Harnessing the multiplier effect of the Diaspora $, £, ¥, €

The debate in Kenya about the efficacy of the diaspora remittance has been spilt into 3 categories;

Welfare givers-that is, diaspora remittances are seen as primarily useless because they only go help relas' consumption out in Kenya. However, this is ignoramus in the extreme. My simple maths tells me that if we assume that this bottle of milk equates to Kenya's store of money. Its quantity currently stands at 8 litres. If a diasporan comes along and adds another 1/8 of a litre, its no longer 8litres but its 8 and 1/8 litres. Whether it increases because of that is immaterial suffice to say there is more of it now. The other point is that this view ignores the circulation of money without which central bank policy the world over would not be effective in combating inflation and the like. If a diasporan sends 20k to his mother in mashinani for her spending she will go to the shopkeeper and buy her supplies. The shopkeeper will go to his supplier with the 20k and buy supplies. The supplier will go the manufacturer for more supplies who will go to the farmer for more materials.

Bubble creators: its argued that diasporans by following Kenyans down the road of currently popular investment avenues (NSE between 2005-6 and real estate since 2008), they add fuel to already overheating investment avenues and with their deeper pockets push prices to artificial highs. Agreed.

The diaspora are also involved in infrastructure projects as well as purely humanitarian projects.

Beyond these avenues, is a consideration of how a significant portion of the remittances can be used to create multiplier effects at a micro level i.e. via the remittances to relatives. And the first step has to be able to step back from the instinctive and emotional reaching for the pocket whenever a rela say they need help. How so?

If you take a typical diasporan. He will probably send Ksh100k per year as part this knee-jerk response to relas. Apart from genuine emergencies i.e. medical/nature related funding or parents/spouse, he’d be better off stepping back and asking the said rela to come with a income generating project that he can finance.

· Say the diasporan was to send Ksh50k to a rela two buy two dairy cows. Assume the dairy cow is those ordinary ones that can produce around 7 litres per day, 5 which can be sold to the local cooperative.

· At ksh23 a litre, that is KSh230 a day and if you assume spending equates to Ksh4,000*12=ksh48k per year.

· Not Mercedes buying income, but if the diasporan supports two of his relas on that basis, will equate to zero handouts the year after!

· Or a potato framing venture. Here, say the disaporan gives the 50k to his farming cousin who can use the same to lease an acre of land. Assuming 50 bags of potato per acre at Ksh1,300 per bag. That is another Ksh50k after domestic spending.

· Another example, the piki piki business can earn one around ksh300 per day and so forth…

Clearly, it’s a win win situation for the both the diaspora and the recipients of their remittances to view it this way.

Investment destinations in Kenya

1. Real estate: Growing population; growing urban population; fewer alpha investment opportunities (past debacles at the NSE will take a while to be forgotten) , mean real estate is now far more liquid than it was even 2 years ago. Whether buy and hold merchant; buy and live to sell later; rental (residential/farming lease/commercial) are available avenues.
2. Agri-business : farming will grow to big business for the discerning. How so? Population growth at 2.5% per year coupled with urbanisation mean that one demand for food is higher overall, but the ones who can farm are moving to towns in search of bright lights. Couple this with uneven weather and you have a situation made for earnings growth in focused farming of any type of crop.
3. Bonds : at 12.5%, a bond whether or government released is now a valuable portion of a unit trust/portfolio manager.
4. NSE stocks: Rains have stopped which if they keep means they didn't reach the end of Feb. Worrying for farmers (who have become the best practitioners of rational expectations in the past, many would plant with a day of heavy rainfall-now many wait a week and then if it rains for 3 and stops, the crop can get destroyed... and the wider economy. But the index is 10% of 4,000 and it won't take much for it to get there
5. Venture/incubation : there are lot good to great commercial ideas out there. Which just need to meet with capital. And a good deal of patience. And here is the thing. In places like my home province of Central, young men who can't financing are being drawn to Mungiki where they can get some help either to commandeer finance from local raia or even get that capital.

Executive solution

How about a parliamentary system with a prime minister voted in by universal suffrage with a ceremonial president (head of armed forces, able to step in if PM is incapacitated) who is a non-MP and elected by a congress made up of 200 delegates from each constituency who are randomly selected by the electoral commission?

Its not Kibaki's, Raila's, Ruto's or UK's country; its yours

Everytime I work up myself to do a blog about Kibaki's extremely non-existent leadership qualities, I am reminded that, I've campaigned for him twice despite no evidence of any leadership skills especially when we neded them most i.e. in the 80s.

Everytime we work ourselves up to write or whine online about his laissez-faire attitude towards corruption, we should look at his ambivalent past record when he had the opportunity to do something about corruption (KREN).

Everytime we sit around asking when he'll show cohones, lets reflect on why the General Kiguoya title coined by Waruru wa Kanja fits Kibaki so well.

Everytime we whine about m-o-1's extremely backward years as president, lets recall that we kept him there for 24 years. He didn't rule alone, we were always the majority. And changing leadership shouldn't just have been about waiting to go to a fair ballot. There are many others ways that we could have gotten rid of him. Just look at how they do it in countries like South Korea, Thailand, and even Russia. Mass movements where young and old march to the capital or to the palace and show their leaders a red card.

We whine endlessly about tribalism, yet in 2008, they had to shutdown Mashada and probably should have closed You Missed this or that given the tribal stuff it propagates.

The simple facts are that, if you were to tell a foreigner that Kenyans were proud of their country and took ownership of problems, he'd ask you why then do they have to wait for Raila to lead them to planting trees on the Mau? Don't they have their own or their parents or their uncle's or grandparent's farm theat could do with planting some trees?

We talk about the need for change but most of us will only talk about it online or in the pub as they sink pints. Why not join Mwalimu Mati, Ombaka and others when they are matching to Harambee House or to bunge?

Predictions for 2010

Markets:

· NSE will touch a high of 4,200 (the highest until 2012) with KQ, Mumias, Equity, Centum, Stan Chart, Safcom all seeing new highs.

· Gold will touch a high of 1,250 before falling off as inflation fears recede due to rises in interest rates in the 2^nd half of the year

· Oil will stay around $80 all year

· Shilling will not go below K120 to the pound but will be much more volatile against the dollar

Economics:

· Kenya’s economy will record 4.1% growth in 2010 driven by agriculture, construction, tourism and “actual” reduction in inflation

· Spain, Greece among others will see credit rating downgrades. UK will only avoid one if Tories/Labour have a clear majority in the May elections

Politics:

· The two mbutas that most of us want to see at the Hague, Ruto and UK won’t be going there

· In keeping with our love of tribalism as a political ideology, various of our elected wabunge will continue alliance building ensuring no repeat of 2008 PEV in 2012

· Tories will win but with a sliver thin majority

Environment

· Mau won’t happen. That is, no mbuta will be evicted without the serious compensation already mooted

Kenya: the reality vs fiction gap

If the only thing you did was to read Kenya's daily newspapers; online bloggers/twitters or watch Kenyan TV; it fair to say that Kenya would always be going to the dogs...

However, travel a little bit and you realise that;

1. Economic growth is taking place. The combination of PEV in 2008 and the long-lasting drought in 2009 would have tested any nation's economic resilience. That the economy still grew is a miracle.
2. Real estate boom is not just Nairobi based and not priacy driven, but its quite wide spread with mnany other underlying drivers like population growth
3. Youth underemployment is an issue yes, but is partly driven by a lack of drive among them? Many want to work in the cities not necessarily because of higher wages (which go along with higher costs anyway), but because its the done thing. Yet, Kenya is starving i.e. opportunity to go into agri-business; there is a gap for tree growing business projects; there is a gap for flooding barriers and water harvesting; there is a gap for rural road building.
4. For travelling on noisy mathrees in which you can't hold a conversation or concentrate on the view outside (sometimes you only know you're near CBD because of the traffic jams); read listening to howling politicians who won't let Kenyans strategise about development or even see where we are going.
5. Tribalism: Given our environment, it should be know surprise that many of us are easy prey for demagogues. Something like 70% of us only interact with fellow tribesmen for 360 days of the year. We think, speak, conduct business, socially interact, politic in our own mother-tongues and we roughly the same peeps. We thus rarely think/speak/interact in our national language. We spend most of our time thinking about issues appertaining to our own nation (tribe as opposed to the larger Kenya). This we only change if we (a) allow students at secondary level access to schools in other areas outside their provinces (b) the continued urbanisation of the nation.

Seen in Kenya

Cloud-covered Mt Kirinyaga seen from a maize farm

Which city please?

Boat from or going fishing...

In case you don't know your Alliance from your Baobob

Boarding the awesome Likoni ferry

Your attention is drawn to the miraa base...

mia

Mombasa seen from the air

Waiting to board fly540.com

Tea farm, Kericho. Farm workers' houses in mid-ground

Kericho town

Kapsoit Junior, Kericho.

Sun setting over Kopere hills

Road to Oneno-nam Primary school

Tangy mangoes in Songhor

Maize, sugar farm near Kopere hills

Sugar harvesting

Chemelil Sugar factory

Sugar fields. Kopere and Songhor hills in the back ground

Sugar on its way to Chemelil Sugar

Turning at Awasi. A much better road

Nyando river

Rice field in Ahero

Some of the lakeside eateries. A mbuta with kuon will set you back Ksh850

The former Lake Victoria now disappearing under hycanith

K-city

...more K-city

I hadn't realised Cittihopa operates outside Nai

Kondele

A K-city momento from PEV

Approach to K-city and Lake Victoria

One of the many large rock phenomena found in Western province. Missed the crying stones though.

... great use of the same by OMO

Another river. Whose name I've forgotten...

Kakamega

Sunday worship. Malava-style

Sugarcane transporter. The faster truck/lorry carrier is yet to be introduced.

The unslick road to Kakamega

Sugar growing in Webuye. Mt Elgon is in the background

Livonda winter resort...

The shut Panpaper needs to urgently re-open. It employs 35,000 directly and 80,000 indirectly in Webuye.

Turbo- on market day

Some river-whose name I've forgotten

Sirikiwa, the hometown of the noisy Ruto, only place a noticed had more grasshuts than mabati houses

Eld has grown fast since I was there some 7 years ago

Heavy traffic in Eld.

At least you can't miss the sign-post

Turning to m-o-1 university

Burnt Forest. Notice the charred remains of one of its tallest buildings.

Maize ready for harvest

The rolling valleys of Londiani

The bane of every driver. 1kph trailers

For some, PEV is still a reality. IDPs still waiting to be settled.

Mau Summit. Notice the obiqitous Safcom mass

Rolling plains of Molo

Sachngwan memorial

Uber-slick approach road to Nakuru town centre

The fast disappearing Lake Elementaita

...same lake from another view

Delamere farm with antelopes. While we are fighting over 2 acre holdings, this dude owns land stretching some 10km!

Early commuters on the slick Naivasha/Nakuru road

Beautifully green Mathira

Army training camp. Ngong hills in the background with the KenGen wind mills

Jumuia is a nice place to take kids for the day

Another new university

I like a CBD with trees

Ikotoilet is the latest scheme to fund public facilities. Fast-growing Tuskys in the background.

Kenyatta avenue on boxing day.

Ngong town. Note the "I am a memba" ad-board in the background

Edge of Ngong forest, Maasai teenagers in the mid-ground

Zebras at Solio Ranch

...and buffalos

The fast growing Naromoru has even attracted a sizeable Muslim population

Mt Kirinyaga covered in cloud, Kibaki's farm in the foreground