Its soaring share price has until two months ago been something to behold but for those who have read C.K. Prahalad, the man who wrote about the 'fortunes at the bottom of the pyramid' this is just proof of a known theory which many players in the banking industry have ignored and snubbed those so called poor unprofitable customers. Prahalad argues, "the word's most exciting, fastest-growing new market is where you least expect it: at the bottom of the pyramid. Collectively, the world's billions of poor people have immense untapped buying power. They represent an enormous opportunity for companies who learn how to serve them. Not only can it be done, it is being done--very profitable. What's more, companies aren't just making money: by serving these markets, they're helping millions of the world's poorest people escape poverty".
Its origins were covered in unbiased account by Microfinance. So I've so far dismissed rumours about its current CEO with a pinch of salt. Despite its current association (foolish and short-term in my view) with the current regime, I am now interested in where it goes next.
It still hasn't gone the length and breadth of the country and its venture to Western Province is good. It also needs depth and hence there is excitement in the likely banca-assurance concept that may come out of its HFCK-Britak integration. It doesn't in my view necessarily need to court big business. The SMEs is where the Kenyan economy will grow.
My limited research of Ug, TZ, Rwanda and Burundi and even further South reveals that its model remains fairly unique in meeting the needs of the majority of their population. And its there that it should be developing its strategy on.
Share Price comment:
Current uncertainties mean that its price hasn't found its floor yet, so hold out for a little longer. Because of the looming additional i supply in July 2008; likely disruptions if there is a new regime, buying now will mean probably holding for 3 to 4 years before one can make suitable returns.