Kenya’s Real Estate Investment Trusts(REITs)

A REIT is a security that sells like a stock on the stock exchange and invests in real estate directly, either through properties or mortgages

Introduction of Real Estate Investment Trusts by Kenya’s Capital Markets Authority is intended to open up space for even the smallest of Kenyan investors, for whom the only alternative investments have been stocks, bonds or insurance. Reits – which are securities that sell like shares on stock exchanges and invest in real estate directly – typically offer investors high yields, and highly liquid ways and means of investing in real estate.

REITs are typically exempt from corporate tax as long as 90% of net income is distributed to shareholders. REITs are commonly structured as closed ended trusts due to the illiquid nature of property.  Individuals can invest in Reits by buying shares directly on an open exchange or by investing in a mutual fund that specializes in real estate. An additional benefit of Reits is that they may allow dividend reinvestment plans (DRIPS). They have tax advantages too.

Kenya’s capital markets can play a strong role in the further development of the real estate sector. The introduction of REITs is viable given the demand for real estate, and the need for additional financial instruments.

The capital markets can help mobilize and allocate resources, as there is a strong demand and cultural bias among Kenyans towards property investments, among the Kenya’s’ middle class investment in real estate is deemed the ultimate Goal!, a break through,

Retirement Benefit Schemes as well as many individuals are already investing in property but many are very limited in their ability to do so in that they cannot afford direct investments that are not liquid.

With the introduction of REITs the property developers would come to the capital markets to raise funds. It is also likely that through a higher level of participation through the capital markets, bank financing would be forced to become more competitive thus helping to further reduce development costs.

• REITS enable you to diversify your portfolio into real estate.

• REITS offer strong prospects of capital gains and high dividend income. Real estate prices have more than tripled in Kenya between 2000- 2010, outperforming some asset classes like equities and government bonds.

• The predicted economic growth in Kenya is looking to lift property prices higher, and with the demand for housing in the middle and lower end of the property market considerably high, REITs are expected to perform quite well.

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Posted by on June 3, 2013 in Uncategorized


The Benefits Of Futures Market To Kenya

The CMA’s Move to establish a futures market will be a great boost to the endorsement of Nairobi as a regional Financial hub.Despite having the most developed financial market in the region Kenya still lags behind Uganda and Ethiopia which have more developed commodities exchanges. The Uganda Commodities Exchange was formed in 1998 . Futures Exchange offer farmers stable commodity prices and a ready market for their produce, hence boosting Commercial agriculture. Ethiopia commodity Exchange lists Coffee, Sesame, Maize and white pea beans among others.

futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. These types of contracts fall into the category of derivatives. Such instruments are priced according to the movement of the underlying asset (stock, physical commodity, index, etc.) So a futures contract whether for commodities, currencies or even based on the movement of a stock or index, is simply a financial derivative based on the underlying assets value.

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Futures Market offer farmers stable commodity prices and a ready market for their produce as has been proved by Ethiopian and Ugandan Commodities Exchanges which have resulted in improved Output in these Countries specially Ethiopia.

Volume in the futures market usually increases when the stock market outlook is uncertain. Using futures is a common way of hedging your bets or indeed securing a given asset at today’s price for an agreed delivery date.

How it works

For example, a Wheat Farmer may require some investment in new machinery for next years harvest.  He could enter into a futures contract by selling a few tonnes of Wheat yet to be harvested at an agreed price; he would receive the money and fix the price for the future date in which the wheat must be delivered.  The other side of this trade might be a wheat flour manufacturer, say Unga Group.  The manufacturer sees that wheat prices are rising rapidly and decides that this will negatively affect his profit margins, so he enters into the agreement for delivery of the wheat in 2 years time at today’s price, Unga Group has locked future delivery of wheat at today’s price!.

This enables the wheat flour company to hedge the risk of rising prices, but also enable the farmer to invest in the machinery to deliver the product. This is an example of a commodity Futures contract that will benefit Tea, Farmers, Coffee Farmers, Sugar Cane Farmers and other agricultural products like Rice that are produced in bulk are most likely to benefit from this market.

Currency futures, Forward Contracts and Options are among the most advanced Financial engineering products that are not common in African financial markets setting.


What does a decline in Kenya’s Import bill Signify?

The countries import bill declined by Kes 14.4 Billion in the month of February. This further reduced trade deficit to Kes 69.7 Billion from Kes 83.7 Billion in January 2013. Does this decline in imports have any effect on our economy and the general welfare of the citizens?

Having imported Kes 117 Billion worth of goods and services in December, Kes 130 Billion in January and Kes 116.4 Billion in February, Kenya is a net importer, and can’t maintain her growth momentum with reduced import levels. Kenya’s imports are majorly Consumption in nature rather than investment oriented. Does it mean Kenyans are finally Buying and  Consuming Made in Kenya products?

With almost 50 per cent of imports (fuel, machinery and transport equipment) being used in production process, it indicates a possibility of increased efficiency which would lead into higher production growing the country’s export capacity going forward.


There are basically five main reasons for which a country may decide to import a certain good or service:

1. it simply does not exist in the country: a mineral which is not in the country’s soil, an agriculture product that can’t be produced there, an innovation that has been introduced in other countries;
2. it does not exist at a specific level of quality; thus, a country imports better products than domestic production, also as far as advertising or packaging are concerned;
3. it represent a product variety that is appreciated domestically but not produced exactly in this horizontal or mixed differentiation;

4. it is cheaper abroad, since producers there are more efficient, are faced by lower costs, better exploit economies of scale and/or accept lower profits;
5. at the current domestic price, producers do not supply enough good or service as the demand requires, also because of ex ante coordination problems; accordingly, consumers buy abroad for insufficient domestic production.

For financing imports, a country must rely on export, foreign credit, foreign direct investments, aid. Countries issuing internationally accepted currency.

Importance of Decline in Imports

Effects on Trade Deficit- The Country’s overall trade deficit is most likely going to reduce, this will have a positive impact on both the Exchange Rate (hence the strengthening  the Kenyan shilling ) and a reduction of the Public Debt as a result on decline in government borrowings to pay for the import deficit.

Increase in Employment Levels- a decrease in imports might also mean that the consumers have shifted their demand from imported goods to locally produced commodities  This is most likely going to boost local production due to increased market and demand leading to higher employment levels especially in agriculture and industrial sectors.

Signals improved macro-economic Environment- This might be attributed to decline in borrowing rates, improved business environment and political stability meaning that local production is improving as result on stabilization in the Macro economic elements.

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Posted by on May 2, 2013 in Economical, economics, Financial, kenya


Measuring The Independence of CBK

A central bank is said to be independent if it has the freedom to pursue its monetary policies without political or other external influences. The central bank of Kenya has struggled with achieving fully independence from the influences of both the politicians and and the government technocrats who wants to oversee its operations.
An independent central bank promotes:
1. Macro-economic stability
2. Orderly Economic Growth
3. A stable regulatory Environment.

The Central Bank of Kenya has failed in its quest to achieve all the 3 mentioned macro objectives, does it mean that CBK is still being controlled by some unseen hand?
The main measures of independence includes:
a) Instrument Independence-freedom to pick appropriate policies to produce a certain outcome in the economy. The choice of OMO-open market operations, change of CBR, Reserve ratio requirement
b) Legal Independence CBK independence should be enshrined in law, this form of independence is limited in Kenya  since CBK is accountable at some level to a government official be it the PS ministry of finance, the minister for finance or the president.
C) Goal Independence  freedom to select objectives of monetary policy whether it be low inflation, the target rate of unemployment, the level of GDP. The CBK has the right to st its own policy goals, whether inflation targeting, control of money supply or maintaining a fixed exchange rate.
d) Operational Independence  the central bank should have the freedom to determine the best way of achieving its policy goals, including the types of instruments used and the timing of their use.
e) Management Independence- The authority to run its own operations(appointing staff, setting budgets, and so on) without excessive involvement of the government. The turn-over-rate of cbk governors can give us a clue on its Independence.
If a government is in the habit of appointing and replacing the governor frequently , it clearly has the capacity to micro-manage the central bank through its choice of the Governors, The governor should have a substantial term of office.
I guess you’ll concur with me CBK has not fully achieved its independence.


Posted by on March 26, 2013 in Banking, CBK, economics, Financial, kenya


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The Launch of Growth Enterprise Market Segment (GEMS) At NSE

What Is  GEMS

Growth Enterprise Market Segment (GEMS). GEMS enables small and medium sized firms to raise substantial initial and ongoing capital, while benefiting from increased profile and liquidity within a regulatory environment designed specifically to meet their needs.
GEMS sets the entry barriers much lower. Aspiring small and mid-size companies keen to raise their profile and capital need to show accounts for a single year, for which they need not be profitable, need only enough working capital for a year, can list as little as 15 per cent of their company, and have as few as 25 shareholders, even three months after listing.

This will enable small companies to list on the country’s NSE, home to 61 companies (51 in the main investment market segment and 10 in an alternative investment market segment) and 70 bond issues (61 government and 9 corporate).


Nairobi Securities Exchange at the Nation Center, Kimathi street Nairobi CBD

The importance of GEMS To the Listing Company and The Economy in General.

The main segment of the market requires a company to have net assets of at least 100m shillings, minimum share capital of 50m shillings held by at least 1,000 shareholders and a track record of three years of profit in the past five years. This punitive requirements have always locked Small and Medium Enterprises from raising the much needed Capital through the NSE, with the introduction of the GEM segment, Savvy investors will be picking on prospective companies at a bargain.

“[GEMS] helps even somebody starting up at a micro level end up a major corporate down the road,” said Mugo Kibati, C.E.O vision 2030. “This is the bastion, the guardian, of universal suffrage in the economy.”

The so called Small and Medium Enterprises of today given ample Funding and the required Publicity will be the Blue chips of tomorrow, 15 years ago Equity Building Society was considered a small struggling Building society but with Good management and availability of Cheap Funds, Equity bank has grown into one of Kenya’s financial success story with subsidiaries all over East Africa.

The Net impact of This Segment on the Trading Volumes at NSE Will definitely be a positive one.

Eligibility criteria for listing on GEMS
1. Public company registered under the Companies Act;
2. Minimum fully paid up capital of 10 million;
3. At least 100,000 shares in issue;
4. Free transferability of shares;
5. Adequate working capital and solvency;
6. Operation for at least one year;
7. No profitability record required;
8. 5 directors, 1/3 non-executive;
9. Directors with no bankruptcy, fraud, criminal offence or financial misconduct proceedings for 2 years;
10. Competent board and senior management – at least 1 year experience in the business;
11. 1/3 board must have completed Directors Induction Program and the rest within 6 months of listing;
12. All issued shares to be immobilized;
13. 15% of the shares must be available for trading & held by at least 25 independent shareholders within 3 months of listing;                                                                                                                                     14. Controlling shareholders lock in for 24 months;                                                                                      15. NOMAD appointed by written contract.

The Nairobi Securities Exchange (NSE) is the principal securities exchange of Kenya. Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities. The NSE is a member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). It is an affiliate member of the World Federation of Exchanges (WFE).


Posted by on January 24, 2013 in Banking, Economical, Financial


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Main Sources Of Income For Kenyan Banks

Kenyan banks continue to post huge profit margins despite the prevailing high interest rate regime,this leaves one to wonder how do Kenyan banks make their money? Banks basically make money by lending money at rates higher than the cost of the money they lend. More specifically, banks collect interest on loans and interest payments from the debt securities they own, and pay interest on deposits, CDs, and short-term borrowings. The difference is known as the “spread,” or the net interest income, and when that net interest income is divided by the bank’s earning assets, it is known as the net interest margin. Below are the major sources of income for Kenyan banks:

1. Interest Rate Spread.

The difference between the interest charged on loans and interest on savings. most banks give 3% on deposits in savings account and 10% on term deposits and call deposits whilst charging as high as 21% on loans advanced to borrowers.This leads to interest differential of approximately 18%.
Interest income(interest on loan) by far exceeds interest expenses(interest paid on deposits). Equity bank had interest income of kes 18.3B in 2011 against an interest expense of 2.8B thus Net interest income of 15.5B and 11.0B in 2012 according to their financial reports, similarly KCB had interest income of 27.9B in 2011 against interest expense of 4.6B. Banks profit from the difference between the interest rate paid to depositors and the interest rate banks receive from loan repayments. Once a depositor deposits money at the bank, the bank then turns around and lends the money to clients for mortgage, personal, auto or business loans. This process is how money is created into the financial system which expands the monetary base. If a bank offers 3% interest on deposits and charges an average of 21% on loans, it keeps the difference as profit. However, banks do not lend out all the money they have or receive because it is dictated by a central bank on how much banks needed to keep as reserves.The CRR.

2. Forex Interest.

Banks also make a sizable income from the currency exchange. Kenyan banks make very huge income from the difference at which they buy and sell foreign currencies. Some banks set very high margins as high as Kes 10 per dollar! For example by selling a dollar at kes 85 and buying same dollar at kes 74. The bank makes a clean kes 11 per dollar, this is a non funded income. Look at a scenario where an exporter has been paid in dollars say $1,000,000 through telegraphic transfer yet he holds a Kenya shillings account, the bank will convert this dollars into shillings to credit the customer say at kes 74 per dollar thus 74,000,000. If an importer wants to make payment in dollars say of $1,000,000 this importer will have to provide kes 85,000,000 to the bank in exchange of $1m thus the bank would have made a clean 11 mio Kenya shillings from this deal i.e they bought a million dollars at kes 74 per dollar and sold a million dollars at kes 85 per dollar.

3. Investment Income

The Nairobi Securities Exchange bond market has been very active, this is partly attributed to the increased investment in bonds by Kenyan banks.
Banks prefer investing in bonds due to the security bonds provide to depositors money and the surety of income. Both government and corporate bonds. These banks aren’t relying so heavily on the retail banking sector for revenue and profits creation, they have diversified broadly in various investment vehicles, Banks have invested Billions in Treasury bills and Bonds.

4. Money markets and other dealings

The money market is a financial market that provides investors access to short term debt instruments, which include treasury bills, certificates of deposit (CDs), banker’s acceptances, commercial papers and repo agreements. These instruments are usually issued by financial institutions, especially Banks. Money markets are used for  raising of short term finance, sometimes for loans that are expected to be paid back as early as overnight. Banks lend huge amount of shillings to each other through the inter-bank money market lending, This is where a bank lends money to another payable overnight. Big banks lend out constantly to small banks to boost their liquidity positions. Banks further lend this borrowed funds to their clients at a higher  rate thus making some  margin on it. There has also been an increased trade in Repos (Repurchase orders). Repos are collateral-backed lending to banks. According to the Business Daily, CBK reported a Sh521 million interest income from banks that used the short term window, commonly referred to as overnight lending, and Sh1.4 billion from inverse repurchase orders. Sh19.8 billion was borrowed in 2011 from CBK by banks.

5. Cost cutting

Reduced branch expansion, most banks have reduced their expansion especially the domestic ones, choosing to improve the functionality and capacity of the existing branches. Freeze on employments- Comparative to 2010/2011 financial year the banking industry has had lower recruitment drive. It has not been rosy either to the decision makers in this industry(Senior Managers and Directors) having to contend with Lower bonuses.

Some banks have gone too far by  cutting their advertising and marketing expenses,  CSR by banks in kenya is almost unheard of!

The truth is banking is a business that aims to makes profits for shareholders

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Posted by on December 20, 2012 in Banking, Financial


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M-Shwari: The Next Big Thing From Safaricom

M-Shwari is the revolutionary new banking product for M-PESA customers that allows you to save and borrow money through your phone while earning you interest on money saved.  I believe this is the next big thing that is going to revolutionize the way we do our banking. With the ever inquisitive Kenyan attitude of trying out anything new, M-shwari has already recorded 640,000 users within 3 Weeks of launch! With M-Shwari, you are also entitled to affordable emergency loans. This product will most definitely replace your Shylock,  the access to emergency loans payable within 30 days without security is more appealing to Kenyans, especially in this high interest rates regime.

M-Shwari is a paperless banking service offered through M-PESA. It will;

  • Enable you open and operate an M-Shwari bank account through your mobile phone, via M-PESA, without having to visit banks or fill out any forms.
  • Provide you the ability to move money in and out of your M-Shwari savings account to your M-PESA account at no charge.
  • Give you an opportunity to save as little as Ksh.1 and earn interest on your saving balance. This cash is moved into the savings account via M-PESA.
  • Enable you to access micro credit product (loan) of a minimum of Ksh.100 any time and receive your loan instantly on your M-PESA account.
  • mshwari

What are the requirements to have an M-Shwari Account?

  • Be registered Safaricom Subscriber.
  • Be registered Safaricom M-PESA customer.
  • Have an active Safaricom M-PESA account/line.
  • You need to hold any of the following identification documents; Kenya National Identification Document (ID); Kenyan Passport Document ; Alien ID (resident Permit) registered by the Government of Kenya.

How do you as an Existing M-PESA Customer opt in/activate your line into the service?

  • Go to the Safaricom menu on the phone.
  • Select “M-PESA”.
  • Go to “My account”.
  • Select “Update Menu”
  • Enter M-PESA PIN

To Opt – in to M-Shwari

  • Go to M-PESA Menu.
  • Select M-Shwari.
  • A message will appear requesting you to read and accept the Terms & Conditions.
  • After accepting the terms; an SMS will be sent informing you that you are now activated on the M-Shwari service.

How do you check your M-Shwari account balance? This is shown at the end of every SMS after performing a transaction or 

    On the customer’s M-PESA menu:-

  • Select M-Shwari.
  • Select show balance.
  • Enter PIN.
  • Wait for SMS confirmation with the message.

Withdraw from M-Shwari Account

  • Go to ‘M-PESA’ menu and select ‘M-Shwari
  • Select ‘Withdraw from bank’
  • Enter Amount
  • Enter PIN
  • Confirm these details then press OK, and wait for acconfirmation text

Other features of M-Shwari

  • It will use same PIN as your M-PESA Account
  • You cannot move money from your M-Shwari account directly into another person’s M-Shwari account. However, you can transfer money from your M-PESA into their M-PESA account.
  • Your account is only accessible through your mobile phone via the M-PESA menu on your Safaricom line, You can’t access it via CBA Branches
  • The normal M-PESA limits apply on amounts that can be transfered per day via this service
  • You can transfer money from your M-Shwari account into M-PESA. Inter account bank transfers is not possible on the M-Shwari service.
  • You can get 5 recently completed transactions through your mini statement. You can also request printout statements from all Safaricom retail centers. You can also view the M-Shwari transactions from the M-PESA statement available on web self-care.
  • You can move a minimum of Ksh.1 from your M-Shwari account into your M-PESA account
  • You can send money to bank as savings as many times as possible at NO charge.
  • The minimum amount you can deposit is ksh.1 (one shilling).
  • You can withdraw as many times as you like at NO charge.
  • Your money is safe because your M-Shwari account is protected by your M-PESA PIN. In case you lose your SIM-card Replace it and once you activate your M-PESA menu, using your current M-PESA PIN you will be able to access your M-Shwari account.
  • The loan is payable within 30 days. However, you can repay the loan before the due date and borrow again. If you pay the loan in less than 30 days your loan limit qualification will increase.
  • The M-Shwari loan DOES NOT attract any interest. The 7.5% charged is a loan facilitation fee payable only once for each loan taken.
  • The loan amount that one qualifies to borrow dependent on ones loan amount limit, previous loan repayment behaviour and usage of other Safaricom services such as Voice, DATA and M-PESA.
  • The minimum amount you can borrow is Ksh.100 and the maximum amount is dependent on your loan amount limit.
  • When you borrow the Ksh 2,000, the money in your savings account will be frozen to the loan amount and the loan fee (loan amount Ksh 2,000 loan plus a facilitation fee of Ksh 150). You will only be able to access any balance above the frozen amount. The frozen amount will be accessible once you pay the loan. However you can continue to deposit money. Note: During the period the frozen savings will continue to earn interest which will be paid into your M-Shwari at the end of calendar quarter.
  • If you don’t pay your loan within the 30 days period. your loan repayment period will be extended for an additional 30 days and you will be charged an additional 7.5% facilitation fee on your outstanding loan balance.
  • If you pay your loan before due date, the 7.5% is a facilitation fee charged on the cost of processing the loan. Early repayment will increase your future loan limit qualification

Deposit to M-Shwari Account

    • Go to ‘M-PESA’ menu and select ‘M-Shwari.
    • Select ‘Send to Bank.
    • Enter PIN.
    • Confirm the message displayed “send money to bank Kshs 2000″ then press OK.

Withdraw from M-Shwari Account

    • Go to ‘M-PESA’ menu and select ‘M-Shwari
    • Select ‘Withdraw from bank’
    • Enter Amount
    • Enter PIN
    • Confirm these details then press OK
    • Wait for a confirmation SMS message.

If you request for a loan of Kshs 1,000 how much will you receive and how much will you pay back?

You will receive the full loan amount requested if you qualify. You will however be required to pay back Kshs 1,075 within 30 days because each loan attracts a 7.5% facilitation fee.

What benefits do you get when you save your money on the M-Shwari service?

    • You will be paid interest paid on your savings balance (Interest will be calculated daily but paid out at the end of each calendar quarter).
    • The product offering will have tiered savings amounts as below subject to KYC validation.

Savings amount Interest P/A
>>KES 1 – 10,000 2%
>>KES 10,001- 20,000 3%
>>KES 20,001 – 50,000 4%
>>KES > 50,001- 5%

How do you qualify for a loan?
In order to qualify for a loan you will have to be an active M-PESA user for at least 6 months, save regularly on M-Shwari account and continuously use other Safaricom services such as Voice, DATA and M-PESA.

How do you check how much you can borrow? Dial *234*6# you will get a notification asking you if you have read and accepted the terms and conditions.

How to pay back the Loan

  • From ‘M-Shwari’ menu, select ‘LOAN’
  • Select ‘Pay Loan’
  • Enter Amount
  • Enter PIN
  • Confirm the message displayed for example “pay loan Kshs 2000″ then press OK.
  • A SMS message is sent on successful or unsuccessful request.

The key advantages of M-Shwari service?

  • M-Shwari is a paperless , safe and fast service that allows you to save; borrow through your phone.
  • M-Shwari has competitive interest rates on savings.
  • Interest is calculated daily and paid out at the end of each calendar quarter.
  • There is no minimum balance on M-Shwari.
  • There are no ledger fees.
  • There are no withdrawal charges in moving money between M-Shwari account and M-PESA.

With all this benefits, i hope you already have opened an M-Shwari Account.


Posted by on December 18, 2012 in Banking, Economical, Financial, Technology


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Is Capitalism Working For Africa?

Looking at the levels and disparities of development around me, This question came lingering. Is capitalism working for this continent? or is it one of the post-colonial fallacies  Africans were made to believe were good for them! You look at Africa’s growth model and you wonder whether its capitalism we are practicing or Greedy.

Do we really understand what is capitalism? what are the pillars of capitalism? This made me re-visit my introduction to micro economics. Here you meet Adam Smith and his great work in the book titled the wealth of nations.

Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and competitive markets.There are multiple variants of capitalism, including laissez-faire, welfare capitalism, and state capitalism.

Principles of Sustainable Capitalism

  • Control excessive profit and compensation levels in all enterprises.
  • Ensure that the market place fairly allocates resources and products. There is enough land, water, air, minerals, food and money for all to share equitably.
  • Adopt a long term sustainable vision rather than short term exploitation for quick profits.
  • Renounce the notion of constant expansion and growth. Encourage  “steady state economy”
  • Restrain consumption rates that simply fuel growth.
  • Reduce unnecessary production and eliminate “planned obsolescence.”
  • Curb resource depletion and focus on conservation, recycling and renewable technologies.
  • Preserve the notion of creative entrepreneurship and innovation but restrain self-interest and control income disparities. Environmental waste is a function of wealth.
  • Encourage an equitable distribution of wealth in society.
  • Do not promote the privatization of basic human rights, such as water.

Sometimes you look at the value we offer for the income we make and realize that we make more money for nothing. There is no match between the value and the income. Be it service provision, Manufacturing or Even agriculture we want to earn more from little value we offer to our customers, employers and society at large. I call this Greedy. Not capitalism. This is the reason Africans have remained poor despite the “illusion that we are very hard working ” Our leadership is more Greedy than capitalists.  Our politicians will go for months without innovating leave alone implementing a single policy that will add value to the masses, yet they draw huge salaries, bigger than the law makers in some very developed and progressive world. is that capitalism? that is Greedy. The wars in Africa where you have to kill so many people in order to get a bargaining power during cease fire Agreements to be recognized as a bigwig is all about value subtraction from the society. I think we lost it longtime ago when our grand fathers blindly followed the so called capitalism that we knew very little about.

Africa needs a more moderate form of capitalism  i think a compromise of capitalism and socialism. we need some thing we identify with. something based on African ‘communal’ style of living. This can be proven by a closer examinations of nations that slowly adopted capitalism after trying out socialism and communism. Look at countries like Tanzania and Ghana. They didn’t adopt capitalism immediately after independence.  This countries have the lowest levels of Corruption, Nepotism and Greedy comparatively to Nigeria and Kenya That immediately adopted the capitalistic approach after independence.

Ghana and Tanzania might have not taken off economically compared  to Kenya and Nigeria but are more likely to achieve Millennium  development goals much earlier than Kenya and Nigeria.  Why? Simply because the true pillar of development- The social pillar is well anchored. The country grew at almost same levels, the disparity between the rich and the poor is minimal and almost all regions of this countries have homogeneous growth rates despite different endowment of natural resources. The national cake was generously and fairly distributed. This countries are more likely to attain true capitalism. Greed is shunned. Smith was convinced that self-interest would in turn maximize the economic well-being of society as a whole, in Africa self-interest destructs the well-being of society as a whole, our technocrats can easily divert donor funding for a bridge to build himself a palatial home.Capitalism has generated the wealth that has enabled diseases to be conquered, clean water and sanitation to become widespread, and has given people more opportunities and choices in their lives than any previous generation has enjoyed, African capitalism  can hardly achieve this.

Capitalism puts tremendous pressure on all of us to make money in order to survive. Hospitals, schools, prisons, “non-profit organizations,” and every other institution must conform to the profit motive, or be swallowed up. I leave you with this question in your opinion Is Capitalism working for Africa?


Posted by on December 17, 2012 in Banking, Economical, Financial, Lifestyle


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Capital Adequancy


Capital adequancy

Banks safe-keep money for depositors and operate by investing the pool of money by lending credits to borrowers. Thus, banks have to ensure that they do not lose the depositors’ trust in them, or it will result in widespread panic withdrawals that lead to the banks’ collapse. As such, banks are vulnerable and need regulation to compensate for the tendency of instability. Regulators are especially cautious that a major bank’s collapse might lead to a contagion of financial crisis (Young, 1986).

“Risk” is exposure to danger; a probability of deviation from expectations. Lending depositors’ money to borrowers is risky because there is a possibility of debt defaults (credit risk). The volatility of the market, interest rates and other factors are also not within the banks’ jurisdictions.

Hence, it is crucial that banks hold a buffer of capital to absorb unexpected losses and protect themselves, especially their depositors. This is the basis of capital adequacy (Gallanti, 2003). The purpose of the risk ratios, as advocated by Basel frameworks, serves to help banks calculate the amount of capital to hold (Young, 1986).

Prudential regulation ensures that financial institutions have the solvency to repay money owed to their depositors, through having the discipline of holding adequate capital (Thompson, 1996). This determines the amount a bank can lend out as loans

This has forced banks to draw up plans to raise money either from their shareholders or borrowing by issuing bonds at the stock market in 2012 these banks include. Kenyan banks are seeking to raise extra funds for expansion for example SCB rights issue, NIC, DTB,CFC stanbic bank, Family is expected to go the market to raise funds in 2013 This is to support their growing loan book.

However, the growth came at a cost. Stanchart’s ratio of total capital to total risk weighted assets stood at 13 per cent, just one percentage point above the statutory requirement of 12 per cent. This is the capital adequacy ratio which banks have to meet. For every kes 100 dollars a Kenyan bank lends out, it is required by law to have kes 12 dollars of its own as capital. The more capital a bank has the more it can lend out or even expand its branch network. majority of the listed banks have $14 dollars in capital for every $100 dollars they have lent out. In the same period last year most of the listed banks had at least $17 dollars in capital for each $100 dollars lent to customers or the government.

Basel accord

Under the Auspices of the Bank for International Settlements, the Basle Committee (which consists of the G-10 countries’ central bank governors), have agreed upon a scheme of regulation which will be applied to international banks. The key element of this scheme is a set of requirements relating a minimum amount of bank capital relative to a risk based measure of assets. Bankers have always been torn between reduction of Risks and increase of profitability . The equity multiplier magnifies the effect of profits on returns which gives bank owners an incentive to increase leverage.

Bank capital absorbs losses before depositors or creditors absorb losses. So bank depositors and creditors prefer capital.

Risky banks may pay higher interest rates so banks may internalize depositors preferences… But regulators have adopted a preference toward capital requirements institutionalized by Basel.

Capital and moral hazard

  • Consider a bank with 0 capital, full financed with deposits of $100 (which for convenience pay 0 interest rate).
  • Bank managers face two loan projects with differing payoff profiles.

Which will the bank choose? Which is socially optimal?

  Prob. of Good Outcome Prob. of Bad Outcome Interest Recovery %


Project A-RISKY .5 .5 .2 0
Project B-SAFE 1 0 .05 N/A



Expected Payoffs to depositors and bankers

The safe project creates value in excess of customers demand for funds. The expected value of the risky project is just $60, less than what was put in the project.

Assume that in the event of bankruptcy, depositors claim all remaining assets.

The depositors have an expected payoff of 100 under the safe scheme and only 50 under the risky lending scheme. They prefer safety. Under the safe scheme, the bankers will get a payoff of 5. Under the risky scheme the bankers will get an expected payoff of 10. They will prefer the destructive, risky scheme. Why?

Bankers get upside pay-off of risky scheme but put downsize risk on depositors. Let us Compare with bank finance by 80% deposits and 20% equity. Under safe scheme, bank gets an expected payoff of 25 for a 25% ROE. Under risky scheme, the bank owners receives 40 back in a good outcome and 0 back in a bad outcome for an expected payoff of 20.  Bank owners share the downside risk and avoid the risky scheme

Capital Measurement

Chief measures are Tier 1 leverage ratio and CAR (capital adequacy) ratio

Tier 1 capital/Total Asset      This equals CAR=Tier 1 Capital + Tier 2 Capital /Risk adjusted Assets

Types of capital

  • Tier 1 capital is thought to be more stable and more aligned with the concept of capital as the funds that owners have invested in the banks (i.e. equity capital, perpetual preferred stock and retained earnings)
  • Tier 2 capital are funds that protect depositors but may be withdrawn (subordinated debt) or is already somewhat committed to other purposes (reserves).

To determine how much capital is adequate

Depends on risk appetite of the bank, regulatory requirements, maintaining a good debt rating, limits of internal growth, relative cost of debt and equity financing.

  • Capital adequacy limitations can act as brake on bank growth.
  • Consider a bank that can achieve 10% growth on the asset side of its balance sheets and also can borrow freely to achieve that growth.

An adequately capitalized bank must achieve 10% capital growth or fall below the adequacy standard


Achieving Capital growth


  • Reduce dividend payout ratios
  • Earn higher ROA to increase cash flow (may increase risk)
  • Change mix of assets to those with smaller capital charges
  • Move assets off balance sheet
  • Issue more stock/subordinated debt


In modern capital requirement management

  • Instead of evaluating how much capital the bank needs, modern banks will evaluate lines of business and how much capital should be allocated for the assets needed to generate income in that line.

Different businesses require different quantities of capital. Capital is more expensive than debt, so business requiring heavy capitalization must earn higher returns






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Posted by on December 11, 2012 in Uncategorized


10 Books To Sharpen your Entrepreneurial skills

1. Buffettology: The Proven Techniques for Investing Successfully in Changing Markets That Have Made Warren Buffett the World’s Most Famous Investor

I NEVER buy books on stock market. And neither should you. It’s a waste of time. The only person you should listen to is Warren Buffett. After all, he is the riches investor in the world and the second richest man after Bill Gates. Warren Buffett once said that he doesn’t care about the price. He cares about value. If you never read Buffetology before, it’ll be a real eye opener for you.

2. Words that Sell

Words That Sell lists the words and phrases that stimulate sales, grouping them in a logical, easy-to-find manner. The three basic sections of a sales presentation are the grabber, the description, and the clincher, and these sections comprise the core of Words That Sell. Once you find out that you can REALLY make a ton of money merely from an ability to put words down on paper, you’ll want to know WHAT to say and HOW to do it. This book does an awesome job teaching that.

3. The Art of the Start

Guy Kawasaki wrote the best book on startups. This book is about starting a business, or a new branch of business within an existing one. And about what it takes to get the funding and momentum you need to be successful. It’s about putting aside the ridiculous corporate culture of “mission statements”, vision statements, binders and all the rest. Guy Kawasaki helps you to think about the most important aspects of your business and your personal motivation for starting it. In short it’s about why the world needs your product or service, why you need to sell it, and how to get there. Much of the content is focused on the mechanics (and pitfalls to avoid) of making formal pitches to venture capitalists, banks and the like. There is also some content dedicated to advertising, marketing and PR, and how *not* to do those things as well. If you’re not smart about it, advertising and marketing your new business will financially sink you, with no real profit to show for it, so pay attention to the advice given here!

4. On Bullshit

This book is a fascinating journey into the meaning of truth, lies and BS. It was surprisingly thoughtful and like anything thoughtful it fertilized more thought. At least for me it did. I think it was worth the investment in money and time.

5. The Millionaire Next Door

The title might sound cheesy, but the book really does share insights on what affluent, and successful really mean. It gives a great lesson on status symbols, and the proper attitudes towards work, and money to build wealth. What appealed to me the most, is that this is by no means a “get rich quick” book, or even a “get rich” book. It does however outline character traits of those among us that have become successful, and shows the many traps that most people, including high earners commonly fall into.

6. Bootstrap: Lessons Learned Building a Successful Company from Scratch

I thoroughly enjoyed reading this book, for a multitude of reasons. Ken details the entrepreneur’s issues when bootstrapping a company quite well (we bootstrapped our company also, and ran into many of the same problems). I enjoyed reading more about how Ken FELT while the company was growing. As an employee, you don’t often know how the CEO feels about anything (Ken is good at controlling his emotions). Turns out he had similar feelings most entrepreneur’s do when starting a company.

7. Little Red Book of Selling

If you’ve been a regular fan like I have of frenetic sales guru Jeffrey Gitomer’s columns in the Business Journal, you’ll want to grab his infamous power book on selling, The Little Red Book of Selling. Like all of his stuff, it’s a straight ahead, well traveled, often brilliant collection of practices on getting the advantage in selling, both over yourself and your competition. Like most of what Jeffrey writes, it holds application for both the individual sales pro and the entrepreneur. Let me briefly show you how this little book is big on take away value.

8. The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich

I’ve read a lot of great books, but this one is the one is truly unique. The ideas found in this book are immeasurably valuable. In this book you will find the secrets you need to live the life you dream of living. Tim is a gift to this world because he has been so generous in writing a book that candidly explains in great detail how to work less and make more. I’ve never seen any other book with more practical wisdom on the art of success. I’ve dog-eared most of this books since it’s so full of great ideas. If you’re an entrepreneur or want your life back, you must buy this book.

9. Secrets of the Millionaire Mind

Eker’s claim to fame is that he took a $2,000 credit card loan, opened “one of the first fitness stores in North America,” turned it into a chain of 10 within two and a half years and sold it in 1987 for a cool (but now somewhat modest-seeming) $1.6 million.As you read through Eker’s book, you realize that intuitively you might have “felt” some of these things all along but DIDn’t follow through. I very much enjoyed this book. It’s certainly one of the better books about building wealth and I think that everyone can benefit from it regardless of their current level of income.

10. Street Smart Internet Marketing

Justin Michie is a successful business entrepreneur who made the life-changing decision to become a full time internet marketer, after he found himself frustrated with the long hours, excessive stress and constant employee management of his offline businesses. So he sold his businesses, left the employees, long hours and stress behind, for the freedom afforded by online marketing. He now makes more money in fewer hours and enjoys much more free time with his family. But the book is really valuable because of street smart internet marketing techniques thata Justin shares in his book.

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Posted by on October 25, 2012 in Financial, Lifestyle



A demerit good is one that if left to market forces would be over-consumed but have negative externalities.

A recent survey by the British Association of Dermatologists (results announced in July 2012) showed that nearly a third of people who have tattoos regret their decision later on in life.  Here is a summary of their survey.

  • 580 responses were analysed (from a total sample of 615) with a split of 53 per cent men and 47 per cent women. The responses revealed:
  • Most tattoos were done by a professional • Half of the patients were over 40 • 45% of the patients had their first tattoo done aged between 18 and 25 years old
  • Almost half had between two and five tattoos
  • Almost one third regretted their tattoo
  • Men were more likely to regret their tattoo than women
  • Men were three times more likely to regret their tattoo if it was done when they were under 16 years of age
  • Women over the age of 21 at the time of their first tattoo were the least likely to regret it.
  • Most patients who regretted getting a tattoo had them on their upper body.
  • Fewer than half those who regretted their tattoos would have them removed.

Are tattoos an example of a demerit good?

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Posted by on October 19, 2012 in Lifestyle



9 Things That Motivate Employees More Than Money

The ability to motivate employees is one of the greatest skills an entrepreneur can possess. Two years ago, I realized I didn’t have this skill. So I hired a CEO who did.

Josh had 12 years in the corporate world, which included running a major department at Comcast. I knew he was seasoned, but I was still skeptical at first. We were going through some tough growing pains, and I thought that a lack of cash would make it extremely difficult to improve the company morale.

I was wrong.

With his help and the help of the great team leaders he put in place, Josh not only rebuilt the culture, but also created a passionate, hard-working team that is as committed to growing and improving the company as I am.

Here are nine things I learned from him:

  1. Be generous with praise. Everyone wants it and it’s one of the easiest things to give. Plus, praise from the CEO goes a lot farther than you might think. Praise every improvement that you see your team members make. Once you’re comfortable delivering praise one-on-one to an employee, try praising them in front of others.  
  2. Get rid of the managers. Projects without project managers? That doesn’t seem right! Try it. Removing the project lead or supervisor and empowering your staff to work together as a team rather then everyone reporting to one individual can do wonders. Think about it. What’s worse than letting your supervisor down? Letting your team down! Allowing people to work together as a team, on an equal level with their co-workers, will often produce better projects faster. People will come in early, stay late, and devote more of their energy to solving problems.  
  3. Make your ideas theirs. People hate being told what to do. Instead of telling people what you want done; ask them in a way that will make them feel like they came up with the idea. “I’d like you to do it this way” turns into “Do you think it’s a good idea if we do it this way?”  
  4. Never criticize or correct. No one, and I mean no one, wants to hear that they did something wrong. If you’re looking for a de-motivator, this is it. Try an indirect approach to get people to improve, learn from their mistakes, and fix them. Ask, “Was that the best way to approach the problem? Why not? Have any ideas on what you could have done differently?” Then you’re having a conversation and talking through solutions, not pointing a finger.  
  5. Make everyone a leader. Highlight your top performers’ strengths and let them know that because of their excellence, you want them to be the example for others. You’ll set the bar high and they’ll be motivated to live up to their reputation as a leader.  
  6. Take an employee to lunch once a week. Surprise them. Don’t make an announcement that you’re establishing a new policy. Literally walk up to one of your employees, and invite them to lunch with you. It’s an easy way to remind them that you notice and appreciate their work.  
  7. Give recognition and small rewards. These two things come in many forms: Give a shout out to someone in a company meeting for what she has accomplished. Run contests or internal games and keep track of the results on a whiteboard that everyone can see. Tangible awards that don’t break the bank can work too. Try things like dinner, trophies, spa services, and plaques. 
  8. Throw company parties. Doing things as a group can go a long way. Have a company picnic. Organize birthday parties. Hold a happy hour. Don’t just wait until the holidays to do a company activity; organize events throughout the year to remind your staff that you’re all in it together. 
  9. Share the rewards—and the pain. When your company does well, celebrate. This is the best time to let everyone know that you’re thankful for their hard work. Go out of your way to show how far you will go when people help your company succeed. If there are disappointments, share those too. If you expect high performance, your team deserves to know where the company stands. Be honest and transparent.

This is a great story that i had to share with my readers.I’m putting them in use, hope to see change soon,

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Posted by on September 11, 2012 in Lifestyle


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Combine several documents into a single PDF file

Combining several PDF file is such a simple thing. Yet very important.

Adobe® Acrobat® makes it easy to combine PDF documents from a variety of sources into one compact file. People in different departments — even different locations — can collaborate on the project. Just ask them to turn their work over to you in Adobe PDF format. You can quickly assemble the files into one document, ready for distribution.

1. Open all the component Adobe PDF files. Open the PDF files you want to combine and choose Window > Tile > Vertically. This allows you to see all the documents on your computer screen

2. Bring all the pages into one file. In the navigation pane of each file, click the Thumbnails.palette tab. The navigation pane expands, and you can see thumbnails of the pages, displayed in order. Drag a thumbnail from one document into another. As you insert the page, all subsequent pages in the target file are renumbered. In addition to inserting content, thumbnails are a great way to reorganize a document. Just drag a thumbnail to a different location, and Adobe Acrobat renumbers the pages automatically.


1. Academic documents upload during job applications. It reduces the number of attachment especially for the Transcript is you can combine them into one documents.

2.Combining different documents during research paper to come up with one great pool of resources for the same.


Posted by on May 24, 2012 in Lifestyle, Technology


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Why Africa’s Economic Outlook is brighter than it seems

First it was Europe during the industrial revolution and long before the America was discovered, Asia was more of a jungle and Africa, the cradle of mankind habitats were still living in caves and walking half naked. it was the time for Europe to rule the world, Europeans explored the world they were at the peak of their economic superiority leading to partition and scrabble of Africa, who will have thought that one day a European nation could ever sought financial bail out from Asia, 100 years ago such a thought could’ve been absurd and stupid but its happening. Right under our very eyes china is ruling the world economically. Last time i checked around my living room everything i had was “made in china” this is the case all over the world, going back the memory lane you’d probably would have had “made in England” and later on “made in USA”. but whatever has changed…will change the world a big deal. It is very clear Asia as a continent has taken over as the next big economic power house overtaking the USA at the rate SHE grows.

Uganda’s new found source of wealth-OIL

After Europe, it was the America as continent that ruled the world economically post the world wars, that has come to pass. It’s the giant Asia taking over. I believe it will be the Sleepy Africa next in line. When Europe ruled England,Germany and France were the front runners, when the American continent took over USA lead the pack from 1930s to the 21st century, As Asia takes shape china has proved to be the captain of the game along with japan. Though there has been overlapping while one continent is taking over from the other one thing has been very clear though “The industry driving Growth” in Europe it was the cottage industries,factories and the automobile innovations, The Americans categorically specialized in revolutionizing Technology and this is likely to go on for long, they simply borrowed and built on the industrial revolution spear headed by Europe. The Americans didn’t have to reinvent the wheel. the Chinese are simply doing the same when it comes to the technology they aren’t reinventing the wheel either simply building on the American prowess as they concentrate on their main economic driving industries i.e the construction,manufacturing and farming  industries. When it comes to Africa its gonna be the Mining industry and they will build on a solid foundation built over years by predecessors in technology, manufacturing, construction and farming as all these industries have already been exploited and perfected. Africa simply has to borrow or benchmark on what has already been done.


  1. Exploitation of natural resources-oil and petrol and minerals. Africa has upped its game in the exploitation of the idle natural resources ranging from oil products, Gold, copper and coal. More importantly its labor that has either been out of active production due to illiteracy or overseas looking for greener pastures.
  2. End of civil wars and political unrest- symbolizing that the population is now civilized and resolved to make life better and be tolerant to those with opposing views both politically and ideologically. The world wars made the America. The end of  China civil wars paved way for civilization of the Chinese. Africa civil wars and political unrest are slowly dying looking at countries like Angola, Rwanda,south Sudan and Democratic republic of Congo reconstruction efforts.

    The reconstruction of Angola’s capital city of Luanda

    and before the wars………………………

  3. Africa is undergoing a building and construction revolution- Roads-There has been a boom in road construction in Africa for example the super highways e.g thika super highway in Kenya, south Africa major roads projects, Railway constructions in Ethiopia and Djibouti, ports expansion in Kenya,Lamu.Symbolizing opening up of the interior land and the landlocked parts of Africa for trade and development
  4. Increased investment. foreign direct investment-Tullow oil, R.J Corp, Puma energy, Virgin airlines. China direct investment in Africa by 2005 was at $1.6 billion. Foreign direct investments play a major role in Africa’s economic development. The International Monetary Fund (IMF) has figured out that sub-Saharan African countries have seen flows increase six fold since 2000. FDI into Africa grew steadily through to 2008. It declined in 2009 and 2010 because of global economic crisis, but remained relatively strong.
  5. Innovation in Africa- who thought that an African company could spearhead an innovation that could be used in the whole world and maybe change the way we do business. Take an example of safaricom’s mobile funds transfer service -MPESA. It is turning around lives.



Posted by on May 22, 2012 in Economical, Financial


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Starting a Business.

If you’re like thousands of other designers, programmers and other creative professionals out there, at one point in time you’ve considered starting your own business. Unlike most, you’ve gone against common sense and decided to open shop for yourself. And not just freelance full-time, mind you, but file for the company name, get some stationery, and wade through the legal mumbo-jumbo. Maybe even get a real office with a water cooler.

This article offers real-world advice from the trenches of a small start-up, and is applicable to designers, web developers, copywriters, usability experts and all manner of service providers. Freelancers take heed: there are several items that are just as pertinent to your profession.

Write a Business Plan

The most important thing you can do to prepare for starting and operating your own business. Developing a business plan requires a lot of time and energy, but it’s invaluable for one primary reason — it forces you to come to terms with your business idea. You must decide how you will generate income, what your expenses will be, who your competitors are, and most important, WHAT YOUR BUSINESS DOES. This may seem obvious to you now, but write it down. Think about it. What sets your business apart? What service do you offer that is superior or unique? What’s going to put you ahead of the competition?

Beyond the mental exercises, a good business plan will give you a much better chance of getting a small business loan from a bank than walking in and saying, “I like Photoshop and maybe a can do some websites or something. Gimme money.”

A few years ago, new age business rhetoric said forget the business plan and just run with it. Obviously, that didn’t work out so well, so if you go that route, God bless you. The business plan exists for a reason. There are libraries of books written on them and huge websites devoted to developing good ones. Some resources:

Take a few weeks and develop a strong and thought-out plan. Give it to friends, co-workers, even family to read. Your business will be immeasurably stronger because you took the time for this step.

File for a Fictitious Name

A fictitious name (called a doing-business-as or DBA in some states) is the government’s term for your company name. If you choose HyperGlobalMegaSoft as the start-up’s name, it has to be registered with the state to ensure no one else is using it. This will cost about $100, but prevents you from accidentally using someone else’s registered name, or from someone else using YOUR name. Also note that two companies can usually register the same name for different industries. For instance, Luigi’s (design studio) and Luigi’s (pizza joint).

Note the fictitious name is not the same thing as a registered trademark. A trademark involves a whole separate process, more paperwork and additional fees. Unlike a fictitious name, however, a trademark is not required.


This is a pretty involved topic, and enough books and articles have been written about it to make for years of boring bathroom reading. Advice in a nutshell: start the business with your own savings or borrow from a bank. I highly recommend the former or a combination that includes it, since it makes you pinch your pennies a little more. If you go the bank route, make sure the business plan is polished to a high shine. This may be a good time to hire a professional business plan writer/editor.

There is one Golden Rule: Don’t borrow money from family or friends. 99% of the time, you won’t be able to pay them back, and on the off-chance you are, it won’t be for months or years. The amount is irrelevant; $1,000 or $100,000 can quickly create bad blood.

Get an Accountant

In starting your business and maintaining its future financial health, there is no greater ally than an accountant. He or she (or they if you go with a firm) will be able to give advice on innumerable aspects of your new venture. They can advise on what type of business entity to start with, setting up bank accounts, a means of invoicing and collecting, and more. Most importantly, they also guide you on paying taxes properly and punctually.

Brief advice on accountants:

  • Go with an accountant or a firm in your state. Each state has different laws.
  • Make sure the accountant knows business taxes. Do not hire a family-oriented accountant.
  • Unless, you are really, really strapped for cash, hire an accountant who is not a family member. While it may be tempting to get a family discount, it is better to have an unbiased viewpoint about your finances, and also better to keep your family’s nose out of your funds in general.
  • Try to trade services! Maybe your accountant wants a new logo, website, or brochure.

Start with a Partner

If you can, start the business with a partner. This person should be another designer or programmer with a level of experience equal to or greater than your own, but with a different skill set. If you’re the God of Annual Reports, your partner can be the Overlord of Identity Design. Having two Annual Report Gods will make for some lacking identity work when the client requests it. And for the record, once again, it will be better if this person isn’t family.

“But why a partner?” you ask. “I’m a darn good designer, and I’m really really gonna do this right.”

A partner will keep you on your toes. When you want to buy that $2,000 scanner, he or she should question why. If you want to design a promotional piece, it should be a group effort to get the best results. If you start to slack off, he or she will be there to remind you of business priorities. No one can do everything, and two complementary skill sets create an asset that cannot be reproduced when flying solo.

About Your New Office

When you start a business, the option of setting up an office outside your home has dramatic pros and cons that must be weighed carefully.


  • You have a place for clients to visit if they are local.
  • Reinforces good image (see below). Proper presentation goes a long way, and making your office appear as if you’ve been in business for years (you didn’t tell them you were a start-up, did you?) helps build client trust.
  • You can write off all office expenses (rent, repairs, phone, etc). This will affect your bottom line drastically.
  • Gets you out of the house. Having a real place to go to work makes the business more real, and forces you to take it that more seriously.


  • Money out the window. Renting an office costs $250-$10,000 a month, not including the initial deposit. This is a lot of money if you have a thin or inconsistent client base.
  • Requires additional expense. You will need to get a fire inspection and a certificate of occupancy, not to mention additional phone lines, Internet connection, furniture, etc.

Setting up an outside office for a new business is a case-by-case situation, and depends almost entirely on start-up money and cash flow. Some businesses truly require a place to host clients (ad agencies),and for others it’s not as important (web development). Weigh the advantages carefully against capital, because being locked into a lease without a means to pay is no fun.

Retain a Good Paper Trail

Make sure to keep a solid paper trail with clients, and that means a real, physical file with hardcopies of proposals, contracts, invoices, time sheets and anything else you can think of that relates to the project. This also includes all financial records, bank statements, receipts, deposit slips, etc.

Before beginning your business, establish several important things. First, design a consistent and scalable filing system for all the forms. Whether you organize by client or project is irrelevant, but make sure you can find the information when you need it. Second, make sure to have airtight contracts. I advise against writing them yourself. There are many places on the net where you can get generic forms, such as You will also need to look for NDAs (non-disclosure agreements, for contracting work out to other freelancers), RFP (request for proposal) templates for clients to fill out, expense reports, invoices, and time sheets. Every project is different, so be prepared to make changes on these forms.

And please, when you sign a contract with a client, make sure you have a copy with BOTH signatures. Seems like an obvious thing, but you’d be surprised. Don’t do any work without one, because legally, you will have a very hard time forcing a delinquent client to pay without one.

Part of maintaining a solid paper trail is having a good invoice system ready to launch at a moment’s notice. Make sure your invoices arrive in the client’s mailbox while the project is still fresh. Every invoice should clearly mark the amount to be paid and terms of payment (30 days, etc.), and clearly indicate any additional fees resulting from delinquent recompense.

If payment is late, don’t be afraid to call the client. Sometimes they just misplaced the invoice. Other times they don’t have the money and are trying to slink away. Sometimes, “the check is in the mail.” Regardless, the business that does not call to get paid won’t get paid!

Start Small, Conserve Loot

Consider working from your house/apartment to start, especially if you have clients that will never visit you, or if you live in an expensive metropolis (NYC, LA, Chicago, San Francisco, etc). Keep your expenses down! Don’t buy a new quad Xeon workstation if your current machine can cut it, or a truckload of networking equipment for two computers. Be cheap! Look for sales at OfficeMax, clip coupons, and just shop smart. You’re going to need the start-up capital down the road, so don’t drain it on frivolous expenditures. (And yes, the folded die-cut business card with the metallic ink counts as a frivolous expenditure.)

Don’t Undercharge, but Be Flexible

If there’s one thing to remember from this article, it should be this point. Proper pricing is the one thing that keeps the business alive, on multiple levels. When you charge appropriate amounts for the work, the client will feel like they hired the right people; when you undercharge, the client will know this and take advantage of you by demanding similar rates in the future.

If you give every client a discount just to get the job (and this will be tempting, especially in the beginning), you’ll find yourself working twelve-hour days and not being able to pay the bills. Undercharging hurts the industry in general as well; undercharged clients come to expect and request absurdly low prices.

Legal Software

Make sure all the copies of your software are retail versions. Do not use “educational” or pirated software. This is very important, and should be part of the start-up budget.

Separate Personal and Business Finances

Nothing much else to say about this. It will save you innumerable headaches come tax season.


Even the most reliable clients have dry spells, so make sure you are constantly putting your company’s name in the marketplace. Word of mouth is the best, but getting truly fresh work usually requires spending money.

The Importance of Image

The importance of maintaining a positive image in the eyes of your clients and potential clients cannot be overstated. Know your firm’s identity so you can project that identity to the customer.

The visual identity is critical. Get business cards, letterhead, and envelopes. Design a good logo or pay someone to do it if you’re not a design firm.

Dress the part. When meeting with a client, look like someone who’s come to do business, not some clichéd black-turtleneck half-shaven graphic designer who’s gracing them with your presence half an hour late. It sounds exaggerated, but it happens all too often.

Make the office welcoming. If you entertain clients, keep the office clean, organized and hospitable. Make good coffee. Purchase comfortable chairs. Make sure they have a place to park.

Use Outside Resources

Running a business takes long hours and a willingness to learn. However, there are many services that exist to help businesses succeed and get work. For instance:

  • Your local Chamber of Commerce
  • Attend business seminars. You can learn a lot and do some powerful networking. Many are free.
  • Full of valuable resources like stock photos, business contracts, freebies and more. $29.99 / year.
  • A cause of dissention among many designers for the ridiculously low rates you have to work for, but a good place to find work when the rest of the world has shut its doors.

If you still decide to start a business, there’s nothing more I can say except good luck.

You’ve got to have the “fire in your belly,” or you will fail. There are long hours, hard work, and incredibly frustrating and stressful times ahead. But the rewards — being your own boss, being able to work on a variety of projects, feeling that proverbial sense of accomplishment — these are all very real results.

A Special Note for Those Still in School

When I was in school, what I wanted more than anything was to start a business creating customized audio solutions for multimedia content creators. I asked my teachers — they said it was a good idea. I asked my classmates — they thought it was a good idea. Then I took a six-month internship at a “new media” company whose focus was streaming audio and met people so poor they slept in the warehouse with the equipment because they didn’t have the experience to succeed in what they were doing. (Incidentally, they didn’t have a business plan either.)

Before you start a business fresh out of school, wait and get some real world work experience first. I started my design company when I was 23, and the business clearly suffered because of it. Not because I was young and dumb (well, not that young and dumb anyway), but simply because I didn’t have enough street smarts to REALLY succeed.

Technical knowledge and raw talent only go so far. When working at a company, you see how established businesses function: how workflow is managed, how clients are dealt with, how managers treat workers, and the absolutely critical nature of deadlines, no matter how tight. These are invaluable lessons that school does not teach.

courtesy of kevin potts


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Originally posted on whesongerwealth:

You can now beat the long bank hall queue by banking at banks agents sprouting all over in town following the CBK Guidelines on agency banking

Here are some of important definitions:

“Agent” means an entity that has been contracted by an institution and approved by the Central
Bank to provide the services of the institution on behalf of the institution in the manner specified in
this Guideline.

“Agent banking business” means the business carried out by an agent on behalf of an institution as
permitted under this guideline.

Here are some of activities the agent can perform on behalf of the principal:

  1. Cash deposit and cash withdrawal.
  2. Cash disbursement and cash repayment of loans.
  3. Cash payment of bills.
  4. Cash payment of retirement and social benefits.
  5. Cash payment of salaries.
  6. Transfer of funds.
  7. Balance Inquiry.
  8. Generation and issuance of mini bank statements.
  9. Collection of documents in relation to account opening…

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Posted by on May 16, 2012 in Uncategorized


Cheque Truncation System- CTS

This is a system of cheque clearing and settlement between banks based on images and associated electronic payment data, without the physical exchange of the cheques. It eliminates the traditional practice of transporting cheques from all bank branches countrywide to the automated clearing house using courier services but instead banks use telecommunications links between their branches to send the cheque data (images) for settlement.

The time it takes to transmit cheque data is drastically reduced, thus a faster clearing process, more accurate reconciliation of accounts and the reduction in paper work for both the clients and the banks involved thus reducing the possibility of cheque fraud emanating from cheque substitution. A faster clearing process leads to a faster clearing cycle (the number of days it takes for the cheque to clear ,for the payee to be able to access funds in his account) with the CTS a one day clearing cycle is achievable.

what is CTS compliant Cheque

These are the new cheque design that incorporate security watermarks as directed by the Kenya bankers association (KBA) issued to the customer in substitution to the old cheques. Among their most notable features are:

  • One standard size across all banks- 4″ X7″ cheques will be issued by all banks.
  • No alteration acceptable- if the drawer makes an error while drafting the cheque he will have to issue a new cheque leaf
  • Use of dark inks -preferably black or blue
  • Security feature- a KBA watermark is visible against the UV light in all cheques

How does CTS Work

On acceptance of a customer cheque deposit, the collecting bank takes an image of the cheque and reads in the magnetic ink character recognition (MICR) code line information from the cheque. This information together with the cheque amount is sent to the paying bank through the automated clearing house for settlement.

Any cheque returned unpaid will not be returned to the customers instead the collecting bank will issue an image return document to the payee, the document will contain the image of the cheque , the payment information  and the reason for the return.

The security, non repudiation and authenticity of the data  and image transmitted from  the paying bank to payee bank is ensured using encryption and other inbuilt security techniques.



Posted by on July 28, 2011 in Banking, Financial


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This is what the world Needs to Know about the Famine in the Horn of Africa

‘We make a Living by what we Get, we Make a Life by what we Give’ These were Words of Sir Winston Churchill. To make the world a better place for all of us it reaches a time when we have to GIVE no matter how little we’ve got, it is all about sharing lest the human race stealthily moves towards extinction starting  with the horn of Africa where the first ancestors of human race lived some million years ago.

For most of us we miss a meal in a day mostly by choice either we didn’t get time due to our busy schedule, we are dieting, or simply because we just didn’t want to, but at the back of our subconscious mind we know we can access food if we wanted… believe me it is very different when missing a meal because there is no food at all…and especially when we are not talking about skipping one meal a day but no food for days. It is a very desperate situation in the horn of Africa

If this kid was yours what would you have done Differently?

Why is the whole world focusing on the horn of Africa?

This is the worst drought to hit this part of the world in 60 years according to the UN. Over 10 million are facing starvation in Somalia, Ethiopia, Djibouti and Kenya. The situation may worsen in the region in the coming months because there is no harvest at all, unless we come together to help these people.

This is a clear indication that unless something is done there will definitely be no life in this part of the world… First it was the vegetation that disappeared, then the livestock and finally its the human race. The blue clear sky sends a very strong signal. There is not gonna be a drop of rain any soon. Why do we blame those which we neither have no power over nor can’t change. We shouldn’t blame the rains it is all our fault. We should share the burden of Global Warming and Carbon Emissions in the same proportions we benefit from them.

Desperate and malnutritioned but life must go on…

A foreign Diplomat was recently quoted saying “It is a terrible thing in our world that a baby should die from lack of food” But to our own technocrats this is very normal, some countries have not declared the drought situation a matter of national importance. We have definitely failed to plan. These people seem to have been forgotten by their own governments. European countries have taken the initiative to avert the situation. British minister for International Development asked the international community and African countries to respond to drought ravaging the Horn of Africa. Andrew Mitchell, who has completed a tour of Dadaab Refugee Camp in North Eastern province of Kenya said Britain had donated £52.25 million (Sh7.5 billion) to feed the region.

The boy Got dreams. if only  we can help


We all agree they need help, but who will help them if not me and you. What if we all Contributed 10 dollars to Aid the Kenya Red Cross drought combating initiative in the horn of Africa. It is advisable to Indicate on the transfer the details of charge as ‘OUR’ To ensure that KRCS receive the full amount of USD 10.

Donations may be made directly to the Kenya Red Cross Bank accounts below:

Account Name: KRCS Relief Account

Bank: Barclays Bank of Kenya-SWIFT CODE: BARCKENX

Branch : Enterprise Road

Account Number: 070-8040126

Correspondent Bank: BARCUS33

The queue in search of food and water……

It is in itself humbling to queue in order to receive a donation,especially food, but like all the disasters that happen in the world we can’t entirely blame our early warning systems nor the planners. Just like the tsunami in Japan let us all rally behind these women and their sons to make sure that after such long wait on the queue they don’t go back home on empty stomachs …



Posted by on July 20, 2011 in Economical, Lifestyle


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A Government that operates both Expansionary and Contractionary Economic Policies concurrently  not only sends mixed signals to the market but clearly shows lack of sync in Government coordination mechanism.

A scenario where the central government through the Ministry of finance signals increased economic activities through expansionary fiscal policies and the Central bank partially practices expansionary monetary policies  and majorly focus on reduction of inflationary pressures through tight monetary policies clearly leaves the market players confused on which way forward. With such contrast in the economic policy the macro economic variables are left wobbling at the fence, non is achieved. This has been the scenario in Kenya. CBK has failed to curb inflation whilst the Government has failed to achieve its main objectives of reducing unemployment, increasing economic activities and reduction in tax burden

Our policies are not focused and we are not likely to achieve any of our objectives as long as the Central bank and government do not match in the same direction. The question is are we seeing a more robust economy in the near future or do we need to reduce the amount of money in circulation to curb the run away inflation we are currently experiencing in the economy. Currently inflation stands at 14.5% and is likely to reach above 20% before the end of 2011 unless the necessary macro economic variables are controlled to acceptable levels.

What is the Government Doing?

The government influences major economic variables through its fiscal policies which can either be expansionary or contractionary depending on the objectives it intend to achieve

The government economic stimulus plan majorly focus on injecting more funds into the economy in turn increasing the amount of money in circulation, Reducing unemployment thus fueling inflationary pressures which the CBK is so much trying to rein on.

section of thika road under contraction

The 2011/2012 Budget was the biggest budget ever in the history of Kenya,  A whopping Kshs.1.155 Trillion the ministry of finance is projecting the government to spend this financial year alone, this is a clear indication that the government is planning to increase its fiscal expenditure thus expansionary fiscal policy.

With the ongoing constitution implementation, creation of new offices and administrative structures through the County governments the we needs more than the budget provided if we are to beat deadlines.

With projects such as The ongoing Thika superhighway construction The government is pouring more money into the pockets of Kenyans, This might make it difficult for CBK to control the inflationary pressure.

What is CBK trying to Achieve

A Circular Dated 11th July 2011 to commercial bank clearly shows that the lender of last resort is gearing up for even more tighter monetary policies. Among the issues that confirms this  despite the bank’s reduction of its overnight lending rate from 8% to 6.25% includes:

  • Restricting Any bank lending in the interbank market access to funds through the discount window on same day.
  • In any week (mon-fri) banks will be restricted to borrowing a maximum  of their statutory cash reserves
  • Requirement for banks to consider other avenue to satisfy their liquidity needs before considering the discount window, that is,Liquidate TBills/Bonds and FX Positions held prior to resorting to the CBK

By restricting commercial banks access to easy funds CBK is basically trying to reduce the amount of money in circulation. Banks will be more cautious on lending.

CBK had already warned commercial banks not to increase their base rates (interest rates charged on loans) on the contrary CBK itself had increased the Rate at which it lends out to commercial banks from 6.25% to 8% Before reverting to 6.25%. A few commercial banks had clearly shown signs of increasing their rates.

The way forward

The Central bank of Kenya (CBK) Clearly needs to move in the same direction with the central government. However much difficulty  this might be due to prevailing shocks in the market, for the two institutions to achieve their objectives their policies must be aligned in one direction. We either focus on reducing inflation through the contractionary monetary and fiscal policies or Increase the economic activities in the economy through expansionary monetary and fiscal policies.

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Posted by on July 18, 2011 in Economical, Financial


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Kenyan Oil Crisis – what ought to be done differently

The Oil industry is grappling with confusion surrounding shortage of super petrol, flawed import allocation processes, poor refinery and transportation mechanisms and a government regulator that seems to have forgotten about its mandate. All the inefficiencies are passed down to the consumer as inflated pump prices. Yes international crude oil prices have been skyrocketing due to conflicts in the oil producing and exporting countries in middle East. But why blame factors beyond your control when you can clean up your own mess? Who says the crude oil prices won’t go up again in 2012? Do we have to pay exorbitantly for fuel until the countries in middle east stop fighting? who says they will bury the hatchet any soon, what if they don’t?. What we need is to come up with structures and mechanisms to Hedge against these kind of eventualities. We cant stop the Arabs from fighting for their freedom if they so wish.

The current Fuel Prices in Nairobi and Mombasa as per ERC Recommendation

                             Mombasa               Nairobi

  1. Super      112.09                        115.35
  2. Diesel      104.77                        108.02
  3. Kerosene   89.77                        92.61
  4. Regular   108.23                        111.48

Comparatively on 14/01/2011 the same watch dog had announced prices that really caused uproar among the public, 1 Litre of super was trading in Nairobi at 94.03 while diesel was 87.45 and Regular traded at 94.39. There has been a big marginal increase in fuel prices for the last 4 Months.

What Ought To Be Done Differently To Avert Current Problem

Despite the fact that Kenya’s problems are externally generated and the country has very little it can do to control what is happening on the international market being a net importer of oil, increased investment is needed in this sector in order to reach both MDG and our vision 2030 because without reliable energy sub-sector all other industries will basically stagnate.

Renewable sources of Energy- Kenya is endowed with numerous unexploited natural resources for example wind energy, solar energy, geothermal springs,Biomass – including wood and wood waste, municipal solid waste, landfill and Bio-gas all these are poorly exploited. Take for example solar energy Kenya has 12 hours access to this resource per day, we take it for granted. why not subsidize the solar panels and let at least each household own one. We have made good strides with the geothermal exploitation in the Rift Valley. Our hydro power is a total mess as far as I’m concerned why rely on fuel to generate electricity? why the ambitious Rural Electrification Project, expanding the electricity network when the consumption needs of the existing customers is not yet fully met. Let us put our priorities right.

Import Routes- in long run we should keenly re-look into our import routes. Alternative sources of crude oil can  be exploited to supplement the traditional middle East and the Indian ocean route. Southern Sudan can be of great help in near future once the country gets on track we can design a pipeline to S. Sudan, construct good road to link the two countries and exploit alternative modes of transport to ferry in that precious commodity. Uganda just discovered oil we should be positioning ourselves as their main customer. It will definitely be cheaper to get oil from Uganda than elsewhere. Unless this is done early countries like Rwanda,Burundi and DRC might just takeover that positioning leaving us struggling with our poor futuristic forecasts.

Enhance the efficiency of the regulator. Why export what you Don’t produce/have?  The essence of international trade is to Import what you have a Deficit and Export what you have a Surplus. In this case we have a deficit in our market as far as petroleum products are concerned, our infrastructures can’t accommodate our own needs and demands why over strain them,Through export to other countries? Do we love our neighbors more than we love ourselves? The oil industry was liberalized in 1994, one will wonder why liberalize and set prices. price controls by the central government is an Economic phenomenon that has been disapproved by time, the market is self regulating and will eventually hit an equilibrium point, setting both the Equilibrium Quantities Supplied and Equilibrium Prices without government interventions. I think ERC should actually be setting the price ceilings (the maximum price level) rather than set actual prices.This will encourage competition amongst industry players that will lead to reduced prices. ERC- The Energy Regulaory Authority should stick to its mandate rather than behave like an industry player, Its mandate include:

  1. Regulate the electrical energy, petroleum and related products, renewable energy and other forms of energy.
  2. Protect the interests of consumer, investor and other stakeholder interests.
  3. Maintain a list of accredited energy auditors as may be prescribed;
  4. Monitor, ensure implementation of, and the observance of the principles of fair competition in the energy sector, in coordination with other statutory authorities;
  5. Provide such information and statistics to the Minister as he may from time to time require; and
  6. Collect and maintain energy data;
  7. Prepare indicative national energy plan;
  8. Perform any other function that is incidental or consequential to its functions under the Energy Act or any other written law.

Infrastructure Development- it does not make any logical sense let alone economical sense to withdraw oil marketers rights to import crude oil simply because the kipevu jetty entry point is congested with oil tankers!!! it sounds absurd but that is how it happens in Kenya, why not think of building another docking terminal for oil tankers. KPRL-Kenya petroleum refineries ltd is dodged with frequent breakdown basically due to the fact that the old plant can no longer handle the volumes, we need to rethink our policies on priority investment. If the government can not inject more funds to expand the plant then it has no business holding its share of the stake in the refinery let them float their share to the public to raise funds for expansion. who said their is no money in Kenya. We should sync the expansion of our infrastructure in line  with Economic and Population Growth Rates. The KPC- Kenya pipeline company ltd has among the best infrastructure in Africa boasting of over 800km of pipe it has the potential to reverse its fortunes, they should consider setting up depots in all major strategic towns along the pipeline. Through Expanded import jetties and pipelines and efficient distribution through pipelines to depots, strategically located all over called bridging to designated retail outlets, oil prices can come down tremendously. There is also provision for using the Rail System to move from some of the depots directly this can maybe rejuvenate the dwindling fortunes of Kenya-Uganda Railway and reduce tankers on our Highways.The ease with which petroleum products are sourced and  distributed to all parts of the country,can enable marketers to sell the product at a uniform price across the country why would some one in Moyale pay additional Kes 8 due to distance.

Support the Small Indigenous oil marketers- the only way we can achieve equitable distribution of oil throughout the country is by supporting stand alone petrol stations rather than having a market dominated by a few big players who are more likely to form cartels to defraud the public through hoarding. By allowing these small petrol stations to buy directly from the suppliers rather than buy from the big oil marketer and expect them to sell at a predetermined price set by ERC. How on earth do you expect a retailer to sell at the same price as his wholesalers. A small petrol station serving an estate buys fuel from Shell or Total and is expected to sell at same price as Shell or Total, it will simply close down. because motorists will get their supplies from shell/total located on their way….. On main highways. Once it closes down the supply chain is cut. This is why we should be weary of the big oil marketers they have the muscle to hold the country at ransom by arm-twisting the government.

Plan for National Petroleum Strategic Reserves- To hedge against the frequent price surge associated with international oil prices we should build our oil reserves that we can fill when crude oil prices are at their lowest, store them to offset local oil prices when prices rise, this is done by diluting the prices through releasing small quantities from our reserves to supplement the volumes procured at high price. The US boosts of one of the biggest Reserves, that can cater for their petroleum needs for 34 days, that is, about 727 million Barrels, Closer home Rwanda, a small landlocked country that imports through Kenya has reserves that can cater for her oil needs for several weeks. Ours is a very complicated situation,it is not that we don’t have storage capacity. KPC has some good capacity but the oil stored there awaits prices to shoot. Basically our reserves are used for Hoarding, bigger oil marketers stores oil to drain the market and cause artificial shortages, thus pushing the prices up.Kenya Pipeline Company is said to be having enough stocks that are meant to be for the export market and not local consumption. Most landlocked countries like Rwanda, Uganda and the Democratic Republic of Congo source their petrol products through the Kenyan port of Mombasa.



Posted by on May 23, 2011 in Economical, Lifestyle


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Tips For Fresh Graduates

More than 7000 fresh Graduates expected in the Kenyan Job market this Semester alone. Most of them after sitting for their final papers in April/May 2011 are awaiting Graduation mostly around August,September and October. The questions in their mind are what do i do to land that dream Job? How do i fit back into the society? Where are all those good friends i had in college….. Life outside college is just so so weird.

The Transition Period

To many this happens to be the toughest transition ever. once out of college life changes things happen so fast, as if in a different planet all the college life seems lost.The college partying, Independence , own room, while in college money is easily available from parents and friends, cheap meal in college canteens….. all these are the privileges lost when one steps out of the university gate. But this can be the best time to reorganize your life and put it back to track. Here are a few Tips on how to prosper out here.

The Dos and Don’t

1. Start a project- Starting an Income generating activity is the best step while out here. you now have ample time to think and make yourself productive. don’t lazy around watching TV. it is not about starting so big. start something that will earn your a coin to enable you send applications for jobs, travel for interviews, buy a newspaper, make copies of your resumes. This will give you the most needed attribute the peace of mind. without income life can be hostile.

You don’t have to start big. From experience starting a small scale business in your rural area/District HQ can be much more cheaper than Nairobi or other big cities. Don’t just finish your last paper and there you are Traveling to Nairobi, it can turn out to be very frustrating especially if you do not have someone to support you financially in the city and offer Accommodation. but if you have an established business in the village and employ someone to man it S/he can be sending you some proceeds either daily or weakly to help you meet your personal needs.

2.Don’t hole yourself in your rural village- Some who grew up in the village do think after college you pack up and go back to the village. That should be just for a few months relaxing your brains and put in place strategies on how you will Survive in the city. You may not have a reliable relative in the city, Gang up with 2 or 3 of your former college mates and rent a single room in the city to hustle from. Life might be difficult but you are close to the world. can access a newspaper, internet cheaply and be in touch with college mates who already got a job. Information is power. your business idea/project should come in hand at this time.

3.Be in touch with your college folks- This will help you access valuable data on available vacancies and other opportunities. Especially those who are already engaged in some income generating activities will be a very good avenue to open up your doors. They make better friends when it comes to morale boost and positive thinking. Be in the group you fit. Be with people you can reason with people who can give a worth advice when need be. People whom you can give your resume to submit to their employers.This has even been made easier through social networks. Occasionally give them a call and ask what is new in the market.

4.Apply for jobs- Don’t wait for your dream job go for it. make sure all the advertised jobs that need graduates in your area of interest are acted upon. there is a misconception that you must have a godfather to push for your application it is not always so, some employers are equal opportunity employers simply use merit. Luck will not come your way unless you make a move towards it. you will realize the harder you try the more luckier your become. make a list of your potential employers. Don’t be afraid to send them a blind application it does not hurt to do so. visit there websites career pages more often. online job blogs are coming up and have some good posts. internet is the best way to search for jobs much better than newspaper and the worst is hoping from one office to another asking for vacancies i think this no longer works. For the first job don’t be so choosy be liberal. we all start somewhere but end up where we want.

5.Plan your time-Set a side at least two hours per day to search for jobs and make applications, a few hours for recreation and spend better part of your day on income generating activities. Don’t limit yourself to the so called white collar jobs. working in small enterprises here and there keeps you busy and engaged. when you will land that interview opportunity the employer will ask you what you’ve been doing since your graduation.

6.Be patient- while the dream job has not come your way don’t lose hope. all your close friends already got a job except you, don’t feel jealousy for them use your relationship with them to your advantage, something is out there for you. you need to give your self strength and focus.

7.Enjoy thy self- Be happy enjoy your life out of college. visit places. don’t let all the hustle engulf you. once in a while loose your head and do those craze things you used to do while in second year. And if you get that job life will never be easy pressure at work place, deadlines but live large within your means. The boss who might not like you, yah you’ve no experience remember. it is all about life within or outside college.



Posted by on May 19, 2011 in Economical, Lifestyle


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The advantages of investing in bonds.

Shares are high-risk, but can give very good returns or cost you all of your savings, whereas bonds are mostly lower risk and generally not very correlated to stocks and do pay an income. A balance between these securities is usually the best bet, Having a well-balanced portfolio is just as important as having a well-balanced diet. Let us analyze why it pays to invest in bonds. Kenyans have been known to be good at investing in shares but we have a long way to go in relation to bonds, asset backed securities and other modern financially engineered investment vehicles like futures, swaps, forward contracts and so on….

The bond market has witnessed increased liquidity and high turnover due to automation of trading and settlement at NSE, lengthening of the Government bonds maturity to 30 years, and a stable yield curve due to the issuance of benchmark bonds, among other reforms. We all know that vibrant bond market will help the country mobilize long term savings and capital needed to meet the aspirations of transforming Kenya into a middle income country as espoused in the Vision 2030 Economic Blueprint, and this can only be achieved through massive participation.

So what is a bond and how does it differ from shares

These are long term fixed interest securities issued by government and corporate bodies. In effect, they are promissory notes in which the issuer (the borrower) makes an obligation to pay interest at specified times and intervals and to pay back the principal at maturity of the Bond. The holders of bonds get interest even if the issuer does not make profit unlike whilst invested in stocks where bonus are only guaranteed when profits are ample to meet internal financing and at the discretion of the management.

There are many different types of bonds. Treasury Bonds These are debt instruments issued by the Government of Kenya  to finance budgetary goals and were introduced in the Secondary Market over 10 years ago. They are available in both the primary market (through auctions) and the secondary market (through the NSE). An investor needs at least Kshs. 50,000 to purchase bonds in Kenya.
Corporate Bonds These are long-term (at least one year and above) debt instruments issued by the private sector . Issuers of this instrument targets high net worth investors who understand technical information about pricing, valuation, yields etc. This implies that this product is not completely open to every individual or institutional investor. Like Treasury Bonds, an investor needs at least Kshs 50,000 to purchase this product. We also have other types of bonds namely Convertible bonds, infrasture bonds, eurobonds and so on

Bonds and stocks are both securities, What are the major difference between the two:

  • Stockholders have an equity stake in the company (They are owners), whereas bondholders have a creditor stake in the company (are lenders)
  • Bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely(Though we have perpetual bonds)

Advantages over shares

  1. safe haven for your savings- investing in debt is safer than investing in equity because of priority that debt holders have over shareholders. If a company goes bankrupt.
  2. predictable returns over time- share prices fluctuates over time unlike bonds- during the stock market crisis bonds always out performs shares
  3. High interest income- bonds pay higher interest than what banks pay on savings accounts. instead of keeping your money in a saving account you better invest in bonds especially if not planning to spend them in any soon
  4. Diversity in investment- bond provide better avenues for diversification- But the question is just how much should i put in bonds? Quite often you’ll hear an old rule that says investors should formulate their allocation by subtracting their age from 100. The resulting figure indicates the percentage of a person’s assets that should be invested in stocks, with the rest spread between bonds and cash. According to this rule, a 20-year-old should have 80% in stocks and 20% in cash and bonds, while someone who is 65 should have 35% of assets in stocks and 65% in bonds and cash

how do you go about investing in bonds: what are the requirements in kenya ?

Who can invest in Treasury bills in Kenya?

  1. Resident or non-resident individuals and/or corporate bodies who hold an account with a local commercial bank
  2. Resident or non-resident individuals and/or corporate bodies who may not have an account with a local commercial bank but invests as a nominee of a commercial bank or investment bank in Kenya
  3. Resident or non-resident individual and/or corporate bodies that has CDS Account with Central Bank of Kenya
  4. Any potential investor must have a minimum face value of Ksh.100, 000. Any additional amounts MUST be in multiples of Kshs. 50,000

How and when do I invest?

  1. Any potential investor must have an active and updated a CDS account at Central Bank of Kenya.
  2. Treasury bills are sold weekly, with 91 days and 182 days papers being issued in alternate weeks. Each new offer is advertised in the Daily Nation Newspaper on Fridays.
  3. Investors MUST correctly and appropriately complete Treasury Bills application form available at the Central Bank of Kenya head office Nairobi or any of its branches in Eldoret, Kisumu and Mombasa.
  4. The duly completed application form must be submitted to Central Bank (or branches) on or before 2.00pm on Thursdays.
  5. Investors may place their application either as competitive or non-competitive (average) bids. Competitive bidders MUST indicate the desired price/yield and usually understand the movements in interest rates and market conditions. However, such bids may either be accepted or rejected depending on interest rates and liquidity levels. Non-competitive bidders on the other hand only indicate ‘Average’ or ‘Non-Competitive’ in the place of offer price per Ksh 100 in the application forms. Since this category is a price-taker of market outcome (successful weighted average rate), their placement is guaranteed. However, maximum amount one can invest per CDS account per issue/tenor is Ksh 10,000,000.
  6. Application forms should be deposited in the blue tender boxes marked “Treasury bills” at any branch of Central Bank by 2.00p.m on Thursdays.

for more information.

The bond market turnover increased from Kshs 110 billion in 2009 to over Kshs 480 billion in 2010. Consequently, the bond turnover as a ratio of GDP has increased substantially from 5 percent in 2009 to 17.5 percent in 2010. This is a clear demonstration that our capital market has high potential to support the financing needed to boost our investments.



Posted by on May 18, 2011 in Financial


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ONSET OF AGENCY BANKING IN KENYA (via whesongerwealth)

now the giant KCB Is here with KCB mtaani, co-p with saccos for real we gonna bank in our villages.

You can now beat the long bank hall queue by banking at banks agents sprouting all over in town following the CBK Guidelines on agency banking Here are some of important definitions: “Agent” means an entity that has been contracted by an institution and approved by the Central Bank to provide the services of the institution on behalf of the institution in the manner specified in this Guideline. “Agent banking business” means the business carried … Read More

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Posted by on May 8, 2011 in Uncategorized


Demystifying Electronic Funds Transfer(Wire Transfers)

mobile banking and money transfer

Sending money across borders has never been easy than it is now, What are the requirements?  what information do you need to provide to the sender or in case you’re the sender what details do you need from the recipient.

The wire transfers are not only used for international payments, Local Payment through RTGS has also been well received by a section of Kenyans.  In Kenya you cant pay more than or equal to One Million using a cheque you have to use RTGS- Real Time Gross Settlement.

1.  Sending or Receiving Funds Locally Through RTGS

RTGS-Real time gross settlement-  Is (kepss) Kenya Electronic Payment and Settlement System in which both processing and final
settlement of fund transfer transactions take place on an item by item (gross) basis continuously throughout a business day. It is an on-line system that facilitates the transfer of high value and/or time critical payments between participants in real time. It aims at
enhancing efficiency by reducing inherent risks in the existing payment System. Unlike cheques that take 4 working days to mature and can easily be forged, sending money through RTGS should take a maximum of 2 hours and the recipient can access his funds the security is enhanced through SWIFT messages.

when sending money through RTGS you need to provide:

  1. Both your account name and number you wish the funds to be debited from
  2. Both account name, account number, bank and branch  details of the recipient
  3. The purpose of payment for example upkeep, school fees, payment for supplies(provide invoices where necessary)
  4. clearly indicate the amount in words and figures and the currency, you can send KES, USD or EUR through RTGS
  5. The form should be signed in accordance with the mandate held for that account and your account should have sufficient funds to cover the payment and charges .

RTGS charges are kes 500 per transaction

As a prove for payment you can leave an email address with your bank to send you a swift message copy(commonly called the TT COPY that can be presented as a prove of payment)

what to check on the MT 103 TT Copy to ascertain the payment went through

  • check the message status whether message was acknowledged or aborted
  • check the value date (date when the settlement will be due)
  • the time the message was sent (RTGS cut off time is 3.30pm) and be keen on the beneficiary details and amount sent.
  • check whether it has, kps, on the header

Currently CBK, bank of Uganda and bank of Tanzania  are testing on possibilities of having a payment system for the whole of east Africa. you will be able to send KES to Uganda and Tanzania and UGX to TZ or UG once the EAPS (East Africa payment system( is effected.

2. Sending or Receiving funds from abroad.

Most Kenyans receive funds from abroad either as proceeds from our exports (mostly agricultural) or through direct remittances by relatives abroad. what do you need to provide the sender with for the money to reach you efficiently and timely.

  1. Your Bank’s Name and Swift Code/BIC (bank identify code)
  2. Your Account Number and Name
  3. Ask your bank for their USD, EUR or GBP correspondent abroad to enhance effective settlement

A swift code is what identifies banks for example equity bank is EQBLKENA, fina bank FBAKKENA, bbk BARCKENX and so on this is information your bank will provide to you on request.

Sending funds a broad …….

while sending USD to USA get the routing code/fedwire for the recipient’s bank, banks swift code and beneficiary’s account name and number.

while sending USD to any other country other than USA you’ll need the beneficiary bank’s correspondent bank in USA

while sending Indian rupees to India you need beneficiary bank’s IFSC code (the clearing code) and must include the purpose of payment.

when sending EUR to a country in Euro zone you’ll need an IBAN (international bank account number) while for GBP to Britain you will need either an IBAN or simply a sort code and beneficiary account number and name.

To avoid losses due to conversion from foreign currencies to KES  you can open an account in the currency your frequently receive funds in mostly open a USD account with your bank


For Local Transfers (RTGS) The sender is charged KES 500 While the Recipient is not supposed to be charged anything. International transfers are charged an equivalent of KES 1500 depending on Currency being sent and Exchange Rate.

While receiving funds from abroad different banks charge differently, Most banks charge USD 15 for US  Dollars, EUR 13  for Euro and GBP 8.5 for pounds.


Posted by on April 18, 2011 in Banking, Financial


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How Deep is Kenyan Financial Sector?

Kenya is rated Second in Africa after South Africa in the usage of advanced formal financial services. Financial inclusion has been a success story in Kenya with over 44% percent of Kenyans having accessed Formal/Informal banking services. Barriers to access to Financial Instruments/services has been considerable reduced during CBK Governor Professor Njuguna Ndung’u tenure.

Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society, this in Kenya has been enabled majorly through use of Mpesa and other mobile phone money transfer services which have virtually “included”  over 18 Million  kenyans in the usage of financial products,This being mainly the rural unbankable population that had previously been “excluded” from the financial system by the banks due to cost implication associated.

Drivers of financial inclusion in Kenya, most notably M-PESA and Equity bank, centre on supportive regulation, innovative business models and technological advances. Both formal inclusion (through Banks) and non formal inclusion (through mpesa, chamas and Saccos) account for over 44% of kenyan population, only compatible to South Africa.

How included are we?

  1. Do you own an active bank account
  2. Have you ever taken a loan from a bank/chama
  3. Do you use Mpesa, zap
  4. Do you own a CDS account, trade in shares/bonds

Those are among the questions that can help you know whether you are excluded or included.

Financial deepening refers to the increased provision of financial services with a wider choice of services geared to all levels of society and how available/accessible are Financial Institutions to population, Banks have been opened in the villages in countries like India, china and so on this is the same trend in Kenya with the onset of agency banking in Kenya you will be doing all your banking needs in your village/ estate.  That is just how deep our financial system is.

what are the advantages associated with these? high volatility (the speed at which money changes hands in the society)  the higher the money volatility the higher the amount of money in Circulation, Thus increased Investments and Employment.

Economists have long held the view that the development of the financial system (financial deepening) and economic development are closely intertwined.

Yes under the management of the current CBK Governor, professor Njuguna Ndung’u , Considerable progress has been made in the financial sector in Kenya, but we are not yet there….



Posted by on April 14, 2011 in Banking, Financial, Uncategorized


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You must have realized that no matter how hard u try to save by reducing ‘expenses’ and increasing income, things hardly work out your way. That is very normal,

Whenever income increases, expenses are likely to  increase proportionately, that is what we call in economics the marginal propensity to consume (MPC), which basically means increase in personal consumer spending in relation to increase in disposal income, on every one extra shilling earned a particular portion will be spent, most likely higher, than will be saved.

Basically this sublimes into a principle called the Ratchet effect

Ratchet effect
A tendency for a variable to be influenced by its own largest previous value. For example, consumption from any given income may be higher, the higher the previous peak income. The ratchet effect implies that variables are more sticky in one direction than the other. For example when given a salary increament of kes 10,000.00 your expenses are likely to go up by Kes 8,000.00 leaving only kes 2,000.00 as Saving. Meaning your MPS marginal propensity to save is %change in exp/%chage in income


Expenses reduction techniques that work.

  1. Learn and shop smart
  2. Minimize transactional costs
  3. Utilize bulk discounts
  4. Budget for your money

All this notwithstanding try to increase your income through doing part time job that pays, start a small scale business, change jobs.

Having enough for yourself and family is not about reducing expenses it about increasing your income.


Posted by on April 13, 2011 in Economical, Financial, Lifestyle


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You can now beat the long bank hall queue by banking at banks agents sprouting all over in town following the CBK Guidelines on agency banking

Here are some of important definitions:

“Agent” means an entity that has been contracted by an institution and approved by the Central
Bank to provide the services of the institution on behalf of the institution in the manner specified in
this Guideline.

“Agent banking business” means the business carried out by an agent on behalf of an institution as
permitted under this guideline.

Here are some of activities the agent can perform on behalf of the principal:

  1. Cash deposit and cash withdrawal.
  2. Cash disbursement and cash repayment of loans.
  3. Cash payment of bills.
  4. Cash payment of retirement and social benefits.
  5. Cash payment of salaries.
  6. Transfer of funds.
  7. Balance Inquiry.
  8. Generation and issuance of mini bank statements.
  9. Collection of documents in relation to account opening, loan application, credit
  10. and debit card application.
  11. Collection of debit and credit cards.
  12. Agent mobile phone banking services.
  13. Cheque book request.
  14. Cheque book collection by customers.
  15. Collection of bank mail/correspondence for customers.

Here are the activities the agent is prohibited to engage in:

An agent shall not

  1. Operate or carry out an electronic transaction when there is communication failure in the system-that is the core banking system of the principal bank.
  2.  Carry out a transaction when a transactional receipt or acknowledgement cannot be generated.
    Charge any fees directly to the customers.
  3. Carry out agent banking business when, in the opinion of the institution the initial commercial activity has ceased or is significantly diminished. The commercial activity should be viable and able to financially support the agent banking business.
  4. Offer any type of guarantee in favour of any institution or customer.
  5. Offer banking services on its own accord (provide on its own account banking services similar to those provided by it under an agency contract).
  6. Continue with the agency business when it has a proven criminal record involving fraud, dishonesty, integrity or any other financial impropriety.
  7. Provide, render or hold itself out to be providing or rendering any banking service which is not specifically permitted in the contract.
  8. Open accounts, grant loans or carry out any appraisal function for purposes of opening an account or granting of a loan or any other facility except as may be permitted by any other written law to which the agent is subject.
    Undertake cheque deposit and encashment of cheques.
  9. Transact in foreign currency.
  10. Provide cash advances.
  11. Be run or managed by an institution’s employee or its associate.
  12. Subcontract another entity to carry out agent banking on its behalf.

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