Alpesh Vadher Presents PKF in Eastern Africa: A Leading Accounting and Consulting Firm in Kenya

Interview with Alpesh Vadher, CEO of PKF in Eastern Africa

Could you provide a detailed overview and historical background of PKF? How did the firm originate, and what were the key milestones in its development?

The firm was started in 1964 by two founding partners, Mohammed Abdullah and Ameer Kassim-Lakha. It initially began in Zanzibar. After Zanzibar’s nationalization, the firm relocated to Mombasa. We used to have five offices in Kenya: Mombasa, Malindi, Nairobi, Nakuru, and Kisumu. We closed the Kisumu office two years ago as part of our consolidation efforts to become the first local firm to expand beyond Kenya. We then began operations in Tanzania, Uganda, Rwanda, and acquired operating licenses for Burundi, South Sudan, and now Somalia. Additionally, we have two offices in London and previously had three offices in Canada. We also operated in Iran and Afghanistan, but have since closed our offices in Canada and Iran.

We recently celebrated our 60th anniversary. The founding partners have retired, and now, with our UK office included, we have about 40 partners and directors, and 750 staff. In East Africa alone, we serve more than 3,500 clients. The Nairobi office is the largest in Africa, and the East Africa cluster of PKF is among the top 20 firms in the PKF International global network. Before joining PKF, the firm was known as Kassim-Lakha Abdulla & Company, named after the founding partners. We merged with another firm, Semver & Company, in 2000, and on July 1, 2002, we adopted the PKF franchise.

What are some of the services that you offer, and what is your competitive advantage?

We provide a wide range of services, including auditing, tax consulting, tax compliance, various types of consulting, HR, corporate finance, and public sector services. We cover almost all sectors in business. Our biggest advantage, I think, is personalized service. You receive attention from multiple partners, so if you cannot reach one partner, you are familiar with a few others. We are competitive in terms of pricing and, being part of a global network, we maintain a strong focus on quality.

The International Accounting Bulletin has ranked us among the top four firms in Kenya, and in East Africa, we are also among the top four or five. This reflects our competitive edge in quality and pricing. Additionally, we offer nearly all the services that our competitors provide, with exceptional attention to detail and care. Our clients appreciate us because we deliver significant value addition on top of our core services like auditing and tax compliance.

What are the latest trends? What is happening in the industry from your perspective?

I think the main concern, not only for Kenya but for Africa as a whole, is vulnerability to external shocks. One key issue is foreign exchange because most African countries have a huge current account deficit, importing more than we export. Currency fluctuations are a problem, and we saw Kenya’s currency depreciate by 30% from January to December 2023, though it has appreciated by 20% this year. However, stability is essential for business.

The cost of borrowing is extremely high due to the government’s high debt. This makes it difficult for businesses to perform and grow. After COVID, high inflationary pressures in Europe, the US, and the UK, along with tightening monetary policies, have kept rates high. Currently, the US rates are about 5.5%, which has influenced interest rates in Kenya, leading to high borrowing costs here as well.

From a manufacturing perspective, political stability is crucial. Many African countries still face political challenges, though there have been improvements. Long-term investment requires political stability. Despite these challenges, I am optimistic. Kenya, being the fifth or sixth largest economy in Africa, has done well, growing 5.6% in real GDP last year, and is expected to reach 16 to 17 trillion this year. Kenya has a highly skilled workforce, fluent in English, and is in demand globally.

Africa is poised to play a major role in international trade. Kenya is beautiful, with a favorable climate, hardworking and friendly people. Expatriates and visitors often enjoy Kenyan hospitality. We have great beaches, hotels, and the Maasai Mara National Reserve, boosting tourism. Kenya has become a top destination for conferences, and there is significant improvement in infrastructure.

However, there are challenges, particularly with the Gen Z movement and the new president’s efforts to reduce debt. There is pressure from the IMF and other institutions to manage debt, which is consuming a significant portion of revenue. The goal is to reduce the debt ratio to 55% in the next three to five years. The Finance Bill 2024 faced opposition due to perceived over-taxation amid a cost-of-living crisis, leading to protests.

Despite these issues, I remain optimistic. Kenya has faced similar situations in the past and has always managed to flourish. I am hopeful we will find solutions to our current challenges.

Could you provide us with an overview of some of the notable clients you work with?

We have a large and diverse client base. We deal with significant sectors in manufacturing, including plastics and tires. We are the leading audit firm for flower companies. I have been with the firm for 31 years, and I look after the flower sector, managing 45 flower companies. Kenya is one of the leading exporters of flowers globally. If you go to Tesco or Marks & Spencer in the UK, you will find flowers produced in Kenya.

We also work with companies in the vegetable sector. For example, if you see any cauliflower or broccoli, it is likely from Kenya. We cover almost every sector, although we have shied away from the financial sector due to high compliance requirements. We focus more on the private sector and have done well in that area. So whether it is construction, pensions, financial services, public sector, or NGOs, we are present in each and every space.

What have been some of your recent projects, and can you also talk about the ones you are currently working on?

From a project perspective, I have been CEO for six years now, and stabilizing the firm has been crucial. Our partners retire at the age of 60, so succession planning is extremely important. One of the biggest challenges for growth in Africa is human capital. You can grow, but without the right people, it becomes difficult, especially in our industry where regulatory standards and compliance are increasing daily.

We are focusing more on quality and efficiency. We have adopted a new product called “Inflo” for auditing, which helps improve our quality. We are also managing our risk better, allowing us to be selective with our clients. Risk management and reputation are critical in our industry.

Personally, as the chair for PKF in Africa and a member of the international board, quality is our top priority. Clients appreciate the value addition we provide. We are experiencing organic growth, around 10 to 15% in US dollar terms across all offices. Our public sector work includes projects for the IMF, World Bank, and the Bill Gates Foundation.

Recently, we have noticed a shift with P funds. While there has traditionally been a preference for the Big Four auditors, there is now a growing recognition in Kenya that PKF can be a viable alternative. In the past few months, we have received five to seven significant assignments from P funds that previously would have gone to the Big Four. This is enhancing our reputation, and most of our clients come to us through word of mouth, which has helped us grow nicely.

Would you like to mention some of the CSR initiatives you are involved in?

Our president is very focused on climate change. We see its impact globally every day in the news. One of our partners, Patrick Kuria, has done an excellent job in this regard. He participates in an initiative called “Climb for Trees,” where he has climbed Mount Kenya twice, summiting and descending within 11 to 12 hours.

The goal of this initiative is to grow about 15 billion trees globally over the next 10 to 15 years. In Kenya, we have a specific target, and this project is a major focus for us. Every year, we have an environment day where all our offices in East Africa close, and we go out to plant trees.

Apart from this, we engage in various CSR activities, but our primary project is addressing climate change through reforestation. We work closely with the Kenya Forest Department to plant as many trees as we can.

Can you describe your vision for the future of your organization over the next three to five years?

I became CEO when COVID just started, in 2019, and then in 2020, COVID hit. So 2020 and 2021 were very difficult for everyone. We had never experienced a pandemic before. Managing the firm in Kenya, East Africa, and our two London offices during lockdowns, losing people, and disruptions to work was challenging, but we handled it well.

In 2023, we had elections in Kenya, and in Africa, elections tend to slow down the economy, but we managed that situation too. Last year, we faced economic turbulence with inflation and the currency crisis. This year, we are dealing with taxation issues. Despite all this, we have overcome these challenges.

Looking ahead, succession planning is key, especially with some senior partners retiring in the next 10 years. We have about eight or nine senior partners to consider. We also need to be strategic with the advent of artificial intelligence, understanding its impact and preparing the firm with the necessary personnel and infrastructure to serve future clients.

There are global economic challenges that require us to stay informed and prepare the firm accordingly. Financially, PKF in East Africa is well-placed; we manage our practice well without borrowing. We need to fine-tune our operations, introduce new products to meet demand, and adapt to the fast-paced, globalized world. Efficiency, profitability, risk management, and reputation are critical.

Additionally, to fast-track our growth, we have identified potential acquisition opportunities in East Africa from firms that may lack a succession plan like ours. These opportunities could arise in the future.

As we know, you are trying to expand to other countries. Which other countries are you planning to enter?

At this moment, we do not have full physical offices in all locations. For instance, in Somalia, South Sudan, and Burundi, we operate on a ship-in, ship-out basis from Rwanda. We have a physical presence in East Africa, specifically in Kenya, Uganda, Rwanda, and Uganda. There are opportunities in other parts of Africa, but our main restriction is HR. Our growth relies on homegrown talent. We only move to new locations when we have our own people, who understand our philosophies, structures, and controls.

We are not a manufacturing company; we are centered around HR because we deal extensively with people—our clients, staff, and partners. The current trend makes it easy to lose people, and retaining them is challenging. We need individuals with integrity, a strong work ethic, and technical skills, which are increasingly hard to find in this generation.

Right now, we are content with consolidating our presence where we are. However, we are always exploring opportunities. We are focusing on developing our people and potentially transferring them to other offices when the time is right. We will see how it goes from there.

We did read a bit about you. Can you give us a bit of your journey and tell us why you went into PKF as well? What is your philosophy in life? You know, once you wake up in the morning, why do you do what you do?

I have a deeply personal and rich history, and I am approaching my 50th birthday in the next two months. Reflecting on my life, I come from a very humble background, and this has profoundly shaped my journey. I am the youngest in my family. My mother passed away when I was only one and a half years old. There was a significant age difference of 43 years between my father and me. Despite this gap, I was very close to him, and he remained a central figure in my life.

From a young age, I had two main passions: cricket and education. Cricket was not just a sport for me but a source of joy and escape. I had the privilege of meeting notable figures through my cricket career, such as the late Queen Elizabeth, whom I met at Buckingham Palace after participating in the 1999 World Cup. I also had the opportunity to meet President Mwai Kibaki on two occasions: once when we won the flag at the Commonwealth Games and again when we reached the semi-finals of the 2003 World Cup.

Academically, I was always diligent and did well in my studies. However, due to financial constraints, I could not attend university in 1993. Despite this setback, I was determined to continue my education. After finishing my A-levels with excellent grades, I decided to forego university. My family and I were still living in a modest house with my two brothers and two sisters. I told my father not to worry about sending me to university, and that I would find a way to educate myself. I remember one early morning, after a night of tears, I decided to take my fate into my own hands.

In October 1993, I joined PKF, which was a significant turning point in my life. In December, I was selected by the Nairobi Provincial Cricket Association as the vice-captain and had to decide whether to join PKF immediately or in January. I spoke to my employers about my cricketing commitment, and they encouraged me to take the unpaid leave to pursue my passion. This support allowed me to play in India, where I was later selected for the international squad, narrowing down from a group of 40 to 15 players.

My philosophy in life, heavily influenced by my father, is to give 100% to everything I do. If I commit to something, I do it wholeheartedly. I am an early riser, waking up around 5:30 or 6:00 AM, and I prioritize my health and work diligently. When I started working, I needed to balance my job with studying for my ACCA. The time constraints were challenging, as I had to navigate heavy traffic, practice cricket, and then study late into the night. My education was largely self-directed: I completed my ACCA, CPA Kenya, CPA Uganda, and an MBA for Tanzania through correspondence. All my education was pursued from home due to my demanding schedule.

My father’s values of discipline, punctuality, and integrity were fundamental in shaping my approach to work and life. I never asked my partners for a pay raise; they recognized my hard work and dedication. When I joined PKF in 1993, Mohammed Abdullah, the CEO at that time, saw potential in me and mentioned that I could become a partner. Initially, I did not fully understand what that meant. My focus was on securing a job, and I was grateful for the opportunity.

In 1997 or 1998, I faced frustrations and decided to resign. However, senior partners at the firm came to me for a discussion. They asked me whether I wanted to be just an employee or an employer. They offered their support, including cricketing leave, and encouraged me to stay. Their mentorship and the question of whether I wanted to take on greater responsibility led me to revoke my resignation. I continued to work hard and eventually became an equity partner, later managing Nakuru, then Nairobi, and eventually becoming the regional executive partner and CEO.

Assuming these roles at a young age was demanding, but it was a continuation of the responsibility I learned from my father. My father’s early assumption of responsibility, especially after my mother’s passing, taught me to value hard work and appreciation for what we had. Despite financial struggles, we learned to make the most of our situation. My father’s support gave me the freedom to make decisions and pursue my goals, which was crucial for my development.

Even as I advanced in my career, I maintained a focus on simplicity and integrity. I still drive an old car, despite my position as CEO, because material possessions are not what define me. What matters to me is my work, my contributions, and my role as a family man. For the past seven or eight years, I have made it a point not to work on weekends, dedicating that time to my children and mentoring them.

Looking forward, my main priorities are succession planning and preparing my children for the future. I will not be CEO forever, so finding the right successor is crucial. In the next three to four years, I plan to step down and ensure a smooth transition. My children, who are now 10 and 14, need to be prepared for a rapidly changing world. The world is evolving quickly, and it is essential to equip them to navigate its complexities.

Health is also a significant focus as I approach 50. I maintain my health and well-being to ensure that I can continue to contribute effectively. My life’s vision involves these priorities: preparing the next generation, ensuring my children are well-prepared for the world, and maintaining good health.

Overall, I am content with what I have achieved. Starting from modest beginnings, reaching positions like CEO of PKF in East Africa, becoming chairman of PKF in Africa, and sitting on the international board with professionals from around the world are accomplishments I never anticipated. Meeting figures like the Queen and President Kibaki through cricket was beyond my wildest dreams. Money is important, but it is not the ultimate goal. What matters most is the impact I make and providing a solid education and upbringing for my children. Preparing them for the real world, beyond what they learn in school, is now my primary objective.

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