Why investors should bet on Kenya

This article was co-authored with the chairman of EEI, Mr. Kennedy. His expertise was vital in elaborating on some of the reasons why investors should have a long position on Kenya.

Kenya has always been a pioneer, a cowboy carving out a destiny in the wild frontier; be it in the political and civic sphere through a progressive constitution, among other things or in the technological sphere through innovative tech companies such as safaricom. The Kenyan people are quite familiar and probably fond of the unknown, the wild west if you will. This is an essential ingredient for growth and advancement in any area of life; willingness to challenge the status quo and chart new paths.

Think of Kenya like a company, and recently its majority shareholder(the people) demonstrated how far they're willing to go to ensure the stock price doesn't continue to plummet. They believed that proposed changes by the management would affect the stock price negatively, so they decided to storm the board room(after trying all other avenues) and get their message to the board members. The elected board had to change course after this, the message was clear; the shareholders wanted better. As an investor this is a company I would invest in; a company with active shareholders whose goals are aligned i.e a well managed company with great return on investment.

Why bet on Kenya

If investing in a company with active shareholders, who hold the board and management to account isn't reason enough, here are a few more:

A great brand

A company's brand value is always baked into its stock price. If you look at some of the big brands like Apple & LVMH, a percentage of their value is derived from brand. Unfortunately there isn't a model for calculating brand value, so investors have to rely on earnings, but you get a glimpse of brand by how much customers are willing to pay for a company's product. For nation states brand value is derived from factors like: financial performance & national strength in the global marketplace. You look at USA, a place where migrants flock to looking for opportunity. The USA has built a brand around being the 'land of opportunity'. Kenya is a good brand in the region, wielding immense power & influence in the continent, both financially and geopolitically. Factors like stability, economic opportunity and freedom work in its favor and lure freedom seekers and investors alike.

Promising future

The protests in the country were led by young people, builders of the future of Kenya. Their involvement in state affairs shows how concerned they are of Kenya's future; will the stock price go up (better living standards for them and their children and a nation to be proud of) or will it lose value (lower standard of living than their parents and a country riddled with problems). The young people of Kenya are committed to building a better Kenya. As investors, we aren't the wealth creating machine, we simply oil the machine with capital and tune it through guidance, the real wealth creators in any economy are the people.

If the creators of wealth are fighting for a conducive environment to create said wealth, we should pay close attention since those are the kind of people we should go long on.

Conclusion

We can't predict the future, we don't know where the market is heading; all we can do is ensure we understand the fundamentals of a business and check the due diligence box before deploying capital. Sometimes we just get lucky, investing in the right company, in the right market, at the right time. The future is determined by what people do today, which is quite frankly hard to predict.

That notwithstanding, investing is all about the future, and we believe Kenya is a future blue chip country with a passionate citizenry who want a better Kenya. Investing at its core is also about banking on people, the true creators of wealth, and the Kenyan people seem like a promising bunch with what it takes to create wealth. Even with recent uncertainty the kenya shilling and Nairobi Securities Exchange managed to out performed their peers. NOTE : Recent events didn't affect the half year performance, we'll have to wait for a couple of months and analyze the data. We believe there's a lot of money to be made facilitating growth in the east African nation, of course only with the right leadership & structures in place.