Personally, I have never met Mr. Tuju as a person – I have only known him as a public figure and through his long battles in court to protect his property from what he calls predatory actions of the lender.
Based on publicly available information, a good financial advisor would advise Tuju to cut his losses, heal from this mess and seek to rebuild afresh.
The rules of money and wealth affirms that any man or woman who has ever created real & clean wealth before, they shall rise again even if they lost everything. Unless Tuju had leveraged on his public office to build, he had nothing to fear for he would surely rise again.
However, here are five important lessons for those that diligently seek to build generational wealth:
1. Debt contracts are always designed in favor of the lender, not the borrower – even Holy Scripture warns that borrowers are slaves to their lender. By design, debt is only beneficial if it is used for leverage (i.e. an investment that brings in enough cash-flow to repay the debt costs and remain with some surplus cash). If a loan facility cannot achieve this, it does not matter what other name you baptize it to be, it simply remains a bad loan, even if you can still repay it from other sources;
2. When you find yourself in a debt hole, sound financial advice and pragmatism wins over legal wars – a big component of Tuju’s debt burden is arising from passage of time in courts and legal cost claims of the lender. This is in addition to potentially hundreds of millions he has spent on his own lawyers. Maybe Tuju would have preserved his properties had he opted for a gentleman’s deal with the lender before it was too late;
3. It is always a bad idea to bet an entire project or start a business with debt – no matter what, never sign a debt agreement for an un-proven business idea in the real market. Unless, the debt structure conforms to strict project financing thresholds where the lender assumes a significant part of the project risks until the project is up and running to recoup their investment -never sign such an agreement;
4. Risks of real estate investments in Kenya – the case of Tuju is not unique in the Kenyan economy over the recent past. It only happens that Tuju is a high profile figure to attract a bit more public attention. Potentially, the best days of real estate ventures in Kenya are behind us. Wash-wash and corruption money has completely distorted property values in the economy. Using debt for real estate is extremely tricky around this town for now;
5. Build enough cash flows first to leverage on debt – from the information moving around, Mr. Tuju’s project relied entirely on the debt facility to stand. No legalistic arguments in court will ever erase a legitimate claim over the sh.950 million disbursed to him by the lender. For any court to act otherwise, it would create an absurdity on the rules that govern commercial banking and trade agreements.
Here is how to get your copy:
a. WhatsApp+254723584928, Free deliveries to your physical location (in Nairobi) or parcel to your nearest township.
b. Walk into Nuria Bookstores, Bazaar Plaza (formerly TSC building in CBD), 1st Floor, Room 12, Moi Avenue (can also order online).
c. E-book available at https://lnkd.in/dKvrZvPb; or Paperback athttps://lnkd.in/dhazXVDZ
The book retail price is Sh.1,850