39 posts tagged may2012
39 posts tagged may2012
The Nairobi Securities Exchange (NSE) is “Making investing cool!!” according to its Investment Challenge 2012, an “edutainment” initiative targeted at Kenyan youth in tertiary education. There are no such excitements on the London Stock Exchange or Deutsche Börse, and the challenge neatly illustrates one of Kenya’s chief strengths: the East African hub is often ahead of the game.
M-Pesa, a mobile phone-based money transfer service from Safaricom, Vodafone’s Kenyan subsidiary, is another example of Kenyan innovation.
The system, which has allowed the country to leapfrog over stages in the banking development process, is now being copied in South America. Other finance initiatives are also helping the Kenyan economy to grow, with Equity Bank a leading provider in this area.
“Equity Bank’s products – microfinance and agribusiness loans – are helping it access the unbanked sector in Kenya, which stands at about 32 per cent of the population,” says Funmi Akinluyi, investment director for Sub-Saharan Africa at Silk Invest.
This savviness – along with recent oil findings – is helping diversify the Kenyan economy away from agriculture, which currently accounts for more than 22 per cent of GDP and employs 80 per cent of the rural population. It is also one reason why Kenyan equities have been targeted by foreign investors, mainly dedicated Africa funds or frontier markets funds.
“Foreign investors have been net buyers, particularly since the beginning of this year,” says Gregory Waweru, research analyst at Kestrel Capital in Nairobi. “They account for 60-70 per cent of daily traded volumes at the moment.”
Another is that the price is right. After a terrible 2011, valuations on the Kenyan stock market look more attractive than they have done for a while.
African philanthropists are working to clean up the mess, using hundreds of millions of dollars of their own money to transform Africa both socially and economically. Some want to develop Africa’s fledgling markets. Others want to strengthen the private sector and work with government agencies to develop business-friendly policies. One wants to use African businesses as a world-class entrepreneurial training ground. If African government leaders play along, economic transformation could ensue.
One African business leader, Tony O. Elumelu, is fond of saying, “Nobody is going to develop Africa except us.” It is his way of saying Africans must control Africa’s financial future - and thus reap Africa’s financial rewards.
“Africa is brimming with talent and innovation, and the continent’s growth and development can best be achieved through private sector investing that creates economic prosperity and social wealth. Africa’s political leaders must urgently focus on creating the enabling environment for business to flourish.”
Elumelu has put his money where his mouth is. The former bank CEO, who is credited for having modernised West African banking, established a foundation (named for him) that seeks to drive Africa’s economic growth from within. The foundation, based in Nigeria, makes what he calls “impact investments” with an aim to turn a profit while focusing on social and environmental problems. Elumelu believes impact investing is a much more sustainable means of capitalisation than direct grants because of the entrepreneurial rigour needed to produce a financial return.
Slideshare presentation by UK group based on existing market data from IMF, Economist et al