Category Archives: SME solutions

Kenya Community Currencies

This morning at a session on currencies and value I got re-introduced to community currencies. Two years ago there was a mini-storm about the legality of a currency called Bangla-pesa that has since quietened down.

There are five Kenyan community currencies that circulate mainly in slum areas of Nairobi and Mombasa.

Community currencies in Kenya

Nairobi:

Gatina
Kangemi
Lindi

Mombasa:

Bangladesh
Mikindani

The paper notes are by the Grassroots Economic Foundation. They are not backed by local currency but have the same value as Kenya shilling notes. Member of groups which have constitutions and rules before they join, each gets currency worth 400. They actually only get 200, and 200 from each member goes to a community fund – to carry out community projects such as trash cleaning and hosting sports events.

The lesson today showed how hawala, bitcoin, and M-pesa had different applications in communities, with a focus on uses away from the formal sector. Also that 10 years after formal financial inclusion, there is still a lot of money being handled through informal sectors.

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TEF Forum 2016 Part II

Tony Elumelu, a Nigerian businessman is considered one of the most influential business people in Africa. He’s been an advocate for seed financing and angel investing for entrepreneurship across the continent, something that he’s dubbed “Africapitalism” and advances this through the Tony Elumelu Foundation entrepreneurship program that has seven pillars including mentorship, online resources, the annual forum, seed capital funding, and an alumni network.

At a Q&A session during the 2016 forum in Lagos, Elumelu spoke of his desire to expand the awareness of the program which currently has applicants skewed in Anglophone African countries (Nigeria had almost 1/3 of the applicants, followed by Kenya, Uganda, and Ghana). He said he’d been asked in France if this meant anglophone countries were more entrepreneurial but he said they were more aware of the program, and that he wanted to see more Francophone and North African participation in the program

He also spoke of his desire to grow the program even larger through partnerships with other organizations, one of which is the African Development Bank to match, and therefore double, the number of fellows that the program is supporting.

Parminder Vir, the CEO of the Foundation also said that the 6-year-old organization would be rebranding several aspects of the two-year fellowship program and that all initiatives will be realigned under the Tony Elumelu Foundation (TEF). So there will be the TEF entrepreneurship capital management , TEF entrepreneurship hub, and TEF research & advocacy etc.

Vir said they had also built a platform to link partners and the diaspora with the entrepreneurs and which can be vital to the program (e.g. Nigeria get $62 billion from the USA in remittance). She asked entrepreneurs to engage on the unique social network (not facebook or snapchat) as the platform is unique for investors thought leaders, partners, funders – VCs, PEs, Angels who want to come to Africa and now would now have access to 65,000 entrepreneurs in the 54 countries who were pipeline of bankable investments, and 2,000 have who had already received advanced entrepreneurship training.

Already the entrepreneurs who are diverse sectors, use the platform to share their stories, engage each other, network, market to each other, pose and get solutions to problems they face. This platform also forms valuable data for research and trends and they will be producing more research reports to market to the diaspora and potential partners.

The largest sector of those supported in the 2006 cohort are in agriculture (27%) followed by fashion/clothing and ICT, and about 1/3 are women. Vir said they were committed to supporting 20-40% of agri-entrepreneurs every year and this was echoed by other participants including former Nigerian president Olusegun Obasanjo.

The next class admission class to the Tony Elumelu entrepreneurship program will start in January 2017.

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TEF Forum 2016

The Tony Elumelu Foundation (TEF) staged its 2nd entrepreneurship forum on October 28-29 in Lagos, Nigeria. Billed as the largest gathering of African entrepreneurs, it featured 5,000 young attendees who were recipients of funding and support from the Foundation through its TEF Entrepreneurship Program.

TEF Forum 2016

The meetup is one of the support structures under the TEF Entrepreneurship Program‘s 10-year, $100 million commitment, which aims to find, fund and support 10,000 entrepreneurs across Africa over ten years. In the first year, they had 26,000 applications, and for these second they got 45,000 from every African country and selected 1,000 who are eligible to receive up to $10,000 to implement their business plans.

The attendees got lessons in entrepreneurship from business, financial and international leaders and other mentors and partners in the program, on things like raising capital and getting started in their ideas, generating revenue and making their companies bankable through efficient financial processes, how to build structures so that companies can survive beyond their founders (“business in your head has to be decrypted so it can last 100 years” – said the UBA CEO) and on how to live within their means.

They were also startled to see and hear from past recipients including one farmer from Uganda who’s won a $70,000 NGO order, and a Gambian entrepreneur who’s gone from earning $20,000 to $2 million in sales through exports of mangoes and groundnuts. Also, some of the suppliers at the event such as the caterer were past recipients of funding and support from the program.

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Understanding Telephone Farming

Many people in Nairobi and other towns and in the diaspora are ‘telephone farmers’. These are people who own or have bought, or inherited land, buildings, equipment on rural farms that they now support. They send money a few times a month for salaries and for operations of agricultural ventures that never seem to have any significant payback.

The owners probably read the Saturday newspapers with envy as they see other farmers holding up rabbits, bananas, watermelons or other bounty from their farms which earn them thousands of shillings every week or month.

The difference between them and the typical telephone farmer is that they are active investors as farmers, not passive which is what a faraway telephone farmer is. That leads to the first point about telephone farming.

The goal of telephone farming is asset preservation, not income generation, and doing some economic activity on a distant farm protects it from invasion by squatters or grabbers.
The social aspect: Telephone farming sustains the local community; it keeps a line of communication open and allows for the community to have a stake in the preservation of the asset as they go about their business. The picture (above) depicts what should be a banana farm, but clearly, the beans the workers are growing in the same field are doing much better. There might be pilferage, misuse of equipment, or other losses: but they should be within tolerable limits and not erode the underlying assets.
The costs of farming are much lower for telephone farmers compared to other businesses investment in urban areas. E.g. labour costs are much lower: an amount of Kshs 2,000 is a salary on many farms, but that could be an electricity bill in Nairobi.
A good rule of thumb for the telephone farmer is to be present at the farm during major operations like planting and harvesting.

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Water Moment: Understanding Nairobi Water Bills

Have you been getting more and more visits from the water meter crews from Nairobi Water (NCWSC), demanding payment?

For years, I’ve been paying every month the same amount of about Kshs 500 (~$5), without seeing my bill, but of late, the bill has always remained over Kshs 1,000 even when I have paid twice within the month. One day they even came around with a bulldozer which they told area people was to yank out meters from people who have not paid.

So I had some tweet chats and went to the NCWSC offices and found out some stuff:

They no longer send out statements or hardly do. They have cut back on mailing statements via the post office. They won’t even issue you with a bill event at the office
They increased their rates at the end of 2015. The guy who came with the bulldozer and another at the NCWSC office said the rates doubled at the beginning of the year.
They have instituted a charge of Kshs 1,000 on every unpaid or overdue bill. This means even if you’re late on a Kshs 204 bill (the lowest bill you can get), you get charged Kshs 1,000.
You can check your bill via *888# on your phone. Sometimes the SMS comes through without information but you still get charged Kshs 10 for the service.
They have an online platform for one to check bills but not ready. Alternately there is a There is a Jambopay Water Bill checker that’s free to check your bill. It is accurate, but often offline.
It costs Kshs 33 to pay your water bill via M-Pesa (assuming Kshs 30 goes to Safaricom and Kshs 3 excise tax charge of the financial service.
The due dates for bills vary in the month, depending on when the water readers come round to read or estimate the amounts.
Water, electricity and other utility companies can now report customers to credit reference bureaus over unpaid bills.. but who is the customer to be reported? The person who pays the bill? This is often a tenant of a house or building. Or the registered owner of a property with a meter? Sometimes this is the landlord or the contractor who put up the building.

Other water tales:

A few years ago, IBM Research in Nairobi gave a talk on the water situation in Nairobi. There are 3,000 known boreholes in Nairobi and it can cost $10,000 to drill one as you have to go deeper than 400 meters instead of 200 in the past.
IBM also reported that 40 – 50% of water sourced is lost (just doesn’t get to consumers) AND that 50% of hospital visits in Kenya may be water/sanitation related.
A feel good story about water supply and the World Bank in Kenya.
Are water charges going up again? – Not sure if these are even more new charges from October 2016
Adding value to water: How the business of bottled water went mad ..How did a substance that falls from the air, springs from the earth and comes out of your tap become a hyperactive multibillion-dollar business? (The Guardian)

Even with the new water rates, getting water from the NCWSC is a lesser evil than paying for your lorries, but…

Residents of an estate in Langata went out and bought a water lorry to ensure they get reliable and affordable water deliveries.
Water supply via lorry is a lucrative business.

$ = Kshs 101

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Bankelele

Nairobi writer on Banking, Finance, Technology, and Investments

Category Archives: SME solutions

Kenya Community Currencies

TEF Forum 2016 Part II

TEF Forum 2016

Understanding Telephone Farming

Water Moment: Understanding Nairobi Water Bills