Gathunuku

It couldn’t have been more starkly different. Amos Kimunya was on his way to delivering 6-7% growth as was clearly evident in the confident noises he was making at this forum. And he proved he could walk the walk albeit right into this snare. But the Member from Kipipiri isn’t one of them. He is immensely qualified in his profession, has had an illustrious career in the accounting/finance industry and is a one-time head of the influential Institute of Certified Public Accountants of Kenya.

He is, at 46, an atypical political leader. One who will, as Finance Minister, dare suggest the taxation of the grotesque (no other way of describing it really esp. the fact that most of it is tax free) MPs pay, self awarded in a moment of unadulterated hubris, so as to raise much needed revenue to cushion wananchi from spiralling living costs. He “gets it”.

But this was never about that.

That transaction that saw the Grand exchange hands was quite evidently mishandled. Whatever the value of the one glaring reminder of an era of ridiculously lucrative air export schemes, the ex-minister was caught in a complex web. Struggling to fill a gaping hole in his budget (his best yet, friends and foe agreed) mostly brought on by an ill timed mix of astronomical oil prices and slowed economic growth in the aftermath of the December elections, there was indeed a rush to raise money fast. When fuel retailers have to recalibrate their pumps to accommodate a new pricing paradigm, urgent action has to be taken to contain the inflation fuelled instability that is surely nigh.

There cannot be any doubt that he rightly expected a fight on his MP tax proposals and thus was not expecting extra revenue from that source for at least several months, had already sold off a significant part of the an actually well run and profitable government owned company and was running out of options. He had to sell the Grand fast. So when tales finally emerge that cast doubt on the integrity of the whole transaction, the messenger as opposed to the sender was unfortunately met with a parliament in desperate need to assert itself. The man who had the nerve to question their decadent ways was actually fallible himself! Not an opportunity to be missed.

After losing a confidence motion and MPs refusing to do business in the matters of debating and approving various parts of the budget, the fall guy had to fall.

Damnation or absolution simply cannot be passed yet but alas the brutal ways of democracy have to prevail.

- Musings from Parselelo Kantai in The Africa Report on the state of the nation in the wake of last December’s elections and the tragic ensuing events. His article “Now the Hard Part” opine that the deep chasm between the ruling class and wananchi will continue to be a significant obstacle to progress on every front. Thought provoking.

- Yes those petro-dollar driven SWFs are indeed piling on influence as fast as cash. This article (free registration required) in the transcendent McKinsey Quarterly has a detailed analysis of the scale of how $140 per barrel oil is having effect on world investments. Closer to home, tales of new ventures actualised in a most determined of manner only illustrate the measure of liquidity in the GCC and other oil exporters. A major international bank is also reportedly looking to these funds for salvation.

- Word that another stock brokerage might be having problems has one inevitably wondering if this is more than just teething troubles.

- All the best to this chap, LiveQuotes is true ingenuity.

Geoffrey Irungu’s article in the excellent Business Daily Africa didn’t quite read the mood right, I thought.

The IMF’s decision to ‘unlock’ loans worth Kshs4 Billion ( as part of a 2003 initiated Kshs17.7 Billion Poverty Reduction & Growth Facility lending program) has been given more gravity than it perhaps deserves. The Treasury’s Budget Outlook Paper 2007 articulates the current rather strong position of the GOK in this matter. Revenue is expected to rise to Kshs377.4 Billion with expenditure remaining largely as planned inevitably reducing the deficit needing to be financed by debt. The people at Treasury now reckon they only need to borrow Kshs8.7 Billion externally down from Kshs9.7 Billion.

So no, we didn’t get a lollipop for good behaviour, we don’t need one anymore. The carrot and stick have been severally reduced by the sensible macroeconomic policies on Harambee Avenue. Perhaps it’s best seen through Prof. Ndungu’s view of multilateral ‘donors’ (aarrrgh) as ‘advisers who reinforce GOK decided policy rather than driving the policy agenda’.

Political party funding is a difficult issue the world over. Democracies with considerable more experience than our forty three year old one are still struggling with it. Africa’s (and Kenya’s) struggle with this has obviously been keeping politicians’ hands out of the certainly tempting public treasure chest. We haven’t got peerages to give (sell?).

It seems our own December2002-born redeemers lost the fight against temptation. They have gone on and vindicated the reputation of African politics being an entrepreneurial activity.

“We have got to keep this going”, the brightest of the pack thought out to the rest of them. “I hear financing companies are in vogue these days” and he went on, “We can’t just export air now.”

What the Big Men didn’t count on was how far another big man (of a different sort) was prepared to go to end the shenanigans. Thank God for the apparent inverse relationship between tech savvyness and age. Voice recorders (wearing a wire) are the most basic trick in the book. And I am talking of a really bad one, think James Hadley Chase. They fell for it, hook line and sinker. So the Big Men sang and one man, who ordinarily should have been another poster boy, had the courage to look beyond the quiet whispers at goat eating parties, take an extraordinary stand and switch on his voice recorder.

“Are you wearing a wire?”

One would think that the rest of the lot of politicians, especially the next redeemers styling for another liberation(second, third?) would see this as an invitation perhaps an opportunity to rethink business as usual. No, not this time. They go on to suggest that they are going to bankroll their campaigns to the tune of US$28M (ODM) and US$70M(NARC-K). In a country with a GDP of US$16B? The figures just don’t add up. To the incumbent; wananchi now know, thanks to Moi & Co, that they can actually use their votes to seek a better life for themselves. To the opposition; those figures do not inspire confidence in your abilities to fight familiar temptations. Upcoming tales of repaying “investments” in your campaign now with inflated public contracts later seem eerily likely in the Daily Nation’s edition of 23rd April 2009.

His efforts must be costing Mr. Githongo an arm and a leg. They gave you a job and you are doing it rather well is what I would say to him. If it’s nearly the end of this constant stream of anecdotes about enterprise in our politics, if Swiss banking loses some business (even marginally) then you are succeeding at your job.

Courage under fire?

Maybe we are indeed at a tipping point. When an unprecedented display of self assertion replaces apathy then things can only go one way. North.

Just three months ago, the ever dynamic Peter Munga thought that remittances KTs sent home could be put to better use. Instead of the USD 1 Billion+ being remitted annually going to pay the odd bill, buying groceries and the latest in fashion, this he thought could form a major source of investment. If only KTs knew how. Hence the Kenya Diaspora Investment Forum. Put together by the Commonwealth Secretariat, Africa Recruit and the Kenya High Commission in the UK, the forum pulled in two ministers, half a dozen MPs, about a dozen CEOs and countless other professionals from Kenya all with one message - invest at home. They were taking this [us] seriously.
The world, like Bill said(as M calls William Shakespeare) is indeed but a stage and so all the men and women demanded to play their parts. So off we went to an hour of “introduction and welcome” speeches, with the High Commissioner welcoming everyone to the “say-teh of rondon” and the organisers blowing their trumpets. Perhaps I shouldn’t read too much into it but when the High Commissioner Joseph Muchemi acknowledged the presence of Norman Nyagah, the government Chief Whip and overlooked Billow Kerrow, the Shadow Finance Minister, I thought that that right there was exactly what was wrong with Kenyan politics. It was an old boys club. This was after all an investment conference with a keynote address from the Finance Minister. His nemesis, the Shadow Finance Minister’s presence was more relevant.

High Commissioner, Joseph Muchemi	Finance Minister, Amos Kimunya
Shadow Finance Minister, Billow Kerrow	Equity Bank Chairman, Peter Munga

On to business and the keynote address from Amos Kimunya. A detailed powerpoint presentation made for good reading. Macroeconomic stability was the main message. And it seems they are doing well with that at the Treasury. All key indicators were up plus a stable(and strengthening) shilling against the dollar and an import cover for up to 4-5 months. Of course exporters will make all sorts of noises about this but Kenya is still by far a net importer.

Further presentations from leaders in the private sector were even more enlightening. Dr. Ochieng’ Ogong’a, MD of the Kenya Tourism Board was of the opinion that continued growth in his sector demanded additional investment. This, he reckoned, would have to be 53% new installed bed capacity every year. Currently bed capacity is 39,000. Eddy Njoroge, MD of KenGen, highlighted opportunities in the energy sector. With installed capacity of just over 1000 megawatts, demand far outstrips supply of electricity. Obviously a need and opportunity for investment especially since private power production was already on going. Perhaps more curious were plans to build two coal power stations between 2008-2010. With climate change becoming a major problem and enthusiasm for reducing carbon emissions upping in western capitals, I’m not sure those plans were well thought through.

Jimnah Mbaru, Chairman of the NSE, went on to extol the pluses of investing in the stock exchange. Plans for an East African Exchange were mentioned, although I later found out from one of the umpteen publications on offer, that between them the Ugandan and Tanzanian exchanges have just 11 listings. James Mwangi, MD of Equity Bank, pleasantly surprised all with the dynamism of his bank. They have online banking these days. Ever so helpful for a KT miles away from home. These guys quietly did what they did best for 10-15 years and when everyone sat up to notice, they had built a financial institution like no other. Hats off. Frank Ireri, MD of HFCK and Caroline Musyoka, Director at Barclays Kenya both promised mortgages denominated in foreign currency. Fair enough but I still don’t get why mortgage rates are averaging 15% while the CBK 91Day benchmark rate is at about 5.6%. Like someone aptly pointed, 15% is a good credit card, not a mortgage.

NSE Chairman, Jimnah Mbaru	Equity Bank MD, James Mwangi
KTB MD, Dr. Ochieng’ Ogong’a	Investment professionals: how to turn this AGM-like congregation into satisfied customers?

Round table discussions brought down the meeting to wananchi. When an electrical engineer from Peterborough asked me how he could open a CDS account and who were the stock brokers to go to I realised there was a glaring dearth of info. Perhaps a sort of Mzalendo project would be helpful.

The one thing that was very visible was the enthusiasm by most KTs to invest back home. Maybe that comment by Mutumia on the now famous post is indeed true; ‘KT-ing’ and ‘nation building’ need not be mutually exclusive. With the debate that is going on about the shortage of investment opportunities over at this post and this other one, I am of the opinion that investment professionals have their work cut out. There’s a glut of capital [KT remittances, increased bank liquidity and first time investors] and obviously many opportunities. These two factors are only asking for a rendezvous and everyone is happy.

- KTs elsewhere, esp in the Americas, we blazed the trail. Amkeni and have a word with the organisers of this fantastic forum.

- Perhaps an invitation the organisers forgot to send was to the Information & Communication Ministry.

- The organisers promised to avail all presentations in digital format at http://kenyans4kenya.com. Worth looking out for.

- Anyone know if the Kenya Vision 2030 [the doc] is available in the public domain?

- NSE please sort your website!