Are investors in Kenya crazy?

I went back to school. Shocking I know, but that’s what happened. It is not as bad as you think – I am actually enjoying it. Anyway, last week we had an interesting discussion in class.


Let us consider the following scenario. You’re an investor. You have some 5 million shillings that you want to invest somewhere. You are a Kenyan living in Kenya. Now, the last assumption is important because we all know what all your friends and family will tell you to do: buy a house, get paid rent monthly.

So let us say that you buy a 5 million house in Mlolongo. How much rent can you get for such a property? I would argue that you will get nothing more than KES 25,000/- per month for a house in Mlolongo that costs KES 5,000,000 to buy. Am I wrong? Contest that in the comments below.

So you’ll be getting 25000 x 12 = 300,000 a year. 300k per year is a 6% return on your investment. Nice eh? Nope. It is actually a shockingly bad return on investment.

Right now (the link leads to a PDF document) you can invest in a Kenya government bond which will give you about 12% returns per year. DOUBLE what you get from a rental real estate investment. This is crazy.

Government bonds are generally thought of as “risk free” investments because the government will always, always pay up. This may not be true everywhere in the world but you get what I mean, right? if an investor is a rational investor (i.e. not stupid) then they will never invest in anything if it returns less than the risk free government bond. Why would you take any risk anywhere if you have a guaranteed 0 risk investment as an option?

If you follow this train of thought then it means that any other good investment simply HAS TO yield a higher level of returns than the government rate. Why? Because it is higher risk. A house can burn down but the government can never “burn down”… see what I mean? Why would you invest in something higher risk, for less returns? It simply doesn’t make sense. Any right-thinking person would never ever do it.

And yet Kenyan “investors” do it all the time. Why is this? Are we crazy??

Small note
I know, I know, there exists governments out there (maybe even in here) that can and do default. But: 1) we’re assuming this is not the case and 2) if a government defaults then all the houses and other investments in that country also go up in smoke.

The Best Internet Marketing Techniques

Have you ever wondered which forms of online marketing produce the best results?

Here’s a case study on what works as far as Internet marketing is concerned.

More and more the internet is becoming a primary marketing tool for many businesses, and those who have not yet taken the plunge are starting to get left behind. Most businesses accept the fact that without an online presence it’s hard to stay afloat, but with all the choices out there it’s easy to end up treading water, and instead of gaining more customers you can end up drowning in Tweets and Facebook posts that never seem to produce results.

To help those just getting their toes wet in the online ocean, we’ve put together a case study that shows you exactly what works and what doesn’t work when promoting your business online. The study below follows a start-up summer camp through their first year of business. The camp has four different camp specialties, each with it’s own website: Windsurfing, Photography, Climbing and Outdoor Adventure. The camp has a fifth website to act as a landing page. Over the course of 6 months they tried different marketing techniques, spending similar amounts of capital on each option.”

The best

  1. Blogging
  2. Online directories
  3. Google Ads

The Worst

  1. Spam email
  2. LinkedIn
  3. Deal Sites (Groupon, Rupu and co.)

Does this tally with your own experiences? What do you think?

Read the full Case Study

The Nairobi Project

I Want to Draw a Cat For You! founder Steve Gadlin tells of how a young Kenyan playwright, Victor Gido, contacted him in 2009, offering original scripts.

This is how Victor contacted Steve (unedited):

hello names is Victor Gido from nairobi kenya and would like to ask i fyou people are intrested in any plays for the moment.i can assure you that you wont regret by doing so.please do reply with immediate effect.i will be looking forwad to hear from email adress is

After some back and forth, they agreed that Gido would write one to order for $50. In the words of Steve Gadlin, My gut told me that I was setting myself up to be the victim of a scam. But I was lured in by the possibility of producing the worst stage play, by the most unlikely playwright. Along with his $25 deposit, I sent Victor the following plot synopsis for his play:

A millionaire named Quack Quack Quimby has forgotten the true meaning of the Jewish holiday Tu Bishvat. His daughter goes to great lengths to remind him of its meaning, and make him happy once again….

The Nairobi Project begins with Gadlin at his laptop, trying to decide whether Gido’s email is legitimate, includes a video of cast auditions, and ends with a performance of Gido’s one-act play, The Price.

Victor Gido’s original work, The Price, was be performed VERBATIM, in its entirety, as part of this hilarious show based on a ridiculous plot by a writer with little to no command over the English language.

So, dear readers, what do you think of this? It seems that “success” is still only an email away!

A Time To Sow

Internet usage growth rate

Internet usage growth rate

Have a look at the graph above. Go ahead, you can click on it to make it bigger. As you can see, the internet usage rate in Kenya is growing rapidly, especially when compared to other countries which are slowing down. In those countries, the internet is already mainstream meaning that a lot of people make money online. However it also means that it is much harder to make money online because there is a lot of competition. Compare this to Kenya and you realise that while at the moment you may not be able to make much money online, it is much easier to launch something and have it do well in Kenya. But this will not last forever.

I think that now is the time for aspiring internet entrepreneurs to attack and completely own internet business niches. It may take a while before you get super-impressive results but if you invest in online business now and take root, you will be reaping huge rewards as more and more people and businesses get online in Kenya.

So what are the best niches to invest in? Going by what works in other places the following, in my opinion, are some of the most lucrative areas to invest in:

Online shopping in Kenya is nothing to write home about at the moment. But as the number of people who are online grows, it will definitely become very lucrative. Just as grew from nothing to one of the largest and most powerful businesses, you can grow a small little online shop to massive proportions and potentially millions in the bank.

Food, recipes and cooking tips are traditionally very popular. This is a saturated market in more developed countries but is quite accessible locally. You should get creative but the basic idea would some website that provides tips on cooking and recipes from around Kenya and possibly the world.

Making Money (or Saving Money)
I think it would be safe to say that literally everyone has an interest in how to make more money, save more money or reduce their expenses. Why not position yourself to cater to this need? There are so many different ways to approach this. Some are:

  • Insurance
  • Entrepreneurship
  • Loans
  • Investments
  • Personal finance

Self Help
Almost everyone has some thing that they want to improve about themselves. In fact, in developed countries, there are countless online “gurus” providing information and guidance on things as diverse as healthy living, career advice, money management, relationships, etc. Your job would be to motivate and instruct others on how to improve their lives in a certain way.

The “Supernatural”
Believe it or not, this is big online. I’m thinking that as big as it is in other countries, it could be even bigger locally. I put the word supernatural in quotes because it can cover many different things from horroscopes to planets aligning with your birth date to psychic readings and even witchcraft/wizardry.

Like me, you may not believe in this stuff but lots of people do and an opportunity exists for you to fill their need. As usual, do not do anything illegal. 🙂


So there you have it. We are at a point in time where you can take root in an industry early and absolutely dominate it as it grows. I am sure a lot of smart people are already diving in and establishing themselves. What are you waiting for?

If I missed any important opportunities, don’t worry. My list is not conclusive. 😉

Google Brings NFC To Kenya

I was aboard a CitiHoppa yesterday when the person seated next to me asked the conducter if he could pay via his Beba card. I didn’t really pay much attention to what followed but later on, I googled about it and found

In their own words, The Beba card is a smart card that makes it easy to pay for bus fare and helps you save money. It’s convenient because you don’t have to worry about getting change.

  1. To use your Beba card, you just tap your card on the card reader to pay.
  2. You can get a Beba card for yourself, family members or coworkers.

What really got my attention, though, was their Terms of Service. is a product offered locally by Google that utilises the much talked about Near Field Communications (NFC) technology.

NFC is not new. It is based on technologies that have been around for nearly two decades. NFC allows two devices to communicate when they are placed near each other (or when they touch each other). NFC technology is already big in Japan – you can use your NFC-enabled phone to buy train tickets in Tokyo or as a contactless payment system.

My guess is that the Beba card is an experiment by Google to try and determine whether this technology can actually work locally. If successful, in theory we could all get similar cards and use them not only for bus tickets but to pay for meals, for shopping at supermarkets, and anything else, really. Exciting, eh?

Learn more: What is NFC, and why do we care?

What do you think of this?

Learn Programming – The New Literacy

A while back, I had written this:

In case you have not realised it yet, computer programming skills are as necessary for success today as reading and writing have been for the past few centuries.

In fact, “You’re a second-class citizen if you don’t know how to read and write today, and in twenty or thirty years the same will be true for people who don’t have basic computer programming skills. Those who don’t understand–at the very least–the concepts of order-of-execution, variables, data structures and recursion will be as socially and economically disadvantaged as the illiterate are now.

I have been taking CS 101: BUILDING A SEARCH ENGINE from Udacity for a few weeks now. I must be honest and say that the course represents one of the very best learning experiences I have ever had. The course instructor, Professor David Evans, is naturally gifted at teaching complex ideas in simple terms.

If you have ever wanted to learn how to program, you have the most golden opportunity to do it now. Have you ever been frustrated when you hired a “techie” who played around with you? This is your opportunity to make sure it does not happen again. Are you an aspiring entrepreneur? Learning to code is never a wrong move. Especially in today’s world.

Just to show you how accessible a good ICT education is today, following the CS101 class, Udacity are introducing the following (among others):

Description: Web applications have the power to provide useful services to millions of people worldwide. In this class, you will learn how to build your own blog application starting from the basics of how the web works and how to set up a web application and process user input, to how to use databases, manage user accounts, interact with other web services, and make your application scale to support large numbers of users.

Description: This class will give you an introduction to fundamentals of programming languages. In seven weeks, you will build your own simple web browser complete with the ability to parse and understand HTML and JavaScript. You will learn key concepts such as how to specify and process valid strings, sentences and program structures. Then, you will design and build an interpreter – a program that simulates other programs.

Yes, you read right. In about 14 weeks you can go to a complete and utter beginner to someone who can create their own simple web browser. How cool is that?

Personally, I think this is a godsend for us in the “developing world”. In my opinion, our tertiary education systems are not at an acceptable level of quality, especially for computer science and similar disciplines. Udacity and others like it represent a great, great opportunity for us.

Nicolas Pottier of Nyaruka puts it best:

Suddenly, the very best education is available to everyone. Suddenly it doesn’t matter if you live in America or Rwanda, the opportunity is yours. And that’s why I think the greatest effect of Udacity will be felt not in America, not in Europe, but in developing countries like Rwanda. Because the improvement in quality over what is offered here is astronomical.

I fully expect that everybody who finishes the eight week Udacity course will be better prepared than those who finish four year university programs in Rwanda. And that’s not unique to Rwanda. Every developing country suddenly got a world class computer science school donated to them. [Read More]

Are you as excited as I am?

How To Make Money From Nothing But Numbers!

This is a free online course about Cryptography. In the video below, the course instructor mentions that he will teach you how to use cryptography to “make money from nothing but numbers”! Sounds great, ama?

Cryptography means “secret writing”. It is the practice and study of techniques for secure communication in the presence of third parties.

Udacity will be offering a course on Applied Cryptography starting April 16th 2012. The course is free and open to everyone.

I do not know about you, but I would love to learn how to make money from “nothing but numbers”!

See you in class?