@Davis, 20% is a huge return, no wonder economy of numbers will never work in kenya and expenses keep rising. Your 20% model only caters for middle income and higher. Vast majority is left out and cannot participate ever in their lifetime. But you are right, I propose that we join the circus of business models that target middle income and above ( the govt doing is also using this approach ), create a switerzland type of economy for the affordables alone.
Middle income is running kenyan economy thru taxes. And plenty are building business models around it, creating niche markets. So banks giving out loans at current rates only help niche users. Wengine watafute pesa with their own methods.
If you read my first line, this is the first pitfall. Prices will never drop in kenya. 6% deposit and 14-17% on borrowing? This is a rip off but it works. Pass the cost to the target markets end users.
Rgds.
On Mon, Aug 31, 2009 at 10:49 AM, Davis Waithaka
<daviswaithaka@gmail.com> wrote:
Let us put some things in perspective. Assumption: banks are not
charities. The owners of the banks have to put in 1,000 million
shillings as capital to run the bank. They are then encouraged to give
loans to our people to enable the economy to grow. Now, if I put in 1
billion shillings in a business, and you want to borrow money from me,
it will be at a price,.. and you had better be serious! Dont tell me you
want the money for a business that cannot bring back at least 20%
returns in profit - you are simply going to rob my cash.