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Safaricom? An Amateur Investor’s Perspective
Written By: owinojesse
Category: Jobs, Work, Careers | Key words:
Date: 2008-03-25 04:36:45 | Views: 672

A few years ago I was looking through the Daily Nation and saw the full spread Kenya Airways advertisement about their Initial Public Offering (IPO).

I was still pretty young by then but having endured Business Education in a school that took KCPE pretty seriously, I thought even then that this was a great investment opportunity. (I kid you not).

I put the idea to my mother but she laughed me off. A single parent in a developing country, why on earth would she even go and take such a risk? Needless to say, a few years later when there was a run on the KQ stock and the share price hit Ksh. 99, I was not only vindicated but quite smug about it. My mother still will not invest in the stock market but the idea has been running around my head for the past few years. There are stories of people who bought their first shares at 18 and left graduate school with tens of thousands of dollars/pounds. And debt free at that. There are also stories of people who invested in the tech bubble and retired at the age of 30 - (read the story of Rachel a young British Entrepreneur).

I myself have never invested in the stock market. Although I've perused a few prospectuses in my time, the fear that another ICDC is lurking is enough to put me off (I encouraged my mother to buy, only to hear Uchumi collapse a few years later. Thank goodness she didn't listen to me then either!). However, recently, I've found myself wondering if Safaricom is just the stock to get me off my lazy bum.

Information on this IPO is difficult to come by if you're not in Kenya, but it's not impossible. Looking through the financial reports on the company website, in the last 4 years, they've made a healthy profit. They have paid dividends to all their shareholders in the last 3 years as well, which means that if things stay on course you will definitely be taking some money home at the end of the year. Although Celtel has given them more than enough competition, Safaricom is today, by market share, subscription base and many other measures the largest mobile provider in Kenya, encroaching upon Celtel's dominance in regional telephony. On a more general note, Xan Rice reported in 2006 for the Guardian that the Kenyan Stock Exchange (NSE) was one of the most profitable in the world, gaining 787% in value over the last 5 years.

So why not invest? Maybe it's just the coward in me, but something tells me that when something is too good to be true, it usually isn't. More likely than not, my fears are unfounded, but I'll share them with you anyway. Firstly, given the hostile investment climate around the world I worry that the downturn will eventually strike Kenya. The USA is one of Kenya's biggest trading partners (AGOA anyone?), and a slowdown in trade in that country will eventually trickle down to us. On the other hand, the Beast from the East (China) has shown itself more than willing to pick up the economic slack, without the attendant questions of democracy and governance that Uncle Sam insists on asking.

Allow me to have a third hand and suggest however, that China's currency is itself undervalued and its economy overheating according to most economic analysis (See The Economist.com this week for an in depth analysis of China's thirst for resources) and one lurking threat at the moment is that many Olympians may boycott the event to protest high levels of pollution in Beijing, forcing sponsors to withdraw from massive investments in that country. Not to mention the current fiasco in Tibet.

Being a Kencell and then Celtel lass myself, I have always had doubts about the Safaricom business model. Bigger isn't always better, and although it's great in general terms for mobile phone telephony to be so pervasive in the country, one has to wonder when the market will say "Enough!" In short, Safaricom seems to be making most of its money off an immense volume of SIM cards at an unbearably low price. Although you could argue that those SIM cards have to be used and thus there is money in that, the 3 defunct SIM cards sitting in the bottom of my suitcase beg to differ. Already in the UK the mobile phone companies have developed a reliance on contracts to make money and Pay as You go (Kenya's scratch card model) is confined to bottom of the line handsets and for the use of broke international students like yours truly. If the company cannot make profits, it cannot pay dividends; where does that leave the investor?

More specifically, I worry that the current investment climate in Kenya has all the makings of a bubble - a self-perpetuating rise in share prices of a particular industry. While Safaricom's shares aren't technically on offer yet, the speculative frenzy with which Kenyans have attacked the NSE over the last three years is, for me, cause for concern. Many people aren't investing because they understand the logic and procedures of being an investor but because their neighbour is doing it, or their Aunt made a huge profit on the KQ run and now they want a piece o the action. Research has proven that non-wealthy people, with a medium level of education are more likely to invest if the people in their immediate society do so (see Hong, Kubik and Stein call in their paper "Social Interaction and Social Participation", 2004, Journal of Finance), and certainly in Rice's article of 2006, many of the fruit sellers and market workers were more than eager to compare notes with family members and friends. This is all well and good when stocks are on the up and up, but any economist will tell you, stock markets operate in cycles of Booms and Busts; a bullish market (favourable to investment) can't last forever.

However, one of my personal mottos has always been if I fall; let it be from a high place. Other than my nervous disposition there is no reason to believe that Safaricom shares will be nothing more than another chapter in the seemingly never ending success story of the NSE.

If Mobitelea turns out not to be a front for dodgy government dealings and Kenyans are actually given room to invest, my advice to other would be investors is first and foremost, keep an eye on the stock brokers. In the stock market, as in life, don't hand over your money to someone you wouldn't introduce to your mother. It's cause for concern that the Capital Markets Authority is having such a hard time regulating brokerages but hopefully the government will hear the calls for greater independence for the CMA. Keep your eye on the markets. If you can't follow the ups and downs of your shares at least weekly don't bother. Buy early and unless you plan on sticking it out for the long run, if things start to go horribly wrong don't be a hero. Even with massive infusions of government cash, if a stock is crashing dramatically, there's a pretty good chance that the company is well on its way to collapse. Sell, sell, sell! I found this very interesting article about an investment club in England - recommended reading for any amateur out there. If you are a rank amateur like I am, the Financial Times last year came out with a great book on "How to Use the Financial Pages" available on Amazon, for about £10 (1,300 Ksh). Take my word for it, it's a good investment, and may save you a great deal of pain.

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Kenyan intellectuals
Written By: owinojesse
Category: Jobs, Work, Careers | Key words:
Date: 2008-03-25 04:34:25 | Views: 625

In the last five years, maybe even much longer than that Kenyan society has called out for fresh ideas, for original thought. It has not come, so we must ask, why are Kenyan intellectuals so uninspiring?

In general, they're trite (Professor John Mulaa, Philip Ochieng), pedantic (Philip Ochieng again), or compromised (Professors George Saitoti and Peter Anyang' Nyong'o, Philip Ochieng, again). Or long -dead (Professors Henry Odera-Oruka and Thomas Odhiambo, ), or teaching abroad (Professors Ngugi wa Thiong'o, Quassim Cassam, Simon Gikandi , ES Atieno-Odhiambo , DA Masolo, SO Imbo, Tabitha Kanogo and Makau Mutua). No doubt you can think of further examples in each category; Perhaps only two premier-league intellectuals who've escaped these strictures: Ali Mazrui and Bethwell Ogot.

Less elevatedly, why is most of our policy thinking done by NGOs, etc? Put another way, there is no serious autonomous, home-grown policy-making going on.

Does President Moi's destruction of what little academic indepedendence there was at the universities explain some part of this? The national disaster that was the Kenyan economy in the later Moi era may also have something to do with the hoovering-up of academic talent by Western schools and the proclivity of intellectuals for politics (and since they tended to lack an alternative source of power, co-option). It is however, also true that intellectuals in Kenya have never developed a strong corporate identity; that the intellectuals were routed meant that there has never really evolved a distinctively Kenyan high culture which might

(a) have disarmed tribalism, and

(b) entered into fruitful disagreement with state power

Is there an explantion that unites and explains these dismaying phenomena? What is yours?

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insurance employee
Written By: lomido
Category: Jobs, Work, Careers | Key words:
Date: 2008-03-13 22:39:08 | Views: 796

Once a man went to a Veterinary Doctor in India and said:

Doctor I have come on vacation for a month so that I can get myself treated fully within this period.

Doctor: I think you should go to the Doctor opposite to my clinic, see that board.

Man: No, Doctor, I have come to you only

Doctor: But, gentleman I am a Veterinary Doctor. I am an animal specialist. I do not treat human beings.

Man: I know, Doctor very well and that is why I have come to you only...

Doctor: I can not, because you speak like me, think like me, talk like me which means you are a human being and not an animal.

Man: I know I am a human but listen to my complaints first:

Doctor: OK. Tell me.

Man:
I sleep like dog thinking about my work load the whole night.
I get up in the morning like a horse
I go to work running like a deer
I work all the day like a donkey
I run around for 11 months like a bull without any holiday.
I wag my tail in front of all my bosses
I play with my children like a monkey when I get time.
I am like a rabbit before my wife

Doctor: are you an Insurance Employee?

Man: Yes !!

Doctor: Instead of telling this long history you should have just told me in the beginning you are an Insurance Employee. Come man, no one can treat you better than me.

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think twice or thrice
Written By: owinojesse
Category: Jobs, Work, Careers | Key words:
Date: 2008-03-07 02:23:50 | Views: 620

A pretty woman was serving a life sentence in prison. Angry and resentful about her situation, she had decided that she would rather die than to live another year in prison.

Over the years she had become good friends with one of the prison caretakers. His job, among others, was to bury those prisoners who died in a graveyard just outside the prison walls. When a prisoner died, the caretaker rang a bell, which was heard by everyone. The caretaker then got the body and put it in a casket. Next, he entered his office to fill out the death certificate before returning to the casket to nail the lid shut. Finally, he put the casket on a wagon to take it to the graveyard and bury it.

Knowing this routine, the woman devised an escape plan and shared it with the caretaker. The next time the bell rang, the woman would leave her cell and sneak into the dark room where the coffins were kept. She would slip into the coffin with the dead body while the caretaker was filling out the death certificate. When the care-taker returned, he would nail the lid shut and take the coffin outside the prison with the woman in the coffin along with the dead body. He would then bury the coffin. The woman knew there would be enough air for her to breathe until later in the evening when the aretaker would return to the graveyard under the cover of darkness, dig up the coffin, open it, and set her free.

The caretaker was reluctant to go along with this plan, but since he and the woman had become good friends over the years, he agreed to do it.

The woman waited several weeks before someone in the prison died. She was asleep in her cell when she heard the death bell ring. She got up and slowly walked down the hallway. She was nearly caught a couple of times. Her heart was beating fast. She opened the door to the darkened room where the coffins were kept. Quietly in the dark, she found the coffin that contained the dead body, carefully climbed into the coffin and pulled the lid shut to wait for the caretaker to come and nail the lid shut.

Soon she heard footsteps and the pounding of the hammer and nails. Even though she was very uncomfortable in the coffin with the dead body, she knew that with each nail she was one step closer to freedom. The coffin was lifted onto the wagon and taken outside to the graveyard. She could feel the coffin being lowered into the ground. She didn't make a sound as the coffin hit the bottom of the grave with a thud. Finally she heard the dirt dropping onto the top of the wooden coffin, and she knew that it was only a matter of time until she would be free at last. After several minutes of absolute silence, she began to laugh. She was free! She was free! Feeling curious, she decided to light a match to find out the identity of the dead prisoner beside her.

To her horror, she discovered that she was lying next to the dead caretaker.

Many people believe they have life all figured out..... but sometimes it just doesn't turn out the way they planned it.

Think of a 'Plan B' !

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cab driver
Written By: lomido
Category: Jobs, Work, Careers | Key words:
Date: 2008-03-04 00:23:22 | Views: 509

A taxi passenger tapped the driver on the shoulder to ask him a question.

The driver screamed, lost control of the car, nearly hit a bus, went up on the footpath, and stopped centimeters from a shop.
For a second everything went quiet in the cab, then the driver said:

"Look mate, don't ever do that again. You scared the daylights out of me!?

The passenger apologized and said, "I didn't realize that a little tap would scare you so much"
The driver replied, Sorry, it's not really your fault. Today is my first day as a cab driver - I've been driving a mortuary van for the last 25 years."

For Love Peace and Unity wear a white ribbon

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