Lessons from Safaricom IPO

Long queues have in the past characterized shares’ purchases in Kenya, mainly through Initial Public Offering (IPO), but the just concluded Safaricom IPO had lessons for aspiring investors.

The queues were pathetic, but what was hard to understand was: Why take five hours to make purchases that can be done online? Many people sought to queue instead of using the online forum provided, arguing that the manual method was safer because they were assured the investment is safe.

Perhaps that is the reason why a friend of mine in the U.S. could not understand when I said the IPO was open for a month. For the countries using electronic transactions, the IPO lasts a day.

Though the online forum was said to have some privacy issues, it received 400,000 applications, which is something that can be improved on in future.

Lesson: Electronic transaction will improve the way we do business and save time.

Of course, the e-transaction bill will help a great deal if it becomes law. People will know that they have recourse in case of any loss or breach of contract. The exercise showed that we need the act to prove that e-transactions are as good as face-to-face transactions.

With banks peddling loans and promising to help us make wealth through the stock exchange, many of us took it as proof that they would get full allocation and make profits.

Lesson: Banks are in the business of making money from us, and their position will always be safeguarded by the shares. A loan is a loan; do not be duped into getting a loan at high interest rates, then complain that the market is skewed against petty investors.