How greenbelt zoning can save Kenya's arable land

The future of Nairobi conurbation looks like that map that Mutula Kilonzo tried to pull off but didn't manage. Everybody is in a hurry to extend Nai's reach to Thika, Kiambu, Machakos and Kajiado.

In the process, some of Kenya's most food productive land not to mention aesthetically please landscapes will disappear for good. The whiners will no doubt be wheeled to talk about GoK not responding quickly enough to flooding, droughts et al. The time to act is now before our food insecurity becomes acute driven by lack of enough arable land.

A greenbelt zoning does what it says on the tin. It puts a belt around designated green areas so as to protect them from planned (or in our case unplanned) buildings. In my humble opinion, Kiambu is a rich agriculture district that should be designated a green belt zone so that crop production can continue in the area. On the other hand, places like Karen should be opened up for further building.

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.

Like the Tatu City idea, but who is minding the ecosystem

Nairobi is the Green City no more. We have built over almost every empty piece of land such that if you were in Eastlands and wanted a game of football or a picnic in the park, you have to walk to Uhuru Park. If you are in Karen, you have to go to one of the gentrified pubs in the area. If you are in Westlands likewise.

As we now look to the outskirts of Nai as the next destination of our concrete jungle, it'd be wise to start thinking about the consequences of:

a) uprooting farmlands with plants that in effect act as part of the cleansing of the atmosphere

b) using the most arable land in Kenya for buildings. Its ironic that most Kenyans prefer building on red soil, which also happens to more productive food-wise.

RIP Nelson Muguku- Equity's largest individual shareholder- an inspiration to me

From this unlikely business, he rose to become a 6.1% holder of a Ksh100bn bank that is one of Kenya's business star stories. Proof once again, "its not where or how you started, its where or how finish".

He put to shame those who said Kenya doesn't have honest billionaires.

He has been an inspiration to me. May God console his family at this time.

The early bird catches the fat worm is the golden rule of investing

Imagine you had invested in Equity in 2006 when it listed. Suffice to say, but today you'd have made a million even with Ksh200k worth of shares. Imagine you had started saving as you started working. Even if it was just 10% of your salary. Today, you'd probably have the equivalent of your annual salary in savings.

If you had a bought a one acre plot in Athi River or Kitengela in the early part of this decade, today you'd be looking to spoilt the same into one eight acres plots costing the same as the 1 acre you bought in early 00s. The same is true of almost any large town in Kenya. Even agriculture land has in some parts increased by similar price.

Who is your uncle? Africa culture goes missing...

Had an interesting discussion the other day. The sister of this guy is having a child. Big news especially in England where odieros are increasingly choosing not to procreate. The guy was very happy that he was shortly to become an uncle and this is where the debate began. You see, I happened to say that I’m already an uncle and the question was then paused as to whose uncle I was i.e. which of my siblings has a child. I responded that all my cousins’ kids call me uncle. At which point, i was told that I’m not an uncle.

You see, according to Western definition, the only person that can be called an uncle is the brother of either your parents and at a stretch (if the sun shining . In Kenya (and I believe a significant portion of Africa) however, the definition for your uncle is extended to include your parents cousins. When I explained this cultural context, there was silence. the sort you get when you are into subjects where the majority are ignorant.

Africa culture is with very few exceptions, ignored the world over. On the other hand since 1884 and beyond, we continue to gobble up other cultures.

Culture is important because it creates cohesion. It gives one roots and identity. Because of these and other important features, colonising nations have either used culture as a colonising tool or a signal that they were in control. Part of reclaiming your nation is to instil your culture.

NSE on track for a 4,800 finish

As previously mentioned, I believe that barring another drought, the NSE will reach 6,000 in 2011 before a slight dip in 2012 to allow for the general election. To do so, it'll have to hit and stay above 4,800 during 2010.

Up to now the NSE has been driven by a combination of emotions primarily derived from the political theatre; economic fundamentals which are driven by rain or no rain and foreign interest which tends to be driven by how Western economies are performing.

• With the katiba referendum successfully out of the way, the only other chink in the political armour might be the ICC investigations, but I see those getting bogged down mainly because this GoK doesn't have the cojones to deal with impunity. Thus no nervous investors.
• Economic fundamentals: The structure of our economy is such that domestic demand plays the key role in the economy's outturn. Domestic demand is driven by disposable income and credit build-up. Disposable income is derived from income less taxation (which is fairly constant) less BAU spend. This BAU spend can be very volatile especially if prices of daily supplies go up. They did in 2008 and the NSE tanked. Once it started raining, Kenyans could spend more on investing and savings. More importantly manufacturers could see returns on their investments, thus economy starting growing again. Should rains continue in later 2010 and early 2011, NSE will search 5300 by March 2011.
• Western economies: Are set for a low growth until 2012 at least. This maybe to NSE's advantage as many fund managers such for alpha will have to go beyond over-priced commodities and buying bonds from heavily indebted sovereigns.
• IPOs: This is not really a driver but tends to be a firm signal that the NSE is buoyant and on the up. So far, KenGen's OSF, NSE IPO, the IPo by the baker, NBK's OSF have all been talked about but not delivered. By my reckoning, the NSE needs 75 counters to really catch the imagination of joeblogg type of Western funds. Nobody wants to pay a P/E of 15+ and having a few more counters will drive P/Es to attractive levels.

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.

Mobile telephony - a low margin future?

Zain's Ksh3 per minute call anywhere announcement last Thursday was in effect the first time Zain has made a no-head scratching announcement. That and CCK's subsequent announcement on halving interconnection rates to Ksh2.21 per minute could mark watershed moment in the mobile voicecall sector.

The key driver of the Zain move is obviously to take away subscribers away from Safaricom. The size of Safaricom's subscriber book is now seen as the biggest entry barrier into this sector and both the measures are aimed at reducing the book. As an aside, Safaricom paid Ksh4.5bn in interconnection rates (13% of its operating expense), you can thus imagine how much the other 3 players pay given most of their subscribers will be calling Safaricom customers.

Safaricom's subsequent response was clumsily presented, but the upshot is that its 8m or so subscribers will only pay Ksh2 per minute to call each other for the next month. Safaricom made Ksh63bn of its Ksh84bn revenue from voice calls last year. Thus Safaricom responded to the threat on its subscriber book (you can tell this is the case by the fact that postpaid customers will still be paying normal Ksh8 rate). The length of the offer period implies that Safaricom's thinking is that Zain can not sustain Ksh3 per minute beyond a month. Wishful thinking?

The issue is this. Can the voicecall providers make money if interconnection rates are reduced and hence they have to reduce the charge per minute? In my mind, the components that make up the cost of a call would be the fixed and variable (staff, commission, marketing) costs incurred by the provider; any costs associated with interconnection; other business-associated costs. A lot of the smaller players can probably sustain a price war because their interconnection cost has been halved. For Safaricom however, such a war would be costly because interconnection rates are a small portion of its business. It is clear that Safaricom is making a very healthy margin from voicecalls.

But the future portends lower margins and I think Safaricom shareholders should not ignore this especially in the medium-term when voice revenue will still be its predominant source of revenue.

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?

NSE: lull before a dip or a rise?

Despite a very positive referendum outcome with Kenyans voting overwhelmingly to look forward than backwards and doing so peacefully even in the volatile RV region, the NSE seems to have taken the news with a discernible lack of interest. Is the market ignoring these gains in the political environment or are there other factors at work?

Yes there was a rise pre-the voting day as it became clear that the YES team had done enough and moreover Kibz govt had anticipated any violence in RV by posting security everywhere, but a subsequent correction whittled these gains.

To my mind, the reduction in political risk should mean the NSE heading towards a 5,000 close by end of the year to reflect the gains in the economic arena not just from the YES vote but also the subsequent dividend from the same as well as the bumper agriculture produce that we should be seeing this year. This latter factor should mean lower produce prices this year and thus lower inflation feeding into higher savings and so on.

The future for Kenya's economy notwithstanding usual weather issues is frankly very bright and one would be advised to pick NSE shares that have either strong regional momentum or products that have a regional reach. Equity, Centum, DTB to name but a few have set their eyes on achieving the same sort of growth rates in EA that they have in Kenya.