The courtiers who use isms like machetes and will grind you to dust.

The courtiers who use isms like machetes

In every city, every town and hamlet, there is a small core of men and women who are drawn to the business of proselytizing to their fellows on how best to think or act. They have sought to join courts with no regard to whether they are monarchical, fascist, authoritarian or democratic. What they desire is the pose that is power, to beat their counterparts competition to the throne. I came to these abstract thoughts recently when I was listening to friends of mine praise the efficacy of free markets and the governmental policies needed to maintain this state of affairs. We spoke of informing, educating and cajoling ordinary people to appreciate ‘how markets work’. We raged (with me contributing a lion’s share) at the ignorance and lack of curiosity among people while generously pledging to help find ‘solutions’. Those of an opposite persuasion, among whom I also count not a few friends, speak of the inefficacy of markets and they too seek to inform and empower by educating and advocating for their point of view. The objects of their responsible attentions mill about, ignorant, disempowered, simple minded, blind to real interests according to their saviours. Yet those billions of people know markets intuitively and intimately. They have been buying, selling, exchanging, possessing and being dispossessed every moment of their lives so that their knowledge resides as much in the instinct and unconscious as it does in their diplomas. To them, the market is not the system their self-appointed betters announce they can view from the eagle’s viewpoint. Rather, it is the millions of transactions they conduct: decisions to act driven by past lessons of painful or pleasurable consequences and sometimes by rights and wrongs that are wholly moral.

The courtiers do not allow their ignorance to stand in the way of their fierce competition among themselves to win the right to be the main proselytizer to the people. Ideas are merely weapons in the race to the throne. This is not to say that they are all equally good or bad, or that they are necessarily harmful to the ordinary person. It is to recognise that those who wield them do it more in the fashion of a machete with which they wish to dismember court rivals. It matters not the historical period or the system of government, the court is where the ideas ‘of the (self) anointed’ are deployed. Our broadest and most opposed political categories after all were born when the deputies of the French National Constituent Assembly ranged themselves to the left and right of Louis XVI during that country’s revolution. Absurdity is always present in court: I am told, for instance, that the arrangement of the ‘conservatives’ to the right of Louis or the Speaker and the ‘radicals’ to the left originated from an old custom of a host seating an honoured guests to his right at formal gatherings. Right versus left, fascist versus communist, social democrat versus libertarian, whatever their roots, are mighty war-clubs called isms used by one group of courtiers against another. The rest, meanwhile, sleep, eat, have sex and die, each individual deeply woven into his own material and emotional markets, some which are regulated by some commandment and others in an unregulated flux of pain or pleasure. Each life is a million contradictions, multiple defeats and victories. There is little that is linear in it, even if its owner tries mightily to think it so. Its layers are multiple, their interaction with time not to mention other lives making for such complexity that it is best described as a universe: a whole. Yet the courtiers would have us believe that their idea du jour must be followed by all of us if we are to better understand the system and live better. Their ambition to possess the throne that they believe allows them to make our lives in their image, blinds them to the fact that each of us is a sun in a solar system with billions of planets. Isn’t this self centring how it should be since we only burn for a short while? The reason so many people love pop music or cliché Hollywood films is that we turn the page and eye the film star through the lens of a dynamic and labyrinthine life. So much so that we can even elevate drying, grey paint into great art provided we filter the experience through us. Alas for the courtiers who hold that learned tomes, with their handy advice or diagnosis, are richer in than the inner life of each person. How little their red or green books or manifestos have that is relevant to the totality of my life. Yet observe how much they threaten it with their conceit and determination to replace me as guardian to myself.

To the court’s aspirants, the mass of people remain ignorant though each one is embroiled in an unending transaction of goods, emotion and sensation. Those who would wear the crown disdain the individual life. They only respect those parts of it that can be loaded onto their ism. They are as the knight who would use the sword to introduce new ideas while clearing the path with a scythe of contempt. The victory of the powerful, which initially must be a victory among courtiers, once it leaves the centre to meet its appointed destiny with ordinary people, is nothing less than the denial of their internal human existence. It should come as no surprise that the communists killed as much as the fascists, they were all projects of the powerful striding out of the court and into the hut or the tenement. The solutions of the court are best considered with suspicion by their ostensible beneficiaries. And the time to fear for your individual life is when one group of ism wielders has beaten another for they then turn to you with your ignorant, unscientific and unintellectual life and if left to it will grind it, and probably you, to dust.

Before this happens though, let me turn again to the game at court which is initially one of poses. Power over the mass of people is pretended to exist at all times over all when the house on the hill can scarcely keep up with the goings on in the bush and bed of the peasants’ life. Most courts rarely emerge from their rivalries except to use a public action to consolidate their place in the only contest that matters to them. The ones that manage to win the throne comprehensively, if only for a short time, will be impelled by the momentum from their contest to try and expand the throne to fit into all the public spaces. When that is done, and they have won even that contest, which is no mean feat, they shall clutch at their bloody ism and wield it at the insides of individual lives. They will be for Life and a life, for The Market and not the individual’s varied transactions. The courtier, unable to peer inside the pleb to see how his ism slices and dices, and intent on his own inner voices, shall desire simplification. That is they shall attempt to match their ism with the inner life of most people or at least ensure that it meets no resistance. But people are unable to switch off, to follow the dictates of any ism and so they slip up, and are judged ignorant, unconscious, counter revolutionary or rebellious. Many are killed to ensure the success of this engineering attempt; it is the ultimate simplification. The courtier’s ambitions pursued to their logical extreme require that his life be the only one left on earth. They are driven ultimately by the little voice that never stops promising the sun that it shall become cold and dead soon, no matter how hot it burns now.

GROW (Get Rich Opportunity of the Week): Uganda’s Farmers Reaching for Global Markets.

Andrew Rugasira, CEO of Rwenzori Coffee Company, which exports coffee to Waitrose UK under the “Good African coffee” brand.

Says Mr Rugasira:

“As an African entrepreneur, I am not looking for handouts that I have not earned. I only want the same opportunities that British entrepreneurs coming to Africa have access to. We went to the same schools and universities, and in the global community we are all looking for the same things: markets and equal opportunities to exploit them.

Many Africans are condemned from birth to a future of poverty, disease and premature death. In addition to this, the prevailing perception of Africans and their capabilities never transcends the confines of their so-called limitations. You are poor because you are poor. While poverty is an undeniable part of the African reality, it is only part of it.

There is another side to the continent. For this we must go beyond the gloom and doom and see Africa as a land of opportunity and hope. I do not know of any Africans who wake up in the morning saying: “Today I am going to engage in ‘poverty reduction’!” This phrase, beloved by the international community, has no place in the vocabulary of the African citizen engaged in the everyday struggle to survive.

It is wealth creation that links the African struggle of yesterday, today and tomorrow. To understand this we must remove the blinkers and see an Africa beyond kleptocracy and Kalashnikovs.” More here and here. (A reporter visits the operation.)

GROW (Get Rich Opportunity of the Week): Kenya Airways Stock a Buy!

After some months of ranting about the limitations of development aid policy, its disgusting mix of Utopianism and arrogance, and the mediocrity that is government in Kenya, I feel that it might be more productive, and fun, to focus on good news. Under the just unveiled GROW series, I shall endeavor to unveil what I think are exciting investment opportunities in Kenya and in the wider East African region. And I am hoping that others who have business ideas that they are not presently trying to patent or pursue in some secrecy share them on this blog.

I come up with good business ideas far more often than I attempt to bring them to practical fruition. So why should they just die, when they might inspire someone else? Having said that, let me confess that on many an afternoon in the library working on my dissertation I have daydreamt of inspiring a go-getter type with an idea that they turn into a billion dollar company. This entrepreneur extraordinaire, having rang the opening bell of the New York Stock Exchange, turns to me with a grateful tear in his eye and awards me a tiny stake worth millions.

First on the GROW SERIES is buying Kenya Airways stock which trades on the Nairobi Stock Exchange.

Kenya Airways has returned a 48 per cent increase in its after-tax profit for the six months to September 2005. For the year, its earnings were $30 million compared $19.5 million in the same period in 2004 and $4.5 million in 2003.

In 2005, it reached the 2 million mark in passenger carryings, a growth of 20% over the previous year. The airline’s net margin improved to 9.2% from 4.3% in 2004.

KQ is the leading regional carrier to Africa operating from its Nairobi hub. It was established in 1977, the hey-decade of the White Elephant Project and went on to lose money for almost every subsequent year until its privatization process in 1996. Since then, it has posted growing profits yearly and is now Africa’s first privately privatized flag carrier.

These positive changes in the company can be directly attributed to KTAP (Kenya Airways TurnAround Project) which over the years has overhauled the airline’s revenue management, cost structures and route and fleet planning with invaluable help from KLM which owns almost a quarter of the stock.

The good news in my opinion goes beyond celebrating the past, the stock is still undervalued. Despite having zoomed from a 12-month low of Kshs 17.15 to Kshs 78.50 on 7/11/2005, it is still trading at a price/earnings ratio of 9.34 on top of having a dividend yield of 1.59%. The clincher: Kenya does not have a capital gains tax!

Compare this with major US airlines which have a net profit margin of -0.7% or even the regionals which can only boast of a 3.6% margin and a dividend yield of 0.6%. This is a great opportunity for everyone who fancies diversifying their portfolio and snapping up a bargain. A glance at the company’s shareholder profile reveals that the world still does not know what a gem KQ is: there are only 77 foreign individual stockholders and 6 foreign institutional investors compared to almost 83,000 Kenyans and 2962 Kenyan institutions by mid-2005.

KQ Managing Director Titus Naikuni recently had this to say:

‘Strong market growth remained in Europe following the successful deployment of the 1st Boeing 777 aircraft as well as the Middle East & Asia that includes the Far East operations. Naikuni further noted that all African regions experienced increased passenger growth, West and Central Africa 17%, East Africa 19%, North Africa 14% and Southern Africa 36%. Over the period, the Kenyan domestic network experienced cut backs in frequencies in response to decline in demand and this restricted traffic growth to 4%. Uplifted Cargo volumes experienced a substantial growth of 38% mainly from increased KQ belly space on the B777 and the increased deployment of the larger B767 in Africa. The escalating global fuel prices impacted the year’s result as fuel cost was 63% above prior year, 30% of it owing to price difference and the rest due to growth in operations and the movement in the KSh/US$ exchange rate. The airline fuel price averaged 140.74usc/ag partly mitigated by a successful net hedging benefit of KSh 235m realized in the year.’ Go here for a simple investor presentation.

So what of the currency risk in buying KQ? Well that is always a consideration when it comes to emerging markets investing, though I am hoping that some of the people reading this are in Kenya. While the currency has experienced some volatility, it strengthened against the dollar since an August 2004 low of Kshs 82 per dollar to Kshs 73 in March 2005 and a subsequent softening to the present Kshs 77. In more palatable and simpler terms, the underlying macroeconomic and fiscal picture may not be the prettiest but nor is it indicative of a currency that is vastly overvalued and undervalued by the market. I doubt that there is a currency crisis anywhere round the corner. The greatest threat will be that the government will decide to print money for the 2007 elections as has happened in the past with disastrous results for inflation, but that still leaves two full years of investing in this wonderful stock. (In case you want to learn more about Kenya’s monetary and fiscal position, click here for a June 2005 Central Bank of Kenya statement)

If this post has raised your interest in learning more about the stock or even purchasing some of it, do not hesitate contact one of the stockbroker firms found in the NSE’s page. Then please write and tell me what you have done and how it is working out for you. The GROW series is open; I hope to hear from lots of people with ideas of how profits can be made in Kenya in particular and East Africa in general.

Fearful Streets and Burning Hearts in Addis Ababa

I just flew back from Addis Ababa where I have spent the last couple of days attending a meeting. The streets were empty of traffic, as most city residents remained indoors in response to demonstrations and riots that have wracked the city for the past week. At least forty-five civilians are dead, killed in clashes between the police and opposition protestors who charge that the 15 May elections were rigged by Prime Minister Meles Zenawi’s ruling Ethiopian Peoples’ Revolution Democratic Front (EPRDF) coalition. It was my first time in Addis and I everyone I encountered was fearful of the ongoing crackdown by the state. I heard of mass arrests, more than ten thousand young men in jail I was told with others claiming that the number was far higher. A young women whose brother was arrested, feared that his punishment might be getting forced to the frontline should war between Ethiopia and Eritrea break out as is seeming more likely by the day. She told me that her mother was in tears daily, dreading the worst for her child, her memories of what happens to people in Ethiopian prisons overcoming any comfort that her daughter and friends tried to provide. I cannot by any stretch of the imagination claim to be deeply knowledgeable on Ethiopia, but I could not escape the feeling I got of it being governed by a state that evokes great fear in its people and that has failed them outside of building wide streets filled with a self regard that gave these poor, brutalised people scant comfort. I hope to return one day when it is more peaceful and I can have the opportunity to discover the city when it is less fearful and when the government is not flexing its muscles.

The Return of the Prodigal Blogger to His Spurned Mistress

Yes, I have been away. Trying to recover from the sickness, the addiction, that is blogging. On most occasions I sat still for any length of time, my jealous mistress, known to you all as African Bullets & Honey, would sound her plaintive cry: ‘you have not posted today’ she would whine. What was I to do, being weak of will and filled with opinions that my dear loved ones now listen to with sighs of resignation? I had to return, to blog, to bloviate and join the almighty clamour of noise and thought that is blogosphere. Problem is this, I find myself unable to write well academically and otherwise while I am blogging. The feedback loop is so immediate that it becomes more attractive than the other forms of writing which might actually present the tiny hope of paying the bills.

Now where was I when I left off a few weeks ago? Yes, I was in mid-rant about the usual utopianism of the Jeffrey Sachs crew. And I stopped, exhausted at the sheer stupidity of arguing about stupidity. So let me turn to something that I think is far more interesting: Jane Jacob’s studies on the nature and organisation of cities. I am ashamed to say that I first heard of her a couple of months ago; now that I am reading her book – The Death and Life of Great American Cities – I am stunned that I did not come across her sooner. How strange it is to now know what I don’t know after not knowing what I did not know. I grew up in Nairobi and always regarded the steady deterioration in its security to strictly be a matter of lax police work by a corrupt and dictatorial state. While that may be true, Jacob’s studies suggest that there might be more afoot in Nairobbery than poor policing, it could be a matter of the way public and private spaces are apportioned, the lack of mixed use neighbourhoods and the paradoxical impact of the ‘high walls for security’ culture actively reducing the ‘eyes on the street’ which are the key to urban safety. But all this is a post for another day, a flexing of disused blogging muscles…