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Follow-Up on Mama Mikes post

I promised to follow up on the interesting comments around entrepreneurship in Kenya that were sparked by my post on Mama Mikes by “interviewing” the founder of the company – Segeni Ng’ethe.

While reading Seg’s responses I was struck by how simple it would be to address some of his issues e.g. setting up a business incubator – unfortunately the people with the resources and the attention of important decision-makers focus on grandiose solutions, that often amount to nothing much in terms of tangible, long-lasting outcomes. The other half is too busy “socializing”
or whatever it is that events like the WSF hope to accomplish.

I smell a rant coming on so let me stop here.

If you have further questions for him, please leave a comment.

Thanks for playing Seg!

First his disclaimer: Take this into account: My answer(s) are very specific to the type of business I am in. If I were in a different type of business/industry, I don’t think the challenges would be the same.

1. What would you say are the biggest challenges you face being a young entrepreneur / start-up in Kenya? In your ideal world what would be the solution/s?
(i). Very expensive internet connections
(ii). Very slow internet connections

Ideal Solutions:
(i) A new technology that allows me to access hi-speed internet from my laptop from anywhere in Nairobi

More practical solution:
(i) A business incubator focused on businesses in need of hi-speed internet access for their business to thrive. The incubator would provide subsidized hi-speed internet access for the business 1st phase of life.

2. Have you tried to approach any local institutions for financing? If so, what has been the response?

Not yet. We intend to speak to at least 2 institutions and at least 3 private investors this year.

3. How did you handle the transition from being based in the United States to being based in Kenya? Is there anything you’d do differently?

Things I would do different:
(i) – Prepared myself better for the lack of inexpensive high speed connections. (Actually, I am not sure how one does this :-) )
(ii) – Established temporary office space (or place to live) prior to arrival (so I avoid working from my parents home). Having a central place to operate from is soo critical.
(iii) – STOP thinking of expenses in dollar terms. I took me months to start valuing services and products in terms of Kshs and not dollars. There is a world of difference as soon you make the switch.

Things I did correctly:
(i) I took time in looking for good people. Kenya is full of wonderful talent, but you have to take your time finding them. Finding good people has been the best thing I did for MamaMikes.

4. There’s been an interesting debate going on in the Kenyan blogosphere about the dearth of investment opportunities in Kenya (esp. for Diaspora-based Kenyans aka KT’s) beyond the overdone real estate market and the stock exchange – what’s your view on this? Where else could guys be putting their money?

I can’t comment on this properly, because most of what I own is tied up in MamaMikes. I have not invested in real estate or in the stock market. So I lack the experience to offer ‘tried and tested’ answers.

Also, I have an issue with how the question is phrased, why call investments in real estate and the stock market as “overdone”. The people I know who have invested in the stock market have done and continue to do phenomenally well. I think investments are ‘overdone’ when they stop generating returns. So long as they continue to give you good returns they will remain a good investment.

If I had cash, where would I invest today?
(i) Planting Eucalyptus trees to feed fuel hungry tea factories. (Tea factories require wood fuel to process tea. And they can’t get enough. The same trees can be used as electricity poles and are used for Charcoal).
(ii) Investing in low income housing in populated areas (target rental rates averaging between 5k – 15k a month). For example in areas like Eastleigh.
(iii) Investing in a learning institution – offering a niche education, not yet offered in Kenya. Eg: Mobile phone programming, high-end web programming
(iv) Investing in good people, who lack the capital to build and develop their ideas.

35 comments to Follow-Up on Mama Mikes post

  • Great interview Ory/Segeni. I especially like it that Segeni emphasized that there are other ways to invest for income aside from buying land and the Nairobi Exchange.

    On the internet access front, I have been promising news for a while now and should have a piece on new developments that go part of the way towards dealing with this problem at my blog before the start of the coming week.

  • Mashatall

    Good infor Segeni, comes in handy for some of us who are about to relocate back home.As to whether good investments are hard to come by, i believe with real estate and the NSE, all we need are innovative products that will spur yet more growth and returns in this areas.For the NSE we need more products like options,futures,margin trading ETC. for real estate we need to introduce mortgage backed securities, and different products of tapping into real estate without having to own it directly.We are yet to exploit fully the liquidity that is available within the finacial markets in Kenya.Lets put on our thinking caps and come up with innovative products.

  • Nice post. I find it useful even if i am not a Kenyan in the diaspora. Piceked up a few tips.

  • acolyte

    Very nice post. Informative and interesting.

  • Good, internet connections in Kenya are quite a pain in the necessary places. Good to follow up.

    I have never thought of Eucalyptus trees, written down for future reference. Good post. Btw Happy Belated Birthday.

  • sijui

    NO! NO! NO! to the eucalpytus trees!!!! It is a Trojan horse for farmers, especially the ones intended to benefit. Eucalyptus trees severly damage the watershed’s ability to rejuvinate i.e. they alter rainfall patterns and contribute to desertification. Just ask all the farmers in Nyeri, Meru etc who are feeling the effects now of large eucalyptus plantations in rainfall and surface water patterns. Water scarcity for farming is getting worse and worse. There is better and cheaper technology out there to run these factories……

    broadband wireless, Segeni does Flashcom offer a high speed service for businesses? I know they do for home use and they are cheaper than Wananchi et al right now.

  • Amused

    Great catch sijui, caused me to do some research. (http://en.wikipedia.org/wiki/Eucalyptus#_note-1) Found the following on wikipedia, “Eucalypts draw a tremendous amount of water from the soil through the process of transpiration. They have been planted (or re-planted) in some places to lower the water table ”

    I don’t think many farmers in Kenya want to lower the water table!!! Great interview Ory. Segeni, great work. It must not have been easy.

  • Good.
    Just spend a few weeks in KE and i think there are many biz ideas still undone.

    @dollar conversion
    I understand the part of tending to convert to the dollar: I was doing a project and kept “overpaying”, since my conversions kept deceiving me about the “low” cost of the services.

    @Eu trees: I have always wondered when someone with power would do something about it. I have actually witnessed a river dry up at the source. My take: the mzungu who introduced them knew what he was doing (i read malice), but my poor kenyan brothers with poor “copy and paste” mentalities have no idea what is in store for him!

  • Ory:

    Great job, as usual in delivering the goods! Excellent questions.


    I am blown away by what you have done-it is such a great example of finding an upward trend and riding it to the top! The Kenyan Diaspora remits roughly $700m/year back home to Kenya. As such, your business should continue to grow by leaps and bounds.

    Keep up the good work and I am looking forward to seeing more interviews on you!

  • Osas

    Planting Eucalyptus trees would indeed be one of the worst things to do, and would further ruin the environment. As Sijui and Toiyoi noted duly.

    Agroforestry is needed, but not of this type.


  • Thanks for the Insight to the challenges and Segeni all the best bro,
    Kenyan Pundit keep up the great work and all the best as well.
    Pamoja and ROAR ON!

  • alex muturi

    a study has shown that it is much better to plant eucalptus, or any other tree for that matter, than to leave the land bare. you lose more water with bare land…….

  • themperor

    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.

    Bund Alexander
    -The darkest man in Africa-

  • The first time I meet this ideal from your article, so I will try to understand your topoint for it.Sometimes new way to the truth for it. ah. isn’t it?

  • This is a great interview especially for those from developing nations. I studied in the US but need to come back to a developing country, Had a hard time to start over

  • Hey there, This write-up is rather educational and fun to read. I am a huge follower on the points blogged about. I also adore reading the comments, but it appears as a great deal of readers have to stay on topic to try and add one thing on the original topic. I would also encourage all of you to bookmark this post for ones most used support to assist get the term out. Thanks

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