Friday 15 March 2013

Nairobi Slums' "Millionaires"


Nairobi’s slums, home to an estimated two million poor people, are — unknown to many — lucrative havens where some enterprising Kenyans rake in millions of shillings.
Most of these people have taken advantage of the huge demand for housing and the sheer numbers to make a fortune.
Slumlords lay a claim on dozens of single-roomed houses, built using rusty mabati or mud, for which they earn attractive returns.
Some, however, sell all manner of consumables and take advantage of the numbers to make their money.
Tenants pay rent ranging between Sh700 and Sh2000 a month, depending on accessibility and the proximity to basic extras like toilets, bathrooms and water.
Daivid Karanja owns 47 such units in Mukuru Kwa Reuben village for which he lets for Sh1,300. His tenants use commercial toilets about 50 metres away, which charge Sh8 for a shower and use of the latrines.
“Landlords here do not provide toilets, the rent is only for the house,” said Mr Karanja who has lived in the slum since 1996, adding that the commercial toilet facilities remain open from 5am to 10 pm.
His monthly rental income from the houses alone is Sh61,100, comparable to revenue from letting four two-bedroom apartments in Nairobi’s middle income neighbourhood.
Farming fortune
He, however, admits that he does not know whom the land he has built his houses belongs to.
Nearby, Stephen Kamanga is tending to his five dairy cows and four piglets.
Mr Kamanga gets about 30 litres of milk per day from the three cows, which he sells to his neighbours at Sh35 for half a litre.

His daily income from the milk is more than Sh2000, which translates to about Sh60000 a month.
That is besides the income from selling of piglets and male calves.
“I have bought my farm in bits from neighbours who are willing to sell” said Mr Kamanga, a retired mechanic who feeds his livestock on waste from vegetable vendors.
There are tens of Kamangas in this densely populated slum, where some of his neighbours across the river live on the upper floors of two-storeyed shanties and keep dairy animals on the ground floor.
Across the city in Kibera slums, touted as the largest informal settlement in Africa where close to a million people reside, Justus Mulwa would easily be among the biggest slum lords.
His monthly rental income is over Sh150,000 exclusive of taxes from the 88 single rooms that he owns.
The rental houses are spread among several villages of the expansive slum, from the more affluent Laini Saba to the poorer Silanga, where he lives.
“I want to build 14 more on this space,” said Mulwa while pointing for a space that on the last row of Silanga village.
He would easily pass for any slum dweller with a misery income going by his dressing, old clothes and torn plastic sandals.
“You have to look like every other person to make it here,” he adds in explaining his humble lifestyle even when he is among the people with the highest incomes in the city.
As a supplier of electricity, Mulwa’s present monthly income is more than twenty-fold the country’s minimum wage, which the majority of his tenants hardly earn.
The massive housing development of the wider Langata area has helped in the drying up of the Nairobi Dam, previously a massive water body where in the 1980s families enjoyed their weekend outings, but now play host to a big part of Kibera.
Just like in Mukuru, Mulwa’s tenants use commercial toilet facilities which charge Sh5 per visit while amenities like water and electricity do not come as a package with the house.

Tim Nyaoma, a graduate from a middle level college who has failed to secure a formal job, is one of the suppliers of electricity in Tetra Park village in Mukuru.
He says that the energy trade is tightly controlled by cartels all over the slums.
“Not anyone who can supply electricity, it’s a tightly controlled business,” said Nyaoma who has about 30 clients so far whom he charges Sh300 a month. “Others control more than 100 connections.”
The illegal connections are tapped from the three-phase power lines that run across the city on about a ten-metre wide leave way.
Tim represents millions of college graduates who had hopes of finding a stable job but have now been pushed to earning a living from illegitimate means.






Original From "The Standard Group (Digital)"

Wednesday 6 March 2013

Africa has the ideas but lacks the resources to fund them, says Swiss entrepreneur !!

Jean Claude Bastos de Morais is a Swiss entrepreneur and investor who has founded a number of businesses throughout his career and has a specific interest in Africa. He is the chairman of the advisory board of Quantum Global, an international asset management group that he founded in 2003, and is an advisor on African financial markets. In 2008 he founded Angola’s first investment bank, Banco Kwanza Invest, and in 2010 he formed the African Innovation Foundation which focuses on driving African-led development through fostering innovation.
Jean Claude Bastos de Morais
Jean Claude Bastos de Morais

How we made it in Africa asks Bastos de Morais to tell us about what his expectations are for Africa in 2013 and which industries on the continent he thinks investors should be looking into.
Briefly tell us what Quantum Global Group does in Africa.
Quantum Global Group offers a one-stop solution for emerging markets, with a focus on the African continent. We have a highly skilled team with a strong African experience, coming from various industry sectors and nationalities. Therefore we successfully provide African market-anchored insight for institutional clients including sovereign wealth funds and national banks.
Internationally, Quantum Global is a group of companies focused on corporate finance, asset and private wealth management, real estate project management and investment advisory. We create a bridge between wealth and appropriate investment opportunities for central banks and sovereign wealth funds, financial institutions, corporate investors and high-net worth individuals in emerging markets in Africa and around the world.
What importance do you think Africa holds in 2013?
Africa’s growth is set to accelerate over the long term, following a decade of strong performance despite socio-economic and political instability. As Europe and the US are struggling to restart their economies, the World Bank estimates Africa’s growth rate will exceed 5% in 2013 and banking penetration is growing around 15% each year. These are all indications that Africa is taking off economically.
My experience on the continent tells me that opening the door to private-equity investment on the continent has incredible potential to fuel African growth and global economic gains.
In your opinion, which African regions/countries and industries should international investors be looking at?
Sub-Saharan Africa has in recent years rebounded sharply, supported in part by the global recovery but mainly through developments on the domestic front: output estimated to have expanded by almost 5% on average year on year.
Across Africa there is considerable unrealised potential that can be maximised by international investors. From infrastructure and real estate to agricultural development and manufacturing, Africa presents considerable opportunities. Africa could become one of the world’s opportunity hubs.
You started the African Innovation Foundation. Why do you think it’s important to invest in innovation in Africa?
I am convinced that the best way to build Africa’s capacity is by investing in innovation and creating an environment that promotes entrepreneurship. The African Innovation Foundation was established exactly to do that – support innovation and sustainable development in Africa. Today, we support home-grown innovations but also facilitate technology transfer and promote the exchange of ideas and collaboration among researchers, inventors, entrepreneurs, investors and policy makers.
A key flagship programme of the foundation is the Innovation Prize for Africa, which is focused on delivering market-led solutions that will move the continent forward. My experience as an investor tells me that seed-funding good ideas can fuel progress – that is what the prize does. We find good ideas, provide them with financing, but also connect them with marketing experts, investors and others who can help them grow their business.
It is my dream and vision to boost the growth of small and medium-sized companies in Africa in the years to come and the Innovation Prize for Africa is an important vehicle to support that idea.
How do you think Africa can reach its full potential? What needs to happen?
My time on the African continent has taught me that there are no shortages of good ideas, but a lack of resources to fund them. I believe that the best way to build Africa’s capacity is to invest in local innovation and entrepreneurship. We need to open doors to venture investing across the continent in order to build African economies from within and reduce dependencies on aid.
Tell us about Banco Kwanza Invest and the investment trends have you noticed in Angola.
Banco Kwanza Invest is the first investment bank in Angola, operating since 2008, and focused on private equity, corporate finance, merger and acquisitions and other financial services.
We have observed the Angolan market closely over the last few years. Inflation was dramatically reduced and gross domestic product increased. At the same time commercial bank lending and government bond rates significantly decreased. All of this has a very strong effect on business and investments.
We believe that the Angolan market needs more venture investing in order to have a much better debt to equity ratio, to leverage their operations. The interesting areas which we see are agriculture, infrastructure, service industry, manufacturing and hospitality.

Originally From How We Made it in Africa