Management Wars Deepen Crisis at New KCC as Financial Woes Mount

Kenya’s state-owned milk processor, New Kenya Cooperative Creameries (New KCC), is facing a perfect storm of challenges as management infighting compounds an already dire financial situation that threatens the company’s very existence.

Acting Managing Director Samwel Kamwindu Ichura’s leadership style has created deep divisions among top managers and board members, even as the Auditor General’s report reveals the company is drowning in debt with liabilities exceeding assets by Sh1.2 billion.

Leadership Crisis Exposes Ethnic Tensions

Multiple sources within New KCC reveal that Ichura has employed new staff members despite an already bloated workforce, with allegations that many new hires at the head office and branches are relatives or individuals from his Kikuyu community.

The acting MD is reportedly pushing for a Kalenjin to be appointed as board chairman, putting him at loggerheads with current chairman David Maina, who is also from the Kikuyu community.

Industry insiders say Ichura’s motive is to secure his confirmation as permanent MD, while Maina is said to prefer bringing in an outsider from Mount Kenya for the CEO position.

“For a long time, in what is said to be regional balancing, the CEO has been from Rift Valley and chairman from Mount Kenya on grounds they are major milk-producing regions,” said a source familiar with the company’s operations who requested anonymity.

Ethnic Targeting Allegations

According to company insiders, Ichura has been vocal about his predecessor Nixon Sigey having appointed fellow Kalenjins to top management positions.

Several Kalenjin executives are reportedly on his radar, including Stacy Too (head of corporate affairs), Bryan Samoei (manager of factory operations), a Ms. Boit (head of strategy and business), and Marusoi Burroh (manager of internal audit).

In what appears to be an effort to consolidate his position, Ichura has appointed George Waithaka to act as chief manager of sales and marketing.

Sources claim this appointment is meant to cover up financial irregularities that allegedly occurred during Ichura’s tenure in the finance department, where suppliers—primarily Kikuyu-owned supermarkets—were reportedly involved in doctored statements to “share spoils.”

Waithaka is now reportedly clashing with Hassan Guyo, the acting chief finance manager, who has raised concerns about suspicious transactions potentially involving ghost suppliers.

Financial Crisis Deepens

The management turmoil comes against a backdrop of severe financial distress.

Auditor General Nancy Gathungu’s report revealed a staggering Sh1.5 billion loss before tax for the year ending June 2024, with the company’s liabilities surpassing assets by Sh1.2 billion.

“This is an indication of negative working capital,” Gathungu noted, adding that the company was surviving on bank loans and overdrafts, having paid Sh192 million in interest expenses alone.

The audit exposed New KCC’s Sh3.2 billion debt, mostly owed to farmers, with some payments overdue for more than 120 days.

The Auditor General warned that non-payment would further destabilize the company’s operations and disrupt supply chains.

“Failure to settle the debts as and when they fall due may attract interest, hence affects the operations of the entity if the suppliers stop supplies due to nonpayment of debts when they fall due,” she stated.

Organizational Inefficiencies

Adding to the company’s woes is an overstaffed workforce, with 171 employees beyond the approved establishment of 400 staff on fixed-term contracts.

This excess staffing directly contradicts a 2021 directive from the state corporation advisory committee.

“In the circumstances, the over-establishment may negatively impact on the realisation of the company’s goals,” the Auditor General said.

Further complicating matters, auditors could not verify the accuracy of the company’s assets register, raising concerns about potential mismanagement of valuable resources.

Presidential Promises vs. Reality

President William Ruto recently toured Mt. Kenya and emphasized the government’s commitment to revitalizing the dairy sector through New KCC.

He assured dairy farmers of timely payments and pledged to upgrade facilities to boost processing capacity.

However, the Auditor General has cast doubt on the company’s future, stating: “These events or conditions indicate that a material uncertainty exists that cast doubt on the company’s ability to continue as a going concern.”

Adding to concerns about accountability, the Auditor General noted that New KCC management has yet to appear before the relevant parliamentary committee to respond to past audit queries.

The Public Investments Committee on Social Services, Administration and Agriculture, chaired by Navakholo MP Emmanuel Wangwe, is responsible for oversight of New KCC.

As New KCC joins the growing list of struggling state corporations for which the Cabinet has proposed mergers, dissolutions, or absorptions, the future of this once-proud institution—and the livelihoods of thousands of dairy farmers who depend on it—hangs in the balance.