Hedging 101

We finance folks have the propensity to confuse the heck out of everybody on simple terms (or issues) relating to finance. We will sit around talking derivatives lingo and other market issues like its alien- speak to others – it really, is not! I usually say to people:

•It is not that difficult

•If I cannot explain my model, in words – i.e. what the model is, what is does and how it does that, I have no business just plugging in numbers, “letting it calculate”, then looking at a number and saying “Well, this number means XYZ” – that is utter nonsense and is one of the reasons why the financial mess in 2008 happened – people not knowing more than just “that number”!

•You must interrogate what the terms and ensuing numbers and operations mean – if you don’t understand exactly what an ABS (Asset Backed Security) is, what it does, how it works, what the end result is intended to be, variations to, relation to other market variables – seriously, you have no business, just “doing ABS “on the quantitative front – because really, what the heck are you doing?

•The market place is very dynamic; what worked in 2007, might still be relevant today (or not), but certainly needs analyzing to ensure it still fits! That business of “this is how we do it” – yah, that doesn’t hold water for serious minds.

Simply stated at first – and I intend to go into detailing in subsequent posts to explore the different facets pertaining to hedging. (I hope to be a better blogger in 2013 – because I am always writing something, someplace anyway!)

So, Hedging:

What is? Hedging is simply the practice (art and/or science) of minimizing losses in your portfolio. It will mean, you make an investment of some kind to ensure that the value of your assets is protected from adverse price movements in the market.


All you are trying to do is ensuring that at the end of it all, your $1 is at least still equal to $1 and not $0.98. The goal of course, it to ensure that your $1 yields some profit, but at the very least, you are not trying to lose any money, no matter what the market dynamics are.


We hedge because of imperfections in the market; ideally, prices should adhere to demand and supply forces. They do not (sometimes, most times actually!) and there is therefore, the potential to make lots of losses if we do not employ strategies (hedging), to accommodate for the volatility in the markets. We therefore hedge to minimize risk exposure in markets (and hence maximize opportunities presented by these very same financial risks, while factoring in the cost of the hedge). We hedge to manage market risks – in a nutshell.

What do we hedge?

Commodities (agricultural or non-agricultural), credit risk, currencies, interest rates, weather (yes, we do have weather derivatives) etc.

How do we hedge?

First you must consider the general organization’s policy and objectives on risk management. This would include types of hedging employed, limits and other guidelines that define the what to do and what not to do as far as hedging is concerned. This is absolutely important, because hedging can never provide cookie-cutter solutions; it is a subtle balancing between market dynamics and organizational objectives. It must be what works for you (which is why as a consultant, I can never, ever recommend generic hedging strategies for a company without understanding the key underlying issues of that company, in relation to market dynamics at a particular point in time while anticipating expected future results and trends)

Then, you develop a strategy that works or you (and I will be detailing specific hedging strategies in follow up posts), and implement and monitor said strategy (usually will be a combination of various methods). You will need to have a strategy that is viable both qualitatively and quantitatively – Like I observe, if doesn’t make sense in words, it probably will not in numbers!

I find that proper documentation of hedging (and risk management strategies as a whole) is imperative to ensuring constant review of implementation, controls and adjustments.

Some forms of hedging will include (but not limited to): futures contracts, options, swaps, forward contracts, EFTs etc) as applied to commodities, currencies, interest rates etc.

My next post will focus on better definitions of some of the terms referenced to in this post……Then we will keep going. Happy 2013 folks!

Apparently or evidently, trying to explain, not the definition kind of explaining, but the “what exactly does that mean kind of explaining” on different issues in futures and commodities trading, in Kenya, can take one 3 years – and counting.  Quite understandably so because: Unless you have had an opportunity to have a hands-on experience with issues in Futures/Commodities trading, all you will have is theoretical know-how – which will not really translate to much in the short term. But folks aren’t even trying – and that’s what’s exasperating! Let’s all take that theory from finance and MBA classes and begin to understand it!


We have been expecting to have a Futures Market in Kenya since 2009 – word has it, we will have one “soon”. Whatever that means! So the CMA has somewhat restructured to be in line with this “soon deadline” by appointing a manager for the upcoming Futures Exchange. As of April 2012, the search for consultants to draft trading and oversight rules for the proposed exchange was still on. Again, a move I can understand because unless the Exchange is well structured, in line with International Best Practices (pardon my use of MBA – type redundant terminology like “best practices”!), we probably will not achieve much from it.


Maybe, instead of trying to find “a” consultant to structure the entire exchange, the CMA could, break down the different facets comprising an Exchange and find consultants for those. An exchange will need to define everything from front to middle to back office and different things must be addressed: structuring of contracts (pricing, contract types, how they trade, expiration, margining, clearing, reporting, delivery, settlement etc) regulatory structures, taxation issues etc.


In my opinion too, the CMA will need an “arm” that will, solely be tasked with addressing issues of the exchange – something like the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission) in the US. The complexity of issues in futures and commodities exchanges, mandate separation of regulatory mandate, if full benefits of the exchange are to be accrued by participants.


As we contend with the pre-Futures Exchange issues, we will continue to grapple about price volatility, price discovery, price risk management (hedging), lack of another asset class presented in a futures exchange etc – things the current market will not adequately address with the absence of a well structured and regulated Futures Exchange.


In the meanwhile, I still continue trying to explain that a CTA (Commodity Trading Advisor) is not a Brokerage Firm. A CTA will generally give advice on trading of futures and options (for compensation) including but not limited to having actual trading rights on client accounts.  A Brokerage on the other hand will be the “facilitator” between the CTA’s, CPO’s (Commodity Pool Operators) and other individual and institutional clients AND the Futures Exchange. In the US, this would be a FCM (Futures Commission Merchant). We need to get this right, because we will need to be registering come CTAs, CPOs, and FCMs etc.


The Bourse Africa – that is to be the 1st Pan African bourse for commodities and derivatives will commence its operations in October 2012 (finally!). Maybe, the CMA, can go on down to Botswana for some “best practice” knowledge share?

Clearly, I am not a very serious blogger! This is my first post this year and the year is not exactly young! It called having a lot to do ( ok, everyone I know has a lot to do), but really, for me I think it is a lot to do compounded with the fact that I have been forced to be a lot like an Octopus since mid last year. I have no complaints because I have been stretched as a person – and I have grown (cliché, but no so much so)

So much going on, but some things I have realized about some of the experiences I have been through is that:

One – there is a special place in hell for doctoral supervisors (I kid you not! I’m sure some day I will have some candidates saying that about me, but at least I will not believe its just hot air – they actually do have valid arguments for),

Two – I am a capital markets girl – give me a treasury department, derivatives, liquidity management, ABS/MBS issues, Foreign Exchange Issues (hedging, transactions, sweeps etc). Stress testing, financial modelling and a fast paced multi cultural environment and I will FIT right in! It has been a time of balancing my passion and my abilities. I have a knack for financial market issues that is just inherent and I am no longer “scared” to admit that! So feel free to share – that there is a woman I happen to know that loves market issues hook, line, sinker!

Aside: The recent spike in gas/fuel prices in Kenya by at least Ksh 10 prompted very spirited debates between my friends and I on various social media networks. At one such discussion, a “prominent” business journalist gave a very simplistic, almost dismissive remark about who we should blame. He simply said, there is a need to realize its all about taxation and blame should be solely on government. Maybe – but that’s an answer you expect from those “tunaomba serikali (we ask the government)” mindsets – NOT a business journalist! Very annoying! And embarrassing.

As one who has worked in global financial markets to include a long stint in Oil and Gas…..I was very perturbed, shocked or whatever that such a callous remark can originate from a business analyst that a lot of Kenyans look to for analytical perspectives! And who doesn’t know that when it comes to crude oil, so much more is at play than just government and taxation? (Maybe I will write a post of this!)

Three – In life, you can’t be scared/ashamed of re – aligning your priorities or business models when you realize things aren’t quite working as you wanted or expected them to. It takes a brave soul/spirit to embark on plan C,D, E or even F – they could be detours that will the IT!

Lastly, my apologies to all that have contacted me personally via email concerning one or two issues on this blog – Please bear with me and you will be getting a response in a day or two. I am humbled that though I don’t publish much these days, someone still finds something relevant on my blog! I want to remain relevant to myself, my readers and to current happenings in our beautiful lives.

Great week to everyone!


Yes, I actually do remember Business School 🙂 even though I am doing something very non-MBA right now. ( As in, I no longer sit at a desk, watching crude oil futures prices graphs on the NYMEX and doing a whole lot of market analysis stuff and whatnot! I don’t “worry” so much what the USD/CAD, USD/EUR is doing etc – that’s what I mean) And no, this is not entirely a finance article, well it is somewhat!

The highs, the lows, predictions, rallies, cycles what not…. I am not entirely sure if I miss my life in finance or if I don’t; what I am sure about though is that I am so very passionate about what I am doing right now, and that I will also never really “de-link” myself from financial market happenings. More so, I have derivatives etched very deep into my DNA :-), and intend to get a lot of billable hours out of what I do know about them 😉

So back to Heteroskedasticity (if you don’t know what that means please look it up – its part of the fun to this piece). Lately, I found myself thinking about a situation I was dealing with and the only term that aptly and jumped out at me, to describe the un-said situation is this word. Trust me I am not “geeky” or anything but I found myself just thinking “Heteroskedasticity” – like I was about to take the CFA or Series 63 or something!

Anyway, surprisingly, it kind of settled me down because I realized I was dealing with something that I had no power to “control” in entirety….so I kept it moving. I also realized that even those parts that I could predict, I really could not, with precision; determine what the outcome would be – just like financial markets don’t you think? How many solid models have totally backfired on ingenious market gurus huh!

You unleash volatility in markets and you can’t exactly tell where it’s all going to end. Or can you? (Somebody that has please share!)Last year, at my last position, I attempted to understand implied volatility in derivatives trading; I did get a model going (but without factoring in the volatility part, meaning I had to rework many variables backwards and the LONG way!)….I quickly realized that had I had a solid grasp on volatility, then my model would have taken me much much much less time to build! BUT, I am not doing a PhD in Econometrics – and for good reason. Hahaha!

Anyway, my life right now is rather “volatile”, even erratically volatile sometimes. I can’t predict for sure what, when, how its all going to happen – but I am taking it in stride. The one thing I can predict though, is that I am not allowing de-railers into the already very “aggressive cycle” and that all shall come together!

Yes, I am a realist! And one that believes that everything that happens in my life is for a reason….

Note: This is a note that I should have posted months ago……but have never quite got around to doing it! But here I am now…

Oprah usually says “never talked about before until now”, and I am following suit – folks, hot off the pan (I love cooking!), here comes:

One lovely evening, Mr Man walked to Ms. Woman’s apartment and “ended” whatever had been going on between them for a while – or as far as Ms Woman was concerned – He ended a relationship between them. Just like that. Reason. “You are too focussed and independent and I don’t want to derail you” – a laughable thing, but not very funny at that particular moment. Ms. Woman refused to apologise for being “focussed and independent”, and said so in both words and by choosing to go on with her life (after dealing with it of course; and for some time). Nway, today, she is a fierce (r) woman with no apology about having a mind of her own and refusing to let people walk over her.

And good people, the above scenario is actually an account of something I went through a few years ago – that I really do not talk about .I blog about this years down the line not because I am all reminiscing about whatever, but because, it keeps getting reinforced in me, that, that is probably the best thing I ever did for my life – the refusing to act “blonde” in order to “keep my man”. I can bet you had I gone the “what-did-I-do” route, my life would be radically different from how it is today…radically different in ways that totally suck…..

– BUT of late, there has been too much talk about independent women etc, some people around me have voiced their sentiments about my being “too independent” and I found my mind wandering to instances that have been alluded to in that respect, as concerns me, in the past. I have also been branded a “woman of the caucus” – Kenyans will get that etc – Like that is a bad brand – thanks for the good PR ya’ll hateful, self doubting people hahaha!

Disclaimer: I am not a relationship expert, a shrink, men/women guru et al; I am just one woman that has a very perceptive mind, eyes that are wide open and ears that work – and a blog where I can write what I think without having to worry about being PC( Politically Correct – Sic!) Lol!

I don’t know if it is just me – maybe it is, but then again, hey, its about what I have observed and maybe actually gone through right?

A recent study, “revealed” – ok pardon my cynicism about the alleged findings, especially seeing I am also currently involved in academic research and is finding out all kinds of things that actually are against commonly held truths

Like did you know that some of the purported micro-credit schemes are actually making some beneficiaries worse off than they initially were? As in some members are actually in debt coz they have to borrow money from elsewhere to be able to sustain themselves in some schemes intended to empower them economically – its either a case of poor product research and management, inadequate research and/ or follow up of implemented schemes or simply a case of we-know-but-give-a-blind-eye-to, by the stakeholders that stand to gain? (Story for another column though!)

Nway, I was saying – a recent study revealed, that there is an increase in the number of divorce cases in the age bracket 25-35 because there is a decreasing number of alpha males and increase in the number of independent women. I would say that is probably a co-relation that would make sense and I won’t challenge the findings because I am not privy to the research factors.

But – what got me going was this…why is there an increasing number of “independent women” – I put that in quotes coz people define an independent woman in very broad terms – no pun intended!

Case in point (a real life story by the way), a man and a woman – child hood buddies, currently aged 36 and 35 respectively. Both hold advanced degrees, one a sort after tax attorney the other a senior vice president at global blue chip firm. They both own their homes in affluent areas of the cities they live in et al – basically, they are doing “good” judged from their careers and lifestyles…AND they are HAPPY with their lives….someday, they both hope to find suitable wife/husband to raise families with – or not – they are open minded about their options for having a family – there is adoption for example.

Personally, I am thrilled coz these two are both my friends and I am so grateful to God that we have each other in our lives…they inspire me each day coz they have worked their asses off to get to where they are…and I always tell them – when I am 35 and 36, I want to be like you – not in the truest sense of the word, but coz I am equally ambitious and am glad to actually know that if I keep doing what I am doing – I am on the right track…..Plus – I am also realistic and honest enough to admit to myself the “kind” of success that I want….


You know sometimes, people are “shy” to admitting what kind of success they want because of societal repercussions – For instance, people wanting to have a big family with one of the parents staying at home cease to do so because their neighbours are going to think they are “weird”, people wanting to have healthy bank accounts and assets to fall back onto for a long time refrain from doing so because they are going to be branded materialistic etc. The best place in life comes from knowing that only you are living in your skin so it matters not what the next person “feels” about your choices in life. Get liberated already!

Fast forward to “larger society”, my 36 year old, male buddy (John) is a success story and any woman would be “lucky” if he was her husband. Flip-side – my 35 year old, female buddy (Jane) is “too independent” – I mean what man is going to be able to “keep up” with her?

Correct me if I am wrong, but does it not come to some age that, man or woman, you are able to do some things for yourself? I mean if, like in this case, Jane has an illustrious career that she loves, has the money to afford the kind of lifestyle she wants and lives it and is happy about it – why should I, or worse still, “society” care what she does or doesn’t do!

And why is she coined negatively as “independent” because of taking care of her business? The reality is – she SHOULD be able to take care of herself, she CAN take care of herself and she CHOOSES to take care of herself – But my friend will not hear the last of her “kuwa na kichwa ngumu” until Mr Man comes along – Sigh!

Don’t we all have enough of our own issues to take care of to keep worrying about others? – I know I do!

Don’t get me wrong – there is a degree of participation that comes natural as a person that lives in a particular environment – we do not live in voids – but surely there is a thin line between being a responsible citizen and blatantly being up in peoples business at the expense of your own goals, ideals and life challenges. BUT, like I said – at the end of the day – it is about personal choice – and I choose to expend my efforts to those things that at the end of the day will make me a richer person – in the truest sense of the word.

Cheers to all the Independent Men and Women in my life – those that appreciate that this here, isnt a game of who is “better” – but rather a level playing field of “I am me, you are you, lets get this thing called living together going” 🙂

If you ask me – Kenya is ripe for a formal Futures and Commodities Market/Exchange.

It was reported (and I paraphrase), that we have had a 561% increase in milk production since 2003 – exponential growth! The milk handling agencies are hard pressed as to what to do with all this milk ( Duh – seriously!!!!!) There is talk of an expected bumper harvest in Eastern Kenya (note that this is an area that is usually drought- stricken, but thanks to donor seed provision programs, people are actually talking about bumper harvests), prices of food are falling due to surplus in markets and farmers are complaining of losses……

Flip- side: People are dying of hunger in some areas in Kenya.

Where is the balance? Isn’t it about time we had a Commodities market in Kenya? I believe so….

For those that know I am out of Financial Markets for a minute working on something that is near and dear to my heart. For those that do not know – this post here will help shed light on that….

I have put Margin Analysis, trading account structuring, Month End Close Cycles, Reconciliation and what not on hold for the minute I am “away” from financial markets – for now! I know I will work in Financial Markets sometime soon or in the future in some capacity, because after all, I have a flair for (I am just saying lol! :D), but my attention right now is focussed elsewhere and I intend to give that 110%, heart and soul.

Nway – that being said – I find it entirely difficult to dis-engage myself from what is going on in markets, or my friends make it difficult for me to do so hahaha! Someone ( I will not mention names :-)), told me I have 2 options concerning my “relationship” with markets – either get a restraining order or get married to them…..I chose neither and instead decided I will have an “affair” with markets ( NYSE, Futures, Commodities and Derivatives et al) and hope “my guy” ( what I am currently immersed in) , doesn’t get jealous.

If you are a proactive mind out there that believes we can get to getting to a commodities market – please begin the “Think- Tanking” Process and holla at me to join you. Seriously! I know for a fact that I do have something significant I can contribute towards that end….

There is not a good reason for having such losses and food asymmetry in the country when we can manage our resources, potentially very effectively with a commodities market.

Please take a minute to read my blog post on Futures Markets in Africa and subsequent comments and I think a lot of us think its about time – now for some action!

So, my poor blog has been thoroughly neglected, but I have been on a good cause! Happy 2010 people! Maybe a little late in coming seeing as its February and all 🙂

It’s been a hectic busy and very eventful 5 months (that is how long I have been back), but I feel like I have been here forever – nimekuwa mwenyeji tena – complete with driving amidst mad matatu drivers on bad roads, sitting in a matatu with blaring music I do not understand ( ama ni uzee? Lol!) It is a little different when you are back visiting for a few weeks, and it is a totally different scenario when you are back for a little longer – as in my case. I say “back for a little longer” because I have yet another part of my “relocation” that I will be going on in the near future that will be my next 4-5 years. That will be talked about when it happens.

Holiday season was very eventful and exciting! All of us were home together for the first time in 10 years. And it was an experience I would not trade for anything! Then its amazing that 10 years ago, we were kids and this time around, there were grand-kids for my mom- talking-too-much, running around grown grandkids!!! Blessings, blessings! Of course, for the first time in many years, I got to enjoy my holidays, winter – free! No winter coats, no scarves, mittens, no snow, no ice – just good weather! (Though it rained a little too much this time around) –Bliss!

I am very humbled and pleased to announce that, together with some people near and dear to my life, heart, dreams, visions and goals, we have founded a Foundation that is geared to developing young female entrepreneurs. We are specifically targeting young disadvantaged girls and our goal is to equip them with a skill and training that will alone enable them go “out there” and be self sustainable. We are absolutely not training the young girls to go out there and look for a job, though that is a choice they will ultimately make for themselves – there is a very serious paradigm shift going on globally and Kenya has not been left behind.

Entrepreneurship is it!

My Doctoral Research will be on Female Entrepreneurship as I had alluded to here so, as you can all see, I am finally, finally, after many years in Financial Markets, beginning to live my passion and that is something that I am profoundly grateful for. Baby steps but I am very confident that our vision at the Foundation is coming alive in a big way!

So besides fine tuning documents for registration and grant presentations, building our initial office facilities (read haggling with Kenyan Fundis that are seasoned to look down on wanawake), extensive travel, getting sick three times, serious networking ( I have talked to people I have never thought I would talk to and folks – its been quite an adventure) – it’s been fun.

I am very picky and detail oriented but I was occupied with other things and didn’t have the time to sit and type up constitution, drafts etc so I had someone do that for us – BIG mistake! Gosh – I got the first drafts and I used very many little words (bearing in mind I am the “polished type” that doesn’t curse). Yaani there were so many mistakes, I wanted to beat someone up! Then I realized, well, I better do this myself – and that put me about 3 months behind schedule because I was basically re-working a lot!

We are working on the Corporate Blog for the Foundation (as we work on the website etc) and I should send a link in a few weeks – so much to do! By the way, for those that do not already know, Social Networking is the in-thing. Yaani nowadays, you can do some facets of business efficiently via just a corporate blog (if well thought out) and even on Facebook. I am not surprised, because I have seen first hand what and how such avenues as Facebook and Blogs can be used in a very powerful and positive way.

Of course, we have issues we have to deal with, like any organization, but we are taking it one step at a time and realizing that Rome was not built in a day. We are taking the things we have to deal with in stride and in line with our mission and our vision.

As Executive Director, boy, the curve balls come each hour! And I realize that people want answers from me! It is greatly shaping me and with each day that lapses I am learning so much. I am no longer in a position where I can just leave and hope that someone gets the job done for me – I have to go out there and get things done. Very exciting, nerve wrecking BUT fulfilling! I knew it wasn’t going to be a piece of cake when I resigned from my Treasury job in the US, and it was something I knew I wanted and had to do – so help me God.

My Mom deserves special mention here – she seriously has been there so so so so much! I WOULD NOT have been able to do this without her support: emotional, moral, spiritual, networking (she knows everyone!) and financial support! She keeps telling me I can do it – and that keeps me going!

There are going to be subsequent posts concerning this (moving back), coz there is so much I want to write about but cannot do so in one post so watch out for, but be patient – Lol! And I hope I will actually get to doing that.

There are 2 things that I want to quickly mention though.

My friend ( and my once roommate in Kansas when we were in Grad School) and I were going for a latte at Savannah in Down town Nairobi and walking down the streets, we bump into this guy that was also living in the same city with us that now works with my friend in Nairobi. During dinner, as we caught up, we were amazed at just how many of us that were living abroad are now back home either working or running our own businesses.

The beginning of the end of brain drain? Maybe.

But one thing I am thankful for is that I am not back to Kenya to “look for a job” per se. I think that would be a very exasperating and novel idea for me right now.
I personally know of about 10 Africans (in professional jobs in the US, UK and Canada) that have been back to their countries in the past year. And I know of a good number that are returning in the coming months.

The second thing I want to note is that I have observed and gladly enjoyed the fact that there are a good number of young Kenyan women “doing their thing” back here. Some are married and have families, some are single and have no children, and some are single parents. In all these situations, I have had an opportunity to interact, in my three months back, with some seriously fierce Young African Women who know what it is they want in life and are going after it. The complacency that was previously held about and concerning us is just simple no longer in existence.

There are still some weirdly insecure and sick men and women out here, that still perceive young women or just women in general in the patriarchal idiocies that defined our (African women’s) place in society, but like I like to say – there are some things that are so etched in people’s DNA’s hakuna haja trying to change them.

A man, a grown Kenyan man, we were consulting on some technical aspects of the Foundation at one meeting told us there are some things a Kenyan Woman cannot simply do and needs a man to do them. We thought it was a joke in bad taste and let it slide that time considering the business at hand – big mistake! (Out of the 7 Trustees, 4 are women). That guy said the same thing in a subsequent meeting and we respectfully told him we no longer needed his services – chauvinistic idiot! I wonder if he has a wife or daughters!

And surprisingly, these self proclaimed, know it all, save the world men are the same ones that have no issue whatsoever with a woman picking up the check all the time, paying for their indulgences etc. They only feel the need to assert and affirm their man-ness to other people (and perhaps themselves!) when they are dealing with a woman who reads into their BS and refuses to indulge their nonsense! Bure kabisa!

Such thinking simply has no place siku hizi!

There are other pleasant things going on in my non-business life that I don’t want to blog about yet, but boy, am I glad to be back!

Happy goings everyone and do not let anything stand in the way of doing what it is you want to get done. The major thing begins with YOU taking the first step.

Be bold and have a great year!

It has been an extremely busy past 2 months for me. I resigned from my lovely Treasury Analyst position in the US of A, packed up, eeehh, tried to pack up the past 5 and ½ years in a few packages and got ready to relocate, ran around with my sister to get ready for her wedding day, attended a WONDERFUL, the most awesome wedding I have attended in my life and watched my sister get married to a wonderful man then got on a flight and began my 30 hour journey to Kenya. I slept a lot on the way and I made a note to myself to make sure I get richer real soon to avoid flying coach on such long journeys 😀

I will blog about some specifics of all these events later – soon – hopefully. For now I want to talk about my woes trying to use my MasterCard Debit Card in Kenya.

Last time I was in Kenya, I did not have to use my card extensively because for one I was there for only 3 weeks and secondly I had carried some USD with me that I exchanged on arrival. The one time I used my card in Kenya, it worked like a charm ( In Nakumatt) – so I assumed I was going to have the same smooth sailing experience this time around.

I had only about USD 200 on me when I arrived in Kenya, that I exchanged for Ksh and with what I am working on right now ( I will also blog about that soon hopefully), that really didn’t last me for long. So I run out of Ksh and I go to a Bank and try to get some money from an ATM using my MasterCard Debit Card. ( My Visa Credit Card – ( I only have one credit card since I refused to get sucked into the fiscal irresponsibility that we tempt ourselves into by having cards we do not need). So my Visa Credit Card is paid off every month and since I am going to be around for a while – I am not intending to put any balances on it – that is how I planned it period!) – Well long story short, after a trip to Barclays, Stanchart, KCB, NBK etc, I was still Ksh-Less! At one of the aforementioned banks they simply told me “we cannot allow you to use our ATMs” – How rude! And, they didnt even give me the option of getting Ksh via Cash Advancing my Card!

One very nice and helpful young man at NBK and a college buddy of mine via Face book directed me to Southern Credit Bank (they deal with MasterCard) and well – I am thankful to them…. 🙂

It made me really consider being a MasterCard Rep to Kenya – Why aren’t our Banks multifaceted and deal with multiple card companies? Seriously – there is nothing special about Visa – or maybe Visa has just done a good job of branding their image in Kenya. Plus now I will have to get used to carrying around wands of cash! I know that we are yet to get to being a cash-less society – but this little experience made me realize just what vast avenues we have yet to address in our financial markets! Such exasperation, such little annoyances that really could be deterring vast potentials out there!

Other issues irritating me are PEOPLE NOT KEEPING TIME! . Anyone that knows me, knows I am always on time! At work in the US of A, I am the one that would get to meeting rooms and call people still at their desks running late for a meeting!

Last week I had a breakfast meeting scheduled with a person helping me out with some of the things I am working on. The meeting was supposed to be at 8am because I had other things to attend to as well on that day. You can imagine my HORROR when he calls me at 915am telling me he is on his way – and finally showed up at 1030am! Gosh! SO, I had to get on the phone and begin canceling most of my other engagements for that day!!

SO right now, I have a bout of Malaria going on – I have been feeling crappy since Sunday – so I might not be very lucid and a little grouchy typing this…Hehehe! But I guess that’s why they call it acclimatization!!! I intend to get well real soon because I have a lot of things to get done!

That’s all for today – Happy goings!


I have been having an amazing time just being, reflecting on things, planning for and just bonding with my inner self – A very, ummmhhh, awakening experience I have been having.

I was happy ( very relative term), when the financials for Goldman Sachs, JP Morgan, Citi and BofAmerica were released last week – Net Income in the Billions, makes me know that I am not in this profession in vain 🙂 – that there is hope for the global meltdown after-all.

I have also received some very good news – news that will be affecting my next few years and I am so looking forward to ” getting at it ” – Bits and pieces and LOTS of work I will be doing here shortly, but it is both a feat and a challenge that I am going to be embracing, giving it all my all, excelling at – so help me God 🙂 !!!

I have been feeling very “grown up” the past few weeks and I guess its because I have been eating well, getting enough sleep, having plenty of me-time, staying away from negativity ( from negative blogs, news, TV etc), and just taking some time to enjoy being me – My short term “solitude” is really paying off!

I have also been really thanking God for where I am in my life, where I am going, my family and for generally being able to keep my head above water in this crazy world 😉 .

Here is one of my favorite pieces of poetry. It is by Rudyard Kipling, an English Author and Poet.

Happy goings all and remember to always strive for the more excellent way. I went to a high school where our principal did an awesome job of scaring us away from failure. My Mom also did a wonderful job of threatening myself, my brother and 2 sisters away from mediocrity – so the way I see it – well, you all see it! 🙂

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream — and not make dreams your master;
If you can think — and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two imposters just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: “Hold on!”

If you can talk with crowds and keep your virtue,
Or walk with kings — nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run —
Yours is the Earth and everything that’s in it,
And — which is more — you’ll be a Man, my son!
Rudyard Kipling (1865- 1936)

I read in the Daily Nation that the Central Bank of Kenya intends to bring into effect an automated check clearing system with the maximum value of checks being capped at Kshs 1 Million as from October 1st 2009.

This will effectively reduce the number of days it takes for a check to clear from four to one – I like! When I worked in Banking in Kenya a while back, and on those days when I had to cover for someone in the Clearing Department, one of the most common occurrences was people constantly stopping by to check if their checks had cleared ( e-banking, mobile banking etc had not quite hit yet and to think that was just a few years ago!) This will definitely lead to efficiencies and also curtail check kiting to a large extent.

Many people were Skeptical when the Check Clearing for the 21st Century Act (Commonly referred to as Check 21) was signed into law in the US 2003 and ultimately became effective end of 2004.

Around this time I was working in banking in the US and yes, we underwent all kinds of training, trouble shooting, etc to address the upcoming switch.


Check 21 basically enhances the efficiency of the check clearing process in the US banking system. The law facilitates check truncation by the creation of substitute checks and process check information electronically. Substitute checks can still be sent to parties that want to receive paper copies and they are deemed legally the same as the original checks. This is only applicable to US based checks – foreign checks still have to go through the foreign collections process through intermediary banks.

What this basically means is the time that it takes for checks to clear is significantly reduced. In the US, under Regulation CC – Availability of Funds and Collection of Checks , banks have the right to place checks presented under “holds” up to 11 days until the funds clear, as long as the 1st $100 is made available next day ( I am paraphrasing this Reg coz I don’t want to go Fed Reserve Legal Jargon!

What this has translated to is this: Using Checks these days is becoming more like using your Debit Card for a vast majority of merchants. For example – at Wal-Mart, Kroger etc, people will present checks, cashiers will run the check through scanners that will record the check info via the MICR ( Magnetic Ink Character Recognition), hand the paper check back to the customer, have them sign an authorization slip and you get home, check your balance on-line and the check has been processed!

Effective and efficient – give or take! But, in my opinion the good outweighs the “bad”. Plus I know that most senior citizens with grandfathered accounts still need their paper checks sent to them – cant blame them – its what they were used to for as long as they had banking going on.

In my opinion, Check 21 is a success and I hope the Central Bank of Kenya’s automated check clearing system will be a resounding success!

So today, we are on an Excessive Heat Advisory till kesho jioni and for the next few days *sigh* It is HOT!….I know it is pretty hot out there because today when I was leaving my house at 715am the temperatures were 82 degrees. Driving back from lunch, temperatures were 102 degrees! BUT, as usual, I am wearing hose –it is summer so it is the sheer kind.

A little information about me and hose, or is it hose and me?


If there was an award or a club for Panty Hose wearers – I would be a triple Platinum awardee. I just am so into panty hose – I am not talking about shapers or those other “suck it all in” kind of hose – just your regular wear to work kind of hose.

I have all kinds of hose – but my “usual” hose is a Hanes, Control Top, Sandal Foot, Gentle Brown – won’t give the size here lest creative minds begin to visualize my assets. I am petite so jijazie. It took me forever to experiment with shades and the Gentle Brown is PERFECT – you can usually not tell I am wearing hose…..I have been wearing some kind of hose for as long as I have NOT been wearing a Kamisi (which I believe is something like Form 1 second term or on those occasions when my Grandma gives me eyes to suggest there is attire I am missing) – does anyone still wear a Kamisi?


When we were reporting to Form 1 at our beloved high school – we were sent a list of appropriate things to buy – one of the items was Kamisi – so most of our mothers fully complied and armed us with those. Most of my friends ditched those after a quick term in favor of “bikers”. Plus my school was “liberal” in that we were allowed to carry “home clothes”. I think the rules stated “3 simple dresses”, but coming back in second term, most of us had suitcases full of all kinds of attire.


Other kinds of Hose you will find in my drawers are – Jet Black (which I will wear with my dark colored pant-suits), Hanes – the very sheer (which is what I mostly wear in the summer with skirts), and Toeless (for the peep toe heels) etc…

A typical hose shopping replenishment trip will take me about 5 minutes – I know where to get it and what I want…Easy!

People have asked me if I am not uncomfortable in hose even in the summer – to which end I hold: NEVER, plus I wear good quality sheer hose that only accentuates my body instead of it being a “drag”. There are those drab, heavy kinds – but I have never developed a fancy for those.

When I began my first “official” job after college, I worked in a bank and I did the whole “ I don’t wear skirts” kinda thing seeing as my college years were spent in an assorted collection of jeans – then I discovered, there is nothing that can rival a well tailored, well outfitted skirt suit. Complete with a good pair of heels and accessories ( my usual diamond right hand ring and earrings ( I am not that into necklaces unless they are simple or bold depending on the look I want – most days I am usually without neck jewelry) – priceless look!. And I actually look really nice in skirt suits.

I have all kinds of colors of skirt suits – from the conservative black, navy blue, brown and grey to the bold purple, royal blue, red etc. I toyed around with the idea of buying a pink suit (because I saw some awesome pink heels on sale – yes I have my priorities right) – but I have never really been a pink kind of girl – so I bought the shoes and wear them with other things….
And with my wearing of short skirt suits – comes the wearing of hose – I just like that look…..

Now, jana I had hose issues….I was wearing peep toe heels so I had sheer toeless hose. As I was parking at work after lunch – I realized I had a run – on the front – and I was in a black on-the-knee length skirt – so the hose had to go. So I took off the hose in my car all the time praying my window tint is dark enough to “shelter” me lest passing by colleagues think they work with a “weirdo” hehehe! Oh – and I have never had such an uncomfortable afternoon being hose-less *sigh* 😦

Then I also started thinking – maybe I should have not put off shaving my legs jana evening – I am usually ok going by for 2 weeks – but that quickly changes when you are in a short skirt and bila hose….So anyway – I made it through the afternoon but it made me wonder just how accustomed one can be to things so small.


I worked at a Bank here and when I worked at the Branch – hose wearing was mandatory – no biggie for me, but apparently a big bother to 95% of the women. One teller was once sent to the nearest store – Walgreens – to purchase and wear hose before returning to work.

In Nairobi – at the Bank where I worked, wearing hose was not mandated but 95% of the women regularly shopped for and wore hose. We even had one of those mamas that goes to Turkey or Dubai and owned several exhibitions make deliveries of hose (good quality hose) at the bank – how convenient!

The hosiery debate is a huge one and each has their side – my side is stated with enough finality – how do you not wear hose! But at the end of the day – to each woman her own. It’s what works for you – and you should be able to feel comfortable with what you are wearing.

But here is a link to an interesting article on hose wearing – I don’t condone some of the pros associated with hose wearing like not taking care of the feet coz they are “hidden” by hose. Hose in my opinion, needs to be enhancing your look, not hiding un- kept toe nails, non- moisturized skin and generally un-attended to feet! I have regular pedicures – self or done at a nail salon and you will NOT catch me with unsightly feet, unpolished toes etc just coz no-one can see them.

Being confident as a person is about tending to those “hidden” things that no-one can see – be it clothes, issues, thoughts, habits etc
Try have a cool summer everyone – hydrate and take care of those things no-one can see. 🙂

The Hosiery Dilemma

My Kenya

Today – I said a prayer for Kenya, I thought about the country that gave me my Me-Ness! God Bless Kenya 🙂 !

I have a personal philosophy; I believe that you cannot change a society by mere giving – I believe that you change a society by enabling its members to be participants in economic development. I believe that you can only effect sustainable development by building capacities in men and women in ways that will ensure they are able to earn their own livelihoods. This is my cornerstone for my passion for entrepreneurial activities, entrepreneurship research and specifically female entrepreneurship.


Many years ago, fresh from high school, equipped with a diploma in computer studies, I had an opportunity to work for an entrepreneurship development center in Kenya as I got ready to go to college. The center basically did project proposal appraisal, but mostly geared its efforts towards issues facing women entrepreneurs in one rural part of Kenya. I was immediately drawn into that vision and that sparked my interest for business, entrepreneurship etc.

For undergrad, our Business class was required to write a thesis/paper either based on our industrial attachment experience or on a business area of interest to you. I didn’t really gain much from my internship experience so I wrote a 120 page paper on Integration of Women in Entrepreneurship and did a case study of one specific Metropolis in Kenya. I knew that this was just the beginning of things to come – and I was right.

When I was working on my MBA a few years ago – my focus on what it is that I wanted to do say 20 years from today was even further accentuated….Not that I am going to write it here….Lol:-)

All, all and all need to know are that I have an immense zeal for female entrepreneurship activities in Kenya – name it – R&D, training, understanding role conflict, motivation for business, issues in running businesses, success factors, micro financing, public private partnerships etc and all those other things that will ensure that women are well placed to be able to engage in entrepreneurial activities.

A while back I read Prof Muhammad Yunus’s, Banker to the Poor and was totally floored. Honestly, I had heard only briefly about the then, Dr Yunus and his Grameen Foundation and the work they were doing among women entrepreneurs in Bangladesh. After reading the book, then listening to a series of interviews he did after that, I totally understood why he had won the Nobel Peace Prize.

One of my favorite books is End of Poverty, Economic Possibilities for our time by Jeffrey Sachs – Prof Sachs simply says that we CAN alleviate poverty, and do it in our time, not our great great grand children’s times – paraphrasing the book would be an insult – its one of those you have to read to draw your own paraphrases. He stresses the need to work towards attaining the MDG’s – Millennium Development Goals, among them Eradicating extreme hunger and poverty – no man, woman or child should die because they are hungry or because of Malaria 😦

I have a hypothesis – hear me out:

Attaining the MDG’s first has to begin with an empowered society. I believe that sustainable development requires a fully participative population – that you have men and women that are WILLING and ABLE to earn their livelihoods in some way.

You know when people talk about earning a livelihood – most people have images of people waking up, dressing up in suits and going to a job or driving an expensive car or sending their kids to the best schools in the country. Well, fortunately, that is not the case being referenced to as far as the MDG’s are concerned.

What we need is that people will be able to feed their families, allow children to have some kind of education ( so that they don’t vote for some way ward politician because he has offered them a pack of Unga etc), have access to health care and be treated equally in the things that be…

So back to my hypothesis, it is about time, specifically in Africa that people were able to have a “decent” livelihood going on – something that will only be possible if the WILLING are ALLOWED to earn their livelihoods. By “allowing” I mean, access to resources and an environment that fosters “participation” – just to be short, since this we can discuss for elongated periods of time 🙂

Dr. Dambisa Moyo, a Zambian Economist, has been fueling some global discussions about Foreign Aid to Africa. A friend recently recommended her book, Dead Aid: Why Aid is not working and how there is another way for Africa to me. I got the book, but I have yet to read it – Yaani I have SO much going on, BUT, I shall be reading the book from next weekend – that has been placed on my calender 🙂 – So I am not going to comment on the contents of the book yet.

I have however, listened to a couple of excerpts from Interviews she has done and read the NUMEROUS reviews about her all over the net.


Special note is being made to her being an African Woman FIRST – then being a PhD in Economics among other academic credentials and professional qualifications.
Well – I am glad the world is finally coming to terms with what we have LONG known – that we African women can do whatever we set our minds to do 🙂 – and do it excellently – and we CAN do all that in Stilettos if we choose to 🙂 :-)!

Dr Moyo, basically says – there are other ways that Africa can get on the path towards sustainable development and keep going forward. She advocates such avenues as incentivising poor countries to access finance on international markets, supported by the tripod of micro finance, trade/FDI and remittances – Instead of GIVING, LOAN! I like!

I am not going to say that I buy into her arguments hook, line and sinker; but I do like the central idea which is – don’t just give aid, give aid to the right persons e.g to the entrepreneurs that need capital for raw materials instead of giving it to Governments without PRECISE stipulations on where the Aid money should be used. How many governments in Africa are misusing Aid Funds? Too Many! Mere giving is not going to change Africa if people are not presented with some kind of responsibility.

I like that idea and like Prof Yunus and Prof Sachs, I know the day is coming when we will see an African Continent that is empowered. I also know that Female Entrepreneurship is well on its way to “officially” becoming the IT, that will transform the lives of so many families in Africa!

I am intending to make my own contribution to this – as I best know how to 🙂



A friend of mine ( thank you! ), this morning pointed it out that Prof Sachs and Dr Moyo recently had a fall-out as concerns the Foreign Aid Model and Africa. Prof Sachs ( once Dr Moyo’s professor at Harvard), seems to believe that the Model she is proposing i.e not depending on foreign aid for sustainable development is more suited for emerging economies and not the developing nations per se. And we wonder why Africa is still lagging behind in economic development! *sigh*


I would like to say that my personal opinion is one where Africa will NOT have to depend of Foreign Aid – each Nation will have to curve out its only model to wean itself off Aid, but I believe we need to get away from the just receiving attitude we seem so complacent with and know we CAN use other available investment avenues to get onto sustainable development keep going from there :-). I like what Dr Moyo says, she says Foreign Aid should be short, targeted and finite – not indefinite as we currently have it!


In Sub-Saharan Africa, President Paul Kagame of Rwanda, has been a strong proponent for African Nations to begin weaning themselves off Foreign Aid by building up Savvy business Ventures and developing and embracing smart economic policy – I like that!

Rwanda may be depending on Aid right now, as does the rest of Africa, but at least we have a President that is thinking progressively and long term in terms of sustainable development for his country. They may not get there today – but it is a commitment they have emarbarked on – Slowly but surely! I can bet in the near future – Rwanda will be so worth watching economically speaking – if it isnt already! I dont care what political views Kagame holds, all I can see is that he is thinking smart policy for his country.

I wish we had more such progressive leaders in Africa!

So the Fed Reserve reports that the economy is “slowly” getting better. NFP (Non- Farm Payroll) numbers being released are evidencing better than expected results – that, even considering downward prior month (s) revisions and an increase in government jobs (though temporary because this relates to the upcoming US census)


That is good news, that we have signs of “improving” economic conditions especially considering the bearish sentiments many of us have held for a while and still hold on to.
Now all we need to do is ensure the cyclical factors that promote sustainable economic progression i.e. employment numbers, manufacturing, retailing etc, keep getting better right? – I would say that is just part of the equation. Let me explain:


Today, driving back to work from lunch (it’s a beautiful day to waste inside eating lunch at the cafeteria downstairs or at my desk. There is nothing quite as good as driving with windows rolled slightly down, moon roof open listening to some IL Divo). Nway, I was driving back and took a little detour to enjoy the fine weather for a little longer and there was a wreck on one of the streets and cops has sealed off part of it – meaning all cars were being re-rerouted into some residences and eventually back into the streets after a series of turns.

The neighborhood was HORRIBLE! But the cars parked on the sidewalks and a tiny parking lot in the midst were EXPENSIVE cars. And, there were Auction Signs by a couple of the houses – that is not even an oxymoron – it is total madness and doesn’t begin to make economic sense! As I finally wound back on the main street – I kept thinking about how badly the banks were blamed in the Sub-Prime Mortgages drama that has changed global financial markets forever!


Don’t get me wrong – I know now like so many others that there was some “creative finance” going on as concerns lending and hedge fund management, market and financial disclosure, mark to market analysis, regulations, leveraging of firms as concerns equity and the overall financial health of the previously financial giants.

BUT – I also have to go back to the issue that ultimately; things have to begin with personal financial responsibility. I think so many of us are trying to keep up with whatever (coz it really is a lot of things), and then blame everyone else but ourselves when things go south!

Why would you want to buy a house or a car that you obviously cannot afford and know that you will still not be able to afford 2 years from today no matter what you do? Should it matter that the bank has “qualified” you for $ 300K, yet you only make $ 30K a year? How do you propose you are going to afford to make your mortgage? And why then would you go ahead and get a $ 50K car on top of that because your local car dealer sent you a “pre- approval” thing in the mail? How does a person live in such a neighborhood, yet afford to drive such an expensive car? Kuna Kitu! And in my opinion I choose to, in the spirit of being “nice”, call it BS – people need to get reality checks already!



When I was in grad school – I shared a house with a friend of mine also in grad school and from Kenya – that was the wise thing to do – split the bills, make your tuition and graduate debt- free – and we did just that! After graduation 2 years ago – we both began to live “normal” lives, she moved to a different state for work and we both began doing other things without being haunted for years to come over school loans.

My life was “normal” until I had a case of serious identity theft that put my financial life in a very interesting situation. An employee at my then bank sold info to a third party – that’s as bad as it can get! Basically that means someone has your SSN (Social Security Number), Date of Birth, Address and all those other details they need to be “you”


One day – I was checking my balance online before going shopping and the balance was in the RED in many digits! ALL the money was gone – e-checks had been presented and paid from both of my accounts and my bank REFUSED to do anything about it!

I still have court cases regarding that to date! (And it’s been two years!) I think I should blog about things I have learned from that experience!


But seriously that’s what you do – live within your means as you work to expand your means. We can blame the banks for the Sub-Prime, predatory etc lending we have going on – but the bottom line – No-one was forced to take out a loan they couldn’t afford.


So Geithner and Bernanke are working economics that they have probably not worked before in a bid to ease the effects of the recession, but in my opinion, if the personal responsibility does not kick in real fast – no economic theory – however tried and true and edge cutting will last in the long run.

I can understand the injections into the markets, I can understand why some things have to be reformulated – but I can’t understand why anyone thinks that just because his/her job has been saved – then things are obviously going to get better!

Indices mean a lot on the macro- picture – that’s it. Just because the Dow closed at a decent level, NFP numbers are not so bad, the markets are somewhat bullish, the NYSE is buzzing, the USD is gaining strength etc, doesn’t mean there is going to be food on my table if I don’t do something to put that food there!


Nway – that’s what I wanted to say today – no economic theories from me. 😉 I hope everyone has a lovely Memorial Weekend/Weekend.

Mine is going to be busy – I have a 4 day “weekend” and I decided I am going to get at least the Introduction to my Comprehensive Research Proposal done. You see, if I intend to move from PhD Student to PhD Candidate anytime soon – I better get some writing going on. So I will be doing just that – personal responsibility!

Have a responsible weekend! 🙂

So, Kenya’s Finance Minister, Uhuru Kenyatta, has basically issued gag orders for Senior Treasury Officials – no-one is supposed to comment on policy issues, and he, Uhuru, will serve as spokesman, sole spokesman for both the ministry of Finance and the State corporations under it – notwithstanding the fact that those are supposedly autonomous bodies. Technocrats in Treasury are barred from communicating directly with parliament as well.

Pardon my long sentences – its how I would say it if I was speaking.

I am not angry, and I suppose Uhuru has to do what he has to do to cover his ass; Now he can, after he gracefully appended his signature to documents, THE BUDGET, with errors to Parliament. Now he can, now that the errors were actually discovered; now he can since everyone is wondering just how some things can conveniently become “typing errors”. What if the “typing” errors were not “discovered”? I think we as a country are beginning to embrace new levels of shame – bila aibu!

My only question is – Alikuwa wapi? Forgive me, but – whatever dude!

For those of us that work in Finance, we KNOW for a fact the hair raising activities, double checks, triple checks, formulation of algorithms, backward testing of data etc that goes on before the Financial Statements are declared good – before the statements are rendered to be an accurate representation for the financial status of an entity – and that is even before the signing of the statements, and then the presentation of that happens and that is way before the auditing part begins!

SO forgive me if I don’t even begin to buy into Mr. Uhuru Kenyatta’s misplaced and reactive anger and measures – that is just a plain and lame show! As Finance Minister, you should have known better – or the people that work for you a.k.a, the people that are paid millions in tax payer money – should have advised you better! (If you choose to abdicate your responsibility and take that route)

This situation we have going on here – should not be happening! Bottom line – Ahhhh, Tuheshimiane tafadhali! And I am sure I have Finance PhD’s, MBAs, CFA’s, CPA’s, Economists, Analysts, your regular “Joe the Plumber” with no Finance technical know-how that will say, this here, is a bunch of BS!

I have had the opportunity to work in our financial markets in Kenya before I left for Grad School and subsequent career opportunities in “Diaspora”. And, I have always known at some point in time – I intend to return to Kenya because – just because. I won’t go into the reasons why – because that is a LONG story.

But, assuming, I would return, not go into entrepreneurial activity and end up working in our financial markets yet again – God forbid I have to deal with such nuances!
I think about it this way – I have worked pretty hard to know what I know today and what I keep learning each day – I simply do not have the strength to fight “forces” that will definitely seek to “gag” what I have worked so hard to understand and know!

You know, there is a very good reason why we will keep losing people that we have no business losing to other nations – it is such “Uhuruish” stances!

And before anyone goes telling me the noble thing to do is “make it work while you are home” – I beg to differ, I believe there is, always, a more excellent way! And this typing error business is simply not it! I am just saying! And like Kaasa – I have to wonder if I really want to…….

I know South Africa, through the Johannesburg Stock Exchange (JSE), and SAFEX (South African Futures Exchange) has a listing for Exchange – traded currency Futures and for Agricultural Futures respectively – and that’s about all I know about Futures Markets in Africa ( because maybe that’s all there is to know?)

I strongly believe that Africa can have a very robust and all that Futures Market if we are willing to work towards putting the mechanisms in place. I mean, we have the “items” that should warrant an active and thriving Futures Market. Take your pick from the following: Crude Oil, Gold, Silver, Cocoa, and Corn etc… We have them all! right? Right!

I have had some experience (both good and bad) concerning Futures Markets, commodities trading etc that make me believe, it is quite “easy” to get a Futures Market going in a lot of countries in Africa.

My most memorable experience concerns the Initial Margining process. Here we go:

So the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE), and I think all the other Futures Exchange Markets use the SPAN model in the initial margining process.

A while back, I was challenged at work to “try” replicating the model for our own purposes. So I began the process and quickly realized, yah, ok, this is going to be a long one!

Between figuring out how our commodities offset in terms of spread credits, to figuring out all the other factors in the model, risk arrays and scanning losses, outright margins, inter-commodity credits etc, my work was cut out!

A few months later, after: spending enough time on the New York Mercantile Exchange (NYMEX), ICE and Chicago Board of trade (CBOT) websites, creating a good number of spreadsheets, having continuous and incessant conversations with contacts I knew that had more knowledge on the workings of SPAN model than I did (that I was sure to thank later), I finally had IT – Yeeeeehhh!!

Then now, I had to translate that into something that means something for our business – a whole totally different story altogether. I was tried and tested, but I grew tonnes from the experience.

What is stopping us from getting on the learning curve to developing Futures markets in Africa? We already have Stock exchanges that are doing ok – how about getting the Regulatory machinations going so that some time in the future, we can have a Commodities Market going? We can learn the basics from the other World Futures Exchanges and build our own! I, for one, would just TOTALLY, love being on such a “band – wagon” 😉

So 19 of the major U.S banks under-went stress tests to determine their capabilities and ability to survive in the event of a worsening recession. These banks hold about two thirds of assets, and more than half of the loans in the US banking system (Source: Bloomberg).

The ideal is for common equity to equal about 4% of a bank’s assets and Tier 1 capital worth about 6%

Maybe its just me – but this appears to be just more modeling going on and unless we can seriously substantiate, using market data, how we are arriving at these factors – Ummmh, why do we think these are the stress tests that are going to prescribe, THE way forward? I think, and again, totally my opinion, I think these remain hypotheses that are just being proven – No?

When I decided to embark of doctorate studies, my sole intention was to research the US capital markets ( narrowed down to a very specific facet of course) – I quickly realized, that is not what I wanted to do and embarked in a different direction altogether – story for another day though).

So anyway, preliminary results indicate that BofA (Bank of America), NYSE: BAC needs to raise $ 34B, Wells Fargo needs to raise more capital etc. This in light of a perceived tentative recovery from the recession.

I can’t wait to see the final results – seeing as its “no comments” from all the banks that underwent stress testing.

So – this is a kind of comment/ rejoinder to my post and comments thereafter on and off the blog – mostly off the blog – coz that’s all we seem to talk about these days – Why didnt anyone say something before the Lehmans, Bear Stearns etc began the tumble to being obsolete? Or did someone say something and just got ignored in the spirit of keeping with the Bullish Market trend everyone wanted to keep seeing?

At the weekend shareholders meeting for Berkshire Hathaway Inc NYSE:BRK.A , Warren Buffet, had a lot of things to say concerning executive compensation, industries he will not touch, a.k.a Newspapers :-), Moody’s etc. A lot of shareholders wanted to know why Moody’s was still a major holding of Berkshire ( 20.4% stake held), despite the finger pointing on the ratings accorded to some previously major, now failed companies.

Now a while back a lot of companies, including those no longer existing or those currently in serious trouble financially were Triple- A rated by Moody’s

Well – simple minds inquire – if those companies were doing so great – what happened?

A lot of things – but the bottom line: too many assumptions derived from theoretical mathematical algorithms that probably do not work in practise. I tend to agree, and tend to think that sometimes in building up over-complex business models leads to the loss of the intrinsic values being modelled in the first place.

Business then tend to spend too much attention ensuring the models are working, results are being mirrored to projected forecasts and any deviations from the models, sometimes not adequately tested using real life market situations, are assumed to need “fixing”. I can bet, that somewhere along the line, a model picked up something on the non-perfomance of sub-prime mortages, but was probably ignored and the model ” corrected” to reflect the expected result – Home prices are supposed to rise, not decline.

They say these days, the most astute of companies are assidiously innovating – thats the only way to survive, let alone compete!

Warren Buffet had this to say on Moody’s:

……the company “eagerly sought stupid assumptions that enabled them to do clever mathematics.” As to why he didn’t exert his influence, he said: “I don’t think I’ve ever made a call to Moody’s. We don’t tell Burlington Northern what safety procedures to put in or AmEx who they should lend to. When we own stock, we are not there to try and change people……

And in any case – the Bullish trend had to be ” allowed ” to prevail right?

I like what he also said nicely, in a very simplistic way that most of us already know:

“If you need to use a computer or a calculator to make the calculation, you shouldn’t buy it,”

I believe in models, thats why I am in the line of work I am in ( and love it 🙂 ) – but I also believe, that if I can’t explain in words what my model is doing – I probably need to rethink it 😉

As for Moody’s – the debate, speculation etc continues!


Revelations 3:8

“I know your deeds. Behold, I have put before you an open door which no one can shut, because you have a little power, and have kept My word, and have not denied My name”

When God leads you to the edge of the cliff, trust Him fully and let go, only 1 of 2 things will happen, either He’ll catch you when you fall, or He’ll teach you how to fly!
‘The power of one sentence!
God closes doors no man can open & God opens doors no man can close.

I received the caption above from one of my friends and it actually is one of those that made sense to me. Maybe because I am trying to sift through a lot of things right now, but most because this year – yes, the 4 months that we have been into it – I have seen so much of my plans actually translate into results!

I am a Christian and I live my life that way – I simply believe there is a God out there! I believe it is my belief in something that is Greater than I am that I am able to be Who I am….But I shall write about that maybe some other time.

As we approached the end of 2008 – actually around my birthday in November, I sat myself down and WROTE down what it is that I want to get done in 2009. My list had 5 things – that’s it. Because I believe that most of the things I wanted to get done were mere details in the 5. And I have actually seen the “things” happen. Some are already off the list – signed, sealed, delivered!

I could have said – it is because I am such a meticulous planner (which I am), focused about what it is I want to do – long term and short term (I am that too) or whatever else; but seriously, there was and still is something at play that gives me the strength to fly all over without getting weary, give my all in my work and current research, realize when some things are not working, be brave enough to venture off that path and embrace new things etc

Some call it, I don’t know – I don’t know! I call it Divine Intervention. I call it God’s favor.

Liquidity Management

This is going to be a short post because I am still composing the long form of what I want to write.

I have been having very interesting conversations with a group of friends on this Forum, at work and elsewhere concerning all things: Futures and Commodities Trading, Equity, Inflation, The Fed Reserve, Mortgages, Foreclosures, rising levels of unemployment, the TARP ( Troubled Assets Relief Program), FX etc.

Myriad viewpoints, similar consesus; things will tend to get worse before they get better 😦

Why? Because of the cyclical workings of the economy – You see, JP, Wells Fargo, BoA etc, may report better than expected earnings ( yes its earnings season), but if the very core that should continue supporting the reportedly improving economic conditions, i.e people remaining employed , is not yet sustainable, then the recovery will also be very cyclical and sporadic in the long run. Foreclosures are still going to go on, credit card default is going to keep going higher etc.

We have also been talking about the pressure that listed companies have as concerns short run returns; volatility on the NYSE is forcing such companies to go to great lengths if only to somewhat keep their stocks at a “decent” level – whats going to be the long term effect of such reactive policies?

My colleagues and I also sat in on a conference call exploring credit ratings agencies, fixed income options etc. It was interesting, but not shocking to learn that most companies these days are not really relying on the the standard company ratings. So , you firm may be Aaa, by Moodys, but that will not necessarily translate to a favourable credit standing with potential business partners. Made me wonder what extra due diligence would be done by firms in the future – or even right now!

I hope to write up something more comprehensive about this soon enough…..

But as one person did aptly observe, do not put all your eggs in one basket – It just might happen to be the Lehman Basket! Have a wise Investing day!