Archive for May, 2009

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!


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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! 🙂

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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…….

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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” 😉

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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.

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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!

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