Kenya Stockholm Blog

Commentary: More Questions From Odero On “Operation Thunderbolt”

I fully concur with Mr Okoth Osewe’s commentary on the proposed “Operation Thunderbolt” initiative by Mr Clay Onyango. I will not repeat Mr Osewe’s words, but emphasize that a serious long-term initiative of this magnitude should first begin with a clear masterplan. Before the proposed October 28 party, available media should have been used to market the idea, underscoring its necessity by touching upon the need to invest in Kenya.

Using available media would have enabled serious would-be investors to debate, thereby poking holes into weak areas and straightening them before this first party. A number of face-to-face meetings should also have been held.

I am astonished that the proposed initiative will take off through a party with music and dance; a serious project that will involve thousands of Kenyans’ hard-earned Swedish crowns! Let’s be serious and know that even if this is a grand idea, nobody in his/her sane mind would just be led into parting with SEK 100 for membership in a project that has no known leadership or bank account.

I beg to ask too that why should Kenyans invest their money through the Kenya Embassy in Sweden? Can’t we open an account and set up signatories without involving the embassy? What happens in case of a regime change in Kenya and say we get into a bad and dark relationship with the embassy?

Mr Clay Onyango should go back to the drawing board with a few serious “forward thinking” Kenyans and come up with a workable structure for the noble idea, and launch it officially after thrashing out all the potential weaknesses, which are already evident at this stage. For some of us in the know, land in Kenya (especially Nairobi), appreciates in value every single year. This grand idea will not allow for apartments in Kariobangi, but within posh areas, which right now cost a fortune. SEK 600,000 for example in ten years will be peanuts, and will only be able to build one apartment.

Why should I put in SEK 12,000 in ten years while I could do so in one year? Why ten years, yet some of us just crave to get serious investors to team up with as soon as possible? As Mr Osewe begged, what happens in case of death, change of residence for a member or any unforseen fallout within the group?

Why retain 25% of a member’s invested sum? Where is the collateral? Which financial institution in Kenya will give a loan without a guarantee? What about legal and binding structures which will involve lawyers’ fees in Kenya? There are a million queries that need to be answered before launching this project. Kenyans should weigh out these points before making the “big leap” into oblivion.

Jared Odero

October 27, 2006 Posted by makozewe | Commentary | Leave a Comment

Commentary: Is “Operation Thunder Bolt” Viable?

Obviously, the idea mooted by Mr. Clay Onyango on how Kenyans in Sweden can build apartments back home with the intention of residing in these apartments in the future is laudable. It is a noble idea which needs support from all economically progressive Kenyans in Sweden. However, if the idea is put under the microscope, catastrophic loop holes which could subvert the whole idea emerges. Although Mr. Clay is already moving towards the implementation of the idea, I wish to draw the attention of readers to certain critical points while at the same time asking several questions.

The initiative is moving from the idea level to the implementation level without a basic structure on how the whole system of “Operation Thunderbolt” will function. Apart from a general outline published at this blog site, there is no document which can act as a point of reference or which could address the myriad questions that emerge about the whole idea.

Clay gave the example of 50 members who could pay 100 kr each, raise 600.000 kr in ten years, apply for a Bank loan and build apartments. Statistically, the opportunity sounds huge. But if the statistics are reduced to a unitary level, a totally different picture emerges.

At the individual level, a person within the group of 50 contributing 100 kr per month will be able to raise 1.200 kr per year. In ten years, this will amount to 12.000 kr or 120.000 Kenyan shillings. The big question is: Will it be possible for this amount of money to build an apartment in Kenya?

When I last checked, the cheapest 3-4 roomed apartment blocks in Nairobi were going for 3-4 million Kenyan shillings ie 300-400 thousand Swedish Crowns. If every individual will be able to raise only 12.000 kr in ten years, where will the millions needed to build the apartments come from? Don’t tell me that it will come from parties in Alby!

According to Clay, the group could apply for a Bank loan using 600.000 kr that shall have been raised in 10 years. If one person will need 400.000 kr to build an apartment, 50 people will need 20 million kr for 50 apartment blocks. This is a whooping 200 million Kenyan shillings. The question is: Will it be possible to acquire a loan of 20 million kr with a deposit of 600.000 kr? In any case, who will provide the collateral for the loan and how will the loan be repaid? These are important questions that need to be addressed otherwise the idea will simply collapse.

Apart from the cost of construction, land is very expensive in Kenya. The assumption here is that the plan is not to build the apartments in some remote village in Nyalgunga. While still working with the hypothetical figure of 50 members, I could bet my liver that in Kenya, a piece of land where 50 apartment blocks (each with a swimming pool?) could be built will cost more than 6 million Kenyan shillings. In other words, after cash has been raised for ten years, the group might wake up to discover that it might not even be possible to buy a piece of land where the apartments could be built so what exactly is Mr. Clay talking about?

Another issue is on administration. The idea is moving towards implementation without a Board of Directors, a Committee or even a working group that could steer it. Mr. Clay has not called a single meeting of Kenyans where the idea could be discussed. Kenyans are expected to join the Operation without being told what the rules are. For example, membership fee is going to be paid at the Party on Saturday but since there is still no account, where is the cash going to be kept? Will it be deposited at the Kenyan embassy in Stockholm or will Clay become the custodian of public funds pending consultations with the embassy to help open an account?

I might not be able to ask all the hanging questions now. Why should 25% of a member’s savings in the group be retained if one wants to quit? Is the group aware that in Sweden, it is illegal and criminal to retain the savings of an individual even if it is 1 kr? What happens if a member dies or if a member who has been contributing 100 kr fails to get an apartment after ten years? From what Clay presented, it should be possible for a member to pay 12.000 kr to cover the next 10 years then wait for an apartment in Kenya. What happens if this does not happen and who will take responsibility when I cannot get my apartment after paying up and waiting for ten years?

I ask: Why must Kenyans go through the Embassy to open an account? How can representatives of one of the most corrupt governments in the world be consulted on matters of serious financial operations of this nature or have we forgotten that serikali inaweza kula pesa? Which Embassy staff is legally accountable for a private economic operation of Kenyan nationals of the type being mooted and what happens if things go wrong? In any case, what is so complicated in Kenyans opening an account?

Further, Will the account be opened in Kenya or in Sweden? Who will be the signatories to this account? If the account will be based in Sweden and profits from parties used to build the project, how will the group relate to Swedish tax laws especially clauses that deal with taxation of profits of economic operations that could run into thousands of Swedish Crowns? Has someone thought about these issues or is Osewe simply out of touch with reality on the ground?

You do not expect right thinking people to put money in an account for ten years without having a say on questions of internal democracy within the group. How will the leadership cycle be organized, what are the rights and privileges of members, who will be taking decision and how will major decisions within the group be taken? What happens if a member defaults in payment or if a member misbehaves? Can a member be expelled or suspended from the group? If yes, under what circumstances? Clay said that members will be informed every month “about progress” in the group. Who will inform members? Is it the Embassy or is it Clay?

In summery, “Operation Thunderbolt” is a good idea which lacks a “Blueprint”. In any case, the name “Operation thunderbolt” is militaristic and James Bond-like while it has connotations or echoes of “violence” that is incompatible with an economic theme. If the word “Operation” has to be used, why not “Operation Apartment Blocks?” or “Kenya-Sweden Investment Initiative”?

Given the magnitude of the operation, 100 kr per month is too little and likely to scare people who are much more serious. It will be impossible to sell the idea that the operation will deliver an apartment in Kenya in ten years if only you can pay 100 kr per month! Jameni. Is it just myself reading from another script?

The point I am trying to make here is that “Operation Thunderbolt” is like a tall skyscraper whose construction has began without an architectural plan. The foundation is being set but nobody knows how deep it should go. You can just imagine what could happen if it succeeds in reaching the fifth floor. If critical questions are not addressed at this stage, it might come tumbling down on innocent members with much more devastating consequences. These questions have been raised in the spirit of solidarity with the initiative and an urge to strengthen the idea. This is my take for now.

Okoth Osewe

makosewe@gmail.com

October 27, 2006 Posted by makozewe | Commentary | Leave a Comment