What Dreams Are Made Of…..
I want to continue my theme on Kenya’s marvelous money magicians and tie it in to this whole concept of Kenyans in the diaspora who are thinking about moving back and what realities they may have to confront once they get there.
I was having a conversation with a friend over dinner the other day about this topic and she said to me that for her, moving back to Kenya wasn’t about the money. Okay. Fine. I get that. It’s about being closer to family, being amongst people who have the same cultural background as you and all those good things, but lets be honest here, even if those things do matter, at the end of the day, you still have to eat and that means you have to earn a living. Now, if your family has the means to help you with that, then that’ll obviously make things much easier for you, but what if they don’t? What are your dreams going to be made of?
It is here that I want to bring in the topic of Kenya’s money magicians and ignite a discussion about what your chances really will be like if you are not in on the game. Today’s money magician, is the one and only Gideon Muriuki, the CEO of Co-op bank and I want to talk about what this guy is doing over at Co-op bank because I just read an astounding piece about him in BD Africa (Gideon, Gideon, who is the fairest of them all?)
According to this piece in BD Africa, Gideon Whodini Muriuki just so happened to allocate himself the most shares when Co-op bank had their IPO:
“The share’s current pricing at Sh8.80, means Mr Muriuki’s stake in the bank is now worth about Sh600 million, representing a 781 per cent gain since the 2007 purchase”.
That’s almost $8 million dollars in less than two years! 
The article does mention that he can’t cash out until next year, but you better believe that as soon as the clock turns on Midnight of December 2009, Muriuki is going to cash out. Then, the share price at Co-op bank will probably collapse, but who cares? He’ll have gotten his money by then.
I’ve said before and I’ll say it again. If I had a company in Kenya, I’d do whatever I could to get it listed on the NSE because that is the easiest way to steal money from a gullible public. You just get it listed, wait for the share price to raise, cash out and sit pretty.
What are your dreams made of? (and are they realistic?)
How do you make money honestly in that system? I want to hear from people who believe it can be done….
KE,
Damn this guy is good. The share was undersubscribed anyway, If i was the director I would have probably bought out some of these shares too. I guess the more the reason why Kenya needs a securities and exchange commission. Otherwise things like this will keep on recurring.
Didier:
The shares were under-subscribed because the public had gotten burned before and they weren’t going to let it happen to them again. So, they stayed away.
But somehow, this guy finds the money to scoop up shares that hardly anyone wanted;
Then, “they” end up inflating the price of shares by 800% (knowing how many they own) and based on God knows what kind of fundamentals (or funny-mentals as I like to call them);
And now, they are going to sit tight till next year (which is just around the corner) and cash out (& at that point, the share price will collapse again, but they’ll have hooked themselves up).
He’s not good. He’s stealing the farmers money.
If I was a farmer in Kenya, I’d just put my money with Barclays and forget about these local banks. You’ll end up getting screwed eventually.
KE
Has Muriuki done anything illegal? I don’t think so. So leave him be.
This the market at work. I thought you were a supporter of the free market!
What should probably be done is that money matters should be taught at primary and secondary school as compulsory subjects. This would make Kenyans realise that they have a big stake in their economy.
As for my own dreams, I just want to live in Kenya coz I like it. Money has nothing to do with it. I am intelligent enough to make money wherever I am – whether in Kenya, Mumbai, Timbaktu or even Caracas.
Annon:
To believe that Kenya is a free market is to believe in fantasy. It’s not even a capitalistic country. What you have is crony capitalism where the wrong people are being rewarded for doing the wrong things.
Has Muriuki done anything illegal? What is illegal in Kenya and what is not? Does anyone know anymore?
This guy awards himself the largest number of shares, at a time when that IPO was under-subscribed. Then, the price miraculously goes up when there was clearly no demand for that companies stock. How? and it goes up by a whopping 800%! and now, his shares are worth Ksh. 600 million shillings?
This is the problem. Nothing is making sense, but nobody is asking what’s going on.
As soon as those directors cash out next year, that share price is going to tank. It’s total manipulation, but they’re not using their own money to do it. They’re using the public’s money and so they don’t care.
And now look at this other story. They’re going after the NSSF account, which Biwott raided when he was in power.
It’s interesting to see that Kestrel Capital, which is owned by Biwott’s son-in-law has now lost the NSSF account and with it, the large commissions that they were charging. I”m surprised they waited this long to get rid of Kestrel. It’s simply a new group of raiders that has replaced the old group.
http://allafrica.com/stories/200911170984.html
Unless i am mistaken Gideon is one of the Directors of Coop Bank therefore the reason why he had many shares allocated to himself. So when the IPO is done obviously he will gain a lot from it if it is heavily subscribed as it was.
It may not have been over subscribed by i think about 90% of the listed shares were bought by closing day.
The share price of 10 shs was not set up by coop bank but by the CMA and Investment Bank that did the research and managed the IPO.
That is how the system works even google shares were sold at $100 a share on IPO at a time when no one knew how they would make money in the future. Now each share is worth $500
So check your facts please. Kenyan Banks are better for Kenyans than foreign banks from my own small experience.
thats the way it works with early investors everywhere, not just in kenya.
take this guy
$12.5 million he invested in 1999 in google is now worth $3 billion after listing.
u know early google employees made millions through share options
I think KE, is trying to say that yes, this Whodini guy didn’t do anything ‘illegal’ but outright wrong. I agree that they manipulate the amount of IPOs offered and their price and calculate that in X- number of years the price will go up by this much and they’ll hit the jackpot. At the end of the day this guy ‘used’ the farmers money to make himself a few millions. He didn’t start the Co-op bank like the google guys and the microsoft guys did with their companies, he is simply an employee. When he goes to bed, when hes all alone, don’t you think it cross his mind… was it worth it Mr. Whodini(s)?
As for living in Kenya, I’ll live there because i am dangerously in with LOVE it. If there was a patriotism contest, all ya’ll will come a distant last [just kidding wananchi,love ya'll] Nowhere else feels like home. You don’t know what living abroad is like till you try it. Its a good experience while it lasts. I’m not for the money, just the experience. Hopefully, i’ll have food on the table [what kind of people lets one of there own go to bed with an empty stomach] or else i’ll start thinking about scamming farmers…
John:
Your information on google is totally, totally, wrong.
Why don’t people read? they are several books out there on google’s story, but let me refresh your memory.
The founders of google put in $1 million dollars of their own money before they ever got outside funds from venture capitalists. They toiled for years, in their small apartments in San Francisco (where they were graduate students at Stanford) as they worked to perfect the alogirithim that would form the basis of their company.
It was only after they had a working model for search, that the venture capitalists came in with their money and told them that they could create revenues by charging people for ad’s. By the time the IPO was ready, they had the software in place and a very, very, good revenue model, which has worked brilliantly to this day. The whole world uses google now.
Please do not compare the founders of google to the crooks who run these local banks. The farmers who put their deposits into Co-op’s bank accounts are the one’s who are toiling. Gideon, with his friends at the NSE is simply manipulating the price, practicing insider trading and is going to make a windfall as a result. Like I said, I fully expect the share price to collapse once those directors cash out.
It’s happened before. People are wondering when prices will rise. They won’t. People like Muriuki are just manipulating the price, cashing out and leaving a gullible public to hold what little is left.
That’s why the brokers are now going after the NSSF accounts. Retail investors have shyed away because of all this manipulation. So, now, they are going to get government accounts like those at the NSSF so that they can continue getting their commissions. They’re messing with people’s retirement funds.
You can’t eliminate poverty if all you have is this kind of wheeling & dealing where nobody is really creating anything.
its not farmers who put their money on coop bank rather its Saccos who represent the biggest accounts
There is absolutely nothing wrong with muriuki buying up shares that no one wanted obviously he knew that the fundamentals were solid
Mariuki does not control what happens at the stock exchange once shares are floated its a free market where willing buyer willing seller maxim operates, it would be very expensive for muriuki to prop up shares as it would mean buying up all the shares as they come into the market.
Crony capitalism operates all over the world not just in kenya, in the US george W Bush gave his cronies no bid tenders got projects in Iraq
KE
There is no point of criticising just for the sake of criticising.
I personally do not see anything wrong with what Mr Muriuki has done.
As for living in Kenya, it is MY country. I cannot be more comfortable anywhere else.
Yes, I do realise that we have problems in Kenya but I refuse to join foreigners in bashing my own country. That would be pretty stupid.
All countries have their own peculiar problems and Kenya is a disadvantaged country. Disadvantaged by the inequitable global economic system which tends to favour the big economies.
One thing I know for sure, Kenya is getting stronger by the day.
I will do my bit and you should do your bit.
KE, can you tell me what specific action you have taken to alleviate the problems in Kenya bearing in mind that you do not have to be the president or even a politician to contribute to “your” country.
I am waiting……..
Waby:
um…But it’s not a “free market”. This is what I’ve been trying to explain here. There is manipulation going on from the inside and from all sides.
And again, crony capitalism may exist in other parts of the world, but again, it depends on how much of it exists. So, when you have such cronyism that you have 10 million people starving..guess what? you gotta problem. You have to look at the living conditions and the inequality gaps and the wider they are the worse the cronysim is.
Annon:
Saying it’s your country doesn’t tell me anything. What does that mean? This discussion is not about blind emotionalism and patriotism. It’s a discussion on an economic system and what one’s chances are in terms of making it within that system. Just saying you love your country is giving the readers here absolutely no information about anything.
In terms of alleviating problems in kenya, I actually think I am doing alot more with this blog (in terms of providing information) than you are doing by telling people you love your country.
KE
You only expose your tenous line of thinking when you say that there is no link between emotionalism and the economy. the two are very intricately linked. People will only invest in an economy with which they have an emotional attachment. It may be a negative emotion or a positive emotion – but there has to be an emotion.
I will entirely agree with anon when he/she states that they will live in Kenya because they love it there. That is their reality and you cannot just dismiss it offhand.
The first thing that Kenyans have to learn is to love their country. They will then make the necessary sacrifices that are required to push the country forward.
Thank God, many Kenyans are not like you KE otherwise everybody would have bent over to be shafted by foreigners.
By the way, how many Kenyans read your blog? I bet its not more than a 100 at the most. Therefore, whatever you are contributing may be negligible. But I will not take it from you. It is your contribution.
As for me and my house, we are rooting for Kenya. I work in the UK but I spend alot of my money in Kenya. I pay school fees for some poor kids. I also mentor some young people on good business practices e.g. book keeping, running an account, discipline, marketing and integrity. One of the youths I have been mentoring has just got a contract to supply vegetables to a restaurant in the Village Market (Ksh 70000 per month). He is now looking for a bigger vehicle. He is only 25 years old.
Equity will lend him the money to buy the vehicle as he has been successfully running an account with them. This is a person Barclays bank could not give a chance! I am willing to bet you that this young man will be a millionaire by the time he is 40 years old. That is my small contribution.
As an aside, I was reading about a Mr Muchene Kinuthia, the one who married Joseph Kamotho’s daughter over the weekend. I understand his company now has a turnover of over Ksh 1 billion. Now that is a success story worth celebrating.
KE, you are living in an ivory tower, please climb down.
Annon:
I don’t know why you are unable to follow my arguments. I told you that coming here and saying you love your country is not providing us with any information. It’s just blind emotionalism.
And saying that people will only invest in an economy in which they have an emotional attachment, just doesn’t make any sense to me at all.
Again, this is not about you or were you chose to live or what you love. It is about making an honest assessment about an economic system and using tangible facts. Telling me a company says they have a turnover of over Ksh. 1 billion doesn’t tell me anything. What do they sell? what do they make? have you seen their books? how do you know he’s not making up those figures?
Your giving us zero information here. Just blind emotionalism.
You need to read the post on Kencall where people have left comments that have provided very specific information on how call centers work and the challeges of runnning one in Kenya.
KE
Why ask a question when you already know the answers that you want to hear?
You asked an open-ended question and you should therefore be open minded enough to accept the various responses that you will get.
Has it occurred to you that your idea of making it may not be another person’s idea of making it? You value money and production as the be all – but other people may just value breathing kenyan air with or without money.
And another thing, I have seen you make many unscientific or unproven statements on this very blog. You should not therefore criticise those who place a high value on patriotism and loyalty to the land of their birth.
VIVA KENYA.
Hey Guys,
Your comments are much appreciated and we shouldnt resort to calling each other names or alluding to someone as something (hem hem didier) but seriously we Kenyans have a knack off shooting ourselves in the foot.
Just about 100 years ago Kenya and indeed much of Africa was living a medieval existence in and around forests and plains that were much of Africa.
A century later we have rapidly developing towns. Increased our population from a mere 100 million souls in 1900 in Africa to 1 billion today.NUMBERS IS EVERYTHING ASK CHINESE.
This is against all odds of genocidal colonialism, tribalism, marxism, neo colonialism, corruption, AIDs, Ignorance and even adverse weather conditions.
The African has evolved the fastest of the human species because of the numerous problems that beset him/her.
Now that we are finally learning how capitalism works and developing our own infrastructure and millionaires some of us want to shoot down our progress.
Growth is incremental and really we should be proud of what we achieved because for me and you to be debating in English (a foreign language) about a wide range of topics with good arguments and counter arguments is a remarkable feat considering everything even religion was(and is) against us.
So to KE and crew keep on keeping on and remember to guard your fortress Kenya. Its the only one that is yours.
JK,
I could dissect many of the falsehoods and misleading points in what you have just said but i don’t have time for that. The past is gone, don’t dwell on what has passed. You should pay attention to what is going on now and the Integrity deficit. If they teach you in sociology to appreciate that then well and good.
Buddy, you can’t build a house on sand and expect it to last.
Annon:
Value breathing Kenyan air without money? Dude? Hello? how are you going to survive without money? by breathing air?
This is why your emotionalism is irritating me. It’s not practical and it’s offering no advice about anything (about work conditions, about one’s ability to make it..nothing).
You said you mentor young people on good business practices. What exactly do you teach them about business? I’m sure your not telling them that money isn’t important.
A friend of mine left for the US in the year 2002 on a green card. Prior to his relocation, he tried to sell a couple of plots he owned in the fast growing area of Kitengela. There were no takers. He is now in kenya on holiday. I accompanied him last weekend to inspect the property. I had promised him a shocker which he surrey got. The plots nobody wanted in 2002 are now worth upward of 10 Million shillings. I could quote other leads.
My friends, it is the in – thing nowadays to bash this beautiful country, but we are missing the point. It is in our hands to make it a better country and the answers are not with the crusaders, local or foreign.
KE- I totally get what your point is what you are asking people to consider. There is serious manipulation going on to benefit a few individuals. Period. That’s the truth and it is at the expense of millions of poor Kenyans who have no clue what’s going on.
The reason Kenya will not prosper any time soon is because even educated people like your readers 1) don’t want to face the truth and 2) want to think about their own individual interests. So what is one individual has land worth 10 million???? What about the other 40 million Kenyans???
Enough said!