The reason I got interested in this man is that he was rich, [...]]]> Sometime back, I had an interesting landlord. He was mainly a loner, had many houses, but he lived in an extension in the same compound with his eight flats and one maisonette. I rented one of the flats – a two bedroom one.

The reason I got interested in this man is that he was rich, retired, drove an old car, but I did not see much his, strangely young, family – discomfited in the Kenyan context.

One day he came to get rent at 10.30PM – that is the likely time to get bachelors at home. We spoke right into the wee hours of the next day.

It was an outpouring of a man so betrayed by his family, that he was in constant panic about his wealth. He had a number of real estates; he had a large ranch upcountry, and a few investments here and there. He said he had many children, all degree holders; lawyers and accountants, but they were estranged, did not get a long, and he had disinherited them.

I thought this was unique to my landlord, but when I saw recent news where a man was trying take over his father’s property, I thought it is problem that needs a solution.

This is where reverse mortgage comes in handy. Reverse mortgage allows you to draw down on the value of your real estate while still living in it. He had high value houses. Instead of living in a back house, reverse mortgage would let him designate one of the large houses he has all over Nairobi as his residence, move into it with his young family (he had remarried because his wife and children wanted none of him, but all the money and property), and draw living expenses from the same house while saving for his family.

At his death, the lender would sell the house and his young family will still continue living and earning from the rest of the estates. Talk of eating your cake and having it at the same time.

The industrial revolution was seen to be the end of development. There were motor engines, powered ploughs, washers and dryers – literally anything that made life worth living. They had made it!

The 1940s [...]]]> In earlier generations, things evolved from stone are, to metal age until agrarian revolution. Since then, the world has pretty much been revolutionary.

The industrial revolution was seen to be the end of development. There were motor engines, powered ploughs, washers and dryers – literally anything that made life worth living. They had made it!

The 1940s jolted the world into a new age; information age. There were computers – big mainframe machines in America – the world loved the marvel – and word spread out. People started naming computers in terms of generations. Technology caught up so fast that by mid 1990s, the generation mantra could no longer hold. We now refer to them by capacity and brand.

Most important is the fact that over the years, computers have become smaller, with bigger operating capacity and speed, and the prices are falling fast. Additionally, the intercourse between telephony, particularly cellular, and the internet is widening the web’s reach immensely. Think of it this way; as long as one has a cell phone, no matter how limited functionality, the internet is reachable.

Much as the person may not be able to use pull technology – meaning logging onto a site and getting the information, one may still benefit from push technology – where the advertiser sends text messages over internet protocol and reach millions of recipients all over the globe with a negligible fraction of what would otherwise be used in TV and Radio.

The internet is becoming cheaper by the day, widening reach by the hour, and facilitating impact assessment. Add podcasting, which creates flexibility in access, to this and you are looking at the new advertising frontier.

Many people are going bonkers – win spectacularly or lose big”. Fair enough. Has the World Wide Web eased your investing decision making process? [...]]]> We were in a rat race long before the internet got here. But with the advent of this web, with the long arms of our search engines, the maze just got worse.

Many people are going bonkers – win spectacularly or lose big”. Fair enough. Has the World Wide Web eased your investing decision making process? Or has it complicated it even more. Looking up investment choices has become like drinking from a fire horse. Much as you thirst for that investment, it is not worth galloping the choices without stepping down the pressure.

I was recently amused by a friend in recent weeks. The guy has no knowledge of the financial world dynamics, yet he had this to say; “People are making a ton of cash on options. I want to start messing with those options”. I smiled and asked him in the politest of terms. “How much do you know about securities trading”? To my amazement, he said Zero! I just told him that, well, the reason those who understand it are making a kill is because there is a number out there who are in the menu, not the guest list of the financial markets.

He was perplexed. So I discarded my rhetoric and said it plain. For my friend in question, “messing with options”, as he put it was taking a peril, not a speculative risk – speculative risk carries both chances of loss and profits. He was going to be mauled. It is a jungle out there, and the financial predators can smell a prey in Kigali, Rwanda while he lies on his back on the beaches of Dominican Republic.

Investments can be aggressive, which is basically ambitious and high risk or balanced with a 50/50 placement in high risk and low risk assets. Conservative investment puts money in low risk holdings.

Investment decisions requires in-depth understanding of where one stands in terms of age, risk preference, current earnings and potential earnings, the business environment, and tax legislations in the investment environment.

So, are you riding your investment train, or just hiking a ride?

KAMPALA, Uganda- They are invisible. They have neither proper addresses, nor official operational premises, or licenses, but their clients are a network of desperate Ugandans, craving quick money.

The mushrooming money lenders, typical of shylock, the notorious usurer in the Merchant of Venice by William Shakespear, employ all tricks [...]]]> By JOSSY MUHANGI
Published December 3, 2009

KAMPALA, Uganda- They are invisible. They have neither proper addresses, nor official operational premises, or licenses, but their clients are a network of desperate Ugandans, craving quick money.

The mushrooming money lenders, typical of shylock, the notorious usurer in the Merchant of Venice by William Shakespear, employ all tricks to fleece unsuspecting customers, by committing them to mortgage their hard-earned assets, for little money, at obscene interest rates.

One such victim is Jane Nasasira, a local councilor, who urgently wanted money for school fees, and to boost her restaurant business.

Nasasira said it was urgent for her daughter to sit for her university final exams, so she approached a money lender, to borrow UGX 1 million.

“I only relied on the lender’s good faith,” she said, adding that the money lending business is premised on mutual trust, and neither of the parties wanted to lose out. “ [We agreed that ] he would not seize my house or land once I repaid the money.”

But when Nasasira failed to repay the money with an interest of UGX 200,000 that the lender demanded, the lender colluded with the local council and court brokers, who evicted her and fenced off of her land in Mbarara Municipality.

Nasasira appealed to the local police for help, but she was told that her case was a civil matter, involving two willing people, and police could not protect defaulters.

In September, Nasasira voiced her concern to President Yoweri Museveni when he met traders from Western Uganda in Mbarara. I listened to her narrate her ordeal, got interested in shylocks, and ventured into learning how they operate.

In Uganda, such money lenders are known as kafunas, a Luganda word literally translated to mean “fast gaining deal.” I tried to borrow UGX 300,000 from a lender, who only identified himself as Asiimwe. Asiimwe asked me to surrender my identity card, car log book, my ATM card and PIN number. In fact, he even insisted that we go to my bank, to prove that the PIN number I had given him was valid.

Before Asiimwe could give me the money, he insited that I sign a bunch of forms. I scrutinized the forms, and realized that he had actually filled in twice the amount of money that I wanted to borrow.

I refused to surrender my ID, so Asiimwe sked me for a post-dated check, indicating that, I would pay him UGX 600,000 at the end of one month. He assured me that he would only recover UGX 360,000 if I paid in time. He lent at 20 percent per month that day.

When Museveni met the businessmen in Mbarara, several people, esspecially women, told the head of state how they had lost their assets to the kafuna. The President asked for names of the kafunas, and promised the victims that his government would prosecute them. But almost three months later, the victims are still waiting for justice to be served.

I talked to the deputy Resident District Commissioner (RDC) Mbarara Mr Keith Mugabi, who said that the government cannot prosecute the kafunas because the transactins are usually conducted on a willing-buyer, willing-seller basis.

“The money lenders are difficult to prosecute, because they have lawyers and an organized system of self protection,” he said, adding that the victims unconditionally commit themselves to signing agreements, and when they default, it is difficult to bail them out.

Pursuant to orders of the President, the office of the RDC, in mid-October, convened a meeting of the affected, and some identified money lenders. The meeting was told that contrary to the Ugandan money lending institutions ACT Section 2, Cap 273, the mushrooming kafunas have no licenses or formally known premises.

I found out that the time the kafunas usually allocate for repaying the money and interest, ranges from one month to infinity, but even when a borrower repays after one week, the interest is usually computed on a monthly basis. Should one default by a single day, the lenders add the interest to the principle, to fetch another month long interest.

Another notorious trick, I discovered, is switching off mobile phones, to cut off access, which makes clients delay repayment and increase profits. Some lenders desert their premises, only to later claim default by clients.

Most kafunas, I found out, ask for post-dated checks, with amounts far exceeding the borrowed amount, which most customers can’t afford. Once a client defaults, the next step is turn him or her to the police for writing bad checks. It’s at this point that the kafunas usually start demanding valuable assets from the desperate clients, who are keen to escape prosecution. They then dupe the customers into writing agreements, to make it look like they have struck a sale deal with them.

Some humane lenders keep their bargain, while reckless ones (who are the majority), rob their clients in broad daylight.

A Kampala-based money lender, who only identified himself as Stephen said, his business is made up of a group of youths, who pooled their money, and began lending it to needy people, especially soldiers and teachers.

“We agree to have copies of their IDs, ATM cards, and PIN numbers, plus any other security, including logbooks, land titles, household property and electronics,” he said.

Stephens denied that they operate mysteriously, saying his office is at the bus park although it is not designated as a money lending institution, but as Kisabya Youth Association.

Another lender, who identified himself as Stanley, said he usually renders his services to friends, who have been denied loans by banks.

“We only attach defaulters properties when they have totally failed to repay, but do not take advantage of the agreements to rob them,” he said.

Vincent, another lender, said there was no need to put up sign posts because, his clients know him well.

“We do not drag people out of their homes, and offices to borrow from us,” he said, adding that they charge high interest rates because of operational costs, including recovery and renting premises, among others. “They come pleading with us to solve their urgent problems.”

Most of the lenders I discovered borrow the money from banks at 2 percent interest rate, then lend it to their customers at interest rates as high as 20 percent and up.

One would wonder why, with the sprawling banking business and micro-finance institutions in Uganda, people still fall prey to the unscrupulous money lenders.

Most Ugandans that I interviewed cited stringent banking rules and regulations as the main reason why they usually resort to the kafunas to meet urgent obligations.

“I use the kafunas to borrow money to repay my bank loans, because with the introduction of credit reference bureau services, banks are internetworked, making it difficult for me to borrow from a different bank, before repaying my outstanding loan,” one woman said.

Parliament is in a tag-of war with the Foreign Affairs Ministry over Shs 17 billion the ministry needs to build a market for Uganda traders in Juba, Southern Sudan.

Whatever reasons parliament has, this money should not be passed. For starters, this is the wrong ministry doing the wrong thing. The docket falls [...]]]> By Amon B. Mbekiza

Parliament is in a tag-of war with the Foreign Affairs Ministry over Shs 17 billion the ministry needs to build a market for Uganda traders in Juba, Southern Sudan.

Whatever reasons parliament has, this money should not be passed. For starters, this is the wrong ministry doing the wrong thing. The docket falls under the directorate of external trade or COMESA Desk at the Ministry of Trade, Tourism, and Industry (MTTI). Two, constructing a market in Juba will not render us more competitive than Kenyans, the main players in the market. It is high time we started doing things the proper and professional way or resigned ourselves to losing out as usual.

All the trouble Ugandans have gone through in Juba has its genesis in our informality and lone-ranger modus operandi. And what makes Kenyans tick?

In the case of Southern Sudan, when it became clear that peace was on the horizon, following the CPA between Khartoum and SPLM, KAM, the umbrella association of Kenyan manufacturers, spearheaded the ’Opportunity Juba’ exercise to ensure the following: all intending businesses, individual or corporate, registered and organised under KAM.

Kenya Commercial Bank (KCB) came in next and opened a branch in Juba, with services; transport, insurance, medical cover, camping tents, all registered under KAM.

All manufacturers and their distributors, regardless of location, were given Export Promotion Zones (EPZ) export terms of trade, all demanded by KAM.

diplomatic and consular matters relating to travel and residence had a coordinating focal person in KAM.

And so the Kenyans went, pitched and conquered. Then in came Ugandans, in our usual ‘ Park-Yard’ style.

How will a Ugandan carrying a few cartons of Royco from Kikuubo, with all costs and profits loaded onto his purchasing price, compete with the Kenyan who sources the same product ex-factory, under EPZ terms, with an export credit line, and all other aids to smoothen his trade? Outcompeted, Ugandans did what we know best: ferry in juju men to ward off kenyan competition. Juju men were chased out. Trump Card? Government to build a market. It won’t work.

It is time for us to either learn and do things professionally or keep losing out even where we as a country invested heavily as we did in SPLA/M. A similar scenario was seen in Rwanda, where the Rwanda Patriotic Front army war was literally a Ugandan war. After the liberation, however, who got the juicy spoils?

At the time I registered my ‘ex-officio’ membership 10 years ago, there were 1,241 Kenyans working in Rwanda, all professionals, in different sectors: private, government, NGO, UN, name it. And Ugandans? Running ‘kifuufu’ garages in Gatsata, ‘tonninyira’ in Nyamirambo and Kicukiro! Ask the ambassador who would lose his mobile phones to his countrymen during Ugandan National Day Celebrations at his residence!

We shouldered the ANC struggle more than Kenya did. But who reaps? Kenyans need no visas to S. Africa, despite their business rivalry bordering on hostility with South African companies in the East African region.

Uganda widely opened doors to South African capital, including erstwhile ‘hard tools’ of apartheid, but we have no visa waiver to South Africa.

Fellows at the Directorate of External Trade of MTTI, Uganda Export Promotion Board, Uganda Manufacturers Association, Private Sector Foundation, Chamber of Commerce, this is what branding is all about. This is what we mean when we talk of carving a niche. This is the meaning of positioning. As Ugandans, we have carved out our own niche in the perception of our neighboring markets! We cannot keep exporting witchdoctors, hawkers, et al and think that building another Mbizzinnya or Park Yard in Juba is the solution. Not even the billions squandered on CNN or Rosa Whitaker! Let’s learn the basics, shape up or ship out!