It was Vinod Khosla, who bagged a billion at Sun MicroSystems in Silicon Valley, who said, ‘The future is not seen in the rear view mirror.’
I started my journey from Mombasa, spent half my life in the City of London running interest rate trading desks, packed my bags when I turned 40 and returned home in 2005. The Nairobi Securities Exchange quadrupled from 2002 through 2007. I spent two years at the Nation Centre in Nairobi.
In those days, prices were projected onto a screen, Kenya had embarked on a Thatcher-style shareholder revolution and 2m newly minted shareholders were created out of thin air. I rubbed shoulders with folks who had sold their cattle, parlayed the proceeds into a line and were swinging the line like we all did when the Nasdaq boomed in the late 1990s.
The Kenyan economy expanded at 7.1 per cent in Q4 2007, the fastest rate it had achieved since a brief Brazil coffee frost related boom in 1977 and, before then, just after independence in the 1960s.
Cynical sorts – and most of the seasoned Africa hands tend to be hard-bitten – would whisper,
‘It can’t last, it never does’.
I was one of the crazy ones, an Afro-optimist, when it was not very fashionable.
Last Year, I was in Zurich and it felt a little circular because I had started my career with CSFB many years before and they had sent me to Zurich for my internship. I listened to the Swiss central banker, the chairman of Credit Suisse and a number of other personalities. And when it was my turn to speak, I said: ‘Do you know what the year on year growth rate for Johnnie Walker was in east Africa?’
I answered my own question. It was 74 per cent.
I said, this is a popping over the radar moment. You do not need a McKinsey report to tell you about the emerging African middle class. Africa is a statistical black hole but in that Johnnie Walker data, a very simple truth is distilled. The emergent middle class is here and it is no different from the middle class in Washington, London, Shanghai or Bombay. It has grabbed the attention of Ivan Menezes, COO of Diageo, and his executive committee who swung through Nairobi a couple of weeks ago. In fact, my proprietary foot traffic indicator of global CEOs passing through Nairobi has been flashing green for quite a while now. These folks are not on some kind of Bob Geldof circa Live Aid mission. They are coming because they can smell a profit. The big oil majors have also arrived in a big way. I happen to believe that the eastern seaboard of Africa, from Mozambique through Somalia and all points in between, might well prove the last great energy prize in the 21st century. Did you see that CNPC is set to offer $4b to ENI SPA for just 20 per cent of its offshore gas concession in Mozambique? We sit on a geothermal juggernaut.
East Africa is not about derivatives. Its not about structured notes which require a degree in rocket science to understand. It’s about simple things. It’s about the building blocks.
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