Business Daily (Nairobi)
Emmanuel Were
30 June 2008
Some time back they operated as social groupings of close- knit family members or friends known as chamas . When they met, it was mostly for social reasons which included a session of meat-eating, washed down with beer.
Now the chamas have watered down the social aspect and are channelling their contributions, averaging between a minimum of Sh2, 000 to Sh6, 000 a person to investments. The money has been finding a home in the stock market or real estate. Reference to chamas is now equal to investment groups.
Statistics indicate that one out of every three working Kenyans belongs to an investment group. This translates to about three million Kenyans.
Going by the figures, the time was ripe for the establishment of the Kenya Association of Investment Groups (KAIG), founded in April, 2007.
KAIG is registered under the Companies Act and has a vision to promote the establishment, growth and good management of investment clubs in Kenya.Tabitha Mwathi, the Association's CEO says they would achieve this by providing a forum through which investment groups can share ideas.
"We would like to create good conditions for investment groups to operate in," she says.
Members of the association are organised into three categories- ordinary, corporate and students. Ordinary members are charged Sh5, 000 a year while the corporate members are charged Sh20, 000. Students from institutions of higher learning pay a subsidised fee of Sh2, 000 a year. Currently their membership stands at 38.
Transcentury, a local investment firm which boasts members such a Eddy Njoroge, the managing director of KenGen and Jimnah Mbaru, the chairman of the NSE, was among the first to join the association.
It naturally followed that the inaugural seminar held by KAIG, in august last year at The Stanley hotel, had Tony Wainaina, CEO of Transcentury deliver the Keynote speech.
Group members listened keenly to Transcentury's success story "from the horse's mouth".
KAIG has since followed up with other talks. In their most recent event held in April, Thiagarajan Ramamurthy, Director of operations at Nakumatt Holdings ,Kenya's largest retail outlet, revealed what had driven the retail outlet to success. The talks were an initiative to educate investment groups ahead of the planned public offering of the retailer's shares in 2009.
Resolution Health, a medical insurance provider and MediaCorp, which sells live online data from the NSE, has also presented investment opportunities to KAIG members through various talks. But all has not been talk.
Members were last year taken for a tour of the East African Breweries Limited in Ruaraka, Nairobi. Some of the corporate members also organised a tour of residential properties that are up for sale in Nairobi.
Corporate members of KAIG get the opportunity to interact and market their products to the ordinary and student members. Sterling Investment Bank and Hekima Milele, a partnership by three financial services - Housing Finance, Equity Bank and British American Investments -targeting investment groups keen on investing in real estate, are some of the corporate members on board.
"We negotiate preferential terms of service from the corporate members to other members not necessarily discount but could be personal service," says Ms Mwathi.
The talks and events have been turned to quarterly events with the backing of a magazine which is published on a quarterly basis.
For the non- profit making association, one of the main challenges has been limited financial resources.
"Board members have been meeting running and other expenses from their own pockets," says Patrick Kariuki chairman of the association.
Apart from that, they have met running costs from charging joining fees as well for the events that they have organised.
Does the association then run a risk of corporate members yielding a stronger financial hand and pushing for more influence for the up take of their investment ideas?
Not according to Mr Kariuki. "We ask our members to carry out independent research on any investment opportunity presented to them," he says.
Another challenge for members of the association is coming up with an organisational structure. Working together with James Mworia, a senior investment officer at Transcentury, plans of coming up with an investment manual should be ready next month.
The manual will act as a guiding light for investment groups on issues such as; organisational structures and drawing up an investment plan. KAIG is looking at presenting a proposal to the Government for incentives for the investment groups.
"We are looking at presenting something based on a more rounded view. for example tax incentives in order to be specific," says Ms Mwathi.
Other initiatives include lobbying for the creation of a separate pool for investment groups during initial public offering (IPO), giving them better chances share allocation. Currently, investment groups are lumped together with individual and corporate retail investors, the category that has been hit by massive oversubscription in recent IPOs.
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