Investment frenzy grips Kenya from top to bottom

Nairobi Letter: Joyce Wanja doesn't look like your typical investor

Nairobi Letter: Joyce Wanja doesn't look like your typical investor. In her tight white trousers and microscopic vest, she looks like what she is - a hooker in one of Nairobi's seedier nightclubs, writes Rob Crilly.

But to the other prostitutes she has become the closest thing they have to a financial adviser.

"What do you mean? I can't buy any shares?" asks one of her colleagues, above the sound of Madonna's Get Into the Groove.

Joyce offers a consoling word of advice before explaining why she made sure she beat the deadline for buying shares in Kengen, Kenya's electricity generating company.

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"The shares are like my pension. They are my way of getting out one day and leaving something for my kids," she says.

"And it might mean that my girls don't have to work in a place like this."

Kenya has gone mad for the stock market and the prostitutes of Florida 2000 are getting in on the act too.

Joyce is one of thousands of Kenyans who have invested for the first time, lured by a market that has seen record growth in the past three years.

She has applied to buy the minimum stake of 500 Kengen shares for about €75, as the government sells its 30 per cent stake. The offer will raise about €100 million, making it the country's biggest initial public offering and the first on the Nairobi Stock Exchange in 10 years.

People queued around the block two weeks ago as the deadline loomed in a country where three quarters of the population lack access to mains electricity and where millions will spend 2006 living on the brink of famine.

Farmers sold chickens and goats to scrape together enough cash to buy the minimum stake. Staff at stockbrokers firms told stories of street boys arriving with bags filled with coins that they had collected by washing cars.

This week PricewaterhouseCoopers (PwC), the government's adviser on the sell-off, will announce that applications have exceeded three times the number of shares available, meaning first-time investors like Joyce have to face another agonising week's wait to find out whether they have been successful.

The offer is changing the face of the Kenyan stock market, according to Jimnah Mbaru, chairman of the Nairobi Stock Exchange.

"What was most surprising was the number of young people who came forward to buy the shares. That is a new thing," he says. "Some are educated people but there are also less-educated people who are in the informal sector."

Many of them are jua kali workers, says Mbaru. The Swahili term translates as "the heat of the sun" and refers to the enterprising traders who run small outdoor businesses making furniture, welding or tending plant nurseries along Nairobi's roadsides.

"We also have a lot of women who are self-employed who we have not seen playing the market before," adds Mbaru, who is also chairman of Dyer and Blair Investment Bank.

His firm had to rent extra office space and employ additional staff to process applications through the night as the deadline loomed.

Other firms, on the upper floors of the city's skyscrapers, commandeered lifts for the influx of customers.

The euphoria has also generated concerns that first-time investors are not aware of the risks of investing.

Vishal Argawal, lead transaction adviser at PwC, says: "I specifically know of cases where people up-country have sold their chickens and their sheep to buy their Kengen stock, and that worries me.

"There is a need to look at protection issues and in particular the question of investor education to make sure people know what they are doing."

Despite the frenzy of excitement, much of Kenya's mostly rural population will not have seen the advertising hoardings urging people to snap up Kengen shares.

Electricity has yet to reach beyond the main towns and cities, and most people rely instead on wood or charcoal for heat and light.

This year some 3.5 million people in the north of the country are surviving on food aid as a bitter drought holds the region in its grip.

The recent onset of the rainy season has brought little respite. Instead it offered rival tribes the chance to launch bloody cattle raids, leaving more than 13 people dead as they attempt to restock their herds.

But that could be a million miles from Nairobi Stock Exchange, where dealers in red blazers bark into mobile phones clamped to their ears.

The stock exchange has seen record growth since 2002, when an opposition alliance swept Daniel arap Moi's corrupt regime out of power after 24 years. Today, the market is worth about £3.5 billion (€5 billion).

Rashid Kanyua (26), who is studying finance at college and who saved up almost £100 for 1,000 Kengen shares, says it is time the outside world learned that Africa had flourishing financial markets as well as famine. "People know about the drought and the corruption here, but there is also a good side," he says, sipping a cappuccino in one of Nairobi's upmarket shopping malls.

"Many people are making good money out of the shares that they own."