In March this year, BAT Kenya announced the appointment of Sidney Wafula as the company’s managing director, effective June 16.
He joined BAT in 2006 as head of audit and has held various senior financial and operational management roles across multiple African markets. Wafula is leading the company amid a difficult domestic operating environment heavily impacted by the illicit trade of tobacco products.
He spoke to The Star about his 20-year journey with the company, leadership, the illicit cigarette trade, exports, regulation, manufacturing and why he believes Kenya can unlock its industrial potential through policy certainty and stronger enforcement.
Excerpts:
Congratulations on your appointment. Tell us about your journey to becoming managing director of BAT Kenya.
It has been a journey of more than 20 years with BAT. I joined the company in external audit before moving into finance, first as finance controller for East Africa.
That opened opportunities to work in Nigeria, Egypt, Mozambique and South Africa in different finance leadership roles. One of my career ambitions was always to become finance director of BAT Kenya because that is where my career started.
I achieved that in 2017 before moving to South Africa as finance director for Sub-Saharan Africa.
Working across Africa exposed me to different markets, cultures and ways of doing business. Looking back, those experiences prepared me for this role as managing director. Coming back to Kenya in this capacity is something I have always aspired to.
What lessons have shaped your leadership style most?
The biggest lesson is that there is no single way of achieving success. Different cultures approach problems differently, yet everyone ultimately wants to succeed.
As a leader, your responsibility is to set the direction rather than dictate every step. People should have room to determine how best to achieve the objectives because they all bring different strengths and experiences.
Living and working in different countries has also made me much more tolerant.
I appreciate that people think differently and solve problems differently. Another influence came from my years in Nigeria, where communication tends to be very direct. I adopted some of that style.
At the same time, I have learnt that respect is non-negotiable. When people feel respected, they are motivated to perform.
Looking back over your career, what management decision are you proudest of?
One decision that stands out was made when I was finance director of BAT Kenya around 2017 and 2018. At the time, we realised we were borrowing money despite being cash-rich because we were distributing almost all our earnings as dividends. We decided to reduce the dividend payout from 100 per cent of earnings to about 86 per cent and retain more cash within the business.
That decision strengthened our balance sheet over several years. Today, BAT Kenya can generate finance income instead of finance costs, and shareholders are now benefiting from significantly higher dividend payouts.
Sometimes good decisions do not produce immediate results. They take years before people appreciate their impact.
Running a major listed company comes with enormous pressure. How do you handle difficult moments?
One thing I constantly remind myself is that almost every problem has a solution. The difference is usually not whether the problem can be solved, but how quickly you find the solution and who you involve.
Whenever we face a difficult situation, I ask who is best placed to help solve it because chances are somebody somewhere has dealt with a similar challenge before.
I also make a conscious effort to take short breaks, even during demanding periods. A refreshed mind is far more effective than an exhausted one.
What do you enjoy outside work?
Sport has always been a big part of my life. I have played rugby, basketball, football, handball and swimming over the years.
More recently, I picked up hiking while living in South Africa, and I intend to continue doing that here in Kenya. I am also rediscovering golf because many business leaders here play the game. Sport and nature help me unwind and maintain balance outside work.
BAT Kenya delivered resilient half-year results despite a difficult operating environment. What drove that performance?
Our strategy remained consistent. First, we continued focusing on combating illicit trade while protecting our core combustible cigarette business.
Although the domestic market remains under pressure, export sales recovered strongly in the first half, helping offset weaker local demand. Second, our modern oral nicotine product, Velo, continued growing compared to the same period last year.
Reduced-risk products remain an important pillar of our long-term strategy. Third, we refreshed our product portfolio while implementing the new graphic health warning requirements.
On the cost side, productivity improvements helped cushion inflationary pressures. Without those efficiencies, our cost growth would have been much higher.
Illicit cigarette trade remains one of the industry’s biggest concerns. What policy changes would make the biggest difference?
The most important thing is sustained and scaled-up enforcement. We are beginning to see encouraging signs from government. There have been more enforcement actions, and that is positive.
However, enforcement cannot be occasional. It has to be consistent and significantly expanded.
What opportunities do you see for Kenya as a regional manufacturing hub?
Kenya already has a strong manufacturing base and an experienced workforce. Among the markets offering the greatest opportunities is the Democratic Republic of Congo (DRC).
Kenya offers quality manufacturing capabilities. The fact that another market chooses to source products from Kenya demonstrates the competitiveness and expertise that exists here.
The opportunity is to build on that and position Kenya as the preferred manufacturing hub for the wider African region.
What is preventing Kenya from fully realising that ambition?
The biggest issue is policy certainty. Manufacturing investments are long-term decisions. When a company invests millions of dollars in a factory, it is planning for the next 5, 10, or even 15 years.
If regulations and tax policies change unpredictably every year, investors struggle to make those long-term commitments. Businesses need confidence that the regulatory environment will remain stable and predictable. They also need assurance that existing laws will be consistently enforced.
The second issue is competitiveness. Kenya has made significant progress, but there are still areas where costs remain relatively high compared to competing markets. Energy costs, for example, remain an area where improvements would strengthen Kenya’s competitiveness.
When investors compare countries, they look at policy stability, production costs and ease of doing business. Those are areas where Kenya can become even stronger.
If you had five minutes with President William Ruto, what would you ask him to do to strengthen Kenya’s industrial sector?
My message would be straightforward. First, simplify regulation. Businesses today face multiple approvals and compliance requirements that sometimes create unnecessary bureaucracy and delays.
Simplifying those processes would improve the investment climate considerably. Second, enforce the laws that already exist. Speaking from our industry’s perspective, the biggest challenge is illicit trade.
Kenya has laws governing excise taxes and tobacco products, but enforcement remains inconsistent. Effective enforcement would protect legitimate businesses, government revenue and consumers.
Finally, maintain predictable and sustainable tax and regulatory policies. Investors need certainty. When businesses know what the rules will look like over the long term, they are much more willing to expand manufacturing and create jobs.
BAT recently announced workforce reductions globally. How has Kenya been affected?
Kenya was affected, and we communicated that during our investor briefing. Approximately 30 positions, representing about nine per cent of our workforce, were impacted.
Those decisions were not easy. They reflected the pressures facing the business, together with efficiencies arising from digital transformation and the increasing adoption of new technologies, including artificial intelligence.
Throughout the process, we remained committed to treating affected employees with dignity, respect and fairness, ensuring they received the support and benefits they were entitled to.
The tobacco industry supports thousands of farmers and other businesses. How are you helping them adapt to changing market conditions?
Declining legal cigarette demand has affected the number of contracted tobacco farmers, but this is not a new development.
Where farmers exit tobacco production, we work with them to transition into alternative crops and income-generating activities.
That includes providing support to move into crops such as maize and other agricultural enterprises so they can continue earning livelihoods.
The broader tobacco value chain supports an estimated 80,000 livelihoods in Kenya. That is why illicit trade remains such a serious concern.
Every increase in illegal products threatens legitimate jobs, farmers, distributors, retailers and many other businesses that depend on the legal tobacco industry.
What advice would you give young Kenyans who aspire to become business leaders?
My advice is simple: dream boldly, keep learning, and never stop believing that you can achieve more than you initially thought possible.
