Monday, September 22, 2008

The current business environment

The current business environment is worrying worldwide.

The question on most business minded people is: how long is this going to last and after the storm, 'who' going to be left standing and 'who' is going to sink? AIG in the USA has been bailed out by the state at a cost of $ 85 billion! Who is going to bail out the worlds' businesses as most face imminent closure?

What about Kenya? What are the ripple effects of this global crisis? Safaricom, the most profitable company in East and Central Africa is not doing well at all at the NSE. Its share price has plummeted below the IPO price of Ksh. 5.00 per share. Retail investors (and I believe some fund managers) are scampering for safety as soon and as fast as they can. The reasoning being that it is better to make a 10% loss rather than wait and make 70% or more loss.

Business people are a worried lot.

Going south, the Africa economic powerhouse, South Africa is in turmoil. The president, Mr. Thabo Mbeki has been ousted from the seat of power - he has obliged quite state manly unexpected in some countries in Africa. Worse off, he might take the highly respected Finance Minister, Trevor Manuel with him as well as the VP. This leaves Africa in a very challenging business environment.

Couple this with running inflation hovering at around 30% in Kenya. Kenyans can't afford to save nor afford to invest anything. In any case they are liquidating any assets that they had to meet short term cash requirements.

What a bleak future it looks like.

However, hold on buddies, the sun might start shining soon!