“I am very angry at Africa’s present condition. We are talking about a continent which is tremendously rich in resources, yet it is mired in grinding poverty and appalling squalor,” says Prof. George Ayittey. But as Ayittey argues that Africa’s development has been squandered and plundered by vampire states, what are the poor people in Africa doing to change their predicament? Western Kenya is put in the spotlight.
The past few years have seen a boom in stocks at the Nairobi Stock Exchange (NSE) emanating from the recent sale of Initial Public Offerings (IPOs), particularly in public companies, with some stocks having a return of more than 400 percent.
But as people patiently queue for long hours to make money, one question remains unanswered: Have the Luhya of Western Kenya taken advantage of the Bull Run at the NSE? When Mumias Sugar Company issued their first IPO in 2001, Luhya farmers were given an opportunity to take up substantive share allocation through Mumias Sugar Outgrowers Association. However, statistics indicate that the majority of farmers have since sold their shares at a throwaway price, reducing their share to a marginal 12 percent. In fact, most farmers sold shares at a 50 percent discount, demonstrating the poor participation of the community in the capital market.
This has prompted the area MPs and the Managing Director of Mumias Sugar Company (MSC) to contemplate initiating awareness campaigns to educate farmers on the importance and long term objective of investing in stocks. The reason is understandable. The local community, whose majority are cane farmers, should dominate the homegrown company as shareholders.
According to a financial report on top millionaires at the NSE in the Financial Post of December 2006, the first and only luhya, Hon. Amos Wako, ranks position 218 out of 318, with 350,000 shares in MSC valued at Ksh 18 million. From the list, it is clear that Luhya enthusiasm in stock trade has not been very good.
The disturbing question is; where do Luhyas invest? Just take a close look at all the local markets in Western Province. People from other provinces of Kenya dominate. The sukuma (kales) we eat come all the way from Molo in the Rift Valley Province. This is very disturbing indeed considering the fact that Western Province experiences plenteous rainfall and has fertile soils. The public transport sector is even tragic: ninety per cent of the buses and matatus plying our roads do not belong to the locals. We should imitate our Kisii brothers who own 100 percent of all public vehicles plying their routes!
One politician recently complained that a particular community is basically taking over Kenya’s economy through the NSE. Unknown to him is the fact that the said community has empowered its people by all necessary means. What are Luhya elites doing to empower their people? Luhya leaders should borrow a leaf from their entrepreneural counterparts in other provinces and if need be, take the whole branch. Where are Micro Credit Finance Institutions in our region? Do they exist? How many of our own run a stock brokerage firm? Only Mr. Jos Konzolo. How can Luhyas take advantage of the stock market? Our sons and daughters are some of the best financial analysts and investment gurus in this part of Africa. The begging question is: who do they advice?
Certain factors impede Luhyas investing in stocks. To start with, there is too much politicking at the expense of economic growth. Most leaders in Western Province haven’t assisted the community to understand the concept of wealth creation through stock ownership. In fact, they are not role models on how Luhyas can empower themselves economically. Secondly, the MSC Outgrowers section lost its vision to educate farmers on the importance of owning and retaining shares in MSC. Third, there is high illiteracy on the importance of the share certificates. Most Luhyas still believe in the old economy of inheritance, coffee and tea farming. Thus, share ownership is still a new concept that many of them haven’t understood. Fourth, Luhyas seem to be risk averse especially when it comes to investment. For example, they seem to fear stock price fluctuations, believing that their wealth could go up in smoke in a second. In addition, lack of Luhya entrepreneurship in setting up stock brokerage agents in Western Province has limited potential investors from exploring the possibility and understanding of how to trade in stocks. Finally, Luhyas have no well organized savings and credit cooperatives through which they can pool resources and expertise for management and investment purposes. This has made those with low income to shy away from such business ventures.
To date, the NSE index has seen an upward climb, presenting a new frontier for wealth creation. Most IPOs shares create a few millionaires whose improbable success sways off risk takers. It is tragic that Luhyas ignore buying shares in these companies. All over the world, politics is driven by economic moguls but Luhyas seem to be disintegrating and sinking deeper into economic quagmire.
It is vital for Luhyas to realize the importance of individual as well as group investments to maximize their wealth. Our leaders should stop trivial politics and concentrate on broad based issues that will benefit and reposition the community for wealth creation. Luhyas should move away from traditional wealth ownership of such assests as land, goats and cows, to modern investments and business ventures by incorporating their traditional knowledge into investing in the stock market.
By Malenya Lusimba and Vincent Rapando