100% mortgages in Kenya.1st signal of the real estate buble

Firstly, a 100% mortgage is when a bank lends you 100% of the mortgage loan you require. Usually, the mortgage loan will be pegged on the value of the property you are buying. In essence, the bank is betting that the property you are buying will rise in value so that should you default on the mortgage, it can realise the full value of the loan.

The bank has now become a property speculator rather than a keeper of your deposits.

Not clever banking and is a big part of the why the West has just had a huge credit crisis.

Hope Ndu'ng'u at CBK will slow down his policy of being supportive of the banking sector and "take away the punch bowl" (to quote Mervyn King) before banks/Kenyan economy binges on lofty credit.

Replace foreign aid with economic migrant quotas

Remittances are now the largest foreign exchange earner in many developing countries. Fact.

So-called advanced economies are currently undergoing their most challenging economic times. Fact.

There is an ongoing, racial-tinged and tortured debate on how to tackle illegal immigration in the West.

Hopefully you can see the link I am drawing out.The west and other advanced economies are currently seeking to reduice their leverage by either government expenditure and or raising taxes where they can. To do so, they are seeking to cut back on ineffecient expenditures. As accurately described by Dambisa Moyo and others, there is none more inefficient than foreign aid to developing countries.

In almost all nations, immigrants to the West/advanced economies whether legal or illegal pay their way. That is they work, pay taxes and proportionately don't make use of public services more than the locals. Crucially, they send a significant portion of their income to their mother countries and so fulfil the trickle-down effect that most of the foreign aid is supposed to do. Simple really, the money they remit is reaches the hands of those is rural areas and even in slums.

The West can and should cut ineffective foreign aid/loans to developing countries and should replace it with smart programmes that allow graduates from developing nations to work for 2/3 years in developed countries. It is not an original idea. The UK has a discriminatory policy in place that gives 2 year working visa to all New Zealanders/Australians and South Africans (white) of under 30yrs of age.

2012 to do : vote in MPs can't be bought

Something like 70% of MPs lost their seats in 2007. Kenyan voters can do change. Despite the high turnover, most of the current crop of MPs belong to a godfather. Most (95%) belong to these godfathers because they've been bought. Tenders for those who had cash in 2007; range rovers and runda homesteads for those who were poor in 2007. Their first call every morning is "mheshimiwa unaenda wapi leo?". This is corrosive behaviour because its difficult to build democracy and infact leads to the tribal politics we now have. There are ways we voters can spot and enable better leadership.

• Stop supporting non-ideological parties: Easier said than done, but we must look for MPs and parties that will support a pure development agenda.
• Party/candidate funding: Question or seek to understand how the political party is being funded. Looking at the big financial hitters in the 2007 general election, one could tell who was going to play the piper.
• Stop demanding or accepting cash or other handouts: As soon as that MP candidate pays you, he has to be compensated and compensated profitably. His first priority as an MP will be to seeks ministerial post where he can eat. Failing that, they'll fall prey to a godfather.
• Pre-general election wealth declaration: If candidates had to declare wealth as part of their election manifesto, it may weed out pharmacists and the like.

The 30 motorcade country-a sign of...

Imagine Maembe is a younger relative of yours say by 10yrs. Like you, Maembe grew up in the village, poor with no shoes until he started secondary. He is/was bright and hence managed to get into a good high school. And there the similarities with you end.

By the time Maembe reached high school, you had finished campus (through many many harambees that started from the day you were called to Alliance) and had a fairly good job. You thus financed him all the way thru to Nairobi campus where he graduated with a good degree. Enough to enable him to get a decent private sector job.

With money to burn, Maembe seems to have taken a turn. Because of the condition of the roads in chagiis where his parents still reside, he owns a Range Rover sport, which is pretty top range. Recently, you received a call at 5.30pm telling asking you if you could buy him a spare tyre as his had punctured huko ushago. He lives in a servant quarter on Mucai drive (off Ngong Road). One drunken evening, you get a call at 2am. Maembe got into a heated discussion with his neighbour who also happens to be his landlord. The resultant uppercut has landed him at Kilimani where the negotiations are at ksh150k for him to walk scot free. Naturally his thoughts turned to his well off rela. He will of course need somewhere to stay while he looks for new digs. Maembe being of marriageable age has found himself a marriageable lady. Good. The lady hails from Kabete. Bad. Dowry is paid over generations. In keeping up with his neighbours, his church colleagues at Nairobi Baptist, Maembe will occasionally call you from Malindi, Mombasa and even Zanzibar telling you how well the weekend is going down there with Kabete gf, why don't you take easy and join him with your missus.

Because of his non-frugal ways, Maembe has several credit cards and is offcourse still paying for the RR sport. You are starting to despair, but then one Satu, Maembe invites you for ride in RR sport saying he has something he wants to show you. He drives you to Kiserian and shows you a 1/2 acre plot he has found. Yippee! You can't hide your joy at his discovered sense. He is there rub, Maembe tells you that because of his upcoming preparations for nuptials, he'll be needing all the savings he can get. Lakini this plot is going for a good price. You make a deal with him, he'll find the deposit, you'll then lend him half the remaining money and give him the rest. He agrees to this, but later calls you to ask if you can lend him the rest as well.

That in nutshell is where we Kenyans are today. We have a president who travels in 30-car motorcade compared to say 10 for Obama (3 for David Cameron). He earns Ksh36m per year, twice as much as the UK PM. And we have a GDP per capita of $315. Something like a 100 times less than the UK. When will we get a reality check.

wikileaks: Kibaki knows Ruto was behind RV violence

A lot of what wikileaks has revealed so far has not come as much of a surprise.

We all knew Wambui facilitated the Artur brothers coming to Kenya. We all knew she and Joho were trafficking drugs at the coast and involved in a lot of other corrupt stuff at the Port. We all knew Kalonzo Musyoka was an opportunist per excellence. We knew Kibaki didn't really want to get rid of Murungaru as he helped do most of the dirty fundrasiing in the 2002 political campaign. We knew that a lot of the Kikuyu elite what very unpalatable views about Raila and the Luo community in general.

The crucial evidence that we've been waiting is for someone high up in GoK to calim knowledge or evidence of who was involved in PEV and especially in RV. On January 21st 2008, yani during the violence itself, Kibaki met Ranenberger. In what I consider the most revelatory http://wikileaks.ch/cable/2008/01/08NAIROBI239.html piece in wikileaks so far Kibaki revealed "that William Ruto, one of the members of the ODM,s "pentagon" leadership, is largely responsible for continuing violence in Rift Valley." .

In essence, the man they've all been trying to get off the Hague train should actually be reserved a first class seat on the train!

Good economics is good politics, bad politics is bad economics

It can be said that Kenya's economy has grown the last 9 or so years. It can be said that Kenya has not known the kind of political we've had in the last 9 years.

But the economic growth has widened the gap between the "haves" and the "have nots". Secondly, it has not been a "jobs" growth whereby, the economy was absorbing jobless graduate, secondary leavers and of course KCPE-leavers. At an average of 4.5%, this means that once you take off the effect of 2.3% population growth, it has grown at a paltry 2.2%. Good enough for the West economies, not for a developing nation. The growth has also not been sustainable. With the exception of the telecom industry, other sectors remain dependant on exogenous factors (agriculture, tourism among our largest fx earners); in others such as manufacturing and infrastructure building, we are still dependant on foreign money or investment.

It has also been growth that has seen concomitant growth in corruption. It has not been felt by the majority of Kenyans in a positive way. Negatively yes because now staple foods and basic necessities are more expensive, but earnings have not kept up. Pour into the mix a very young population and really the growth looks anything but stellar.

Kibaki doesn't do politics. Politics is not just about being able to take smart political decisions, but also more importantly, being able to take the public pulse into on major decisions.

On both fronts, we are not giving ourselves the chance to grow.

Investing with 2012 general election in mind

Einstein defined insanity as doing the same over and over again and expecting a different results.

Prior to the 2007 general election, I argued here and elsewhere that Kenyans must ignore politics and effectively decouple it from business for our economy to flourish. I still urge us to do and the need to do so is even more urgent today. It saddens me when you see a whole mashinani town come to a standstill for a whole day when well-fed politicians land in their helicopters.

In part, my drive was because I used to think Kenyan siasa and had small if any effect and in any case this would be temporary. PEV and its after effects disabused me of this notion.

Politics does have a serious impact on the way your investments will turnout and you have to bear this in mind when investing. And the risk is higher the more liquid your investment is.

So real estate will be risky to extent there is a repeat of PEV because certain areas will become no go zones. Cosmopolitan towns like Nai, Mombasa and Nak will benefit on the other hand. Any slight hint of discord will send NSE investors scurrying into bonds, saving accounts and other frontier markets if they are foreign investors. IN which case, an investor will want to stay in stocks that show low volatility but give fair income (say 4%+ dividend yield). Alternatively, one can focus on being liquid to take advantage of volatile shares. As of now, I am looking at shares with that are either illiquid or have small floats in the NSE and either give good income or are more affected by other factors other than politics. Examples being Carbacid; EABL; Eagaads.

So what is the likelihood of discord or even PEV in 2012? The signs are not promising. The Ocampo announcement gave Kenyans hope that VIPs who had been able to escape the law would finbally be getting some law on their heads. It was to be a huge step forward in quashing impunity. Somebody would finally be held accountable for PEV. The new Katiba gave Kenyans hope that we'd henceforth start doing things legally, but also with goodwill.

Alas, Mwai Kibaki has other ideas. The first appointments under the new katiba for AG, DPP and CJ have be done with the utado attitude thaat we expect from Kibaki and since he has the numbers in bunge, the 3 will go thru. The appointments are not dissimilar to those of the ECK commissioners in early and late 2007 that effectively created the environment for the rejection of the 2007 ge results. The political elite don't suffer from the consequences of their actions and hence will never learn. There is no excuse for us investors.

Kenya Real Estate for beginners - Plots/Land

It’s never too early to buy a plot for your own future home or for investment purposes.

Do your due diligence

1. Check in your proposed location of purchase for amenities that you require

a. Electricity

b. Water

c. Nearness to tarmac road/main road or river if for farming

d. Any proposed developments

e. Any past or present issues with land ownership such as reserves, demolitions, forest land

f. talk to neighbours understand if any issues over land

g. confirm pricing either via Nation’s Thursday property guide or visiting nearby shopping centre

h. above all, visit the plot/land you intend to buy wherever possible.

2. Paperwork

Get the owner to show you the title deed. Note the title deed number and the size of plot/land. Note that 1 hectare 2.47 acres. ¼ acre is therefore 0.24 hectares. Note that some surveyors can and do understate acreage

Take a photocopy of the title deed and take the same to the local district land registry where you will pay Ksh500 for a search. The search is a land registry document that confirms if there are any caveats from bank, other buyers or relatives.

There are occasions when owner may legitimately not have a title deed. The only legitimate reason is inherited plot/land. Certificates are tricky because there is a trade off between legit certificates that can easily be converted to title deeds and certificates of ownership that are in perpetuity

It favours you often to have a sale agreement that has the legal back up. If you are buying plot/land worth Ksh1m plus, the lawyer costs can to around 30-40k. I think it is worth it.

You will need original and copies of your ID, KRA PIN (which you can no longer obtain without an ID). You will also need 4 passport photos from buyer and seller.

Don’t bribe to get paperwork processed faster. For example special land boards will usually come back to bite you. Most land offices have the terms of service prominently displayed on the counter and its worth reminding them.

vii. Copy of owner's title deed->search->sale agreement->transfer->land board consent->stamp duty->your title deed

Pricing: Kenyans today know the worth of their land. No seller will overprice you if you make them a reasonable offer. Cash is king and if you have it, it opens doors to very reasonable price offers. As an example, most people nowadays do 10% deposit and remainder in 3 months. If you go to the seller 10% now and remainder in a month provided they drop price, it leads to a different outcome. It’s also possible to go to the same seller and offer 50% now and remainder in 6 months and they’ll favour you because of the cashflow aspect of a deal. Pointing aspects that please you and those that don’t while pointing out favourable payment terms will get the price down too.

Related costs: Stamp duty on plot/land is 2% in rural areas and 4% in urban areas. That is % of buying price or Lands’ valuation whichever is higher. Where land requires surveyor beacons, you need to add another Ksh10k though you should get the seller to these on. The costs of changing the documents tend to be around 3-4k. If you get a sale agreement, you’ll find most sellers don’t really care either way and you bear the cost 100%. All in all, these related costs will be between 3-6%.

Caveats: There is caveat emptor. You also place a caveat with Land registry if you are putting down a deposit and paying remainder much later or you fear somebody may attempt to sell your plot/land especially if you are in diaspora.

Please support the "Yes to ICC, no taxpayer money for ICC culprits" petition

Many of us lead busy lives. Many of us can't afford to march on streets of Nai or elsewhere against impunity. Surely, we can however sign the 1 million petion(http://www.petitiononline.com/811976/petition.html) in support of the ICC process and to say no to continued impunity in usage of our taxes.

Many of us are afraid to take a stand lest will be laughed at; injured by no brain kalaus; fired from our jobs; ostracised by fellow tribesmen.

Lakini today, we are faced by "manifest nonsense" of a different level. If you drive through the Nai-Eldoret road, you'll note that we still have active IDP camps. Kenyans like you and me who happened to be in their own homes were thrown out by impunity as a response to impunity. Many other Kenyans lost loved ones because of trigger happy cops given permission to let loose. And then we are being told that taxpayers money will be used to defend the drivers behind this PEV. I think we can agree, this is not a good idea.

1 million signatures are significant today in Kenya because its the number required to amend the new Katiba.

Did Raila create a frankenstein monster that will destroy him?

In the 2007 general election, Raila successfully campaigned on a platform of overt tribalism. Let’s be clear at the outset. Tribalism has plagued Kenyan since independence Kenyatta practised it; m-0-1 improved on the practice, Kibaki reverted to the Kenyatta practice and so forth. The first two presidents dealt with tribalism by dictatorship. Kibz on the other hand allowed democracy to flourish in country that is not yet a nation, but made the mistake of perpetuating past tribal practices. The difference is that democracy is a competitive where you gain voters by creating an ogre out of your opponent. So in the US, you call Obama a communist and a Muslim; in the UK, you used to anoint your opponent as a tax and spend Welshman with character flaws. They do however, campaign on issues pertinent to voters. If it was an issues based campaign, the 2007 ge would have been very close as I then alluded to.

Once the no campaign closed out the 2005 constitution with a convincing, Raila then moved on to create his 5 pillars effectively channelling tribal kings in each of the bigger tribes sans the Kikuyus. The campaign was successful in that he run Kibz to the finishing line. Unfortunately for him and us Kenyans, the general election campaign legitimised the no-issues, no-ideology way of campaigning. This was replaced with the tribal mathematics game whereby the most intense part of the campaign is spent in looking or creating tribal kingpins who can deliver a good number of votes.

Today, his protégé Rutovic is looking to copy and paste the same trick. He has already created his ogre, "Raila the betrayer", the next step is then to find kingpins with likeminds but with numbers and finally cobble up some bull to feed voters. There will also be subtle digs against "the people from the lake".

My hope is that this time round, Mzalendo Kibunja and his colleagues at the National Cohesion will step in to nip this nonsense on the bud before it steps us up for another PEV.

Kenya in early 2011

• The economy is growing once more at an amazing speed. Growth is not as uneven as some would have you believe. You can see progress in as devise places as Nai with multi-estates coming up every year; Kisumu with electricity even in such outposts as Sengho on the Nandi/Muhoroni border; Nanyuki with its expansion towards Naromoru and Timau; even Diani is seeing some huge real estate growth as people wake up to the huge potential of South coast. Its not just real estate growth. Businesses as diverse as greenhouse farming to new hotels are seeing good and sustained business growth. However, we are still too dependent on good weather for continued economic growth.
• Kibaki is road builder per excellente. The only that will thing stop you from doing Nai to Eldoret in under 3 hours is that you may pass on since Kenyans can't drive safely at speed and of course a few bits of new tarmac ruined by overweight trucks. Yes, Kisumu to Kakamega remains neglected still, but I can safely say it is one of the few bits of bad road I encountered in a tour that took in some 2-3,000 kms of roads
• Corruption remains big and bold issue: I was asked for bribes a record 4 times in one holiday. Imagine the I land at JKIA, as I pass through the obligatory custom check and after the usual queries about what I am carrying, the custom guy asks for my passport. As soon as he saw my name, the conversation was surreal. The customer guy to his colleague who was about to inspect my wife's cases "we, hawa wako pamoja, wacha waende". Then he turns to me in kiuk and says "Maina, what you'll do is buy 3 beers" then to a kalau standing by. "Wewe enda na huyu atakupatia pombe tatu". The custom guy is obviously from the Sonko school i.e. not too bright. As soon as I get outside and I am there with waiting family, the cop is prodding me on the back ati "si ulete pombe tatu". I just said loudly, "unataka ni kuhonge". And he practically ran-off. Corruption is now seen especially in mashinani as the only way to get service when you encounter public servants. This has in effect created a real problem in tackling the issue because the giver and taker of bribes almost think alike. Lakini if you pay taxes, and still pay bribes, its like paying your worker a salary and then bribing him to do a task for you.
• There is a now a huge political disunity among Kenyans which poses questions about 2012. Many uniformly agree that our politicians are a problem and sow the seeds of disharmony and yet when they are asked to, they'll back their tribesmen without questions. The Ocampo announcement day was very instructive in this respect. Before and immediately the announcement was made, Kenyans almost to a man were agreed that the guilty must carry their crosses, that Ocampo and the ICC were impartial and that Kenyans would not support impunity. In contrast, the first MP to be questioned about it, said "Ocampo has totally failed, he has targeted Nandis". Two things wrong with this, firstly, there was no challenge from the Citizen reporter since the 6 also include 2 gema and one somali. Secondly, even other politicians who came after were similarly one-eyed. By the end of the week, you would hear similar views from mashinani guys.

Kenya's next leader -a sweet talker or a deliverer?

A developing nation needs a leader who will (a) increase the size of its ugali and (b) do so sustainably. As a Kenyan, you can attend as many political rallies as you want; listen to as many funny political jokes/tales as you want, but come dinnertime, you'll be wanting to eat and possibly eat better over time to allow you to attend more political rallies. Once you have a family, you'll want to get a job or business that puts food on their plates; to be able to cloth them; shelter them and pay bills. You'll want a career or growing business so you can keep up with their growing needs. Finally, as a good parent, you'll want for them to successfully replay that same tape. Believe you me, that is only going to happen if you elect leaders that can do (a) and (b).

I believe that both are very challenging deliverables and it'll take a good leader to do one let alone both.

If you look at our past, Kenya has had two leaders who delivered somewhat on (a), but because they didn't deliver sustainable growth, their record is somewhat tarnished. Up until mid70s, Kenyatta had allowed Kenya's economy to grow at a good speed. Corruption and signification changes such as allowing civil servants to own businesses; rampant tribalism meant that there was anxiety as he approached his last days and political assassinations meant he bequeathed a failing template.

Hopefully we can't argue that Kibaki has implemented policies that have allowed the economy to grow during his term so far. And yet, the anxiety we collectively feel about 2012, says a lot about his failure to deliver a sustainable growth model...

A sustainable growth model is difficult to deliver because it requires the deliverer to be of sustainable habits. If you are corrupt, tribal, uneducated, don't do politics, vision-challenged and so forth, you won't deliver a good legacy. You won't build institutions that are sustainable. Your going will find people rushing in to replicate your habits.

The search continues...

Kenya's adoption of the "spend now, pay later" model

If you were to be offered the choice of shopping using your credit card or somebody else's credit card, your behaviours would be very different.

The spend now, pay later model is now a key characteristic of Western capitalism. The 00s boom and its aftermath have been funded by private sector leveraging itself to the hilt. And the public sector (govts) stepping in to continue the leveraging and in effect spread the same to everybody. In layman terms, many people and companies borrowed more than they could afford on their credit cards loans, mortgages et al to finance a feel-good lifestyle. When the whole facade crumbled, governments stepped in and borrowed money to in effect repay these debts. They also performed a socialist service by making sure that the paying was spread out to everybody.

GoK has been borrowing to finance both its blotted bureaucracy and also development projects. Lately, private sector lending to finance mortgages, credit cards et al has also increased. While financing development projects such as infrastructure will pay itself back in due to course, the rest of the spending is unlikely to bring any returns. As such, paying back the borrowing will become a problem in the medium to long-term.

Rather than waiting for the medium-term, Kenyans need to start taking pro-active steps to ensure they leave and grow economically. Within their means.

Charterhouse bank - the money-launderer's dream bank

Charterhouse bank cost a CBK governor (Andrew Mullei) his job. It also led his obvious successor, Jacinta Mwatela missing out on the job. Several people involved in investigating the bank either had to flee for their lives or their careers were ruined. Its crimes:

• Money laundering: In any story you read about money laundering in Kenya, one of the best examples you get is that of Crucial properties which held a foreign currency account with Charterhouse bank. The company owned by among others Humphrey Kariuki (Wines of the World; Dalbit Petroleum and I think former proprietor of Green Corner in Nai) was investigated by CBK after it received $25m from either Leichstein or Jersey (depends who you ask). CBK reckoned this was drug money. Charterhouse refused to provide details and the whole thing went to court. The judge allowed Charterhouse to go scot free. In the meantime, the CBK team doing investigations discovered that Charterhouse had like 200 customers with 20,000 accounts. Many lacked basic know-your-customer information, but were clearly opened for the the purpose of layering where you disguise the source of your money by making multiple transactions into different accounts. That money-laundering only became illegal in Kenya this year is neither here nor there. When CBK delved it discovered the following other crimes none which have ever been successfully prosecuted because CB and related players pay well.
• Tax evasion: Charterhouse helped Nakumatt (had a 10% stake in CB), to effectively under-declare it sales which meant that its tax payments to GoK were something like Ksh50m compared to Ksh500m for the smaller Uchumi! Effectively, Nakumatt and associates had not paid taxes amounting to Ksh18bn going by the CBK findings. How? Suppliers were paid into their CB accounts where they would either ship the money abroad or shift into several other accounts within CB. When KRA came, it started chasing the account holders. Those cases are still pending.
• Large exposure breaches: Means nothing to most of us, but most banks that have either been conduits of crime or played with the idea of collapsing always do so because they breach larg exposure requirements. In layman terms, no one customer should more than 25% of a bank's loans or deposits. Reason being, if the customer collapses and goes to heaven tomorrow, the bank will more or less follow (though presumably not to heaven). Nakumatt and associates probably did something like 50% of all CB's business. CB also broke banking rules on lending to employees;

Why did Charterhouse survive to awake now as its threatening to do? The owners of CB are well connected characters.

Fuller details here.

County Kenya - making your county viable

I see counties working only if they tick 4 boxes:

Financial control:

The world over local governance fails because for a whole host of reasons they spend more than they get from central govt or can collect locally. As of now, I'm aware of any financially solvent municipal or city council in Kenya. Its not Kenyan either. In the US, very few states are able to balance their books. In Kenya, the chief issue is not corruption but lack of financial control. Corruption is a by-product of this. Add politics and the cocktail is potent. Apart from the kind of auditing that is being done on CDFs, the second part has to come from the locals themselves. Seek accountability from your county by electing men/women of integrity and professionalism. Ksh2bn can look like a lot of cash but if your county has 1m population that is only Ksh2k each. Its not cash to be pilfered but to put into projects that will generate returns. Proper accounting, budgeting, project management and procurement processes will seal loopholes. Although, new Katiba doesn't have it, I expect some revenue raising powers for counties eventually. In any case, revenue and job creation measures will become a key differentiator between viable and non-viable counties. Hence,

Industrial base:

Nairobi has grown chiefly because its a magnet for most of the Kenyan brains. And many others. Counties without any employment prospects will become a mere curiosity. A grounded industrial policy should be one of the things each governor should be judged on. Measures to attract some of the industries currently congested in Nai's industrial should be looked at. Counties should consider setting aside 25% of their revenue to attract prospective employers be it via soft loans or even infrastructure development. While industrial development should be pegged on comparative advantages e.g. its no point Turkana setting a tea factory; certain counties may need to create the comparative advantages. As an example, Laikipia can look to set a meat processing concern or even look to aggressively market its tourism potential which is huge (Mt Kenya, Bantu lodge, Solio lunch, Samburu traditional homes etc). Others like Eldoret must look to turn the nearby Moi University into a R&D assembly point where students can come to study and build their lives as they become part of the next Silicon valley and so forth. No industrial base will really take off without...

Infrastructure:

Many counties have basic infrastructure. A touch of tarmac here; a few homes with electricity; very basic health centres. If a county is planning to become the next base for manufacturing of agricultural produce and other value-adding activities, it'll need power either from the national grid or by supporting solar energy collection. It may need a working airstrip or even airport to either transport produce to JKIA for onward transmission or direct to export markets. Roads will have to be good even for non-perishable produce as bad roads increase fuel costs. Its not just hard infrastructure, soft infrastructure in form of promoting R&D to locate to your county will create the brainpower to attract the employers that are needed. Upgrading and increasing the number of secondary schools (provide subsidised internet); technical schools supporting industries; universities will create a virtuous circle. Planning will also make a difference. Nyeri has had the same buildings and streets since I can remember i.e. late 80s, but also seems like many other towns to have sprang up a slum or two.

Minimise impact of politics:

Unless we get any external influences, competitive politics are here to stay. If Kenyans can't understand or won't play by the rules of such competitions, we'll have bloodshed or the kind of tension we had between 2005-8. Eventually, you find the economy goes backward as ours did in 2008-9 period. County govts that fall prey to negative politics will become like in the council of Nai or even Momba where nothing really progresses because the political animals can't see the big picture. How do you minimise negative politics? This comes back to the local county people electing men and women of integrity. It doesn't matter what you want as a county dweller, if you vote for the guy who builds up your party or pays out most, he'll need to recoup that outlay or party line up. Secondly, CDFs seem to have elicited more involvement by constituents in their affairs and this level of involvement will need to be there for county governance to work. Finally, the foundations and the future of your county will be laid by the first county government in 2012. Electing the right leaders; having succinct katiba provisions for counties and central govt involvement (via annual audits) will ensure that strong county institutions are in place to ameliorate politics.

In short, County governance is here to stay. If it can build on the positive aspects of the CDF experience, it'll take Kenya places.

An analysis of the 2009 Census figures

Well. Its official. China's one child per family has never seemed more appealing. We've increased by a third in 10years. As many couples will tell you, have one child is very noticeable on the budget. Having two or three is even mooore noticeable.

Unlike in Chine were you need permission to have two children, in Kenya, GoK should just say you have to pay for schooling your second. And clearly we need family planning education.

Other highlights?

• Nai has the highest proportion (14%) of its young going to University. Central is next with 2.6%. Vast gap and I'm pretty sure some of it is explained by the fact that Nai houses more single people than children.
• 2 of the largest counties (outside of Nai), are in Western. Bungoma and Kakamega with around 1.7m each both have 700k more people than Mombasa. Nyeri has a similar population to Kajiado and Kwale (just under 700k).
• North Eastern hs the highest proportion of bush toilet users (63%). Unsurprisingly, Nai has the highest proportion of its population (47.7%) with main sewer toilets followed by Coast. With 5.8%. Huge gap. Only 8% of Nyanza households have piped water. Only 2.6% of households in NE (which has the highest), use rain harvesting techniques.
• Despite (or because) fo their love of mbuzi choma, Central only have 0.5m goats compared to 4m in Eastern and almost 12m in Rift Valley. Human population outnumbers each of its animals even ingoho which are only 25m. There is an economic opportunity here and I think guys need to think harder about the meat business. If you want asali, go to Eastern province where
• Surprisingly, Central has the highest proportion of households (85%) that own a radio. 62% of Nairobian households own a TV with 40% in Central doing the same. Only in North Eastern do less than 50% of the households own a cellphone. A flattening market? Computer ownership (14% in Nai at the highest and 3.8% in Coast which is 2nd), is paltry although I think cellphones have been a handy substitute.
• 42% of our population is aged less than 14 years.

Well done to GoK for doing this census because it'll help to guide planning.

2012 and beyond: US/Swiss model or the Nigeria one

The more I reflect on Kenya's history, the more I realise that how we are governed will be the key differentiator on whether we achieve our potential or not. The new katiba has given Kenya a potentially life-saving form of governance but only if its implemented to the letter. Below I review some of the new facets and their implications.

The 2012 general election will usher in

• an executive where only the president and his pre-nominated vp will be elected officials. The rest will be appointees from outside the political circle who will be vetted by the various parliamentary committees. This will work if you have a president who wants technocrats that can deliver in the particular ministry. The US model almost works but don't forget you can get guys like Donald Rumsifield. If done properly, we'll get a John Michuki-type in every ministry.
• County governance. This is new but it means that a lot of the current MPs will actually prefer being governors and senators than MPs. A positive because it means that we'll have a new crop of MPs. The downside is that your current MP might be angling to eat his cut of the 15% from the budget. In this respect, lets pray we don't get the dysfunctional Nigerian model but the super uber efficient Swiss one. Already in Nyeri, Elephant Maina is eyeing the governor seat to consolidate the horrible road he did in the area. Do you think any other road contractor will build roads there?

Proposed constitution: A review

Basically, this document is idiot-proof. Anybody can read this katiba and understand what each article says without needing an expensive lawyer or re-reading it severally.

Parliament:

Set parliament periods. Elections will be held on the 2nd Tuesday of August every 5 years.

Parliamentary Service Commission's composition continues to nag at me. i think its too MP-heavy and renders itself to their undue influence.

The MP recall clause- is in, but its not i.e. parliament has been given permission to come up with a law setting out the requisite criteria and procedure. However, article 105 does allow one to take a petition to high court against your MP basically declaring his seat vacant. And petition will be heard within 6 months.

Executive:

President has to seek parliamentary approval when appointing his/er Cabinet (now known as Cabinet Secrtaries), AG, Secretary to Cabinet, Principal secretaries, ambassadors , Cheif Justice and his/er deputy and ANOTHER.

Has to wait for 7 days after the elections before s/he is actually sworn into office (no more midnight swearing shenanigans)

Cabinet ceiling set at 24. Not sure why there is a floor of 14.

Cabinet secretary can't be an MP.

Cabinet secretary can be dismissed by parliament via majority vote (Kimunya won't have to die and resurrect)

Kadhi courts deal with muslim matters. Imho, they shouldn't be part of the civil service, but having been around for 53 years, it'd sheer hypocrisy to say I'm voting NO because of them. I can wait until the katiba goes through and then wage war proper.

Economy:

Devolved government has made it into the katiba complete with revenue (set at a floor of 15% of GoK revenue) and own senate.

Better control of public finance via a pre-budget statement that will allow parliament committee to consult the public.

An independent CBK-very very important especially for banking supervision and monetary policy.

Other of note:

National police

Amendments can be done via parliament and popular initiative.

Land policy

Dual citizenship

Make voting mandatory

I am ashamed when I read people of my generation who say they won't bother voting. I worry when I read that only 55-60% of people vote in Kenya and less in developed countries. Part of it is a lack of history. Most of the people who died or were detained without trial in the 80s and early 90s in Kenya did so while agitating for the right to be able to vote for people they wanted to lead this nation. That is the emotional part.

If you work, run own business, invest or own property, you pay tax. That is unless you are not on the tax avoidance thang.

If you pay for your groceries, you check they are green enough. If you pay for your car, you check steering, brakes, accelerator, cromes et al. And you pay more in your ta,x (30% every month of your income) than for all these other things part from may be your home. Its not just intelligent, but right that you care about how what you've earned with your sweat is spent. Your vote may even change how and when you are taxed. Vote because whoever you choose will decide how your money is spent.

After 2007, some may say your vote was stolen. It wasn't because everybody in Kenya is in GoK and we have all now learnt a few things. Like? Most politicians in Kenya are the same and it'll require us to reassess whether its presidents/tribes/personalities we vote for. Or ISSUES. The katiba debate is encouraging in that respect. Your vote is your way of saying you are engaged in what is happening in your country.

For those of us who are prayerful. Paul spoke about how prayer alone may not be enough without action which represents our faith in something happening. If you have faith that God will give us good leaders, put it into practice by voting for those good leaders!

NSE @ 6,000 a possibility in 2011

In 2007, when the NSE last reached 6,000, Kenya's economy was growing at around 7%. 2008 was 2-3% and 2009 was similarly anaemic. This year, God's favor in form of good and continuous rains mean that we are almost guaranteed 4-5% growth this year. Next year, with God's favor with the rain, we can touch 7% again assuming that we don't get into any early 2012 political skirmishes.

Because we never entered a recession in 2008-9, the economy has continued to grow and thus I believe we are poised higher in the NSE.

The private sector manufacturer and service firms should be announcing firmer or better than expected results for Q1 2010. By extension, financials which took non-performing loan hits due to PEV in 2008 and drought in 2009, will now see the upside in their balance sheets for which they've been restrained in growing.

All the above, plus the artificially lowered lending rates portend a higher NSE.

The key supporting point is 4,800 which we need to touch in 2010 so we can launch higher in 2011.

Which stocks?

Equity- we all acknowledge the step into IB was unclever. Not so Uganda and South Sudan businesses. Uganda ofcourse has oil and despite M7's re-election in 2011, its economy will continue a north-bound journey. South Sudan goes for a certain independence referendum in 2011. Both will support the upturn in Kenya's economy still Equity's bread and butter.

Centum- I think its a transformative time for this investment firm and James Mworia hasn't put a foot wrong yet. Getting into Carbacid when he did and breaking its logjam to allow trading resumption at NSE was a masterstroke. Exiting RVR and writing off the investment in advance all mean good thangs for full year 2009/10 (announcement due soon) and going forward.

I also fancy some manufacturing exposure to the likes of Crown Berger, Carbacid all which do well in an upturning economy.

Downside risks: as mentioned, any early 2012 campaigns will remind investors (specifically foreigners) that a new leader is due in 2012 and create tension. Another drought will have a similar impact to 2009.