Postcard from the Edge

My first love was Susan Morasky, but my second – and far more enduring – has been Africa. For that I credit Mrs. Walden, my third-grade teacher, who encouraged us to think big.

Sadly, even the loves of your life can let you down. In Nairobi last week to promote the Africa Board Fellowship, our new program on governance for sub-Saharan MFIs, all went well. Until, that is, I tried to go home. A 20-minute taxi ride to the airport became an hour, then two, then four.

I missed the KLM flight to Amsterdam, and of course the connecting flight home. As I sat in the cab, fuming in First-World frustration, I peppered the driver with questions. “What’s the cause of this?” Rain. “Can’t you go another way?” This is the only way. “Where are all the policemen directing traffic?” Incoherent response. And, finally, snippily, “How on earth do you people put up with this?” Obviously embarrassed, he finally stopped answering my questions.

Everything’s relative, especially in Africa – something I should have remembered, given the banking and finance conference I’d just come from, and the presentation by Amish Gupta, head of investment banking at Standard Investment Bank in Nairobi.

Some of the most compelling advances in financial inclusion can be found in Kenya. Equity Bank. M-Pesa. M-Shwari. The country is known as Africa’s tech hub. You don’t hear that from Amish. “What,” he rhetorically asked conference attendees, “does every African want?” Someone fired back: “A piece of the soil!” He nodded, then gave us some numbers. Kenya – estimated population, 45 million – boasts 14 million personal bank accounts spread across 40 banks. A mere 30,000 mortgages are on the books. “Absolute failure across Africa,” he said, estimating the continent’s home-ownership rate at perhaps 10 percent.

He ticked off some of the missing pieces: listed mutual funds, listed unit trusts, derivatives, REITs, and especially mortgage-backed securities… not to mention the need to create a national finance housing agency to guarantee loans, so mortgage rates – averaging 16.7 percent – will tumble. “We’re missing statistics on the percentage of working-class people who own homes,” he explained. “We’re missing average-mortgage-debt-to-household-assets ratios. We’re missing average-mortgage-debt-to-income ratios.” Financial inclusion, he inferred, goes well beyond microloans, mobile money or financial literacy.

“We are waiting for the revolution in capital.”

Amish remains upbeat. Kenyans – and Amish, personally, it sounds like – are working on all of these issues. A new company law framework, the Companies Bill 2014, was introduced last year in the Kenyan National Assembly. Although withdrawn by its sponsor earlier this year for needed amendments, it includes such common, yet new-to-Kenya, provisions as corporate stock buy-back options and the ability to issue multiple classes of shares. Kenya, Amish implies, is finally putting on its financial big-boy pants. With a nod in my direction, he added, “This bill will bring more and better governance to Kenyan companies.”

Governance. There’s that word again.

Mortgage rates pushing 17 percent, home ownership at 10 percent, a capital-markets infrastructure still in skeletal form… What, by comparison, is four hours by cab to Jomo Kenyatta International?

Written for the Center for Financial Inclusion, June 2015.