It so happened today that on my way to work in a matatu today, it was tuned to Kameme FM. One Muthoni wa Kirumba, my good villagemate, was hosting Sampesa Ltd. Sampesa were talking about their business model.
Breakdown:
They engage in joint ventures whereby they lease strategically located plots for 15 years.
They then build apartments where for the period of lease, they take 70% of the rent; 30% goes to owner of land
In the example given, they build a 25, 2-bedroom apartment for 40 million (1.6milli construction cost per house)
Each such apartment makes 20k in rent; implying 20k*25=500k as monthly income
NOTE 1: This conveniently assumes full occupancy, an impracticality.
NOTE 2: This assumes no costs such as security, cleaning, minor repairs, e.t.c.
Sampesa earns 0.7* 500k=350k.
Total earnings in 15 years: 350k1215= 63 milli
Gross profit: 63 milli - 40m =23milli
Yearly returns: 23m/15= 1.5333m
Rate of retutn per annum: 1.5333*100/40= 3.833%
The rate of inflation in Kenya stands at around 6% p.a. Basically, at 3.83% p.a, the company is losing money; and fast. Mark you, this is gross earnings. We have not included staff costs, Sampesa office rent, taxes, e.t.c.
In such an instance, you are better off investing in GoK treasury bills and bonds, at SO MUCH LOWER RISK, and MORE PROFIT since returns are around 11% p.a as it stands.
Sampesa further state that their business was first registered in 2009. Therefore, their first project should mature in 2024. In my understanding (I may be wrong), they should be injecting money without having realized break-even or thereabout as per 2018. However, they state that they have managed to grow their market cap from 1B to 4B through realized profits.
Ladies and gentlemen, ata kama nilienda Kajinga primary and SoHK, mtu anielezee vile hii biashara inaenda ata mimi nianzishe yangu.
Feel free to correct, educate, or divulge on the secrets of running businesses juu yangu imenishinda.
Buy houses in Mukuru each at around 50k; chances are that you can make over 50% yearly turnover ( around 2k per month)assuming full occupancy na kama tenant sio yule sumbuaa.
Alternatively, buy a house in the adjacent estate at around 20M, get 3% annual returns assuming 50k rent per month
ati sampesa. na hii sio ukora ingine kama gakuyo? on their website they say they were established in 2003 not 2009 na hapo chini wanaweka hesabu tamu ya ku entice any kiuk passerby. And they end presentation with a bunch of random photos of arpartments with no mention of where they are or when they were completed. na middle class anameza hook, line and sinker.
I imagine the sampesa is probably meant to fool the public that they are affiliated with mpesa.
The figures are not. Nothing mysterious about it. There are 10 kind of people when it comes to math. Those who can read it and those who see what they are told.