By Prudence Minayo
Francis Thuo is credited for being the first African to become a stock broker after Kenya gained her independence. His parents were not able to pay his high school fees but that did not stop him from becoming a big name at the Nairobi Securities Exchange then known as Nairobi Stock Exchange. The Form Two dropout established ‘Francis Thuo and Partners’, a successful brokerage firm that came tumbling down barely three months after the demise of Thuo in 2006.
Here is his story as told by WoK.
Background
Francis Thuo went to secondary school for two years before dropping out since his parents had no money to pay for his fees. This forced him to move to Nairobi where he ended up working as a taxi driver. He started doing an accounting course from a South African college via correspondence and at the same time continued with his secondary education as a private student which was unfortunately disrupted by the Mau Mau war.
Stock Market
In 1955, he secured an internship with an accounting firm before getting a job with a stock broker. This is what got him interested in the stock market. He enrolled for a course at Makerere Extra-Mural Studies in Nairobi.
He was so interested in the stock market that he resorted to theft. He would secretly take files from his boss’ office and study them at night and then return them in the morning.
After Kenya gained independence, he got into the stock business, establishing a company named Francis Thuo and Partners. This made him the very first African to open a brokerage firm. His target was Kenyans and he was right. During this time, the industry was plagued with uncertainty and panicking investors were selling their shares in a hurry.
To market his business, he printed pamphlets, organized government seminars and used radio and television. When the Kenyatta government encouraged Kenyans to buy shares in companies, Mr. Thuo was ready for it.
By 1966, Kenya had bought 653 foreign companies but only 5% of these were allowed to trade at the Nairobi Securities Exchange (NSE). The government could not control prices but it made it mandatory for any listed company to make it a condition that no one group or person dominates shareholding.
His company was given a seat at the Nairobi Securities Exchange and he joined four brokerage firms. They met everyday for half an hour to review the active stocks at the Stanley’s Exchange Bar. The stock market was born at the Stanley’s in the 1950s when the NSE was registered under the Societies Act in 1954.
Chairman of NSE
In 1969, Thuo became the chairman of Nairobi Securities Exchange, taking over from Roger Chapman and becoming the NSE’s first indigenous chairman. In his early days as chairman, he would sit at the head table and spot a sleek back hairstyle which was made famous in the 1950s thanks to film icon Clark Gable. He got an office at the top floor of the International House close to Hilton Hotel.
Mr. Thuo faced the difficult task of demystifying the NSE as a club for the select rich people. The 1967 Trade Licensing act had also made it hard for foreigners to invest since they had little faith in the country. Hence, his task was very hard. In 1975, he faced another problem following the introduction of the Capital Gains Tax. Listed companies grew to 67 then the coffee boom weighed down the market and the East Africa Community collapsed.
Mr. Thuo encouraged the big investors to increase their investments through stocks and the little investors to put money in big firms.
In 1983, he became the Member of Parliament for Kigumo and served for two terms. During this time, he encouraged members of parliament to invest in stocks.
Collapse of Francis Thuo and Partners
In 2007, the firm was placed under statutory management after it was proven it could not meet its financial obligations.
The firm was accused of misappropriating investors funds worth Sh100 million. The demise of the firm caused a crisis with confidence in the market dropping. The NSE promised to pay investors who had deposited money with the company.
