The Entrepreneurial Spirit of T.K. Muya: A Story of Resilience and Perseverance
When we look at big successful companies around us that are integral to our lives, such as banks, telecom companies, and big tech giants, we often cannot fathom how they started. We often think of these companies as birthed by professionals as a product of a calculated decision and readily available funding. This article tells the story of Titus Kiondo Muya, a relentless entrepreneur who defied all odds to build Family Bank, one of Kenya’s most renowned banks.
Table of contents
- Background
- A dream is born
- Education
- A stagnated career
- The bold step into business
- Troubled waters — the financial crisis of the 80s and 90s
- The big break
- A big blow — The NYS money laundering scandal
- Where Family Bank is today
- Lessons from Family Bank
- TK’s awards
- What TK is up to today
- Sources
Background
Titus Kiondo Muya, commonly referred to as TK, was born in 1943 in Kiambu County. His father was brutally beaten to death by British soldiers in 1953 during the MauMau War of Liberation. The family still does not know where his remains were buried. His mother suffered severe torture at the hands of the British and was permanently hospitalized at the Mathare Mental Hospital. You can read more about what happened in Kenya during that period in the book Imperial Reckoning: The Untold Story of Britain’s Gulag in Kenya by Caroline Elkins.
TK was the firstborn in a family of three boys and one girl. TK and his siblings were brought up by his grandmother, uncle and other relatives, who were not doing very well themselves.
A dream is born
The Family Bank dream was born in 1961 when a young TK in high school came across a business article in an international magazine.
“Most of the big institutions and banks you’ve seen in the world today were all started by individuals. They all start small, initially growing in their countries of origin. Thereafter, they open branches across the world and become international organizations.” — T.K. Muya quotes the article
On reading the article, TK realized that he could start a bank. So he decided he would definitely start a bank one day.
Education
TK completed his O levels in 1963. As he likes to put it, he did not go to anybody’s university. Sometimes he tells people he went to the “University of Family Bank” where he learnt so much on the job. Whenever he visited banks, he keenly observed how things were done and he took notes.
A stagnated career
He got a clerical job in 1964 where he worked hard and rose through the ranks. At some point, he was in charge of training university graduates who were joining the job market. He noticed that the graduates he trained would climb the corporate ladder quickly, leaving him far behind. When he inquired why he was not getting promoted at the same rate, he was politely informed that his career had stagnated since he had no university degree.
The bold step into business
Considering his options, he realized he could not return to school since he had four young children, a wife, a sickly mother and a vast poor extended family, all fully dependent on him. Recalling his dream of starting a bank, he decided to venture into business despite not having the capital and know-how. His determination was solid and unquenchable. As the firstborn in his family, he wanted to support his siblings and also show appreciation to his relatives for raising him.
He registered the company “Family Finance and Credit Limited” in 1977. He could not use the word bank as regulations prohibited the use of the word ‘bank’ unless the company was registered as a bank. For 3 years, he only stalled and built castles in the air due to lack of capital until January 1980, when he mastered the courage to submit an application to the Treasury for a banking license under the name Family Finance and Credit Limited. He did not even tell his wife about his dream because he simply did not want anyone to stop him. TK did not meet the Treasury’s criteria of capital, college education or banking experience. All he had was an idea, strong determination and self-belief. The process dragged on for four years until the Treasury finally rejected his application and advised him to apply for a building society license instead. He strongly protested the Treasury’s decision, but it was in vain. While venting to his friends, one friend counselled him to start a building society anyway and do with it what he would do with a bank.
He then applied for a building society license at the offices of the Registrar of Building Societies under the name Family Finance Building Society. The license was issued within two weeks. TK was so excited that he ran around town telling everyone he got a banking license. He appointed himself CEO and the first employee of the company. In November 1984, the company opened a temporary branch office on the 2nd floor of the Standard Building at Kenyatta Avenue, in Nairobi. The company started opening accounts there. In 1985, the society opened branches in Kiambu, Githunguri and Nairobi, and later in Gatundu. The society got funding of Ksh. 400,000 from Dhabiti Finance Limited, then owned by the former minister Dalmus Otieno. Unfortunately, Dhabiti Finance later fell in 1984 during the financial crisis.
The business began to notice a pattern where customers came in to ask about loans but leave without opening accounts. Larger banks in Kiambu only provided loans to high-profile clients, whereas typical customers needed loans to cover costs like school fees. Family Finance Building Society launched school fees loans for small-scale tea and coffee farmers, guaranteed by proceeds from farm produce such as tea, coffee or milk. They developed a niche market for the business by focusing on the lower end of the market, which the major institutions ignored and underserved. Their primary clientele consisted of low-wage workers, small traders, and small-scale producers of tea and coffee. Loans began at Ksh. 200, which was a large sum of money at the time and could cover school fees. The product quickly gained hundreds of customers who also acquired other financial services as a result of its popularity. This shocked the mainstream banks, which had mistreated them and viewed them as unwanted. Within 2 years of operation, three branches were already making profits and the main branch was breaking even.
In 1987, TK noticed all the big banks in Kenya had an executive chairman. He appointed himself chairman of the Family Finance Building Society. In 1980, the society opened a Thika branch, which gave them access to the farmers and agribusinesses in the Aberdare ranges of Mt. Kenya, in both Murang’a and Nyeri counties. This move made the company grow tenfold.
Troubled waters — the financial crisis of the 80s and 90s
In the 1980s and 1990s, there was a financial crisis in Kenya which was characterized by high inflation, high interest rates, and a decline in economic growth. Interest rates went through the roof and many building societies and financial institutions collapsed due to a high number of non-performing loans. Despite the crisis, Family Finance Building Society never went beyond an interest rate of 25%.
The big break
The big break came in 1993 when the company receive a cheque of Ksh. 149 million from the Kenya Tea Development Agency (KTDA), which were bonuses paid out to farmers. The company, despite considering itself a bank, had not handled such a huge amount of money up to this point. The company had to discretely persuade cashiers from mainstream banks to take leave from work so they could come and assist the company. This helped the company open branches in the Mt. Kenya region and then the rest of the country. In 2005, the company had over 30 branches all over the country. The company applied for conversion to a commercial bank. With the negotiating power they now had, they were allowed to successfully convert to a fully-fledged bank in 2007. In 2012, TK handed over the chairmanship of Family Bank to Dr Wilfred Kiboro. TK continues to serve as a non-executive director of the board.
A big blow — The NYS money laundering scandal
In 2016, Family bank was accused of participating in the Ksh. 1.6 billion National Youth Service (NYS) money laundering scam. It was alleged that substantial sums of the stolen money had been transferred through Family Bank accounts. The bank entered into a plea deal with the Director of Public Prosecution, in which it pled guilty to flouting regulations meant to detect and prevent money laundering. In 2018, the bank was fined Ksh. 64.5 million and then exonerated from the case². This saga led to lots of panic withdrawals, but the bank survived because of its liquidity. The bank afterwards implemented measures to detect and prevent money laundering. Also during that period, the bank was targeted by social media attacks which took a toll on its profitability³.
Where Family Bank is today
Family Bank is currently the 14th largest bank out of the 42 banks in Kenya, and the 4th largest bank in terms of the branch network. It has 93 branches all over the country, with 3 other branches under construction. Family Bank has an asset base of Ksh. 130 million. It has over 1500 staff and more than 1.8 million customers. The bank is eyeing regional expansion, listing in the Nairobi Securities Exchange (NSE) and becoming a tier 1 bank. In Kenya Bankers Association’s (KBA) Customer Satisfaction Survey of 2020, Family Bank was ranked the best tier-two bank and second-best bank overall for customer responsiveness and a positive digital experience⁴. Family Bank takes great pride in being a financial institution that endorses financial inclusion. It claims no customer is too small for them. The MSME segment accounts for about 60% of the bank’s revenue.
Lessons from Family Bank
So many lessons are to be learnt from TK’s inspiring story. TK urges people with a dream not to stall like he did for the first three years. He advises entrepreneurs not to give up on their dreams no matter the challenges, which will be numerous. He urges entrepreneurs to correct their mistakes as they occur and learn from them quickly. He also counsels business people to vigilantly monitor income and expenses. It goes without saying that liquidity is important in running a business, especially a bank.
TK’s awards
The Marketing Society of Kenya presented TK with the Trailblazer award in honour of his business acumen and contributions to the banking sector. He is also a champion of social empowerment through education, health, and environmental conservation through the Family Group Foundation, which provides scholarships and mentorship to more than 1000 children in all 47 counties. In 2011, President Mwai Kibaki bestowed upon him the Elder of the Order of the Burning Spear (EBS) title in honour of his distinguished service to the country through entrepreneurship and his contribution to the banking sector.
What TK is up to today
TK serves as a non-executive director on the board of Family Bank and various other companies in the Family Group. TK has also ventured into the insurance business, agribusiness, and real estate. TK founded Daykio Plantations Limited in 1986. This real estate business buys vast tracts of land, divides them into quarter-acre or eighth-acre plots, and then sells the subdivided land. The company has settled over 12,000 Kenyans through 14 projects spread over Kiambu, Machakos and Kajiado counties. In 2004, TK acquired the Kenya Orient Insurance company. He also founded Kenya Orient Life Insurance Limited in 2014. In addition to that, he runs a sizable tea and dairy estate.
Sources
[1] MUYA, T. K. (2023, March 10). PUBLIC LECTURE BY TITUS K. MUYA FOUNDER & DIRECTOR, FAMILY BANK LIMITED. YouTube. Retrieved March 20, 2023, from https://www.youtube.com/watch?v=PemSnFldREI
[2] Walter, D. (2018, December 17). Family Bank to pay Ksh.64m fine over NYS scandal transactions. Citizen Digital. Retrieved March 20, 2023, from https://www.citizen.digital/news/family-bank-to-pay-ksh-64m-fine-over-nys-scandal-transactions-223630
[3] Family Bank Profits Slump By 82%, Blames Social Media Attacks — Kenyan Wallstreet. (2017). Retrieved 20 March 2023, from https://kenyanwallstreet.com/family-bank-profits-slump-82-blames-social-media-attacks/
[4] Soko Directory Team. (2021, January 26). Family Bank scoops second-best in customer responsiveness. Soko Directory. Retrieved March 20, 2023, from https://sokodirectory.com/2021/01/family-bank-scoops-second-best-in-customer-responsiveness/
