industry as a reseller to a fully-fledged oil marketing company. A reseller starts by looking for a company to supply them with enough product for a day with a small margin, but an oil marketing company in Kenya (OMC) has to fulfil certain minimum requirements set out by the Energy Regulatory Commission and sign a Transport and Storage agreement with the Kenya Pipeline Company.
An OMC also has to deposit enough for a million litres of combined products with KPC, can participate in the open tender system and build depots to store products, and pay for three weeks’ worth of products based on their daily requirements. “OMCs have to have projection, a team doing supply planning, expand into marketing and have an organized plan,” he said. “A reseller can be run by one person out of a briefcase, but an OMC requires several hundred million shillings to even set up.” The needs have changed tremendously from the days when all they needed were overdrafts, to now when the business requires such facilities as trade finance, foreign exchange and other options about how to finance facilities. Eng. Njeru says that Riva has also experienced rough times, some of the most difficult being external. “Sometimes the liberalization was too open so you get people who supply adulterated products while you are selling products that are proper for vehicles.
We went through a season before our brand was reasonably well known where we were competing with counterfeit products,” he says. The other challenge was building an innovative business model and one that would hold as the company scaled up operations. As the business grew, Eng. Njeru realised that his engineering knowledge was not enough to run a business. He enrolled for a Master’s Degree in Business Administration (Finance), in order for him to better understand how companies are structured and effectively managed. He also needed a deeper understanding of financial management. Another challenge was how to keep up with the financial requirements at the Kenya Pipeline Company when the limits were raised. “You have to look for the finances to support that. The multi-nationals have an external source of funding and we have had to find ways of keeping up with that,” says Eng. Njeru.
A petrol station costs between Ksh25 million and Ksh45 million to set up and every new station — the only way to grow their footprint in the market – arrives with enormous financial demands. He says that the business might not have survived unforeseen shocks had KCB
Bank not stood by them. “Three of these challenges have been external. There was a time the country was having foreign exchange problems and we needed foreign exchange to import our oil; the bank came, sat with us, and we agreed to develop our programme together so that they could organize for the funds when we needed them. We really appreciated this,” he said. The second time was when one of the larger companies in the market suffered financial difficulties and it looked as though the entire industry was in trouble.
“The bank said they knew us and our integrity and said they would continue when other banks were pulling out of the industry. It was very supportive,” says Eng. Njeru. The bank also looks at Riva’s books, and assists them with ideas on how they can better run their business. “They do not merely look at what profit they can make from us; they look at how we can make money together,” says Eng. Njeru. “It’s a partnership”. Within 20 years, Riva has managed to grow from a small reseller to an oil marketing company with a turnover to the tune of billions, 30 stations in the country, dealers, staff and external operations in Uganda. “We have also grown in the area of real estate, which, again has to do with the relationship because we’re continually investing and we needed assets that could also support our balance sheet.” Eng. Njeru says that the growth has been enjoyable as he has learnt a lot about running a business and human resource management; he now has 200 employees in Kenya and Uganda. “You have to get into the industry and become established as a serious player. We have also focused a lot on ICT. In retail networks, marketing and management, we have always been very open to continuous investment in technology,” says Eng. Njeru.
Expanding the business beyond Kenya has also taught him lessons about how different cultures bring about different demands, from staff expectations and management to regulatory environments. “Basically, it’s about learning how systems work in the other territories. Fortunately, we have a very dedicated team there,” he says. But just where does he draw his staying power? “What satisfies me most is achievement, and what supports me is my faith in God, because we formed our business on the basis of quality.
Our slogan is: We Deliver Quality. When I see my customers satisfied, my family supporting me and my employees pulling in my direction, I’m satisfied that we’re moving forward.” In the beginning he would put in a lot of time, working sometimes up to 14 hours a day. Currently, he is able to leave the office at 5pm because of the human resource structure that he has built over the last two decades. His desire for stabilizing his family has been more than met.
Leave us your details and we'll get back to you.