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Monday, January 20, 2014

Investment Options in Kenya: Where to Make Money in 2014

December holidays are now behind our backs, January blues will soon varnish and the only challenge remaining this year would be to implement the many resolutions you reached with yourself for 2014. The razor thin wallet, empty fuel tanks, school fees and tense relationships characterizing this dreaded month of January will be gone immediately you receive your first pay check of 2014 in a week or two.
Despite the tough beginning to the year, majority of Kenyans remain hopeful that 2014 will bring with it better things; a bigger house, a new job, financial stability and a new car.
However, difference between those who will achieve thier dreams this year and those who won’t comes straight from the investment decisions they have made or will make this January.
For the business savvy individuals, the time to reflect on the enjoyment over the December holidays is gone.
They have already ordered consignments of goods from Dubai or China, scanning through the  newspapers for lucrative government tenders, contacting their brokers and / or financial managers on which cherry stocks to pick at the NSE, the next car, land, or real estate deal to close and the like.
Below are a few tips on where to invest and make some good money in 2014:

Stock Market
The NSE is a one hot investment option for those willing to take the risk and have a sizable financial cushion to absorb potential losses.
Measured by the NSE all share index, a well-balanced portfolio of shares in the stock market in 2013, made returns of upto 50 percent. This means that a ksh. 500,000 investment in the stock market would have swelled to 750,000 on average.
The Nairobi Stock Exchange has been on a 2-year bullish run and the indications are that the appreciation in share price is set to continue for a third year running.
Safaricom shares made headlines after soaring above the 2008 LPO price of KSh5 per share, more than doubling the investment to trade at 11.10.
However, the stock market, is quite volatile and is therefore most suited for investors with long-term investment views. It requires patience and good investment strategy as it can result in loss of investment in some instances.
Generally, there are two categories of companies listed at the Nairobi Stock Exchange; the growth counters which basically pay the investor through share price gain but offer low to zero dividends and the mature ones which pay high dividends annually.
Growth companies should be viewed as long-term investments. They include NBK, Britam, DTB Centum, and NIC, among others.
The mature stocks which pay high dividend annually, include BAT, Bamburi, EABL, Carbacid and the Nation Media Group.
A clear understanding of the performance of listing companies and the overall economic performance are good indicators of which shares to buy and which ones to sell.

Forget Maina and King'angi's cash cow, farming is becoming the new money minting machine. Young investors have realized the huge potential in this industry and the handsome returns it offers.
Besides soiling hands, setting up a value-addition plants represents a massive growth with potential for high return on investment, for the small scale investors who grow and sell agricultural products like onions, watermelons, apples, and tomatoes.
Technological advancement, such as the use of greenhouses has help farmers controlling crop growing conditions thereby almost guaranteeing good yields.
Look at the number of Kenyans scrambling for fruits and vegetables and you will realize that agribusiness is the in thing. Timing your harvest to coincide with the dry season will automatically multiply your returns.
For large scale farming investors, agribusiness also offers lucrative opportunities such as leasing land for maize, wheat, or potato farming. The high demand for Kenyan flowers oversees provides a ready market for horticultural investment farmers.

Real estate:
The boom in the Kenyan real estate sector has continued for the past few decades, lifting most investors into the millionaire class.
A quarter acre piece of land in Nairobi, Kisumu or Mombasa could earn you multi-millions either through just waiting for price appreciation or developing it into residential or commercial property.
A high-rise residential apartment, directly targeting the middle to lower income class where demand for housing is high, can fetch anything between, Sh4 million to Sh13 million depending on the location, neighbourhood and quality of finish.
The houses selling for between Sh1.5 million and Sh3.5 million targeting the lower middle class are also a good investment opportunity  for investors this year.
Establishment of county governments and the devolution of functions and civil servants to the counties,  offer good bets  as thousands of civil servants will looking for new homes.
To get the most value in future, always be sure to move in before the infrastructure. Real estate investment thrives on speculations. Therefore, if you get wind of a planned hospital or road at a site in a year or so, get in now.
The Thika Superhighway, Northern bi-pass came and went and real estate investors made a kill for their money. The Standard Gauge Railway, Outering road, Turkana oil fields and Lamu port are coming.

Government tenders:
30 per cent of all government contracts, this year, will be reserved for the marginalized: the youth, the women and the disabled. This opens a huge business opportunity for groups and individuals to do business with the state and earn some extra coin.
The most important requirement is that you must have registered company and get a KRA certificate.
The beautiful part of this investment option is that the tenders range from smaller contracts like supply of stationery to bigger ones like construction of roads. This opens the door for Kenyans from all walks of life aged 35 and below to participate.
Investment in Government tenders require individuals or companies with deep pockets. This is because government tenders require huge capitals. The cash-flow projection is rarely accurate as payments may delay by months and payment is only done after service delivery.

Foreign Trading:
The import / export business is an area likely to experience high growth especially now that the government is trying to promote its exports relative to the country's imports. Export opportunities can be exploited in the form of value added agricultural products.
Most of the Chinese products that may seem cheap to Kenyans are even even cheaper in Shanghai.
There are high chances that the Chinese earphones that you bought, in Nairobi, for ksh150, go for as little as kSh30 in Guangzhou. This is a business in which profit margins of 500 per cent is often attained.
For property developers, importing construction materials like roofing and floor tiles from China or Dubai may just help you cut costs and make huge profit.

Construction of hostels:
Expansion, Devolution add subsequent expansion of our public Universities in the last ten years has lead to at least one or more University in your county. 
However, despite the rise in admission numbers to match the expansion in public and private universities, development in accommodation facilities - hostels, have not kept the pace.
For instance, it’s now common for self-sponsored students, and at times JAB students to look for their own accommodation around our public universities.
This has opened up investment opportunities to build hostels around universities and their satellite campuses to accommodate students.
Considering the small size of a hostel room and that an investor can put multi-storey building with multiple double-Decker beds per room, the margins from this venture are high.
For monied investors, you can get into public-private sector partnerships (PPPs) with public universities.
The private developer will build the hostels on the University lands; operate them for up to a period of 25 years before leaving it to the Government.


  1. :) very good writing Sir. Special thumbs up for you...
    Actually i am a finance student and i want some ideas about the portfolio investment. On internet i am consulting if you have any extra information please let me know. thank you

  2. Despite of drought at African Islands, Kenya stands among one of the golden opportunities creation for many investors. People are struggling for wealth and even they consult from for their economic success and freedom.

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