Monday, February 15, 2010

NSE & 2012: Scenarios for investors to ponder

Investors who hadn't factored 2012 into their equation when investing in Kenya, will today have bashed the wall in frustration.
Although most of us only think of LEPEST in theoretical cases, in Kenya and some other parts of Africa, its must to peg some risk-weighting against each of these factors at a macro (investing in Kenya vs investing in the UK as an example) and micro ( the impact of changes in political situation on the prospects of a particular firm).
Lets consider likely before and upto 2012 and likely bearing on NSE:
  • ODM/PNU break up: Initially, I thought RAO and Ruto were playing for the cameras. Until I heard Joshua Kuttuny say that their (some of RV MPs) strategy was to muddy RAO until he became unelectable. The weekend's events portend serious issues for ODM. People like Martha Karua are not really in PNU. Lets assume that the wantaway parties don't join up with anybody else. Would be the worst case scenario for Kenya imho because the nation would be ungovernable. Note, if Ruto et al leave ODM, they'd have to seek re-election
  • ODM loses Ruto et al gains young Central/Kisii/Coast MPs: The compe with PNU and Ruto ensemble (aka KKK aka Klu klaxx Klan) would be interesting. If KKK lost against an ODM alliance with those MPs, Kenya would prosper despite pockets of violence in RV. A win for KKK would lead to more corruption with a rapture between UK/Ruto vs Kalonzo when he realises he'll never be Rais.
  • Kibaki waits until new katiba is passed and goes for a 3rd term: Would lead to PEV all over again.
  • Business as usual: ODM remains intact and PNU similarly continues to go thru the motions of breakdown though primarily a GEMA party. Most likely to lead to PEV repeat in my view. The mantra that drove ODM was hatred of the GEMA...

What a benevolent dictator of Kenya would do...

We've tried dictators, they didn't do it. We've tried democracy and so far its not delivered. So why not a benevolent dictator.
Definition - A dictator that has power because the people choose to allow him/her to; who must make wise use of power since the benevolent dictatorship system allows them to be peaceably removed from office.
I prefer the wikidictionary's defnition.
What should he (or she as it can happen) do on ascending to power in Kenya:-
Corruption -
  1. require all cabinet ministers, PSs, heads of parastatals and judges to publicly (via adverts in at least two national dailies) their wealth within a month of being in office
  2. make corruption (whether tkk or mega), a capital offence punishable with a death sentence
  3. give those who are implicated in past corruption, 6 months to payback what they gained corruptly or get taken to court and suffer 2 above
  4. create a special corruption court with lower threshold of evidence
  1. Create special courts to deal exclusively with all cases older than 2 years.
  2. target judiciary with reducing outstanding cases by 200,000 per year with sackings where necessary for failed targets
  3. reduce judiciary entitlement to time-off. In fact make it compulsory for courts to be open on all but public holidays
  4. and of course increase the number of judges
  5. make corruption, rape, paedophilia, drug dealing, homosexuality and armed robbery capital offences i.e. death sentence
  6. drink driving, speeding, drug taking, littering, robbery all become punishable with varying degrees of caning
  1. Create an independent central bank charged with monetary policy (rates, inflation) and banking supervision
  2. Create two universities via public-private sector initiatives. One exclusively for IT and another for agriculture
  3. Require all public road works projects to have significant managerial as well as general Kenyan headcount
  4. Reduce government holdings of parastatals to 25%
  5. Move government ministries from Nairobi to another town via referendum - to create room to turn Nairobi into a proper commercial city. 2ndly to reduce the detrimental economic concentration in Nairobi
  6. create an industrial corridor stretching Mtito Andei all the way to Limuru
  7. Coffee and tea would only be exported as value added products rather than raw materials
  8. All new buildings would have to include solar energy capability to power 50% of power installations in the building
  9. Close all but those local government councils that deliver profitably. For the rest, use constituency funding to deliver services
  • To aid family planning now desperately needed, only couples will be allowed to have children and only 1 child at that. Any kids born out of wedlock, the parents would be punished (unless it was rape in which case, the family of the rapist would pay for the child until it was 18).
  • cutting a tree down would require a licence and two that the cutter to have al;ready planted another 5 that have been growing for 12 months
  • abolish the rvr venture agreement and instead have one that is completely performance-based. Alongside this, restrict heavy road haulage to a certain maximum weight