Kenyan opens up Banking to the Poor

Bankers are often seen as only serving the interests of the rich, especially in the wake of the financial crisis, but Kenya's James Mwangi has managed to transform his company's fortunes while still offering services to the country's large poor population.

James Mwangi

Kenya's Equity Building Society was founded in 1984 with the goal of providing mortgage financing to low-income Kenyans.

But poor management and insufficient board supervision, among other factors, contributed to its deterioration and a decade on, the Central Bank of Kenya warned that Equity was on the verge of insolvency.

With the sword of bankruptcy hanging over their heads, in 1994 the building society's board of directors decided it was about time to include independent members in their rank and to recruit externally for managers.

That was when James Mwangi - who had worked with Ernst & Young and Trade Bank, and had been banking with the society for a couple of years - came on board as its finance director. 

"I jumped into the sinking boat so there were no two choices. There was only one way out: salvage, salvage, salvage," he told the BBC's series African Dream.

He said that, to his surprise, they managed to rescue the bank without having to recur to a reinvigorating injection of external capital.

"We used customer experience. I just trained the staff to give customers an experience they had never received before and what attracted customers was initially that customer service," he explained.

"And consequently we used customers' deposits to leverage. For three consecutive years, we had negative capital. We were leveraging on customers' deposits."

Microfinance

In the following years, Equity went from success to success and by 2000 its pre-tax profit was growing by nearly 80% a year. 

Mr Mwangi became the company's CEO in 2004 and two years later Equity - which had already been moving under his guidance from mortgages to savings and loans - was listed as a commercial bank on the Nairobi Stock Exchange.

Despite the changes of fortunes resulting from its new business strategy, Equity maintained the empowerment of Kenya's poor as a core value through its microfinance scheme.

"I think that what kept me going was that I was pursuing an idea. It was not an interest. It was that, in the fullness of time, we would make financial services accessible to the majority of Kenyans," Mr Mwangi told the BBC's Kevin Mwachiro.

"Every moment we looked there were signs that we were making progress. That constant progress is what gave us the strength to move on."

Over the years, Equity Bank has spread it wings across the region. It now has more than 7.5 million customers and has become one of the biggest financial companies in Kenya and East Africa.

Mr Mwangi considers that the bank's success has to a great extent been fuelled by passion and enthusiasm.

"If you look at Equity, it's an emotional business. People are driven by emotions and it's all about the enthusiasm of liberating our people, empowering our people to transform their lives and livelihoods," he said. 

'Symbiotic relationship'

In 2010 Mr Mwangi was named by the Financial Times as one of the 50 emerging market business leaders that have shaped the economic performance of their regions.

In September 2011 the Africa Investor magazine chose him as the African Banker of the Year for the second year in a row. 

He says that his motivation throughout has been to make a personal contribution to reducing poverty in Africa.

"You do good to society, they support the business, so it's a symbiotic relationship that seems to grow simultaneously," he said.

And what advice would he offer to people would are looking for capital from institutions like the one he directs?

"Prepare, prepare, prepare because you're competing for capital and capital is looking for prepared entrepreneurs," he said.

However, in his opinion, aspiring business people should also look beyond banks, at other factors of production.

He also thinks that they should try to get coaching and mentoring from those who have been successful.

"They have overcome all the odds, they borrowed from the banks so they have the know-how, and one need not reinvent the wheel if it has already been invented."

Source: BBC

Ghana Tema Oil Refinery shuts unit, runs out of crude

ACCRA  - Ghana's 45,000 barrel-per-day state-run Tema oil refinery shut its main crude distillation unit on August 28 after running out of feedstock, two sources with knowledge of the plant's operations told Reuters on Monday.

Ghana is Africa's newest crude oil exporter after starting up its offshore Jubilee field, but the country's sole refinery in Tema requires upgrades to be able to run the domestically produced oil and generally relies on imports from Nigeria.

"We don't have crude to process so the main plant is not working at the moment," one of the sources said, adding the refinery was waiting for a cargo from Nigeria. He did not say when the cargo was expected.

"We have not had a smooth production in the past months - today there is crude, tomorrow there is no crude - it's been an off-and-on situation since the beginning of the year and its getting worse," the source added.

The Tema refinery has been hobbled by repeated shortages in available crude since 2008, when its main lender Ghana Commercial Bank cut off support due to unpaid debts. Ghana's government repaid the debt earlier this year.

The repeated outages at the Tema plant have led to shortages of domestic supplies of fuel, particularly of cooking fuel, and could weigh on the government of President John Atta Mills ahead of next year's elections.

Source: Reuters

How to have Self-esteem after loosing your Job

The credit crunch is causing havoc everywhere and it does not spare anyone. People are loosing their jobs everyday through shut down of many organisations. Social life is disorganised homes are in crisis, yet a career management consultant Jayne Mattson of Keystone Associates  says you can develop a routine each day to regain your Self-esteem.
Bellow are some of the tips to do after loosing your job:

1. Be a member of a supportive network

Being surrounded by healthy and positive minded people can help rebuild your confidence According to  Mattson, "The people who believe in you really do want you to find the right fit and they will be your best advocates to others". Anyone from former colleagues or acquaintances to family members can help boost your self-esteem after a layoff.

2. Help others

Instead of feeling sorry for yourself, use your new free time to help others. Establishing new connections and applying your skills to other areas like volunteering or taking on leadership positions in your community can help you to bounce back, Mattson says.

"It will keep your skills sharp, make you feel better, but will also give you something to talk about when meeting others," she continues. And this can be a new carrier development or enterprise development for you.

3. Use positive affirmation

While getting support from others is key, it's also important that you believe in your own skills. Use each day to verbalize a positive affirmation and remind yourself that you possess valuable skills, Mattson says. "Self-talk becomes an important part of rebuilding self confidence," she says.

4. Take time to do something you love

"Filling part of every day with something you love to do will keep your engines going longer," Mattson says. It can be as simple as reading a book or writing articles about you do everyday to regain your self confidence or listening to your favorite song, but make sure it's a part of your day that you can look forward to.

5. Exercise

Exercise is a natural endorphin booster, so you're bound to be in a much better mood post-workout. If paying for a gym membership is prohibitive, keep costs low by jogging or cycling outdoors and doing an at-home yoga routine. Since you're no longer tied to your desk for hours each day, use the new flexibility to get back into shape and feel better about yourself.

6. Allow time to heal

Especially in a tough economy -- when job interviews are harder to come by -- it can take time to regain confidence and no one expects you to recover right away.

"Don't beat yourself up," Mattson says. "Recognize that you will have good and bad days." Going through a job loss is never easy, and there's nothing wrong with allowing some time to heal.

7. Attend job search workshops

Knowing that you're not alone can go a long way in helping boost your mood. Seek out networking events in your industry or attend job search lectures to get out and mingle with other job seekers. With less interaction in your day-to-day life, meeting others can play a big part in boosting morale.

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Where's the Cash?

As any small business owner knows, it's a struggle to survive when cash flow gets tight. Creditors want their money; employees must be paid; and the landlord is at the door.

What to do?

You must take charge and calm things down. It's up to you to make good decisions and you can't do that when you're constantly fighting a cash crisis.

Every business owner knows that a lack of cash threatens his business. You need time to think. Wouldn't it be great to know each day that you had enough money to get through the week?

Try this: use a tourniquet-like cash budget to stabilize your business and control the cash.

Here are three important reasons why you should try this technique: 

Cash is the lifeblood of the business. Run out of cash and your business will die.

Here are some tips to maintain a positive cash balance:

Never spend more in a week than you start with on Monday, regardless of how much you might ultimately collect that week. For instance, if you began this week with $50,000 in the bank, that's all you can spend this week, even if you collected $80,000 on Thursday. Adjust your payables to fit your beginning cash balance for each week. Only pay out what you have at the beginning of each week, not what you collect during the week.

Make a simple cash budget to guide you. Tear up all written but held checks in the drawer. Reconcile all bank accounts and start with an accurate balance. It's far safer to deal with facts, not fiction, when in a cash crisis.

Sign every check that leaves the building. This will sharpen your focus. Put all the cash in one account so it's easy to keep track of and hold weekly cash disbursement meetings with your staff. Keep your key people informed.

Be conservative in estimating collections. Now is not the time for rose colored glasses. Separate short-term from long-term. Who really owes you how much in the next 30, 60, and 90 days? Analyze last year's cash collections by date and by customer. Compare last year to this year, by customer. If not sure or your records are out of date, use 90% of last year's collection performance to estimate this year's collection performance. 

Cash buys time to find out what went wrong. Here are three ways to buy more time by creating more cash:

Spend less cash. This seems obvious, but many owners simply forget or don't want to make the hard decisions. Fire deadwood employees. You know who they are. Eliminate perks and all non-essential expenses. Pay only life-threatening vendors. These should be at the top of your list.

Collect more cash. This, too, should be obvious, but it often gets ignored. Call every customer and ask for payment of open invoices. Factor eligible receivables; send past due accounts to collection. Ask your accountant about potential tax refunds, lease abatements, and other cash concessions.

Control purchasing. Change the culture of buying when you think you need it. Cancel all purchase orders. Determine exactly what is needed to survive for 3 months. Personally sign every new purchase order. Buy nothing you don't absolutely need, regardless of special deals offered by suppliers. 

Cash lessens uncertainty and improves confidence. Transfer some of this "good news" to your staff. Hold weekly budget meetings with your key staff. Involve them in decision-making and reward them for performance. Your people must be able to share your confidence.

Control the cash. In addition to signing every check that leave the building, you must know your financial numbers without hesitation. Be certain.

Be the leader. In every crisis, people look to leaders to plot a course away from danger and set the pace. This is your job. It cannot be delegated.

Maintaining a positive cash balance requires discipline and sacrifice. It's worth it, because the lack of cash is the greatest threat to small businesses in trouble.

You can maintain a positive cash balance by never spending more in a week than you have on Monday. This is real power. And, it's the key to stabilizing your businesses so you can make informed decisions about what to do next. Try this technique. It works.

 

Source: SMEToolkit,Van Lanier 


Buy these books now and acquire the skill of cash flow and liquidity management
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5 Steps to Rebuilding Your Credit, Finances and Emotions after Bankruptcy

Rebuilding your life after bankruptcy – including your credit rating, finances and your emotional well-being – can sometimes seem like an overwhelming task.

But if you've recently filed for bankruptcy protection, it's important to realize that there is life after bankruptcy. And it doesn't have to be a life where you're treated like a financial outcast and banished to years of credit exile.

On the contrary, life after bankruptcy can be enormously rewarding – but only for those who strategize properly and commit themselves to not wasting the second chance that bankruptcy can offer. Ultimately, how well you rebound from a bankruptcy filing depends on the post-bankruptcy steps you take to safeguard yourself against future financial calamities.

Here are five steps to speed up your recovery after bankruptcy – and help you get on with the business of living life well without the stigma of the bankruptcy process.

Let Go of the Guilt and Shame

If you've gone through bankruptcy – or are contemplating it – you're certainly not alone. In 2010, personal bankruptcies in the U.S. rose by 9% to 1.53 million filings. Also, a May 2011 survey from FindLaw.com revealed that one in eight adults in the U.S. – 13% of the population – admit they've considered bankruptcy (Africa statistics is not yet available). These sobering statistics are telltale signs that many Americans are still battling the lingering affects of the Great Recession.

Nevertheless, people who've filed for bankruptcy protection are often wracked by guilt and shame. It's not uncommon for bankruptcy filers to say things like "I feel like a failure" or "I'm so disappointed in myself."

But beating yourself up about your predicament won't make your situation any better. In fact, succumbing to a steady stream of negative emotions about your bankruptcy can even be harmful to you by preventing you from moving forward in a positive way.

A better strategy: Resolve to make peace with the past by letting it go, and don't dwell on negative thoughts or wallow in self-pity.

"Sometimes things just happen," says James Feazell, who has counseled scores of financially challenged consumers over the years in his role as vice president of education at the National Foundation for Debt Management in Clearwater, Fla.

Feazell notes that job loss, divorce, medical bills and other personal setbacks can drive people into excessive debt and force them to declare bankruptcy. "So the challenge now is to adopt the right attitude," says Feazell. "You have to get yourself mentally back in the right place where you can become more disciplined and better educated, and where you can learn from life and not make the same mistakes."

Reflect and Regroup

How do you get to a healthier place emotionally if you're disappointed about the past and perhaps experiencing regrets about choices you made?

Once the dust has settled after your bankruptcy, do some soul searching, recommends Chris Bridges, owner of Vision Credit Services LLC in the Washington D.C. metropolitan area.

"You really need to ask yourself several key questions," Bridges says, "including 'How did I get here? What could I have done differently? And what have I learned from all of this?' " Your answers will help you create a better financial afterlife in the wake of bankruptcy.

Additionally, enlist a great support system, Feazell suggests. "Friends, family, your church or members of civic organizations can all provide you with an emotional charge when you need it, or even just a shoulder to lean on," he says.

It's important to have the right people around you, Feazell adds, because "positive people who are in your corner, telling you that you can overcome this, can help you deal with all the bumps, plateaus and valleys you may experience after bankruptcy."

Create a Realistic Budget and Pay All Your Existing Bills on Time

After a bankruptcy, you must become extra vigilant about your finances. Even if you've never created – or stuck to – a budget in the past, now is the time to get serious about doing so. Your budget will act as your spending plan, helping you to manage cash flow and preventing you from racking up unnecessary debt.

"Understanding your budget means you try to live below your means and stop keeping up with the Joneses," says Dawn Brown, a certified financial planner and senior financial advisor with Altfest Personal Wealth Management in New York City. "Your budget should also have a line for saving, so you can pay yourself first."

Brown and other experts say having an emergency fund is vital to deal with future emergencies or unexpected events that can derail even the best of budgets.

Also, make it a priority to pay all your current bills in a timely manner. Set up automatic bill payments, and remember to pay your rent on time since rent payments are now being tracked by the credit bureau Experian and will affect your credit score.

Repaying your existing bills as agreed will be one of the single, most powerful things you can do to restore your finances and your credit, according to Bridges, who has also written the free e-book Your First Step to Credit Restoration.

If you can't pay everything that's due, says Bill Hardekopf, CEO of LowCards.com, "prioritize your expenses. Pay the ones necessary for survival first, such as food, housing and utilities. This also helps protect your credit score, because a missed mortgage payment can hurt your credit score."

Pick a Credit Card That Will Help You Rebuild Credit

Experts agree that another key strategy to rebuilding your credit rating after bankruptcy is to obtain a secured credit card. With a secured card, you deposit a given amount of money, such as $500, into a bank account and that $500 becomes your credit limit. By charging small amounts each month and repaying your debts as agreed, you can gradually rebuild your credit.

"Some of these (secured) cards will reward responsible borrowers by upping the limit without an additional deposit," Bridges says. "Some will even convert the account into a traditional credit card."

A few caveats about secured cards: First, recognize that at some banks, not everyone qualifies for a secured card, particularly if your bankruptcy is less than a year old. Also, stay away from secured cards that charge high fees, that don't report your payment history to the credit bureaus, or that ask you to call a 900 number (you'll be charged for the call).

Separate Fact From Fiction About Bankruptcy

Bankruptcy filers are often force-fed a host of myths and misconceptions about how horrible their lives will be in the wake of a bankruptcy proceeding. While life after bankruptcy certainly won't be a cakewalk, unfortunately, much of the information doled out is flat out wrong, according to credit experts as well as people who've successfully and quickly bounced back from a bankruptcy filing.

First, there's the incorrect notion that bankruptcy will automatically disqualify you from getting a mortgage for at least 10 years. Wrong! You can actually be in the middle of a Chapter 13 bankruptcy proceeding and still get an FHA home loan.

There's also the false assertion that getting a credit card will be next to impossible for at least seven years. But this is untrue as well: Most bankruptcy filers receive a slew of credit card offers from banks almost immediately after their bankruptcy is discharged. One study showed that 96% of consumers were offered new credit within a year of declaring bankruptcy.

And then there's the wrong-headed idea that car dealers and lenders will only approve your application at sky-high interest rates. Not so. As many people who've gone through bankruptcy will attest, there are numerous auto companies and lenders willing to finance a vehicle or approve loans at reasonable rates after a bankruptcy.

And while it's true that bankruptcy will remain on your credit report for up to 10 years, it's definitely not the case that it will take a decade to re-establish a positive credit rating. In fact, many people's worst credit problems – even bankruptcy – are often not as bad as they think.

"Because credit scoring models typically lend more weight to your recent activity than to the mistakes you've made in the past, you can change your habits right now and begin reestablishing yourself as a good credit risk for a purchase or refinance loan in just six to 12 months," says Bridges, who offers free credit report consultations to consumers.

FICO credit scores range from 300 to 850 points. Roughly six months after a bankruptcy is discharged, Bridges notes, "it's not uncommon for people to see their credit scores skyrocket up into the 700s, if they have absolutely no late payments or collections" following the bankruptcy.

On the other hand, says Bridges, "if you do have a late payment or a collection following bankruptcy, you get dinged double by the credit scoring system, because it's like: Didn't you learn your lesson?"