Sunday, March 04, 2007

A business experiment

If you have read my posts on currency trading then you'll know about my latest fascination, forex. This week that passed I decided to send out feelers to Kenyans to see what their thoughts were on forex. I took out a 7-day classified ad in the leading daily with the words
How to invest 14K and earn 50% pm. www.geniuskenya.com/scalp
My primary objective was to gauge the quantity and quality of response to see what kind of future if any forex trading had in Kenya. The link on the ad led to my website where I had a free teaser e-book for download. At the end of the book one was requested to transfer mobile airtime of K.Shs. 100 (~ $1.50) to my mobile phone in order to register for a free lecture I was to hold on forex trading. The lecture was for March 3rd. Secondary objectives were: to market GEC, market my consultancy services with regard to rural internet connectivity and see the opportunities for training in forex trading.

Trust my luck, just after I had put my ad two potentially "experiment-ruining" things happened. First of all the Central Bank of Kenya put out a paid advert warning people about unregulated financial investment schemes in particular pyramid and ponzi schemes. Unfortunately the wording of my ad was very much like those for the aforesaid investment schemes. Secondly Safaricom also put out an ad warning people about fraudsters who were requesting unsuspecting members of the public to send airtime in order to qualify for some prizes. Even though my ad was innocent, I know that we Kenyans are pretty suspicious so the warnings must have had an adverse effect, although I'll probably never know the extent.

However immediately the ad was out my phone started ringing off the hook and my inbox always had a new message. Most of the inquiries started off with a hint of disbelief at the possibility of earning 50% profits per month, but it helped that I had put a disclosure that money could be lost or gained in equal measure. Some callers asked so many questions that I could swear they were Central Bank anti-fraud investigators :-). I think that the fact that I had put explanatory information on my website and disclosed my monetary objectives also helped in putting people at ease over the whole project.

March 3rd finally arrived and I had 18 people registered for the lecture (some just 10 minutes before!). The lecture was very engaging and informative for both me and the participants. I will be sharing the gems of the lecture in this blog but for now I must go and prepare for my next lecture.

14 comments:

Eve Sheridan said...

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AFRICAN LIZ said...

What a story! Clearly shows the many risk takers we have in Africa. The expedient responses by CBK and safaricom to warn the civilians was equally astounding.

startupkenya said...

Yes African Liz, risk takers are there.

I think the CBK and Safaricom warnings were coincidental though. But it was interesting how they coincided with my ad.

The Emperor said...

Greetings,
I am a finance student of Strathmore University in Kenya, i enjoy your discussions and would like to share my inputs.
I think the only way of increasing kenya's economic growth to rival that of India other than using the youthis through developing SME financing.Most SMEs in Kenya are at the moment left vulnerable as banks and microfinance instituitions are climbing over each other to attract SMEs to obtain loans from them, which is leaving SMEs at ransom since they are not adviced on how to pay back the loans and huge interests. Utmost these SMEs borrow from one institution to pay a previous loan from another instituition, making this a vicious circle and reducing the growth potential of these SMEs.
It is in these regards that i have registered an investment company, Networth Investment Group of Africa. It has been a trying period for me given my financial situation( broke arse student life) since i had to fork out all the registration costs (Kshs.65,000- and i still have no licence and office), i managed this through getting some 4 classmates of mine who became my business partners and shared in the costs.
In the business we are setting out to buy out viable SMEs that are being run down by mismanagement, restructuring them into profitavility and growth then selling them to willing buyers and venture capitalists.
We are also planning on applying for a licence to the Capital Markets Authority to operate a securities exhange secondary market for an Over-The- Counter market for SMEs where we create a portal for SMEs to obtain interest free and capital that they don't have to pay back which they can put in their business and expand to enjoy economies of scale.
Given my lack of experience in the financial industry, i started a Students Finance Assiciation in Strathmore University where i can get a lot of training and exposure in this industry.
I am currently looking for angel investors who can invest in the business and add their experience and technical expertise.
I am also requesting for guidelines and information on how to expand my knowledge in this industry.

Bunde Alexander
-The darkest man in Africa-
bunderalexander@gmail.com

Moosh said...

In response to "the emperor" (Bunde Alexander) - yours is a great idea. Very similar to (or same as) the idea of private equity.
I agree with your assessment that financing is a huge problem for most SMEs in Kenya. For the economy, this is serious since SMEs constitute a large portion of the economy - I am not sure but probably more than large listed companies. In addition, there is the issue of poor management.
PE that is focused on making capital more affordable and available, allocating it effectively and at the same time getting involved in the improvement of management is something that is long overdue, in my opinion, and good for business in Kenya.
Bunde, please keep us informed on your progress.

PETER said...

The idea that 'the emperor' has is GREAT. To me I have thought of it as being well in think in lines of a micro-private equity entity that participates in buying-INTO (i.e consult and provide loans payable inform of gaining an equity position) small businesses that have a well articulated value-proposition, targeting a pressing need but are struggling due to lack of proper management systems , turning them around and growing them for a future sell-off to major private equity providers or just keeping them as part of a wider portfolio.
Infact its not only in Kenya alone, the LSE has had an operetional trading exchange of private equity providers and firms seeking it and Nasdaq is currently thinking of the same. Well the dynamics of the demand of this service might be very differrent on these US/European markets and the Kenyan markets, the principal one in the US being the rigorous SEC regulations for seeking capital in public markets including the complex and expensive reporting procedures SARbanes Oxley. In Kenya , the need is just there for the myriad reasons you have stated, capital access being the foremost plus the fact that the Kenyan tax watch-dog had been sleeping pre-2000, many of the small business might never have had an incentive to establish proper accounting systems, which are preliquisites to getting the management of these small firms right , and putting them not only on a growth path but on a sustainable well managed growth.
And this all the micro-private equity entity would exist to do.

niatrading said...

This is very interesting.I was searching the net for internet connectivity prices in Kenya as I wish to come soon this year then I came about your blog.Then this topic really made me interested.

We are a team of 3 forex traders who do it for a living in the usa and were just thinking of coming back home to do our trading there.That is why internet connection was damn important.

I do train my clients and also have great relationships with forex brokers in the usa as we are independent brokers too.
I would like to talk more about this with you but please, we never tell anyone that they will make 50% a month as that's not true, that's why most traders fail.

See our forex trading site. A real one this time with real kenyan traders . http://www.niatradingsignals.com.
Also note that we are one of the top 50 forex sites in the world and have been there for more than a year. http://www.top100forexsites.com/

Lets talk as maybe we can work together and this time you won't be posting impossible returns that can get you called a ponzi.

tonyrich

startupkenya said...

Thanks tonyrich for your comment.

The business experiment was quite successful. Take a look at www.geniuskenya.com to see what we are doing now with forex.

I hit your website but I couldn't get a contact email. Please drop me a line at harrykaranja at yahoo dot com , I'd be interested in talking more.

Anonymous said...

hello...Am Rose okode!
i work with ExiteAfrica which is a subsidiary of SELECT INVESTA which is an offshore Forex trading Company that has its links in Sweden.
The partner from Sweden will be here on the 9th of march to share with most Kenyan on how to invest and benefit from this kind of business...for more details on how to get to know our company and its partners contact me at exiteafrica@myway.com or call 0722402316 and ask for rose i will give u more information.

sasa said...

Hi I need someone who runs a managed accounts services. Say a $1000 start up and toping up $1000 monthly. what rates can i get PER MONTH!?

zang said...

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Anonymous said...

niggaz trade in bananas and leave the rest to the white man...

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