Issues for Diaspora Investors

Unit trusts
In all the political news this week, some may have missed this story on collective investment schemes (funds, unit trust), who will now have to get more aggressive (take on more risk) to deliver commensurate returns - and are now asking the regulator (CMA) to relax some of the rules that restrict their investments.

A year ago this post discussed unit trusts and the cost of investment being a major deterrent to the returns they offer (and at the time the NSE was in a much better position). I still have issues with the 3 – 5% initial fee and 2% annual fee charged by many unit trusts.

Real estate
The post-election violence will have a mostly negative impact on property values and in rural Kenya, and in towns like Eldoret, Kisumu, Nakuru and especially in Mombasa (where the real estate boom was driven by visitors/tourism numbers). The cost of building will also go up as demand for supplies will be great. So buy cement company shares (Bamburi, ARM, Portland) the day Kofi Annan succeeds in his mediation efforts

In Nairobi, properties near slums like Ayany (adjacent to Kibera) have been badly affected owners and/or tenants moving out. However there is also increased demand in some of the same areas – perceived to be safer parts of the city, such as Kileleshwa and Westlands. They will also benefit from residents of other towns like Kisumu relocating to Nairobi.

These are also the areas that many Diaspora Kenyans have invested in or are considering investing; and while many have postponed their real estate investment decisions, those already in (with mortgages to pay) will have to wait out the storm. Also it may be wise to set up several investment companies to keep rental turnover and sidestep new tax laws

Also Kasarani which is one place you can still buy land cheaply to build, will have values of land increasing as will parts of Central Kenya.

Kutwa: Tuesday: Pick out a positive story

Bank Round-up

- Co-op Bank extends its banking hours from the now less-traditional 9 to 3 to 9 a.m. to 4. p.m. daily and up to noon on Saturdays. 

- bold Equity Bank announced plans last week to open new branches in Kisumu, but that was before a new outbreak of violence over the weekend and the fatal shooting of an opposition MP this morning. 

- The Business Daily reports that West African giant Ecobank plans to take over a majority stake in limping mortgage bank EABS, whose recent growth had lagged most of its peers

- NIC Bank to convert cashless ATM points into full branches and expand its network. 

Capital flight: A leading multi-national bank is considering moving an African operations department out of Nairobi, and to another country. The amount of capital flight (money leaving the country) is also at an alarming high. 

Other sectors

- Valentine’s Day massacre?; What does Naivasha flare up mean for some flower farms who Valentine's Day (Feb 14) shipment/sales can account for up to ½ their turnover in a year ?

- Nairumor that a blue chip CEO and turnaround specialist will resign next month in search of (foreign) greener pastures

- The Harvard Business School’s Africa Business Conference is on February 15-17, 2008 in Boston MA. Details from YAP

- Some troubling signs and even more today.

- Another regional airline upstart is Executive Turbine, flying 4X weekly to Kisumu for Kshs. 3,540 ($70). Regional airlines should be added to the earlier post on election winners. 

Trivia

- Will ‘President Obama’ need Equity Bank? - because 46% of African American households don’t have bank accounts - he can tap Equity Bank’s revolutionary model to bring banking to the unbanked. 

- wish I was in France: It’s better to be a rogue trader facing charges for misplacing $7 billion. But it’s also a reminder that financial shenanigans are still rarely punished and prosecuted in Kenya. E.g. Francis Thuo. (and maybe Mr. Kerviel would rather have worked for a Kenyan bank instead)

Post-election Winners

(Non political) : For a month, we have concentrated on the losers - Kenya’s image, banks, truth, profits, employees, tourism sector, insurers, economy; so it's a good time to look at some 'winners' today – people, concepts, companies who proved themselves and who may make some money from the post-election turmoil.

- Mobile phone companies - Safaricom and Celtel were a vital link throughout the country. Airtime was worth more than money at times.
- Language schools: Why? Cause you never know when it will be an advantage to multi-lingual in our multi-tribal Kenya again.
- NGO’s: Are back in business in a big way.
- Dick Morris: He never had a chance to participate in the election, but his ilk i.e. dirty tricks campaign managers were at work and in full force such that many professionals who ran clean, issue-oriented campaigns rarely had a chance in this election.
- Gated community housing projects.
- Uchumi Supermarkets: Won a lot of points for being open and doing business even when urban clashes were at outide their doors. Investors can expect no dividends until 2011, but the company may get a better reception if they approach investors with another rights issue thsi year.
- Kenyans online: From blogs, to online initiatives (reporting violence, airtime/voucher transfer) thousands turned online to vent, tell their stories, get news, correct their country's image and restore sanity - after a media blackout and/or fatigue from the political bickering and violent images that ran on TV all day.

Can you name any other winners?

Kutwa Tuesday: Jan 22 Pot Pourri

All Safaricom: :
Good: An IPO from Safaricom could be the tonic that will restore investor confidence in Kenya that has been damaged the political events over the last month.
Good: Safarciom has partnered with Google to offer free email (6GB worth) to all their customers.
-but not good Have Safaricom raise their data costs? Internet browsing by phone seems to chew up airtime a lot faster these days

Air wars:
- Fly cheaper: Kenya Airways flights to Mombasa are now 3,000 shillings ($45) one way and 5,000 for roundtrips (plus tax) – about ½ of what they were a month ago
- There's a new airline on the Kisumu route, as another airline, Fly 540 has also acquired new aircraft to embark on flights to other regional African countries.

Mitigating political risks:
- There was notice in the paper by the Association of Kenya Insurers (AKI) confirming that political risks/riots are not covered in their policies. However ye members will discuss loss compensation on a case by case basis.
- But there’s a green light for some; Today’s Daily Nation has a (offline) story about the Africa Trade Insurance Agency - a World Bank subsidiary that covers political risks that has been largely dormant in Kenya until this month when corporates like Kenya Airways, Telkom and Nakumatt have been flocking to enquire about political risk cover. The story has an ominous warning that election violence could be an event that recurs every five years in Kenya in future.

Phantom exchange: Owing to a system hitch, there was no trading at the Nairobi Stock Exchange on Monday – though someone at the Standard says there were some trades. The exchange appears slightly inflated with all that’s going on around in the country.

Boycott averted: I was in the second week of my personal boycott of national broadcaster Kenya Broadcast Corporation (KBC) for shoddy programming and outright disservice to Kenyans in the post-election period. But they have won me back temporarily with their belated offer to broadcast soccer matches from the Africa Cup of Nations in Ghana. Having a variety of channels to watch is however a luxury that million in rural Kenya do not have as they only have the national broadcaster to tune to for news and entertainment.

Opportunities
Consult with Pricewaterhousecoopers: Kenya jobs include Transfer Pricing Manager, Consultant (Internal Audit) Senior Consultant (Internal Audit Services) Specialist (s) (Public Sector) , Manager (Financial & Operational Effectiveness), Consultant (s) (Financial & Operational Effectiveness), Manager (Assurance-Audit), Consultant (IT Effectiveness), Consultant (CCH TeamMate), Associate Director (Mergers and Acquisition), Analyst (M&A), Manager (M&A). Also other positions available in Uganda and Tanzania – D/L for all is 31/1.

Jan 18: From ODM to Icarus

three weeks after the ill-fated elections and three days of mass protests

The Disruptions in the work flow have been a nuisance to the country, while the violence is threatening to cut off Central Africa. But how long before President Yoweri Museveni decides to drive eastwards for another road trip eastwards to check out the situation for himself?

If ODM’s goal is to grind the country to a halt, it may take a while. With tax collections significantly down, the pending Safaricom IPO which I thought will be an election winner could turn out to be a (one time) budget lifesaver – expected to yield over 30 billion shillings in Q2 of 2008.

ODM is now specifically targeting companies linked to key government personalities like Citi Hoppa, Brookside and Equity Bank. This sounds far-fetched and could lead to retaliatory attacks (ODM personalities are also business people); it's also an extension of silent boycotts that people have undertaken on their own. E.g. people who only selling petrol to their kinsmen, while others boycott pubs or have stopped reading the Nation or Standard/KTN because of their perceived political leanings.

While George bush is trying to revive the US economy through bipartisan tax breaks, but here we have two sides who won’t even sit down with each other. If they don’t, the crisis may soon spin out of control as the race for the presidency assumes historical dimensions

cut & paste: The Central Bank has introduced business continuity guidelines for all banks. However, it seems to be an update of an IT disaster preparedness document that's a few years old, and does not mention any of the words - crowd, riot, security, cash, ATM – and only one mention of ‘police’. In short, it does not address many of the challenges banks have faced.

Insurers with hearts: Some insurance companies like pan Africa and Heritage (CFC) making exception on a case by case basis to assist business people victimized in the riots. As a rule, insurance companies have no responsibility to cover such acts

Such as Business coping: Ukwala supermarket, which was destroyed in Kisumu, lost all their financial records. They are asking suppliers & partners to provide them with statements, delivery reports, and invoices as at December 31 and not to bank any of their cheques.

But can’t please everyone: like thieves who take advantage of busy police battling rioters, some unscrupulous borrowers are also using the economic shutdown to plead with banks for delayed repayment and favorable revision of loan terms when the haven’t really been affected.

Signal of confidence: On Wednesday, Imara Holdings introduced a new fund targeting the Diaspora willing to invest in east Africa. It’s an open fund with minimum investment of 6.5 million shillings (~$100,000) and will be sold through Kenya’s ICEA

- Recognize us: Barclays have eaten humble pie for two years, but who would have through that high-street Standard Chartered would open a branch in Eastleigh?

Local Icarus: what happens when you fly too close to the sun

opportunities
- From PSD Blog; nominate a women entrepreneur to the doing business group of the World Bank.

Current open jobs
from the papers this week
- APA Insurance: unit managers, account managers. Apply to recruitement@apainsurance.com
- Safaricom: VAS Propositions Manager, Channel Development Manager, Key Accounts Executive – apply online. But for the position of chief information officer - but apply though pricewaterhousecoopers executive selection division (ESD).

Kutwa Tuesday: Banking Brief's (Jan 15)

CFC on hold?
Could the ongoing political crisis be giving Standard Bank of South Africa second thoughts about its approved merger with CFC? A decision by the Reserve Bank in SA to conclude the deal is also overdue.

Dangers of insular banking
Our banking history is littered with the remains of Daima Bank and other indigenous African and Asian banks. Most went down due to malpractices by directors and managers, but also in-lending to close circle or community companies who as a group could be potentially exposed to a singular risk.

The banks also engaged in subtle discriminatory practices like charging outsiders higher rates, frustrating their loan applications or facilities, or making them feel unwelcome - which ultimately proved to be counter productive as locking them out increased the risks that the banks faced by increasing their exposure and dependence on a core group or sector.

Something to Do

1. Donate

Through Mama Mikes and a bloggers for Kenya initiative.



There are also other other initiatives - like Save-A-Life, Kiss FM's Jaza Lorry, the Nairobi Women’s Hospital, but beware of a revival of some NGO’s and unusual causes

2. Report Violence
Ushaidi.com is a tool for people who witness acts of violence in Kenya in these post-election times. You can report the incident that you have seen, and it will appear on a map-based view for others to see.



(3) Become a better tipper
Or, better yet, start tipping - because in Nairobi, tipping is something that we have left to tourists only.

Kenyans are woefully underpaid especially out security forces (some of whom had not been paid salaries even as they were asked to quell post-election violence) and yet they also guard our houses, million shillings cars, look after our families, serve us meals they can never afford, and never ask for more.

Many of them live in the very areas that relief initiatives are being formulated for - but just because they are not visibly suffering does not mean they don't need our help. And while many of us are at the mercy of people whose ability to take our money we can’t say NO to (taxman, church, landlord, relatives), we need to spare a moment for those less fortunate who we interact with everyday, who also have lives and families, and are more at risk after working a full day. Yet we dismiss them so quickly, if they ask or dare to look like they are about to ask for help while at work.

So even if it means paying less tax or tithe, or having one less beer in order to spread some wealth around, get to know these people better and tip them well; waiters, maids, taxi drivers, bank clerks, and especially policemen – though how this can be done without being seen as bribing them – is a delicate task to accomplish.

Banking briefs

- Kenya’s leading bank, Barclays, is the first to acknowledge a distressed loans problem resulting from the post-election violence and standoff.

- From IHI blog; tired of bank charges? Consider a shariah account since they won’t incur frivolous charges that build bank profits.

Paper banks : Is the Nigerian banking model, which Kenya is going to emulate with increased share capital and consolidations, built on sand and bilking shareholders?

Other observations
- China speaks on the Kenyan political crisis blaming the west for imposing democracy on Africa.
– Mobile phone wars continue with Celtel shockingly low rates, while market leader Safaricom won't compromise and keeps making money
– Hawkers who expected to be evicted from downtown Nairobi, on December 28, now enjoying continuing business with the political uncertainty in the air
– It’s not quite as staggering as Marion Jones or BALCO scandals, but from this month on a whole bunch of expensive, long hitting, golf equipment, widely used in Kenya,(including some Callaway, Titleist and TaylorMade), are now illegal. If caught using them you will be disqualified from a tournament or match event.
– Rapidly growing and expanding Fly540 airline taking a dig at Kenya Airways – with an advertisement that their propeller powered aircraft (ATR72) are more environment friendly than KQ's jets
– Advertisers taking down the politician billboards that littered the city
– As fuel prices pass the 90 shillings a litre, will some petrol pumps in the country be able to process the sale prices over 100 per litre (3-digits) which are around the corner?
– Where’s the prophetic prophetic Mutahi Ngunyi gone to?

Opportunities

- Kenya Airways: Head Of Marketing & Corporate Communications, In-flight Performance Manager, Load Control Officer, Head Of Is Development (IS) , Systems Administrator, Training Officer – Fares & Ticketing, Qualified Pilots, Multilingual In-Flight Attendant, Customer Service Agent
- Sales positions at KCB. download form here.
- Director of research at the Mo Ibrahim Foundation. D/L is 31/1

Bankers' post-election assessments

Citigroup (CITI)
- Limited impact on economy if political crisis is resolved. It Matters little to the economy who won the election as private sector will continue to drive growth
- Share sell off at NSE could be a good buying opportunity as economic fundamentals unchanged
- President will use police and military to clamp down on protests which themselves will not last more than a few weeks
- Parliament loyalties will be split by president as MP’s vote with their stomach
- There’s little the international community can do besides pushing for reforms.
- Also in the pre-election period, the opposition may have been falsely buoyed by opinion polls which are not sound (& could the same thing have happened to Obama in New Hampshire ?)

Renaissance Capital (RENCAP)
- Crime wave has emerged under the guise of political riots
- Government may take all 12 nominated seats in parliament
- Reemergence of the civil society and NGO’s as source of political pressure and search for solution
- Main threat is if two parties don’t agree so may revise down the 6 – 7% GDP projections.
- Also prices have not factored in the chaos, so investors should hold off on buying.

Thanks to Silaha for the 2 reports – and who has also blogged some post-election predictions for Kenya

Treasury Officals:– from Business Daily
- Damage on the economy could cut the projected growth by as much as a half, if not worse.
As agricultural, financial services and tourism sectors are likely to under perform
- Treasury could be forced to craft a stimulus economic package to help reconstruct the affected regions and
- Lower the interest rates in the economy.

Central bank Governor - from Reuters
- Kenya can still achieve 8% growth in 2008
- Disruptions were temporary and will have a major impact on GDP growth
- Shilling’s depreciation was due to holiday period
- Safaricom IPO in first quarter of 2008
- Interest rates will not change

World Bank
(Hat tip Kumekucha) There’s a controvery brewing of the World Bank’s assessment of the election and resultant crisis

Excerpts;
- The considered view of the UN is that the ECK announcement of a Kibaki win is correct. More irregularities of consequence on the Odinga side than on the Kibaki side.
- The process of arriving at the result created a crisis of confidence due to missteps by (a) the ECK chair (who joked about possible rigging during a news conference), (b) the vocal EU observer who was not thorough and precise in analyzing information provided to him (c) the lack of preparation by Kibaki’s party in dealing with a highly media-savvy opposition.
-Moving forward. One option being explored is getting them to agree to a recount which, by law, has to be done through a petition to Kenya’s High Court. Eminent persons from abroad would monitor this recount. Meanwhile, Kibaki would proceed to form a Cabinet, possibly with some participation by Odinga supporters. It is unclear what would happen if the exercise arrived at a different result from the ECK decision. The gamble is that this would not happen and that even if it did, both sides would have a face-saving way to accept a change in course via-a-vis their supporters

This is not the first time the first time that the land-lord-tenancy arrangement between the President and the World Bank has been put to question – see here and here

Finally;
Not sure if she’s a banker, but Kenyanentreprenur argues that what Africa needs are development minded dictators since we are not ready for democracy – and i hope we won’t be having this debate in 2012!

My own take is that the people at the Coast, Nyanza, Rift Valley and Western provinces need to start rebuilding their lives and their industries - otherwise they will be left behind. Rioting in your own community is dumb as you destroy businesses that deliver services and create jobs within the community. So pass that message along with any peace & sympathy messages you convey. Also watch NTV's great Voices of Reason program on Youtube that looks at pre- and post-election issues (more on that later).

Mama Mikes & the World Bank

Money, food, transport have been in short supply in many rural areas affected by the violence. Equally crippling has been the lack of communication capability where there has been no electricity (poles brought down/lines cut) or shops (closed/looted/overpriced) selling mobile phone airtime.

People in urban areas have been sending airtime up-country by the thousands to stranded friends and relatives, while others from overseas (and even within Kenya) have turned to Mamamikes – who apologize for some logistcial delays and problems that may have been experienced in the transfer process.

DC opportunity
World Bank Summer Internship Program; apply online before January 31.

Rebuilding Kenya: mini steps

Talks are ongoing, marches have been postponed and parliament possibly opens next week - January 15 , paving the way for the country to focus on re-building - but these initiatives can’t begin until a proper government is in place that is seen as legitimate internationally:

Finance: We have companies who have not done business in two weeks, or received their just-in-time supplies - yet they are expected to pay full installments to banks at the at the end of the month. There’s even a mega tourist hotel opened over Christmas in Mombasa! The financial sector will have to chip in terms of waivers and new financing for businesses destroyed. These include;

(i) Debt forgiveness: at a minimum a waiver of installments for three months. Loans can be refinanced and the Kenya bankers association (KBA) to agree on modalities.
(ii) Rebuilding Fund: Last year we had women’s fund, youth fund and another funds is needed, with the support of the international community. Business people should be allowed to re-build in new areas if they are not comfortable re-investing where their businesses were destroyed
(iii) Insurance fund: Since it appears that those whose cars or businesses were looted and burnt will not be compensated by the insurance companies.
(iv) Some form of specific assistance to farmers e.g. livestock, crop replacement, (see a past initiative)

Banks : may be reluctant to chip in, arguing that their portfolios in half the country have been negatively impacted - but since they are about to announce record profits for 2007 their arguments will not be viewed with sympathy.

Employment : Impact will not be seen until about mid-year when companies announce their March 2008 results (they are still competing their 2007 accounts, which were normal up to the end of December, apart form the extended public holidays). The Kiss FM breakfast crew have been vocal about cutbacks if they don’t earn income this month, and this week Barclays has asked casual stuff (who hawk personal loans) to stay home until further notice.

International relations: Mr. John Kufuor is the president of Ghana; he is also the head of the African union. He is no doubt a very busy man, yet his name has been bandied about in a cat-and-mouse, back-and-forth, should he-or not mediate the Kenyan political crisis. Either he is needed or we should not waste his time!

International media: Al Jazeera has become the channel of choice of since local media has instituted some-self censorship of the violence and politicians. But the international media has been found wanting; they have been called biased by BeckyIT while the Police Commissioner has called them gratuitous in desire for displaying morbid images - which they don’t show in covering their own country stories e.g. 9/11 or London bombing coverage. He asks that they adopt the same standards.

Different investor perspective: While local investors fret about falling stock prices, foreign investors may view the market turmoil positively since shares on the Nairobi Stock Exchange are viewed as being ‘over-valued’ compared to their regional peers

Also

Micro finance in Africa: According to list from Forbes of the top 50 microfinance institutions in the world – only two are from sub-Saharan Africa (both Ethiopian).

Finally; parallels in the Cricket world as two giants - India and Australia are also not talking to each other.

Alternative solution for Kenya election stalemate

The police are tired, protesters are tired, and many displaced people are stuck and starving as they contemplate rebuilding their lives. The citizens are ready to get started, but the government is not ready to get back. Citizens are out today wishing their banks would open to enable them to start school shopping for next week's re-opening, but the government is the government is still on halt. The presidency is in doubt, and there is no cabinet in place.

Kenyans want to get back to ‘normal’ life and citizens in Nairobi are pretty much trying to do that. Solutions are being worked out, diplomat are talking to politicians, there are peace campaigns in the media – and some of us are fiddling and thinking at home while the fires cool outside.

what are some solutions? Some are not constitutionality possible

government of national unity - this seems to be thee consensus among bloggers and the diplomatic community – But no! We have had that since 2004 and it was about the business of government, not about national unity. Forcing two sides who don't agree, and can't stand each other to sit for an interim period is not going to work

interim government followed by new elections in a few months. These however cannot be overseen by the electoral commission of Kenya. In fact, after the 1982 coup attempt, the air force that instigated the coup were disbanded, and replaced by an 82 Air Force which ran for the next dozen years. Same thing should happen with the ECK. Also what will happen in those few months? Who will coordinate the government? Kenya’ can’t afford to remain in limbo for six months.

my thoughts: In primary school we learnt that there's the executive (president & cabinet) judiciary, and legislature (parliament). Other bodies are the citizens (who voted about 4 million votes each for either Kibaki or Raila) and remain polarized, as are the media and religious leaders. The judiciary is universally seen as not being partial in this debate.

One institution we have intact and legitimate is parliament – whose members were gazetted this week. Parliament to be reconstituted – and they can then vote for the president.

The MP's are our elected leaders and all (but 3) of the countries 210 constituencies have duly elected their representatives for the next five years. There elections are not in doubt for the most part and they are a legitimate group of people, many of them new to parliament for the first time. The vote can be in public or by secret ballot. And surely it will be easier to tally 210 votes than 10 million votes. This can be done in a week at most and will result in a legitimate president for the country.

With about ½ of parliament this would appear to favour the Orange side, but the race is open to all MP's gazetted –not just Kibaki and Raila only. Any MP would be eligible, provided they meet other requirements so potential successors such as Mudavadi, Kalonzo, Saitoti, Uhuru, Karua, and Bifwoli could all run. The election would take a day, be under the full glare of media, and not require the electoral commission of Kenya.

The president elected by parliament - will then form the next government and appoint a cabinet of his liking. His first task of business will be national healing which will include resettlement of displaced persons, rebuilding small businesses affected by riots, relief efforts, rebuilding infrastructure, peacekeeping operations, mending international relations, etc.

The idea stems from novel I read recently, (can't remember the title). Anyway, I'd dearly like to get back to posts on banking and stories like these, but until the politic is sorted out, they are not very useful to write about;

- Diamond Trust Bank: Taking regional banking to Uganda at no extra cost for cross-border transaction

- NIC desperate to go into stockbroking even with an imperfect deal - paid a lot, but don't have full control over stockbroker

-Safaricom extended their cheap calls offer which expired on New Year’s Day to January 15. Many people are still on holiday, some unintended and will benefit from the extended period of ‘cheaper’ calls.

Elections derail Kenya’s Vision

some rambling thoughts to start the new year

It's been a week since the election was held last Thursday and we are in a different world at the beginning of 2008.

Up till December 2007, the focus of Kenya was investing towards Vision 2030 - now we may have to find a new target to aim for – a Vision 2009, which is to perhaps to get the economy back to where it was in 2007.

The coverage by bloggers, Kenyan Pundit, Thinker's Room and others has shown how we have receded from a generational vote (half the cabinet and sitting MP's voted out – some after spending decades in parliament) to the equivalent of a - hate the term banana republic

Kenya has been there before, but was it necessary to go back? To be on CNN and Al Jazeera alongside Pakistan and Zimbabwe? If Ms. Bhutto had not been assassinated, Kenya would probably have been the top world story. This has now happened as Pakistan has reverted to status quo (with an election next month)- while the situation in Kenya has gotten worse each day.

The election was a spark; When one is car-jacked carjacked or caught in a Nairoberry situation, the smart advice, is to co-operate with the thugs – as a car or money is not worth your life. The election created such a feeling of being robbed in many parts of the country, but people fought back. They could not hit at the alleged (and likely) carjackers at the KICC, so they revenged against the agents of their perceived enemy (Kibaki, Raila, Moi, and Kivuitu) on the ground – their own neighbors.

Beyond Politics
From stories about the violence around the country, this has gone beyond any PNU vs. ODM, or Raila vs. Kibaki. It has pitted neighbors against each other, the have-nots against the haves, communities being targeted, revenge targeting, rapes, looting, highway extortion or murder gangs, and others acts verging on ethnic cleansing.

There have been simmering issues in the country – unemployment, poverty, landlessness, jealousy & envy, police crackdown on cartels in slums and the matatu sector, the government crackdown on pyramid schemes that had developed extensive networks of 'investors and savers' in many urban & rural areas, - all followed by opportunistic thieves (looters).



The bloodshed in Kenya is a result of simmering tensions in the country. It has been totally unnecessary, could have been avoided, but the spark/pressure cooker was triggered by the ECK decisions over the weekend.

consumers & the economy
My personal hardships pale in comparison to most Kenyans - but include; no petrol for car, January funds being used to stock up/buy essential dry foods, no fresh foods, no cash as ATM's were empty/unplugged, lack of Safaricom airtime and Internet access (except by cell phone)

We as Kenyan citizens are not used to this – we have a culture of positive self development – that we have to improve our lives by investing, acquiring assets, educate our kids, – which probably informs a widespread government expectation that we will soon have to get back to work, and forget the politics.

But, on a national level, certain industries have taken a hit from which they are unlikely to recover this year (2008) – insurance, transportation, tourism, real estate & mortgages, banking sector, banking, real estate, the agricultural sector, infrastructure, insurance, and thousands of small businesses (SME’),

We can forget about 8% or 10% economic growth for 2008 and maybe the next two years as well. As banks, we tried to persuade companies (local and foreign) to commit to business decisions from October onwards - without much success; now their wait-and-see caution appears to have been the right thing, and they will probably take another six months to recommit. Also, the demand for credit to rebuild, both from the whichever ‘government’ and the private sector is likely to dominate the budget of June 2008.

There's been a dead cat bounce, with some companies making a little money against the odds – Uchumi supermarkets, Safaricom, Taxi's, private security companies, hotels (until they run out of supplies), and soon building & repair companies, but they will be the minority.

we need solutions

But don’t look for answers here:

- Police: They are tired and overworked. They have been on high alert since November tackling electioneering and extra security. They have done their best given the circumstances.
- Violence: does not solve anything
- international and diplomats – they seem to think political leaders have all the answers.
- Politicians: Everyone is calling on political leaders (Raila, PNU, ODM but especially Kibaki) to have dialog as a way to peace. While, as far as I know, no national leader has orchestrated any violence around the country, they are old hands (three years of constitutional war – remember 'consensus building') at sitting at the negotiating table and not resolving issues. They can wear out Nobel Prize winners and the international community with their bickering.
- The USA: As the WSJ story on the violence in Kenya shows, they have a history of siding with sitting regimes after unpopular elections e.g. Ethiopia, Nigeria
- The Kenyan court system

The answer is citizens themselves

Every day this week, I have heard & seen touching stories like these;
- Neighbors talking to one another about maintaining their many years of peace
- Neighbors setting up watch out groups and liaising with the local police
- Neighbors taking in and sheltering friends, relative and strangers
- Police officers talking down residents this morning who had hoped to march to Uhuru Park.
- Local leaders and MP's talking to their constituents – preaching non violence.
- Neighbors standing together and ignoring the sparks from outsiders

I'd like to see the media highlight more of these, but such peaceful efforts may only put such proponents at risk. However today, all th media houses appear to have come out with a joint peace campaign message.

And whatever the outcome from the peace parley's over the next month; I'll make money with a Kibaki win, but I feel that the country needs Raila to lead and tackle some of the serious imbalances in this country. If Kenyans were rated among the most optimistic people in the world in 2003, how do we feel in 2008?

other losers & gains

Losers
- Kenyans; It was sad to watch the pre-elections stories on Al Jazeera and CNN breaking the election number down by 'big', 'populous' tribes of leaders, but the vote outcome showed that we still vote against tribal lines
- Kenya: The image of the country is shot. There are the huge land cruisers racing around Nairobi displaying their MEDIA and RED CROSS stickers and flags that grant immunity and safe passage in trouble spots. And will the Diaspora continue to invest in the country?
- President Kibaki whose 50 year political legacy is at stake
- Former president Moi; his sons lost and what were those ODM Win violence threats about?
- Majimbo proponents.
- The ECK and especially its Chairman whose popularity stemmed from the fact that Kenyans expected him as a righteous, religious man to do the right thing.
- Free secondary education promised by all the parties will likely be shelved, as will many other promises made in November/December.
- Nyerians who are the butt of jokes by their regional neighbors for their incompetence at ‘vote tallying’ (this could either be funny or not – I apologize if you’re offended)

Winners
- Kenya voters who turned out in record numbers, despite overwhelming difficulties, many voting for the first time. Unfortunately many of them have been stranded in the rural areas where they went to vote & enjoy Christmas.
- Safaricom and Celtel until their distribution networks dried up: – I thought Safaricom would be shut down, but it is so essential for communications (police use cell phones more than their call radios) and has kept families in touch. People have used M-Pesa and Mama Mikes to send money to stranded relatives even from abroad.
- NGO’s and civil society. They had become largely irrelevant under the NARC administration, but have become energized by the post-election outcome.
- Former president Moi: the sad events of the past week could have happened in 2003, but he took the mud and the humiliating defeat, and walked away (until recently) - allowing the pent-up emotion in the country to become euphoria and optimism.

Blog Review of 2007

some significant posts from the year gone

January
- Began with a review of 2006. As planned, in 2007 I did fewer posts, traded fewer shares, but did not acquire new tech skills.
- A bit of TMI, but getting hospitalized was a lowpoint
- Wrote about admiration of the work ethic of
Asian businessmenand families. Made more poignant when you look at countries that have harassed such entrepreneurs.

February
– As more investors got tired with the hassle of share ownership, many were considering using unit trusts however a caution was the high cost of entry.
– Visit the technological graveyard and reviewed gadgets used and dumped in just a few years - including answering machines, pagers, car phones, cassettes, VHS etc.

March
- Review of mobile money transfer from Safaricom as a threat to debit cards and credit cards.
- Nation Business Daily was launched on March 7 - an all business weekday paper.

April
- The first Nairobi barcamp
- Discovered government payments online - that are larger than 5 million shillings ($71,430)
- Review of the new banks expected in 2007; but by year end only Family Bank and Gulf African had taken off.
- A visit to Masai Mara yieldedno pictures but great insights on the finances involved in the great park.

May
- Kenya airways had difficult quarter following the loss of a plane and strong Kenya shilling. Poor customer service has since been an issue at the stretched airline since the crash and what does an even stronger shilling at the end of 2007 portend for their income position?
- Got a copy of the controversial media bill, and as predicted it was later passed by a vindictive parliament, before it was amended.
- How much does a week in Kampala cost?

June
- The first anniversary of the collapse of Uchumi and this was shortly followed by one of several unsuccessful initiatives to get shareholders to invest more funds into and revive the company.
- If you have access to some tip-earning positions (tip jar) in Kenya, you may not need to ask for bribes
- Attending TED Global - Arusha was one of highlights of 2007 for me.
- Joined long suffering shareholders at the National Bank AGM just as a new dawn beckoned for the bank.

July
- Is the diaspora responsible for the strong shilling and can anything be done about it?
- Attended a Talk by the MD of Rift Valley Railways on the hardships and steps to rehabilitate Kenya Railway network which had essentially collapsed.

August
- While majority of the country thinks parliamentarians are overpaid (also under-worked & under-taxed), the financial burden that their constituents place on them can leave them struggling for cash.

September
-Anti-corruption site, Wikileaks spotlights Kenya with revelations of Kroll report tracing embezzled funds abroad, money-laundering at Charterhouse bank and later the Ndungu report on land grabbing.

October
- Lamented my inability to view Youtube or TED Global videos, video or other vital online content owing to the slow internet connections we have.
- Attended a talk given by John Gakuo - the man largely responsible for cleaning up, making safe, and beautifying Nairobi over the last few years. The Town Clerk will have to do it all over again as hawkers, garbage, and petty crime all filtered back into the city of the December election period.
- Can we talk about something other than AIDS (in Africa)?

November
- Pondered if depositors in Shariah accounts enjoy the same protection (up to 100,000 shillings [$1,500] on their deposits in case a bank collapses as do other account holders.
- Watched the just released American Gangster and realized that we have several local examples i.e. drivers, clerks and other 'lowly' officials who later become business moguls.
- Witnessed the baptism of the new CFC/Stanbic bank as CFC shareholders endorsed the country largest banking merger.

December
- Did the first of three part review of the banking sector performance in 2007.
- Also reviewed predictions for 2007 as they appeared in the December 2006 Business Post magazine - which included a win, not a rigged/theft, of the presidential vote by the incumbent.

Plans for 2008
Travel more within Africa and explore the banking systems in other developing countries.