Kenya – Africa’s Top Emerging Investment Hub

Despite the recent terror scares being pronounced all over Kenya, our economy remains to be among the most vibrant and promising in the African continent.

There is a lot of political bickering and terror threats from all angles that tend to paint a picture of a critically ailing nation. However, behind the curtains things are very different with investors busy making money every day. The ordinary citizens are busy with their daily hustles at the construction sites, farms, retail trades among other businesses. And the broader picture is even more colorful!

Attending a property investors’ breakfast at hotel Villa Rosa Kempinski in Nairobi earlier on this month that fact better dawned to me than before. I was sitting with real estate investors and developers behind the magnificent property developed in Kilifi under the brand name of Mandharini and their view of Kenya was amazing. In a precise and concise manner, our own investment analyst and commentator Aly-Khan Sachu summarized the economic context of Kenya with facts that cannot go unshared.

According to the IMF, Kenya’s economic growth is projected to be 5.9% in 2014 up from 4.7% in 2013 and 4.6% in 2012; and thereafter grow by 6.3% in 2015. The report from the IMF also terms Kenya as one of the Africa’s frontier economies. That notwithstanding, in 2013 Kenya was also rated by the World Bank and World Economic Forum as the top country in Sub-Saharan Africa for economic policies and institutions. Its score of 3.9 was the highest among 40 countries in Africa.

A year earlier in 2012, Kenya was ranked among the top 10 African brands by Brand Finance; a global valuation consultancy which measures a country’s reputation and image with investors. In the same year, the Economist Intelligence Unit polled global institutional investors who reported that they all hoped to invest in the emerging Africa markets by 2016. The good news is that Kenya and Nigeria were top preferences for the investors with two-thirds of them seeing the two countries as holding the greatest opportunity.

Our own stock market the NSE was among the top performing securities markets in Africa, with the NSE All Shares Index rising 50% in 2013 and beating the 33% growth of the S&P Africa Frontier Index. The Index tracks stocks in Nigeria, Ghana, Botswana, Zambia, Namibia, Ivory Coast, Mauritius and Kenya.

On the other hand we have multinationals coming to Kenya and others relocating their regional offices to Kenya in the recent past. Top in the list we have Coca-Cola, Google, IBM, Visa International, Pepsi, Nestle, World Bank’s International Finance Corporation (IFC), General Electric, Bharti Airtel and South Africa’s FirstRand Bank.
With the Kenya’s middle class growing and accounting for 44.9% of the population, things can only look brighter for this great nation in the years to come.

A multi-billion property developer from Spain at the breakfast compared the current political noise and terror scares in Kenya to the same situation in their home country last year. Spain was among the countries in the Eurozone which had been blacklisted as bankrupt and their credit rating reduced to junk by the international credit rating agencies including S&P, Moody and Fitch. Spain actually completed the acronym coined to list the bankrupt countries in the Eurozone; the PIGS.

The investor however was quick to explain that the actual economic conditions on the ground were very different with what international media was broadcasting. Businesses were running as usual and the cities never lacked ravers in the night clubs as the property investors continued with their normal buying and selling. The bankruptcy according to him was more of a concern for the policy makers than it really mattered to the ordinary citizens.

Well, the terror scares may be real and the politicians will continue with their bickering, corruption and ethnic appointments in the government for public offices. However, after the dew dries up Kenya will always emerge a strong economy driven by the private sector, if the strong economic indicators outlined above are anything to go by.

Equity Bank Enters the Kenyan Telecom Industry

In a press interview this week, the Equity Bank CEO Mr. James Mwangi disclosed the plans his bank has of introducing its own SIM card into the market. Disguised under the camouflage of mobile money transfer, the SIM card comes with all other capabilities and can be used for SMS, making calls, data among other banking and money transfer services.

Though brought into the market from the banking sector, the Equity SIM card is a soft way to revenge against the telecommunication industry that has encroached the banking territory in the past through provision of money transfer services. This increased competition for clients between the banks and the telecommunication industry, and it was only expected the banks would react to the same and retain their dominance in the financial sector.

The latest move by Equity Bank therefore opens the floor for such witty reactionary measures from the bankers in order to solidify their customer base. After the failure of M-kesho the concept that Safaricom later implemented successfully with CBA under the brand name of M-Shwari, Equity now takes the telecommunication industry head-on.

By offering all the telecommunication services using their ultra-slim SIM card that turns your phone into a double-SIM card phone without changing the SIM cards, Equity comes in as a game changer to both the banking and telecommunication industry.

The obvious thing to expect next is some crazy innovation from the telecommunication industry to counter Equity’s move; with the fast mover being Safaricom. On the other hand, the other banks will have to duplicate the Equity Bank model or come up with their own innovations aimed at luring customers to their banks and retaining the ones they currently have.

The launch of the Equity Bank SIM card is scheduled for July 2014 in a month’s time. Until then, you can expect the research and development functions of the telecommunication companies and the other banks to have sleepless nights as they work towards countering the competition wave created by Equity Bank.

Kenya Needs An Inclusive Tourism Approach

Anyone would love to spend their holidays and vacations in a safe and peaceful place. After saving for some time and preparing for quite a while for a holiday abroad, I would expect nothing less than a perfect ambient environment for my relaxation. When my tourism destination cannot provide that, blame me not for packing and going back to my safe home country.

But Kenya is not unsafe, if anything Kenya is one of the safest places in the world to live in and do business. Unlike many countries globally where civil struggle is the norm day to day, here we tend to have a calm business environment albeit marred with deep corruption. Then why do we have tourist’s running back to their countries over a weekend resulting to thousands losing jobs and businesses closing at the coast?

The reason is more of political than terror related. The tourists were given travel advisories by their home countries and some even evacuated their citizens in a rush meant to portray a very serious security scare in Kenya. If Kenya was unsafe as the travel advisories tend to depict, then I think half of Kenyans could be dead by now from terrorist attacks. But on the contrary, we are strong and pushing on with our businesses every day. So why do the big brothers of ours from the West keep on harassing us with travel advisories and tourist evacuations?

The big brothers are who they are, big brothers. As big brothers, they obviously were born before us and they have much experience in international economics and multinational trade dynamics. They understand that tourism contributes a big deal to Kenya’s GDP and if it is tampered with, things get hot at all levels of political power. When we decided to go East and in an open manner decided to trash our big brothers from the West, they knew exactly the button to press to bring us back to our senses. Though they smile at our faces as they give diplomatic press releases as to why they do what they do, the true reason why they do what they do is to push us to the edge and make us realize that we are operating in a global village.

No man is an island just like no country can exist in isolation. Even Putin’s assertions this week that Russia will thrive on its own are laughable. The Kenyan government needs to realize that we are much better when we embrace both the West and the East than when we trash our old comrades from the West for new allies from the East. Why did other countries from other parts of the world not issue the stern travel advisories as did the West? We need to be more inclusive in our geo-politics and avoid the economic impacts that result from such misguided attempts to run away from the large sources of our foreign exchange.

Kenya’s goal should be going to both East and West not forgetting that the South also exists, and Africa is a large market by itself too. Tourism can be revived when we look in all directions not focusing so much on one alternative while losing on other numerous opportunities. In the meantime, the government should be thinking of ways of diversifying the Kenyan economy and reduce the dependence on tourism which can have catastrophic economic shock effects when it dips.