The National Bank of Kenya
I’ve had long arguments with my friends about the role of corruption in propping up many wealthy business owners in Kenya. Some of my friends believe that they are many successful business people in Kenya who I’m just not willing to give credit for who have achieved their wealth through sheer genius and hard work.
However, when I look at the economy and the landscape, their stories just don’t add up and when I continue to read stories such as these, it just keeps re-confirming my strong held belief that they are a lot of people who are stealing privately and many don’t know about them. Here is a story coming out in the Kenya Times about loans totaling more than 20 billion shillings given out from the National Bank of Kenya, that Kimunya then tried to pay off with tax payer money (read more here: The National Bank of Korruption). According to this article: “The National Bank of Kenya has had a long history of bad debts, dating back to 1980s. At one time, Simeon Nyachae ran into trouble when he publicly published names of high profile individuals that owed the bank billions of shillings that they were unwilling to repay”. Let’s be honest here – this is where the corruption in Kenya begins. It always starts with banks giving away these loans and these loans have given a number of people, a great head start.
I mean, when I get into discussions with people who try to tell me that people like Kibaki or Matiba never “stole”, I just end up shaking my head and it’s not just people like Kibaki or Matiba. It’s several other less known, but equally connected people. This is how they all got going: They got these massive loans from government owned banks, they then turned around and built businesses with this borrowed money and everyone thinks they are geniuses! but guess what? how hard is it to start a business with 10 million shillings which you know you never have to pay back?
I’ve been asking myself for years and years, why it is that a country like Kenya, which supposedly has all these smart entrepreneurs, is not producing any innovative companies? When India’s economy started emerging as a global power, it was because these hard working Indians were building innovative companies that were competing on the world stage and the reason they were able to build these companies is because they were not just stealing the money. They actually had to work and think and in the process, they were forced to learn how to sell beyond India. I listened to an interview by the founder of Wipro where he said that living in a closed economy for years, forced them to learn how to do everything on their own. They couldn’t import anything and they learnt how to build their own computers, make their own cars, grow their own food, etc, etc…and when the economy finally opened up, they just exported all they had learnt to the outside world, but at 40% less of the cost.
What I’ve been seeing in Kenya is just not adding up and it’s not adding up because the people who’ve been getting these loans for years have never been forced to learn how to innovate. They’re all doing the same things: Get a loan, buy lots of land and then grow a crop for export (like flowers). Then, spread the rest of the money around and buy apartments and/or buildings all over Nairobi. More recently, pump some of it into buying shares at the NSE of parastatals that are being privatised. If you still have some left, transfer it to bank accounts in London or New York for safe keeping. That’s it.
The culprit for this lack of innovation, is these massive loans that people have been getting. They’re just spreading around the money. They’re not actually creating anything because they don’t have to.
So, let us have this honest discussion and I want people to tell me whether the Kenyan economy makes sense to them.
You have a point there about lack of innovation.
We need a long term strategy – probably starting with schools. Why can’t we have centres of excellence and innovation using the Bangalore model?
But I also think that the availability of credit is important. Otherwise, Kenya would be like miserable Tanzania.
KE
What do you think of Kajwang’s shenanigans?
How could he allow a welder and a salesman into the country?
Would a Kenyan welder be allowed to work in India? Fat chance!
I say he should resign before he allows a terrorist into the country…..
I do not know the full story but apparently the ‘welder’ was working on a development project sponsored by the Church of Latter Day Saints aka Mormons.
He wasn’t a welder in that he would set up shop in Kariobangi and compete for jobs!
Coldtusker
The fact is that the Church of Latter Day Saints could have employed a Kenyan welder. They do not need to import a welder. The welder is still depriving a Kenyan of a job opportunity.
This is part of the problem with the so called “development projects” sponsored by foreigners – right from the World Bank to the Mormons. They give aid with strings attached. They mostly insist that they bring in their own employees and that the contracts (in case of World Bank) are given to companies from the West.
I am sure that if Kajwang had said no, the project would still have continued – with a Kenyan welder.
KE
I agree there is a lack of innovation in Kenya but is that really what we should be concentrating on right now? Is it really a priority?
What about concentrating on our strengths right now e.g. farming and tourism. Kenya can earn more from its coffee, tea and other commodities if they are branded and marketed in the right manner. The same case with tourism.
Yes, we need innovation but it is also important to take advantage of what we already have.
KE
This is the most important post : Bloggers ar skirting your question …Why are we poor?
1) Because we NEVER work? PERIOD: and whats work ?
Work is the process of creating VALUE…
The Kenyans who are supper rich,( WHEN ONE follows) are ALL and ALL beneficairies of SCAMS like National Bank..
I Call IT AJUA economy (you know the ajua game)
The Kenyans who are said to be enterprenual are NOTHING but conveyance traders (ONE goes to DUBAI buys a few clothes..brings them to NRB and LO she/he is a genious Oh Oh)
I have NEVER believed in THE Kenyan Economy..Its not there
NB: I must comment though the LUOS…They to me are the ONLY kenyan people who do some value addition albeit in a low tech way
In Kenya people
Wear clothe through luo hands(TAILORS)…(remove Mitumbas from DUB)
Sit on Luo constructed chairs/ table
Sleep on Luo made Beds
Work in offices painted/ maintained/constructed by LUO artisans
Own Houses constructed by Luo hands
Drive DUBAIS mantained by machenics from the LAKE….
Have Luo family DOCTORS…..
All African Eateries worth eating are LUO ones
They have 20 MPS out 222 YET sound like they have 80%(educason)
……
The lsit is endless about this people:
THEY have never held POWER (NEVER Been Beneficairies of AJUA SCAMS) hence people describe them as a VERY POOR LOT
They are the only just about to take off people:
The Kikuyu & Kalenjins are in the STONE AGE: Fighting over land to be peasants: They have been in POWER but NOTHING TO SHOW except the AJUA ELITES and dirt poor peasants:
Lets vote for a Luo next time please:
I love this post: Keep up KE
Lord
Your post started off very well and then degenerated into the most base primordial tribal chest thumping I have seen in a long long time.
One of the reasons we are poor is because of TRIBALISM – which you appear to be promoting.
It is a very myopic way of looking at the world.
BTW – I do not think Kenyans will vote someone just because they ARE Luo, Kalenjin, Pokomo or whatever.
This post was about the economy, not about Kajwang. Lets stick to the topic at hand.
KE,
I agree and disagree with some of your observations. Where I agree, companies pre 2000…….absolutely, many I’m not saying all, benefitted mostly from political patronage and outright corruption
Where I disagree, successful companies post 2000 and definitely post 2002 with the new Kibaki regime. Yes, some political patronage but a lot of sweat equity and innovation. I list
1) Equity Bank
2) Wananchi Online
3) Bidco Oil Company……though Bidco was doing well even during the worst years of Moi….and yes this is not a new ideas, services company per se but it is definitely rags to riches
4) Access Kenya
will think of a few others but there are many success stories coming onstream like Seven Seas Technologies etc…..
For anyone in Kenya who is reading this for business ideas, I would suggest looking at
http://www.crowdspring.com
and also http://www.elance.com, http://www.guru.com
A website for web designers/developers. I am not involved in the company, but thought I would let people know. These are sites, where Kenyans could bid for projects, in the west. Business Week, has an article of how small businesses in the US, are outsourcing work.
http://app.businessweek.com/Us.....ageIndex=3.
Luo’s… Luo’s… Luo’s…. Tribalism mpaka kwa net…
These are the fellas who bring our country down.. we we others work hard to make Kenya an exemplary among growing countries in the region…
Hell No.. m not voting for people with myopic visions like you…
Lord
Luos eat:
Potatoes grown on Kikuyu farms
Maize grown on kalenjin farms
Bananas grown on Kisii farms
Meat reared by Maasai and Somali hands
Mangoes harvested by Miji Kenda hands
Beans grown on Kamba farms
Miraa grown on Meru farms
Luos travel on:
Matatus owned by Kikuyu businessmen
Buses owned by Waarabu businessmen
Boda Bodas owned by Luhyia entrepreneuers
Luos live in:
Flats owned by Wahindi, Kikuyu and Nubian businessmen.
etc etc etc etc
Luos depend on all other Kenyans to ply their trades. We are all depedant on each other and we cannot survive without each other.
Do you now understand why Raila was prevented from assuming “SUPREME AUTHORITY”?
Let this be a lesson to you and others who think like you.
Kei O: (I am not a Mormon)
1) We are beggars.
2) This is not a loan that one has to pay back. The Mormons are probably ‘donating’ the money.
3) Mormons have to provide ‘free’ service as part of their faith. They may get paid a stipend from their Church.
4) The ‘welder’ might be a volunteer (under 3 above) and is donating his services.
5) ‘Welder’ is a general term. There are tons of specialties within welding. Some of the jua-kali welders we have cannot & should not be trusted with high-priced equipment. I am not saying we do not have qualified welders but… if I am donating the money (not a loan) I should do what I please!
Remember the issue with “Kenyan Pilots”… I asked a senior KQ staffer about that… the response was that KQ needs trained pilots on the new aircraft. They are not in a position to train pilots for 2-3 years who then leave for Emirates. The Kenyan pilots are not qualified for 737s, 787s & Embraers.
Also KQ does not want jua-kali pilots so they insist on standards that are criticized as ‘too high”.
We have lots of illegals from Uganda, Somalia, Ethiopia, India & Pakistan in Kenya. Guys with zero qualifications. Why are we hassling with a volunteer?
The only reasons Africans are where they are is because we have over 200 tribes; yet we all can’t agree. if i was kikuyu but i wouldn’t criticize them as the author do, i’d be doomed anti kikuyu. if i was luo, i’d definitely support raila, kweli huu ni ungwana? why cant we all be neutral? it’s also the reason why India is a 3rd world country even thou 3 of top ten worlds billionaire are Indians, fck ths sht, lets all unite and work together towards a specific damn goal!