KAINVESTOR

Tale of Two IPO's

2011-09-01T17:30:00.000+03:00

In the last few months we've seen two pubilc share offers in east Africa; the Bank of Kigali offer in Rwanda and the British American Investment Co. offer in Kenya, both whose shares were supposed to start trading this week.

While Bank of Kigali offer was successfully oversubscribed by 274 percent (raised $62.5 million out of the targeted amount of $16.7) and went ahead to gained 52 percent on the first day; British American IPO managed a 60 percent subscription (only managing $37.8 million of the $62.9 million targeted) and has said in a newspaper posting that it would delay its stock exchange debut by six days to September 8.

Does this mean Rwanda is a better investment destination in the region than Kenya?

Cherry Picking - 2011

2011-02-26T13:05:00.004+03:00

2011 has opened with more than enough offers for East African investors. After several rights issues were over-subscribed last year and with the economy looking quite optimistic, the bull market could be back in the region.

A quick line up of some corporate actions across East Africa[no particular order]:

Kenya
- TransCentury (net assets worth $150mln) - to raise Ksh.3 bln through introduction
- British American Group: planning a Ksh.7 bln IPO
- CFC Insurance Holdings to list this year.
- Kenya Airways fund raising for expansion (right issue/corporate bond?)
- TPS EA planning a second rights issue
- Cooperative Insurance Company (CIC) IPO [2013]
- National Bank of Kenya – government 51% divesture
- Consolidated Bank – government divesture
- 30 year state bond {on going}
- NSE trading at a seven months low = undervalued stocks?

Uganda
- Kinyara Sugar Works - to list a 49% stake this year
- Tullow Oil - to cross list some shares in USE

Rwanda
- MTN Rwanda – state to sell off it’s 10% stake
- SONARWA – Rwanda’s biggest insurer. Govt to sell a 20% stake in an IPO.

Tanzania
- Precision Air – 55 mln shares or 65% of its authorized shares worth $28 mln to be sold in an IPO
- African Barrick Gold Plc – listed on London Stock Exchange in March 2010. To cross list some shares at the DSE

mostly sourced from Reuters

Blocked

2010-12-14T07:29:00.002+03:00

It's been a while since my last blog post: too much to do, too little time, too lazy to write anything. Good news though, at last the block is headed to an end. And this one does not count as a post either.

Forex Trading for Newbies

2010-09-21T07:14:00.005+03:00

I’ve always been skeptic of forex trading. I figured out from a friend a few years back that the risk of losing money trading currencies is even higher than the disclaimer given on trading sites. However a tweep friend @faithmight, who I can easily say is a guru in forex trading, introduced me to some newbie guide sites in this volatile form of investment. Among them I found one top rated forex broker site that proved quite helpful.

ForexTraders gives a comprehensive step by step guide to forex trading that is set to make any net forex loser a net gainer.

Trading in forex always require that you use an online broker and like any other investment choosing the right broker is quite important. The difference between these forex brokers is the broker fee. Another difference might be how much your consultant or reminder, will help you in your first steps and if they are willing to guide you all the way. ForexTraders provides a full review about these aspects, so you can decide which are the best forex brokers that suit your needs.

ForexTraders also update with the latest forex news and latest strategies constantly, which helps a trader know the latest news or the trend about the current market. Information is quite important in forex trading and may determine if you make some gains or not.

Uchaguzi

2010-07-27T11:13:00.004+03:00

The creative minds @Ushahidi have once again launced Uchaguzi, a technology platform that allows citizens and civil society to monitor and report incidences around the electoral process during the upcoming referendum on August 4th.

It provides web and mobile-based channels for citizens and civil society to report on electoral offences such as intimidation, hate speech, vote buying, polling clerk bias, voting misinformation etc. The reports are then sent to the electoral authorities or security personnel for action.

Anyone can report on these incidents during and after the referendum by sending a text message to 3018 (normal charges apply) or sending an email to reports@uchaguzi.co.ke or sending a tweet with the hash-tag #uchaguzi.

Uchaguzi is a collaborative action by The Constitution & Reform Education Consortium (CRECO), The Social Development Network (SODNET) and Uraia. It’s funded by HIVOS and Twaweza

Is MJ a Legend?

2010-07-22T18:30:00.007+03:00

Safaricom has announced that Bob Collymore will be replacing Michael Joseph as the CEO from November. Collymore was chief officer for corporate affairs at Johannesburg-based Vodacom Group Ltd. (who's on facebook and twitter)

MJ, who says he started the giant firm with only five people, has managed to built the biggest (I’d say best, but some will disagree) company in East and Central Africa in terms of profitability. He’s managed to spin it off from a government parastatal to the ‘Green Eyed’ monster of Kenya’s corporate world in just 10 years!

He’s the only Kenyan CEO who’s managed to become a household name. Toddlers know him…some named after him (true story).

If he's not our own Kenyan living corporate legend, I don’t know who is.

Enters Old Mutual

2010-07-07T17:40:00.005+03:00

Old Mutual (OM) finally bought an NSE seat through a buyout in Reliable Securities Ltd that was placed under statutory management last year. The exact amount of the acquisition has not been relesead. I’m sure is a colossal amount, going by the Sh451 million bid they placed for the Fransis Thuo (FT) seat, that was taken up by RenCap for almost half the OM bid at Sh251 million.

Last year, the NSE revalued the minimum amount that a new entrant would pay for a seat at the bourse to Sh251 million from the previous Sh50 million.

Back then the reason given for not selling FT to OM was that it was one of the market mover through its equity related units and could not be allowed to also deal in the stock market as a broker. So what has changed?

Some analysts (@SokoAnalyst and @AlykhanSatchu) say existing brokers are likely to loose out following the entry of OM; in what I presume is due to the low transparency levels and OM alignment with foreign investors. OM also has got good corporate governance compared to most NSE brokers.

In a span of about two years, at least five ‘old and shaky’ stockbrokers have been bought out by new players (mostly banks)

Old & Shaky	Buyer

Fransis Thuo	RenCap
Solid investment	NIC Bank
cross Field	ABC Bank
Bob Matthews	Coop Bank
Reliabe	Old Mutual

I'm expecting Ngenye Kariuki, which is also under statutory management, will go the same route.

NSE still remain a closed knit exclusive club with the ‘Big Boys’ running the show. This has made it almost impossible for aspiring licensee to obtain a seat on the market. This is likely to change if the long awaited demutualization takes place any time soon.

NSE Report Goof!

2010-06-17T17:24:00.007+03:00

This document appear on the NSE website momentarily yesterday, but was removed within an hour after they realized that it had numerous mistakes in it e.g.:

"...Foreign investors dominated the equity market, representing 77% of the total equity market turnover."

This was later replace with this saying:

"...Local investors dominated the equity market, representing 61.35% of the total equity market turnover."

What a goof!

Here is the 'error' pdf:

Budget 2010 Live!

2010-06-10T14:42:00.002+03:00

Kenya Budget Reading 2010

Economic Survey 2010 – Quick Hits

2010-05-20T19:08:00.008+03:00

Capital Markets
- Volume of equities traded during the year increased from 855 million to 1.12 billion, raising the value of shares to 13.04 billion
- NSE capitalization dropped from 854 billion to 832 billion on declined share prices
- NSE 20 dropped 7.8% to 3,247 point.
- The credit referencing bureau regulation and the Anti-Money Laundering Act came into effect
- The top ten firms at the NSE accounted for 73.9% of total equities capitalization.
- There was an increase in the number of foreign investors at the NSE, who now hold 26% of the market.
- 90% of Nyaga investors were paid (what happened to the other 10%?)

Agriculture
- A substantial number of animals were slaughtered during the year due to drought (Nyam Chom was the order of the day)

Tourism
- Earnings improved to Ksh.62.5 billon representing a 18.6% increase
- International arrivals went up 24% to 1.5 million visitors despite ‘swine flu’ threats.

Transport
- Less vehicles were bought (mostly station wagons – 27k), but more motor bikes (boda bodas – 16k in 07, 51k in 08 and 92k in 09)
- Road accidents increased 36%. Leading to the drafting of the National Road Safety Action Plan 2009 - 2014.
- Established three road management agencies during the year (KeNHA, KeRRA and KURA) – why three?!
- Fuel levy raised Ksh.19.7 billion for government.

Communication
- Mobile subscribers increased by 34.2% to 17.4 million – almost half of Kenya’s population
- Demand fro fixed line connections dropped 72.4% as people shifted to mobile and wireless devices.
- Mobile phone money transfer subscribers increased to 7.7 million from 5.5 million in 2008.
- Number of sms sent by Kenyans rose from 362 million in 2008 to 3.3 billion in 2009 (wow! Facebook notifications, please call me back, insufficient funds and m-pesa/zap notifications all included)
- Kenya has 3.6 million internet users.
- The Kenya Communication Amendment Act 2009 was passed. Captures cyber crimes (waiting for a more detailed e-transaction bill to pass)
- CCK is not giving out any more TV frequencies (now capped at 81) as it prepares for digital TV.
- Fm stations increased to 303 from 268 although 9 frequencies were revoked due to hoarding.
- 55,400 new jobs were created in the communication/financial sector.

Labour/wages
- Construction sector registered the highest growth in employment rate growth due to the government road construction initiative and private building coming up
- Although private sector wages are still high, public sector is narrowing the gap.
- Wages are high in Finance, Insurance and Real Estate sectors (average 803k p.a.) – more than double the average national wage of 378k p.a
- The study does not mention Kenya’s unemployment rate.

Demographics
- Women and men between the ages of 15-35 are the majority, with 72% women and 68% men.
- 58% of women between 15-49 are married or in an informal union (with a man) compared to 51% of men (with a woman)
- Women are more than twice likely to be widowed, divorced or separated.
- Fertility rate is at 4.6 births per woman.
- Fertility in women peaks at 24 years in rural areas and 29 years in urban areas.
- 1 in 14 children die before age 5 (down from 1 in every 10)
- More than half of the women are using some kind of contraceptive (mostly injections and periodic abstinence). Central province has the highest number of women on contraceptives.
- 39% of women between 15-49 (mostly older) have been physically or socially violated (mostly in Nyanza and Western provinces)

Education
- Form 1 enrollment went up – mostly gals;
- no teachers were recruited in 2009 due to a court case about intern teachers (but recruited in April this year);
- University enrolment up 45% - mostly public/part-time students.

Different Strokes

2010-05-19T17:42:00.004+03:00

*round-up*

On the low end: I don’t want to sound like a skeptic, but I find nothing new with the M-kesho product by Equity bank and Safaricom. Too complex and not particularly new (Zap does it with Stanchart, M-pesa with KCB). It’s yet another typical hyped James Mwangi style of massive account opening scheme. What the M-kesho does is just get more accounts opened at Equity and probably a few more transactions for M-pesa. Other than that, it’s a low interest savings account, with zero opening balance and an enhanced ‘okoa jahazi’ loan facility. How much is the interest rate on the loans?

On the high end: Stanchart launched another high end segment product – Priority Banking, targeting net worth customers and include the Visa Infinite Debit Visa card. They say it has “No additional fee” type but then it won’t be high-end.

AccessKenya is in some serious trouble; boardroom wrangles, bad investments in Openview, media wars and CMA may be on their case. Some one once told me the reason he won’t list on the NSE is because Kenyans don’t value IT firms. With the circus at AK, I want to believe it’s them who don’t value us. And they did not have to publish a tweet-like announcement that they are postponing their May AGM to August.

Anonymity: @Bankelele lost his on joining the Ushahidi team (Congrats!)

Market Wrap By @SokoAnalyst

2010-04-30T14:51:00.003+03:00

*Lazy Post*
Lately I've become lazy on this blogging thing, so to coverup I would let Steve Biko (@SokoAnalyst on twitter) of Hidalgo do the talking in this interview with CNBC Africa:-

NSE: In Your Face!

2010-04-18T11:06:00.003+03:00

Ok, we get it! Somehow the numbers at the NSE have improved and every one is rushing to tell us how things are getting better. Good for them and for those who beat the herd mentality and averaged down on their equities during the down-turn. NSE has a report on how they are the best in Africa for Q1 2010. The market index rose 24.89% during the period, crossing both the 4,000 NSE-20 index and the Ksh.1 trillion mark in capitalization.

Dyer & Blair and Apex Africa stock brokers have published their impressive Q1 results. Compared to their full year results things are really looking up. D&B Q1 pre-tax profit rose 166% to Ksh.35 million, compared to a Ksh.53 million loss in the same period last year. Commissions’ increase 202% to Ksh.54 million; total income increased by 114% to Ksh.103 million (including Ksh.35 mln from unrealized revaluation gain on equity investment); while total expenses dropped 30% to Ksh.64 million mainly due to a 43.9% (to Ksh.12 mln) reduction in operations and admin costs.

Apex operating profit was already 130% up for the first three months of the year to stand at ksh.35 million compared to only ksh.15 million for the full year 2009. Their Q1 published statement was more of a ‘gloat statement’ looking at its sheer size with no much information to go with.

@AlykhanSatchu of rich.co.ke expects Kenya’s GDP to grow by at least 5% this year. Quite optimistic, but could happen. Everything is going well: farmers experiencing a bumper harvests, easing inflation rate and interest rates, reduced political tension (for now) and a seemingly return of foreign investors to our markets (though some pundit tells me that’s not the case). Striking oil now would be a nice addition. At least we won’t worry about shifting balance of trade with our good neighbors the Ugandans.

As much as I share in our brokers and NSE excitement, at least these good tidings have reversed my paper loses; I think it’s too early to scream eureka! Not yet. It would be wise to wait and see developments in Q2 and what the reviewed constitution referendum will unearth in our political scene.

Most of the listed firms, with an exception of banks, have posted improved results too. Some activities expected at the NSE this year include a rights issue from KCB, separate listing of the CFC/Stanbic insurance arm and relisting of Uchumi supermarket. An IPO would be in order, but not without some improvement of brokers corporate governance.

KQ – Quick Hits

2010-04-08T17:20:00.002+03:00

Kenya Airways has been on a rally for over six months driven by what they say is foreign investor demand. It has been the darling of my small portfolio at the NSE, posting an over 100% rise in price to stand at the current Ksh.60. I’ve been keeping tabs on it, just incase I’m caught off side with another workers strike. Their service however, is still in bad taste to many. Competition on its African routes is getting stiffer as Ethiopian Airways ups its game but lucky the hedged fuel contracts ghost is fading as oil prices Increase. Any way, I’m still watching patiently, with a finger on the ‘sell button’.

True Love (Didn’t) Last

2010-04-02T06:21:00.005+03:00

*for lack of a better title*

At some point a year or so back I was engaged in rigorous process of coming up with a budget that would have seen a hard-copy magazine published and distributed all over the world. After several days of dicing and slicing I came to a simple conclusion that it couldn’t happen. Unless it was purely for humanitarian purpose, sponsored by a very deep pocketed donor, it wasn’t going to be viable.

The recent folding of Media24/EAM magazines in Kenya is just a good example of how hard it is to make head way in this magazines industry. However, I still find the blatant blaming of their collapse on an ‘imported model’ half baked.

Generally, SA firms find it hard to adapt to the Kenyan market. What with peculiarly behaving customers as Michael Joseph once put it. That was before he became a darling of the masses we know today. A long list of firms that have gone the Media24 way include Supreme furniture, retail chain Cash and Carry, cinema company Nu Metro, fast foods giant Nandos and beverage giant SAB Miller (who’s planning a Ksh.1.2 billion ‘EABL-hostile’ come back soon). An in-depth research on why this trend is so would be quite interesting.

There are several other magazines, published by Kenyan media outlets that have gone down the same path – (Business Post?). At the end of the day it is all about content and understanding your target client, both of which True Love, Drum and Twende lacked. Most Kenyans would only buy a magazine for its good-unique content, not just anything they can get freely on Google search. And our appetite for magazines, or any reading for that sake, is at a historic low.

Despite dwindling trends in the developing world, Kenyan newspapers seem to be fairing well (for the time being). They too have been feeling the heat as internet penetration in the country increases with the landing of faster (not cheap yet) fibre optic. Loss of advertisement revenue to other media sources has also had them think hard, with a shift towards providing online content by most of them albeit slow and uncoordinated for some.

Blame It On Safaricom

2010-03-10T18:13:00.007+03:00

Stockbrokers

Once again the Kenya Association of Stockbrokers and Investment Banks (KASIB) has released a statement requesting for another in-depth audit of the Safaricom IPO, blaming its shady handling by Citi Bank NA for the liquidity constraints that have befallen them. A previous audit report by the Controller and Auditor General on the IPO had also faulted the manner in which the bank handled the issue. The report questioned incidental costs paid to the receiving back as well as payments to an advertising firm. It also seems stockbrokers were duped into signing reconciliation certificates attesting to the completeness of the reconciliation process between themselves and Citi.

Safaricom IPO may have been a black hole for stockbrokers, but that doesn’t explain the numerous cases of abuse of customer accounts, market manipulation antics and poor accounting standards witnessed in their published financial statements last year.

.ke Developers

Local developers are another group that have made it fashionable to bash Safaricom in every IT conference this year (and there seem to be many of them this time round). I’m just saying, not that I know anything about development of applications. But, it’s a bit redundant to blame Safaricom (who BTW are also in the same business) for idea-jacking, implementing and commercializing. Wake up techies, that’s what happens when you are in business with a much bigger and stronger competitor. Microsoft or Google doesn't makes its huge profits playing nanny to clueless developers? At least now, for local techies, there's iHub :

An open space for the technologists, investors, tech companies and hackers in Nairobi…. a tech community facility with a focus on young entrepreneurs, web and mobile phone programmers and designers. It is part open community workspace (co-working), part vector for investors and VCs and part incubator.

Personal Moment (1)

2010-02-28T08:52:00.006+03:00

I’ve tried as much as possible not to merge my personal affairs with my blogging one. So far I’ve succeeded. But sometime they tend to converge, especially on twitter [a micro blogging platform]. I’ve contemplated creating another blog for my personal journals, but I’m too lazy for that too. What’s with all this social engagements online? With twitter, facebook and linkedln I think I’ve had enough of social networking sites. I need more offline contacts and I’m not so good when it comes to sharing matters close to the heart online, mine or any other.

In the last few months I’ve realized it easier to make more head way with offline networks than online. Online networks appear larger than they actually are. I’m currently job hunting and most of my offline contacts seems to be working better. That brings me to another issue, Job Interviews. So far I’ve attended a few and some of the questions interviewers ask are just plain pathetic. I’m only asking for a job, its not like I’m at Heaven’s Gate begging to get in. Give me a break Mr. Interviewer and stop playing angel Gabriel or whoever it is at the Gate.

They say you’ve got to admit you have a problem in order to solve it. Mine I think is a career-identity-crisis, if there is any thing like that. These few interviews I’ve been from quite a diverse range of positions, ranging from accounting, project management (NGO) to a business writer. In the name of all wild thought I’ve ever had, I’ve never thought of myself becoming a full time business writer, with the reporting and all. OK, I write here and a few other places, but I’ve never considered my writing to be that much, if not just plain boring rumbles here and there. And my grammar is not the best [as you can see :) ]. But someone somewhere thinks I can make a good writer. Let me wait and see how that goes.

Can someone help me get a career counselor? And how much do they charge to put people like me back on the right path?

Earth quakes happen to be the order of the day for the first two months of 2010. Started with Haiti, now Chile and then? I hope it doesn’t hit Nairobi. Only God knows the state of our buildings. I’m actually considering moving to the suburbs – somewhere like Syokimau (kwa mama-round) or Rongai (kwa Nkoroi). Just somewhere safe. You can’t trust these estate flats so much; some of them were built by shady contractors. A man can be paranoiac, right?

(Don't) Save Ngenye Kariuki

2010-02-10T23:58:00.006+03:00

A response to Jaindi Kisero

Jaindi Kisero had a piece in yesterday’s Daily Nation putting out a pro-stockbrokers’ argument on why Ngenye Kariuki should not be allowed to fall. In my very humble opinion, I believe his argument has no basis whatsoever and using some excerpt of Jaindi’s articles I give my arguments why not.

To begin with his opening statement just doesn’t sound right:

Ngenye Kariuki stockbrokers, which has just been put under statutory management, must not be allowed to collapse. The dent to public confidence in a market that is yet to recover from protracted bearish conditions could be severe.

It beats logic why an inefficient, unscrupulous broker should be saved from collapse just because of the general fact that if not, market confidence will receive a dent. It has been known for quite a while [as far back as 2007] that Ngenye Kariuki has been in troubled waters.

…compared to the brokers which have recently collapsed, the net insolvency amount in Ngenye Kariuki is much lower.

I don’t see how this is even an argument for helping out this broker. Does Jaindi mean that since the insolvency faced by other failed brokers was much higher they should be left to collapse? Looking at the grace period given to Ngenye Kariuki by CMA to put its house in order, I wonder why they were totally unable to fix this ‘low insolvency’ problem. Two deals fell through (first with a Tsavo securities consortium and later with Equatorial IB) and one with Eco-bank on the table, CMA still deemed it fit to place them under statutory management. In fact, CMA gave the broker too much leeway on this.

… Right now, there is a strong rumor in the market that another stockbroker is in trouble and may be suspended from trading. The latest I have gathered, however, is that the said broker is in negotiation with a finance house with very deep pockets for a possible buy-out. How I hope this deal comes through! I shudder at the prospect of the collapse of another stockbroker.

Now, such a rumor is more likely to cause even greater panic than one shaky brokerage firm collapsing. I believe by just publishing it in a nation-wide newspaper indicates the lack of seriousness in this market. I consider such information quite material and should be made public as soon as possible or else it amount to ignoring a severe case of insider trading. As much as this said rumor may be common knowledge to interested parties living in Nairobi, the same may not be said of the rest of Kenya and may further aggravate on the lack of confidence in the NSE (problems of a centralized economy)

… On paper, a good number of stockbrokers are well-capitalized. But where is the business to sustain them? Just take a look at the turnover numbers for 2007 and compare them with the present trends. Brokers are earning peanuts in fees from equities, the bedrock of our capital markets. Why aren't we debating about a government bail-out? In the US, the government responded to widespread distress among intermediaries by pouring in billions into Wall Street.

These same brokers were earning ‘peanuts’ before the stocks boom. Poor corporate management and incompetence has seen them succumb to this predicament and there is no way a copy-paste government bail-out from Wall Street would help them. It would be just another case of grand corruption that, like many others, won’t be solved. Comparing stock brokers now and in 2007 (when the market peaked) is not bright idea. I would rather compare it with the late 90’s when the economic and political standings were more similar. And we are debating about a bail-out. There’s a stimulus package that no one knows where or what its going to do. If this is one of the things, It’s a big NO for me.

…If we can bail out Uchumi and Pan Paper, why not respond in the same manner to cure widespread distress in capital market intermediaries?

Have you checked out New-KCC and KMC lately? they are knee deep in financial troubles and seems like somebody needs to bail them out (again)

In conclusion, I think any form of government bail-out should not even be considered for these brokers. It would be simply using tax-payers money to reward those who have robbed them off their investments. Why then not just bail-out pyramid-schemes? Unlike the Wall Street cases, the Kenya government is not endowed with huge reserves to waste on bailing-out inefficient brokers who can easily be bought out by other interested parties such as banks and other interested investor.

Changes at Nakumatt

2010-02-05T11:17:00.003+03:00

The last two years have been tough for Nakumatt. First came the Thika road demolition, then the downtown fire tragedy and the wetland encronchment claim on westlands Nakumatt Ukay. All these have cost the supermarket chain quite a fortune. Its major recent expansions have been into Kampala and Rwanda, where they seem to be doing well.

In the wake of news that Nakumatt CEO, Mr. Atul Shah, was named one of the top 50 emerging market business leaders by Financial Times, it has emerged that its top management has been resigning over the recent months. Including their media friendly COO, Thiagarajan Ramamurthy.

Probably all this is linked to the incoming new investor, who is set to take up 30% shareholding in the firm at a cost of about US$25 million. The other main shareholders being Mr, Shah - the CEO and Hotnet Ltd – associated with Harun Mwau [Assistant Minister for Transport]. Like many other, Nakumatt’s bid to list on the NSE has taken a back sit until further notice.

A Property Bubble That Never Burst

2010-01-20T06:54:00.008+03:00

For quite a while now I’ve heard that there is a housing bubble in Kenya’s urban areas, particularly in Nairobi, that is likely to burst. This has not come to pass (yet). Talking to a friend, whom I consider quite an expert in this field, it emerged that there are at least three arguments behind the Nairobi property burst:

Argument 1: the bubble is already over stretched and likely to burst in the course of this year, probably in the second quarter of 2010 (same was said for 2009)

Argument 2: there exist different bubbles across Nairobi. While the bubble in Westlands may have burst, other areas may still be at different stages of bubble development or none at all.

Argument 3: the bubble may not burst at all as demand for property in Kenya will always surpass supply, at least in the foreseeable future.

Unfortunately, there is no centralized data on property prices movements in Kenya that can be used to support any of these three arguments. Some major real estate agencies, such as Hass Consult and CitiVillas Valuers, have developed their own biased property price index, which are not universally acceptable.

A basic look at the price changes indicate that back in 2004 half an acre in a suburb area such as Rongai, Kitengela, Athi River or Syokimau would cost about Ksh.550k, two years later the same went up three folds to about Ksh.1.5m and right now Ksh.3m won’t get the best location. Up market areas such has upper hill and Westlands, property use has moved from residential to commercial purposes as more and more businesses/MNL’s move there. Half an acre there would cost anything from Ksh.25m upwards.

The cost of construction would vary with the type of building. However, a normal family house which would have cost anything from Ksh.3 - 4.5 million in 2006, would now cost anything from Ksh.5.5 – 10 million.

Taking into account that over the years the cost of land and construction has gone up considerably, coupled with inflation, some factors that may have continued to feed Nairobi’s property boom include:

Somalia’s high sea piracy ransom money finding its way into the country. Kenya allows foreigners to buy land for commercial purposes and this has contributed largely to a small Mogadishu in Eastleigh, with near 24 hours malls replacing residential plots.
continued increase in demand for land that has seen land prices going up despite a slow down in the general economy
Increased demand for mortgage houses rather than rental houses by an expanding middle class
Lack of information on property prices. Most property/mortgage buyers make uninformed decisions and end up unknowingly paying exorbitant prices.
Unflustered foreign currency remittances from the populous Kenyan diaspora despite the recent recession in the west.

Only in Africa (& Kenya)

2010-01-10T18:46:00.001+03:00

One week into 2010 and it feels like it would be one great and thrilling year (sport wise at least). But despite all, happenings across Africa in last few days have just been disappointing, if not disturbing.

Only in Africa would:

- A government let it national team travel through a war zone to go for a continental tournament. After they’ve been shoot at and lost 3 member of the team, the said government sends a presidential jet to get the rest of the team back home. How ironic. The Togo national team bus shooting will definitely spread a dark cloud over 2010’s African Cup of Nation tournament.

- A president/ruler get shot at [fatally] in head or go into a comma and still insist on leading a country. The Nigerian president and Gabon’s military ruler have just out done themselves – almost posthumously.

- One country in the south consider legalizing prostitution while another in the east is busy gay bashing. While South Africa is considering legalizing the oldest trade in preparation for the world cup, Uganda is passing a law to hang any person perceived to be gay or an accomplice to gayism. I neither support legalizing prostitution, especially in a country that’s known to have the highest rates of HIV cases nor do I support gay rights. Just contrasting here.

Only in Kenya would:

- The finance minister rather die than quit his position? Japan’s finance minister just quit last week citing health reason and the world didn’t end – hear that Kimunya?

- A parliament that’s being faced with massive corruption cases in government, internally displaced citizens, abject poverty all over and a series of both natural and man made catastrophes consider hiking parliamentarians’ allowances. Disgusting!

- Business (matatu) owners admit that they don’t have control of their businesses. Their drivers, touts and myriad of illegal cults and cartels are in charge of business. Do these matatus owners ever make any profits after ‘taxes’.

- Buildings keep tumbling like house of cards every once in a while, loose some few Kenyans, promise ‘stern’ actions, then forget all about it and move the next hot topic. How safe are buildings? Better still, how effective are our media houses on citizen patrol?

My Day with the SmartBus

2010-01-05T09:51:00.004+03:00

I wanted to write something about the state of transport system in Kenya, but didn’t have the energy to. I’m too tired from walking long distances due to the Matatu strike. Didn’t they have a better way to protest about police brutality and intimidation other than subject innocent commuters and school going kids to this kind of torture? Apparently even the matatu owners were not in support of the strike [according to the Matatu Owners Association – MAO chairperson].

Thanks to the strike I was finally forced to seek the services of the Smart Bus. All along I’ve had this perception that the smart buses were nothing but another inefficient government propped investment in public transport. From experience, these have always turned out to be a big flop e.g. KBS and the Nyayo buses.

My short experience with the smart bus turned out to be a rather sobering experience. Surprisingly, the company is partly privately owned, by the same company that owns Budget Kenya and has embraced technological use rather well (something least seen in .ke transport system, which is largely labour intensive). Further more, it’s far much cheaper and charges per kilometer unlike matatus which would charge a flat rate despite the distance.

Kwikfix blog has a detailed post on steps for operating a Smart Bus (as a commuter)

The only problem is that there are few Smart buses around [15 I’m told], since they are still in the testing phase. Currently I think they are only on route 126, 110, 46 and 33. If this test phase goes well, then Nairobi commuters will for once have an alternative efficient and cheaper transport mode. My hope is that they finally replace these cartel ridden, indiscipline crew 14-seaters minibus matatus. Though I still have a feeling someone in government circles has vested interest in this whole deal.

Some changes/addition expected with the smart bus system includes:

• boards at stages that let commuters know how far out the next bus is,
• SMS notifications,
• real time route info via their website,
• Other relevant mobile application.
• Set up credit top-up points at bus stops

These additions will enable commuters’ better plan their trips.

Farewell 2009

2009-12-30T19:29:00.002+03:00

I don’t know about you, but 2009 has been one tough year for me and I’m more than glad to see it turn the final corner. At the beginning of this year I set out to accomplish some personal targets. Of the five targets, only two have turned out successful, two are still work in progress [considerable progress I would say] and one didn’t even take off. Sigh. I hope to improve on these in 2010.

Consumers Insight

Anyway, looking around here, I would say the year was tough for many Kenyans. Despite government’s efforts to conceal the true inflation rate by changing the mode of calculation, nothing much has changed. Prices of most essential commodities have doubled from a year ago. Petroleum, which affects everything in this small Kenyan economy, is in fact set to raise a notch higher come next year. How come prices never adjust downwards when conditions are favorable?

Tragedy

The year opened on a rather sad note, with the Nakumatt downtown fire followed closely by the Sachangwan oil tanker tragedy. I lost a close friend in the Nakumatt fire (RIP Belinda. You’ll always be in our hearts). Then the predicted drought hit hard. I’m told the Maasai, who are largely nomadic pastoralists, lost over 90% of their herds. Consequently, with the lack of rain, KPLC instituted a power rationing programme, while the water companies started rationing the precious commodity. Ironically, the drought has been followed by El nino rains with the same effects being expected.

Divisive Politics

Politically, I won’t say there is much to celebrate. Our so called political ‘leaders’ seem to have forgotten what we went through post 2007 general elections. They are still at their old divisive politics. Is it KK or KKK now? I stopped watching and reading Kenyan news after I was constantly fed with these disgusting political circuses by local media sources. The last time I checked, guys in Rift Valley were rearming for 2012, Youth in the northern part were joining Alshabab in droves, Coast province was threatening to secede and politicians were still bickering about the stupid constitutional reforms (which I believe won’t change a thing). Oh, and there was the Migingo circus.

Markets

And there is a new bubble in our securities markets. Since the equities bubble deflated in tandem with the global financial crisis on set, attention has been shifted to the fixed interest securities market. Bonds have become the darling of investors, with oversubscriptions every other week. This year has seen several bonds hit the market: the government infrastructure bond; the KenGen PIBO; and the Safaricom corporate bond among other. This is expected to continue into next year.

The equities market is still struggling. The trade volumes are still low and prices quite subdued, if not undervalued. Recently it has shown some signs of recovery, with Safaricom rising momentarily above the Ksh.5.00 listing price. The funniest thing happened when stockbrokers released their published result. The reports were simply pathetic, poorly done and most of them in losses. I hope they improve on them next year. CMA tried to restore some investor confidence with new regulations but we are yet to see their effects.

Technology

The long anticipated Fiber Optic cables landed at our shores. So SEACOM and TEAMS are already here with their high speed internet and we are waiting for EASSY next year, but internet is still slow and expensive. Any techie willing to explain that to us?

Adios 2009!!

Online Followings

2009-12-03T21:10:00.003+03:00

It’s that months again. December is always another excuse to over spend and be lazy before we discover the financial dents made, rush to make new resolutions or not and go back to our usually misery in the new year. I’ve been away for a while now and I intend to end this hiatus soon.

When I notified my online acquaintances of my planned absence, someone told me that it will be suicidal to my online followings. That once I stop posting regularly on a blog I risks losing most of my readers/followers. The concept is a bit complicated though.

Basically, it takes a while and a bit of effort to develop an ample readership on ones blog. Generally a blogger has to do some linking here and there, post comments on other related blogs; tweet new posts links, among several other things. Above all your posts need also to be palatable to your target audience eyes (I admit business like posts tend to attract very few readers around here)

Making any money from this kind of readers is like milking an elephant. Google adsense or any other affiliate marketing won’t help. Even online media sites are grappling with this. The economic slump hasn’t made it easy for them both online and hard copy. With the exception of the Wall Street Journal, which seem to have succeeded in get very loyal online subscribers who are willing to pay-up.

Back to my losing readers, I don’t think it’s an issue for a blogger. Every blogger’s dream is to top charts with readership and definitely becoming an authority in whatever field they write on. However we have very little control over these parameters. Over time blogs tend to gain and lose followings, but it never translate to much. Blogging to many is a pass time hobby like any other.

While I Was Away – Quick Hits

2009-11-10T14:28:00.006+03:00

While I was away, on a rather ‘short-lived’ sabbatical, several things took place that I would have wish to discuss here, but couldn’t or wouldn’t. Here are some quick links to Kenyan business headlines I found interesting:

- Kenya clans in the Great Rift started 'rearm for 2012 poll'

- KenGen’s PIBO result unraveled Kenya’s inequality

- Safaricom barred retail investors from bond offer

- Jinchuan terminated purchase of Tiomin Kenya - Kwale and contributed largely to a massive US$ 31.5 million loss in Tionim’s Q3 results

- NSE’s automated system collapsed soon after launch [we never learn]

Hope I would get time to do a full post soon.

Sabbatical

2009-10-04T21:44:00.003+03:00

As I start a new year in my life, I’ve decided to take a break from blogging (this includes interacting on debate-type forums with my good friends at twitter.com and elsewhere). Several posts, tweets and discussions down the line; I have discovered something about myself that I think others knew before I caught on: I can get fairly absorbed in this cyber-interaction thing. There are others things, for the time being, I want to spend more time with. Life can get quite hectic sometime with work, family and its general happenings.

I will still be commenting and reading yours (you know yourselves). When I come back from this sabbatical, I’ll have a new perspective and ready to get what is trapped in my heart and head out.

I can still be found on email at kainvestor@gmail.com. I hope to continue nurturing friendships already made via these mediums.

KenGen PIBO: Greenshoe Option Kicks In

2009-09-26T11:10:00.002+03:00

As highly anticipated, the KenGen PIBO has likely been oversubscribed and the green shoe option will be put to effect.

Greenshoe Option:
“A provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer. This would normally be done if the demand for a security issue proves higher than expected. Legally referred to as an over-allotment option” – Investopedia.com

Upon oversubscription of the initial Ksh.15 billion, the Company has an option of increasing the offer amount to up to Ksh.25 billion (an additional ksh.10 billion). The main contributors to this oversubscription are institutional investors, but we’ll be getting the final results of the sale p on October 30th. The bonds will be listed on the NSE on November 9th.

The offer closes on Tuesday 29th next week and despite doing a summary of the offer information memorandum the first day the offer opened; I’ve managed to be caught in the last minute rush. Like a typical Kenyan “naomba serikali ituongezee siku kadha” (I’m [shamelessly] asking the government to add a few more days to the offer!) #FAIL

KenGen PIBO: Information Memo Highlights

2009-09-09T13:44:00.007+03:00

KenGen’s 10 years public infrastructure bond offer (http://www.kengen.co.ke/PIBO/) opened yesterday with little enthusiasm from local investors [blame it on the short publicity period]. I had previously posted the main features of the bond offer here. The offer's information memorandum is out, both in hard-copy and soft [courtesy of ribacapital.com]. I skimmed through it and came up with the following highlights:

It is a fixed rate long term unsecured public infrastructure bond offer [meaning?]
NSE/CDSC is expected to operationalise electronic CSD accounts for bonds to enable investor immobilize their bond certificates [despite the fact that it will increase bond liquidity, I don’t think it’s a good idea. Look at the mess the equities market is in due to this]
KenGen has 14 directors (3 female, 11male)
East African citizens from Uganda, Tanzania, Rwanda and Burundi are considered as local investors.
Proceeds of this infrastructure bond offer will be used to increase KenGen’s generation capacity by 528.6 Megawatts in the next four years.
KenGen has approval to put a 600Megawatts coal plant in Mombasa in partnership with a joint venture partner [with KenGen owning between 40% and 49%, while the Venture partner owns the rest]
KenGen produces (1,008.8 MW) 75% of Kenya’s electricity requirement. The rest is produced by: Iberafrica – 56 MW expected to increase to 108 MW [thermal]; OrPower4 – 48 MW [geothermal]; Tsavo – 74 MW [thermal]; Mumias Sugar Co. Ltd. – 2 MW expected to increase to 25 MW [cogeneration]
Rabai thermal power plant [diesel powered], a new station still under construction, will produce an additional 90 MW once completed.
KPLC monopoly as a distributor is set to be curtailed once the newly commissioned KETRACO (Kenya Transmission Co. Ltd) develops a new national transmission network [at least for the bulk consumers]
Shareholding: GoK has the majority shareholding at 70%, while of the total 216,728 shareholders more than 63% hold less than 1,000 shares [42% with less than 500 shares]
It’s assumed that KenGen will maintain a 60:40 debt/equity ratio even after the bonds are issued. However the bond amount would not be enough to finance the expected projects and the company will have to raise Ksh10.2 billion [US$135 million] through a rights issue, plus repatriate all its profits in the next four years towards this projects so has to remain within the 60:40 capital structure. [Dividends will then be a thing of the past!]

Risks to note:

Construction risk arising from delayed completion and commissioning, escalating cost of construction
liquidity risk and default risk in respect of power purchase agreements with KPLC
adverse weather conditions [like drought which can be mitigated by diversification of generation sources]
change in regulations and fiscal policy in tax rates and levies by GoK [n it's still the biggest shareholder]
KenGen’s ability to roll out capacity expansion projects is held back by KLPC’s ability to transmit the same to the consumers
Lack of a well developed bonds market will affect investor easiness of exit

Joint applications to meet the minimum investment amount of ksh.100,000 is allowed, but not encouraged.
Applicants who wish to credit their bond allocation into their CDS accounts’ will have to pay an extra 30 bob [to cater for the cost of postage for a CDS account statement?]
The placing agents will receive a 0.25% commission of the offer price of the bond allocated per applicant. KenGen’s expenses for the bond offer is estimated at about Ksh.229 million
The memo assumes Kenya has a population of 37.2 million people [why was I counted?]
Kenya has tax treaties with Uganda and Tanzania that are not yet in force
There are other 73 state bonds, 8 corporate bonds issuers with 11 bonds/notes, with a total market capitalization of Ksh.326 billion as at June 2009

Auditors’ statements to note:

Despite PWC giving a clean bill to the financial statements of KenGen, they note that after change of accounting policy by the directors in February 2009, the company failed to comply with IAS 21 that would have seen KenGen record a Ksh.5.4 billion loss in their interim reporting ended 31/12/08. This being as a result of unrealized exchange losses and thus gives a qualified opinion on the said results.
Its likely that a Ksh.826 deficit with KPLC will not be honored and KenGen may have to settle it
KenGen further failed to comply with IAS 19 that require they conduct an actuarial valuation. The last valuation done by the company is dated back in 2006 and may not indicate the true picture of the company’s assets value

The power purchase deal between KLPC and KenGen doesn’t look good to me. KPLC has constantly arm-twisted KenGen into accepting lower prices. So much for a monopoly distributor.

My Opinion: at 12.5% the interest rate is quite good and hoping everything goes as expected, it’s a sure BUY for me. However I’m concerned about the numerous assumptions they’ve taken into consideration and the recent Auditors’ qualified opinion. Looking at KenGen’s FY08 results its clear that without the deferred tax gains their profits where dropping. And with the change in accounting policy this year and non-compliance with relevant reporting standards makes me wonder if this deal is too sweet to be true. Then again this is my own opinion and should not be taken to be an investment recommendation. Please consult your financial advisor before you make your investment decision.

Opportunities All Round

2009-09-07T22:07:00.003+03:00

*mostly from the Daily Nation*

DAAD; a joint organization of Germany’s higher education institutions, will be conducting an open day at the Geothe-Intitut (Maendeleo House, Loita Street) on September 12, 2009 for high school leavers who wish to pursue higher education in Germany. For more info check http://nairobi.daad.de

The Nestle Prize: a prize of 500,000 swiss franks investment is up for grabs by any individual, NGO or business that engage in projects that seek to improve access to nutrition, improve rural development or increases access to clean water. Nominations are open until 31st October 2009. More info at www.nestle.com/CSV/CSVatNestle/CsvPrize

Grofin: a global venture capital firm, is giving financial and expert support of between Ksh.3.5 million (approx. US$50,000 ) and Ksh,75 (approx. US$1 million) to SME’s across East Africa. See more at www.grofin.com

Namba Moja: the owner of 2525, an SMS information service provider, is giving out US$1,000 for Kenyan animators, graphic designers, copy writer and web designers for the best that idea that will make the public aware of their new service. More info at www.nambamoja.com

Moving offices:

Syngenta East Africa ltd has moved its office from Industrial Area to Matumbato road next to Don Bosco Catholic Church, while the Standard Group is in the process of moving office from CBD’s I&M tower to their new office block along Mombasa road.

KenGen PIBO

2009-08-31T14:04:00.007+03:00

(PIBO = Public Infrastructure Bond Offer)

Opens – 08/09/ 2009

Closes – 29/09/2009

Rising – Ksh.15 billion (in case of an over-subscription, KenGen is allowed take up an additional Ksh.10 billion, through a greenshoe option)

Why? – to finance its geothermal expansion programme

Period (bond term) - 10 years

Interest rate - 12.5% [fixed – quite good in the current market] (Interest will be paid in the first two years while the principal sum is redeemable every six months for 8 years in equal installments)

Minimum investment (per investor) – Ksh.100,000 (Additional investments in multiples of Ksh.100,000)

Who can invest? - Open to individuals/retail (20%) and corporate (80%) investors (including both locals and foreigners – basically everybody)

Lead sponsoring broker - Standard Investment Bank

Lead arranger - Standard Chartered Bank

Financial advisers - KPMG

For more information on how to invest in this Pibo, contact your ‘loss-making’ broker. The prospectus will be out on 8th September.

Kainvestor Business Daily Feature

2009-08-21T21:28:00.005+03:00

So yesterday evening I got this tweet from @kahenya that a peice of my previous blog post (rather a mutilated, copy and paste piece) appeared in the Business Daily. Unfortunately i hadn't read the days BD. Anyway, there is no bad publicity and I appreciate the recognition. here is a scan of the feature:

KQ Strike Weekend

2009-08-16T21:42:00.003+03:00

For three days now I’ve been following the Kenya airways strike with a very personal interest (as a shareholder and having a close family member as a passenger). A 21 days strike notice was given and expired exactly at midnight on Friday August 14, 2009. The workers union 130% raise demand (unreasonable!) was only able to be met by an 8% increase (only!) from KQ’s management. The difference set the stage for one gruesome workers strike.

KQ management tried every trick in the book to avert the strike, including a court injunction banning the strike and negligible increase to the initial 8%. But by then the strike was inevitable. And they’ve had to settle for a 20% salary increase that will see the airline spent an extra Ksh.900 Mln on these increases.

The international departure section at JKIA, on Saturday morning was a total mess. Long disorganized queues to nowhere characterized the airport. I dropped off a passenger at 6.30am for a 9.15am flight, but by an hour after departure time she had not even check-in. and even after checking in and waiting for the flight the whole day (with little communication on the flight’s fate) the flight was cancelled. As I write this her flight has not yet taken off.

What is the implication of this strike to KQ and its stakeholders? It’s obvious that the airline has been set back several hundred millions (estimated to be over 400 million) in revenue over the last three days. This may take KQ months to recover (that is if they ever recover the Ksh.5.66 bln loss reported in its previous year). Then there is the issue of lost customer confidence, which I don’t know how they will work around this.

Despite KQ recovering a little bit from the oil edging deal that contributed largely to their losses in the previous year, the workers strike this year will surely make their recovery much difficult, if it won’t contribute to another loss.

A detailed analysis @BusinessDaily

Banks Interim : Equity ’s Delayed Results & a Fast from StanChart (K)

2009-08-11T14:16:00.005+03:00

Most listed Kenyan banks have just published their half year result ending June 30 2009. But conspicuously missing in these releases is Equity Bank’s results, which in the previous years has always been among the first to be released. So why is it taking them too long this time? Could it be that loan defaults have hit the bottom line with most banks adjusting their loan-loss provisions upwards?

Equity’s Q1 2009 results indicated a 26% YoY increase in PBT [Ksh.1,164 Bln from Ksh.918 Bln]. Nothing fundamental has occurred to warrant any speculation on dismal results for the bank in its H1 09. However if I can remember, the bank was huge on margin lending during the Safaricom IPO in April-May 08 (about Ksh.5 Bln). We all know how that IPO went.

Then there is the ‘I’m a member’ advert (if you live outside .ke you may not be aware of it, but can check it here and here). The advert is trending in Kenya (like #MichaelJackson on twitter!) and everybody seems to like it. But why now and not before?

More H1 09 Surprises:

StanChart (K) pulled a fast one when they reported a 46% rise in its PAT for H1 09, while other banks like KCB and BBK, known for impressive results, reported dismal growth of 1.8% and 7.5% respectively.

More results at Nairobist Stocks

Does AGOA benefit Africa?

2009-08-05T12:40:00.002+03:00

NO! Says James Shikwati [Director, Inter Region Economic Network] and Jean-Fracois Mercier [Chief Economist, Citi SA] in an interview with CNBC Africa presenter Eleni Giokos.

3 Questions, 7 Panelists & the Answers

2009-08-03T21:56:00.006+03:00

These questions were raised during the recent Tujuane Mixer, an information session on financing and managing a start-up business in Kenya. Some panelists responses are quite interesting. (Appology to the KCA lecturer, whose name i didn't get clearly - to be edited soon)

What are the leading economic trends in Kenya that an entrepreneur should look at?

Aly Khan Satchu: with the connection of the fibre optic to our region the connection process has taken off. With this infrastructure in place communication with the rest of the world would be enhanced. Furthermore, the lack of many things creates an enormous opportunity for entrepreneurs.

Moses Kemibaro: still on fibre optic and communication in the region, mobile phone revolution in the region combined with the fast internet connectivity is something to look at as an entrepreneur and see how one can benefit from it.

Annabel Onyando: Agriculture is also a factor to look at. The use of traditional technology in tandem with new modern technology will help East African farmers to have an easy transition and establish a ready market in the vast population in the region of more than 100 million people.

Agatha Verdadero: Entrepreneurs should always keep with trends to make sure they move with the masses.

Gavin Bell: as much as access to technology and information is good, other factors such as the roll of the government in supporting entrepreneurs, the type of education system in place and other factors.

KCA Lecturer: the trend world over is that most businesses are looking at how to harness their natural resources effectively (going green). Kenyan entrepreneurs should also look at ways at which they can use their businesses to harness some of our resources such as reclaimable land, water bodies, sun (solar energy), wind and even our youth (human resources.

What can Kenyan entrepreneurs do to improve on customer service?

Agatha Verdadero: there is no excuse for not conducting one’s business in the right manner – even is its how small. Personally I work from a home office and no one can know unless I tell them, because my service is above international standard. (quotes Sunny Bindrah’s article on Tribe Hotel)

KCA lecturer: it always works for us to have good customer service. We don’t take our job descriptions seriously that why we don’t serve our customers well. One thing to note is that for every customer who receives good customer service there will be at most four referrals, but for every customer that receives bad customer service there will be at least seven referrals.

Gavin Bell: poor customer service is a bad culture thing (business culture) where Kenyan entrepreneurs concentrate on the bigger picture and forget the small details that made them get those customers in the first place.

Annabel Onyando: I disagree with Gavin that it’s a cultural thing. Bad customer service I believe started a long time a go. It’s common in most Kenyan household for owners of the house not to say thanks to their house-helps when they serve them. How do we expect to treat our workers differently and expect them to treat customers nicely?

Participant addition: most of us don’t set rules of how we want to engage customers and even if we set them we don’t remain consistent to ensure that the same is implemented in serving our customers.

When it comes to financing for start-ups, banks usually don’t trust such entrepreneurs no matter how good the idea is. Why is this so? And how can it be addressed?

Aly Khan Satchu: banks usually have a very rigid outlook that only looks at the business Cashflow (nothing else!). Historically, there is evidence of a high failure rate among start ups (eight in every ten fail!) that’s why banks would rather deal with an organization that has been there for a while.

Annabel Onyando: banks are not wired for start-ups. Please check www.bignetwork.com on how to get financing for your start-up. But then again some people are not also wired for running their own business. Some are good at being employed.

Gavin Bell: start up support organizations are also in business. Be very careful with them or else you stand a high chance of loosing your business. The best way to finance a start up business is either through personal savings, family/relative/friends support, angle investors or getting a financially strong partner. Also do some research on other similar established entrepreneurs on how they started out. Formal financing route is not the way to go for a start up.

Joanne Mwangi: I would advice anybody who is still starting out not to be too eager to become big. Taking baby steps in any business is always less expensive and helps one to learn the tricks of the business. For an entrepreneur to own the business he must invest heavily in it, if not financially, his time and experience. Access to loans for most self employed persons is very difficult because most of them mix business money with personal money. It’s good for any entrepreneur to employ him/her self in the business and separate the two. Also working from home is not bad/wrong, but be honest about it. (she gave a vivid description of how she started her business. Quite inspiring!)

Agatha Verdadero: for starters working from a home office is not unprofessional. Then again banks are not the only resource that a start-up needs. Most start ups fail because the entrepreneur doesn’t want to tighten their belt and fight for the business. An entrepreneur has to take risk and be ready to loose all.

Moses Kemibaro: trying to get funding for a start-up is always almost impossible. As an entrepreneur you must have a ‘hunter’s mindset/instict’. One should be able to hustle, beg and do any thing to make the business work. Starting up my business, I had to take up a partner who we could compliment each other weaknesses. After seven years in business we are now able to attract financiers from all over the world. Over ten investors have approached us this year alone!

KenyaBuzz: How to Set up a Business in Kenya

2009-08-02T12:43:00.005+03:00

I received this book from my good friends at KenyaBuzz on “How to set up a business in Kenya”. Reading through it, I came to a simple conclusion that it is one of the best compilation of setting up a business in .ke I’ve ever come across.

The book, is said, was conceived after the Directors of KenyaBuzz went through the process of setting a business in Kenya and found it too difficult and burdensome. They weren’t able to find any resources about what were the full set of procedures to set up a company in the country and made a lot of mistakes along the way. But after several mistake they managed to set-up KenyaBuzz.

They thus decided to put together sort of a Kenyan business set-up manual. Through this book, readers can see the general process of setting up any business (sole proprietorship, partnerships, limited companies, foreign companies and even how to acquire an already existing business – as a going concern of course!) at a glance, including the ‘average’ time it takes and the costs involved. It also includes samples of all the paperwork and tips for making the whole process smooth and cost-effective.

Furthermore, the book gives a detailed analysis on how to open a bank account for your start-up business, accounting requirements, taxation requirements and licenses from all relevant authorities (including City Council licenses – for Nairobi based businesses)

I believe this 65 page book is a must have for anyone thinking of setting up a business anywhere in Kenya. At a small investment of only Ksh.500 (≈ US$7.00), it is worth every coin. And would save you a lot of time and money too!

“A much needed step by step guide about how to set up a business in Kenya that de-mystifies the process” – Alix Grubel (Director KenyaBuzz)

Tujuane Mixer: Info Session on Launching a start-up in Kenya

2009-07-20T17:59:00.004+03:00

Nairobist (through the Tujuane Network) in Partnership with GoInnovate would be hosting an information session on financing and managing a start-up business in Kenya on July 30th, 2009 at The Sarova Stanley Hotel. Emerging Kenyan entrepreneurs are invited to discuss and share their insights on the challenges, opportunities and experience on financing and managing a start-up business in Kenya.

Theme: Challenges, Opportunities and Learning in Early Stage SME Financing.
Date: Thursday, July 30, 2009.
Venue: The Sarova Stanley Hotel (Huxley Room).
Time: 5:30 P.M to 8:30 P.M.
Cost: Tujuane Members: KES1000 (& it’s free to join!)

Topics:

Strategies for overcoming challenges of start-up businesses
Key economic trends that affect start-up businesses in Kenya
How Innovation and Technology impacts the success of a start-up business
Insights on Creating a Successful Hybrid Social Venture Capital Fund

Panelists and Speakers:
Gavin Bell: Founder and Managing Director, Kengele's Restaurants
Joanne Mwangi: Founder, Professional Marketing Services (SME Top 100 Firm)
Al-Khan Satchu: Founder and CEO, Rich Management Limited
Moses Kemibaro: Co-Founder, DotSavvy Limited
Annabel Onyando: Founder, Synergy Excel Management Consultants
Agatha Verdadero: Founder, Master Publishing and CAN-DO! Magazine
(Their Profiles)

Moderated by:
Wanjiku Kamau: Events Manager, Nairobist
Courtney Rountree: Harvard Kennedy School and Founder, GoInnovate

for more info click here or email info@tujuane.com

KenCall: Dialing Up An IPO - 2011

2009-07-20T07:30:00.008+03:00

(Thanks to @alykhansatchu of Rich.co.ke tweets)

KenCall, a leading East African call center company based in Kenya, is planning an initial public offering (IPO) on the Nairobi Stock Exchange (NSE) or the London Stock Exchange (LSE) (how feasible is this?) in 2011. With the landing of fibre-optic cables at the Kenyan cost this month, call center costs are expected to decline tremendously. With the increased internet speed, the company aims to generate sales of up to $10 million this year.

According to their website, KenCall operates 24 hours a day, 7 days a week, has over 600 employees (mostly recent graduates) and can scale up to 1,500 seats. KenCall has a world class facility in Nairobi and last month opened an office in London. The company has been in business since early 2005 but turned its first profit in April 2006 (still searching for the numbers) .but it has not been a smooth ride ever since either, the company has had several cashflow glitches.

Expansion plan

In the next 18 months the call center plans to triple its sales and to expand its operations in Africa. The firm is already building a second bigger office in Nairobi to boost its capacity and plans to open an office in Rwanda by the end to this year.

Call center services in East Africa have been limited by the mere fact that we are probably the last part of the planet not connected by the under sea internet cables and depends mainly on costly satellite links for internet. That’s until the recent landing of The East African Marine Systems (TEAMS) fibre-optic cable at Mombasa, closely followed by the East African Submarine Cable System (EASSy) and Seacom.

NSE & ‘The Envelop’

2009-07-14T17:39:00.002+03:00

(over night Ocampo has become a household name – with varied pronunciations)

Who knew that a securities exchange could be affected by a mere envelop? Only in Kenya. The NSE has been on a downwards trend has Kenyan politicians continue with their bickering on what Annan’s handing over of ‘the envelop’ to the ICC means.. And the envelop is not opened yet!

Analysts have it that this may affect the market marginally, probably just this week, as investor adopt a wait and see approach. Then again we’ve been with this envelop for over one and half years, why should it tense investors now?

Where Did the IPO’s Go?

2009-07-06T16:13:00.002+03:00

If my memory is not failing, there were several offer slated for the 1st half of 09 that have just disappeared into oblivion. Nothing is being mentioned of them in our Kenyan business media. Some that were slated for this year included DPL Festive Ltd, Telkom Kenya, K-rep and Nakumatt. The most recent announcement of intentions to list on the NSE has been Radio Africa (just launched KISS TV), Family Bank and Consolidated bank.

Others that also mentioned they’ll be seeking to list anytime were KenGen’s 2nd offer, Sarova Hotels, Wananchi Online, NSE (Demutualization) and Suntra Investment bank.

Also in line were several government of Kenya privatizations, with the likes of Kenya Wines Agencies, Kenya Ports Authority, Kenya Pipeline Company, Kenya Meat Commission and New-KCC being fronted. I think the government privatizations are still on course with the recent appointment of two transaction advisors.

BLUE Financial Services from down South Africa was also planning to cross list on the NSE but has since gone mum on when this will ever materialize. Similarly, with the finalization of the integrated East Africa bourse Ugandan Tanzanian and even Rwandan firms were set to cross list on NSE. But this will remain a pipe dream for a few years to come has the four countries sort out their ‘abusive’ relationships.

Sectors to invest in:

Regardless of the IPO’s dry spell I still consider Financials (especially banks), telecoms (Safaricom n Telkom Kenya on listing), construction (ARM’s, Bamburi, not Olympia), ICT (Accesskenya) and energy (KenGen, KPLC and KPC – despite the inefficiencies n desputes) as viable sectors to invest in at the NSE. Agriculture and Insuance are too risky for now.

1,000+ Tweets Later…

2009-07-04T13:53:00.006+03:00

This is yet another excuse for a real post. I guess I’ve been spending far too much time on twitter and neglecting kainvestor Blog. Six months of tweeting has seen me post over 1,000 tweets (not much compared to a few twitter gurus) ranging from simple links on business issues and other news to very personal tweets. And its proving to be addictive, that is if you find your self thinking in 140 characters constantly!

For those who have not yet discovered Twitter, it is a free social networking and micro-blogging service that enables users to send and read others' updates, simply known as tweets. Phenomenal if you ask me, but who am I to say.

Looking back at some of my tweets, I think I have loosened up a lot on the personal information front. Something that is not quite easy to do in a blog post here (Ask @PinkM with her new ‘serious’ blog). From following 251 tweeps, being followed by 330 of them (bless them all!) and 1,022 Updates, I’ve made great online friends.

I would highly recommend following @bankelele, @coldtusker, @kachwanya, @InvestingInAfrica @Alykhansachu and @moseskemibaro for some serious business insights. @Ayittey for a serious dose of Africa leadership reality. @kahenya @roomthinker, @ArcherMishale, @alfredmutua and @mwaikibaki for some funny tweets and my friends @michaelmusau and @teyie if you don’t mind not getting any updates from them.

Funny that no one really answers the one simple question, ‘what are you doing?' the guys at Twitter.com brain stormed and came up with.

Budget 09: Capital Markets Proposals

2009-06-18T10:59:00.005+03:00

Following Uhuru’s budget reading there has been a renewed investor interest in the NSE. The NSE 20 share index surpassed the 3,000 mark after a 14 days continuous rise. Analysts are predicting further improvement in the market activities in days to come. It seems the 09/10 budget reading brought some life into this market. Below are the proposal indicated there in:

- Increase in stockbrokers and investment banks minimum share capital from Ksh.5 million and Ksh.20 million to Ksh.50million and Ksh.250 million respectively by December 2010. This could see some mergers, acquisitions and entrance of foreign investors to achieve this new capital requirement.

- Industry players to publish half and full year (audited) financial statements in at least two national dailies (It’s about time we saw what this guys do)

- Monthly reporting to CMA and submission of quarterly portfolio reports

- Agents restricted to only one broker for easier scrutiny

- Approval from CMA before any change in the shareholders, Directors, CEO’s and other key personnel of a brokerage firm

- All brokers will be required to get an indemnity insurance of an amount not less than five times their daily average turnover to compensate investor losses due to irregularities. (the cover is a bit low and may not be able to cover all claims – from experience)

- As incentive to firms that list on the NSE, the listing fee will be halved to 0.15% from 0.3% of the value on issue. Similarly, withholding tax on long term bonds of 10 year or more maturity has been reduced to 10% from 15%. (this incentives are not good enough and no significant change in likely to be seen)

- Proposed amendments on the Retirement Benefit Act to limit investments by pension schemes (such as NSSF) to only invest in government securities and bonds from public institution could see reduced activity at the NSE.

You can also read the full budget speech here and a PWC-Kenya Budget Bulletins here.

Budget 09 - live

2009-06-11T14:35:00.000+03:00

&amp;amp;amp;amp;amp;amp;lt;a href="http://www.coveritlive.com/mobile.php?option=com_mobile&amp;amp;amp;amp;amp;amp;amp;task=viewaltcast&amp;amp;amp;amp;amp;amp;amp;altcast_code=2cae31a899" &amp;amp;amp;amp;amp;amp;gt;Kenya Budget Reading 2009&amp;amp;amp;amp;amp;amp;lt;/a&amp;amp;amp;amp;amp;amp;gt;

Sin Tax, Zain & KCB

2009-06-09T14:05:00.005+03:00

As usual, this year’s Kenya budget reading will not miss a dose of ‘sin tax’ for smokers and beer lovers. How effective these ‘sin taxes’ are is still a matter of contention, but this Mercatus Centre policy paper discourages them. In summary it says:

- Sin taxes are the result of anticompetitive behavior rather than true public-interest concerns. Most of them are used by industry leaders to fight back at their competitors (EABL, Keroche, tax stamps)
- Sin taxes are not used for their intended purpose and consumer of the taxes product don’t have control over the raised funds (which ends up funding political agendas anyway)
- The weight of sin taxes fall disproportionately on the poor
- Consumers of sin products are usually not responsive to increase in prices and may only substitute the product for a lethal alternative – defeating the objective
- Then there is the issue of same products from neighboring countries finding their way into the market albeit illegally.
- The effectiveness of ‘sin tax’ is thus trivial and a total failure (it even feeds immorality!)

No more Zain (Again!)

Zain Group is reported to be looking to sell its African unit, Celtel International. It’s said that Zain has been approached with a USD12 billion deal to sell Celtel to an unnamed French company. Zain has also received inquiries from firms in India and China. And still on Zain, its Zap money transfer service has been approved in Uganda and will be now be operational across East Africa.

Another first from KCB

KCB has announced a tender for an internet acquiring gateway, which according to @moseskemibaro is an indication that the bank would be offering an e-commece services platform locally. Following the passing of the ICT bill into law earlier this year e-commerce is now easier in Kenya and KCB may be the first to launch it. (ok let me not indulge more lest I become a ‘corporate cheerer’)

KCB: Big in the East

2009-06-05T08:56:00.003+03:00

Talk of going regional and KCB Group comes first to mind. The rate at which Mr. Martin Oduor is expanding the bank regionally can only be said to be phenomenal. Last week there were opening their fifth outlet in Southern Sudan and sealed a Ksh.38.4 billion ($452 million) mortgage deal with the Government of Southern Sudan. The S&L (KCB’s mortgage subsidiary) deal to finance construction of 1,750 houses for Southern Sudan civil servants is the biggest deal a Kenyan firm has ever got in any of its East Africa subsidiary.

Compared to other indigenous banks, KCB regional expansion strategy/ implementation eclipse them all. And it’s been paying off. KCB's businesses in Tanzania and Southern Sudan have already crossed the profitability threshold, while the one year-old Ugandan subsidiary is likely to break even this year.

A look at the Groups 2008 financials indicates that KCB Uganda assets grew to Ksh.2.4 billion after operating for a year, with its banks loan portfolio, reaching Ksh.660 million, while deposits grew to Ksh.1.48 billion. KCB Sudan returned a pre-tax profit of Ksh.530 million while KCB Tanzania, which reached a breakeven point last year, recorded a pre-tax profit of ksh.32 million.

In Kigali Rwanda, KCB is also the first to be cross-listed (listed) on the Rwanda's Stocks Exchange. This would see KCB’s stocks trade in four securities markets in East Africa; Nairobi, Kampala, Dar-es-Salam and Kigali.

The bank further plan to open 30 additional branches in Kenya and 20 more in Sudan, Tanzania and Uganda. Other Kenyan banks that have ventured into the larger Eastern Africa region include Equity (Uganda); NIC (Tanzania); and DTB (Kampala/ Dar)

Notice that most of these banks have shied away from Ethiopia and Somali (for security reasons: but isn’t the piracy money worth the risk). For Ethiopia I’m yet to understand why Kenyan banks don’t even mention their intentions to go there, probably due to the big government there. But I can bet KCB Group will be the first to set office there.

*Opinion*

From a personal experience with KCB’s below par service, my opinion is skewed towards investing in the banks stocks and not considering to be their client (unless you travel a lot across Kenya or East Africa)

Broken Integrity

2009-05-24T20:39:00.004+03:00

What would you do if you discover that your so much cherished investment that you’ve been thinking is safe with your ‘trusted’ broker is not actually there has the CDS statement has been indicating? You don’t have to imagine, because this is the exact nightmare that hundreds of NSE investor are going through. And it doesn’t matter if your stockbroker is one of the few investment banks or the many shaky brokers constantly under CMA’s red list.

Seeing shareholders turning the Barclays Bank AGM into a cry session against unscrupulous brokers was a really sad turn of events. It’s now clear that the NSE, once the symbol of renewed confidence in the Kenya’s investment markets and a darling of all, has been turned into a shell by shameless brokers (owners and employees) who lack any sense of integrity and professionalism in their duty.

I see Uganda Securities Exchange (USE) turn to the electronic shares system, with investor having CDS accounts instead of share certificates, and I shudder. The advent of the same system at the NSE was just but the beginning of the investors’ troubles. Unlike with the physical certificate system the CDS gives brokers a pass to trade in clients shares without their knowledge.

A CDS statement indicating a cash balance is a magnate for brokerage employees to forge documents and defraud clients. Even worse is a case where the statement is forged to indicate that an investor has shares in his account when in real sense the shares don’t exist. The shareholder never receives dividends from companies he’s purported to have invested in nor does he get invited to the firm’s AGM. This happened a lot with Nyaga clients before it went down.

Nothing could be worse to an investor than discovering your investment that has lost over 60% was further pinched by your ‘trusted’ broker/investment banker (after moving two brokers – one collapsing and another being bought out by a bank). Brokers’ integrity at the NSE at the moment is at its lowest and so is investors’ confidence.

Will the perpetrators of these scams ever be prosecuted? Or investors will continue to be given lip service from CMA and NSE on what measures are being taken to bring back sanity to this ‘ponzi’ market? Micah, you’ve been served.

Magazine Review: HOST Africa

2009-05-19T10:19:00.003+03:00

Yesterday I was privileged to receive the premiere issue of HOST Africa magazine from my good friend Ken (thanks). Went through it in the evening and thought a small review on it won’t hurt. The magazine focus is mainly on the hospitality and tourism industry and all its stories are skewed towards these. The magazine goes for Ksh.350 (≈US$.4.50) per copy.

The first issue cover story is on fibre optic and what it means for businesses in Africa, particularly Kenya with the landing of SEACOM at the Kenyan shore next month. The issue also features a story by Lee Simon, an award winning kitchen designer and the author of “The Restaurant Dream?” (a must read for food lovers) among other writers (both local and foreign).

Great topics such as hotel security, reinventing Kenyan tourism and brand changing in the hotel industry, have been discussed (even a review of my favorite traditional delicacies hotel – Amaica). For a start I think these guys at Mondeas ltd. have done a great work. I will be waiting for their follow up issues in the coming months.

To subscribe check their website at www.hostafricamagazine.com or email host@mondeas.com

Investing in Re-opened Bonds

2009-05-18T17:51:00.003+03:00

The demise of the NSE has seen Central Bank of Kenya (CBK) become the biggest beneficiary with bonds and bills being over subscribed every other week. Late last year government reduced the minimum initial investment amount in treasury bills to Ksh.100,000 from Ksh.1,000,000. CBK has now resorted to reopening of bonds issued in the previous years. Last moths CBK reissued a Ksh.7 billion 5-year bond that was successfully subscribed and is now planning to reopen a 15-year bind that was issued two years ago (07).

Reopening of securities is a common practice in the developed markets. This is done when seeking to eliminate bond market fragmentation (existence of too many but small outstanding bonds scattered everywhere in the secondary market). Fragmentation leads to unstable and uncertain bond prices and reduces free trading due to few investors (who buy and hold bonds reducing liquidity)

When a bond is reopened, an old bond is offered to the market on a date other than its original issue with a view to increasing its outstanding amounts and expanding the original amounts. On reopening investors are offered the same instrument (bearing the same features as the existing bond – same maturity date n coupon rate) except for offer date, offer price and yield.

Requirements to participate in a reopened bond are the same as those of any government securities auction i.e. you need to have opened a CDS account with CBK and complete the application form with all the details has specified in the prospectus.

Centum: A Close-up

2009-05-12T15:25:00.003+03:00

Centum Investment just impresses me with their over-optimism (if there is anything like that) when it comes to their dwindling performance and aggressive investment plans. Despite its Full-Year 2008 profits dropping 64% (to Ksh.313.2 million; investment income dropped by 33% to 392 million) and making some unwise investments in Uchumi and RVR (Rift Valley Railways), the investment firm is going forth with an aggressive 5 years plan (2009-2013) and has announced a Ksh.2 billion bond issue.

It has already appointed transaction advisors for the issue set to open in three months time and is seeking regulatory approval for the same. cash raised in the bond issue will be invested in regional securities (both public and private) taking advantage of the investment opportunities created by the global recession that has seen value of securities dropping significantly as foreign divested.

The firm had issued a profit warning earlier in April indicating that it expected its full year profit to fall by up to 80% mainly due to an 84% drop in the value of its holding in RVR. The bear run at the NSE further eroded gains realized by the firm from publicly listed shares. Its current portfolio is valued at about Ksh.6.4 Billion from Ksh.8.67 billion in at its peak in 2006.

Dividend Hunting at the NSE

2009-05-09T08:59:00.006+03:00

Over the recent weeks NSE firms have been releasing their full year results for 2008 and most of them have announced dividends for their shareholder. In this bear NSE the only thing we have now is dividends that we can take advantage of. In developed markets its called dividend investing, which focuses on identifying solid companies with a record of growing dividends each year and buying their stocks expecting that it will continue declaring dividends.

One thing that investors need to know when dividend investing is that it’s particularly different from normal value investing, where one invests in a stock considered undervalued with an expectation that it will rise to its true value or higher. And a combination of the two can yield some very good results:

Dividend Investing + Value Investing = Great Returns

Dividend investing focuses on identifying solid companies with a record of growing their dividends each year; and an expectation that it will continue into the future (almost speculative). This sounds so short sighted, but history has proved that stocks that pay constant/growing dividends have always out-performed those that don't.

Dividend investing is usually associated with the bear market since dividend yields are considered relative safe in down markets.

Signs of a Dividend Stock

There are several things to look out for in a stock before considering it a dividend counter:

Dividend yield doesn’t mean much. dividend yield (annual dividend divided by the current stock price) simply indicate if the stock price is low or high, which is based upon current stock price and historical dividends thus not capturing the actual facts at a particular time.
A company that has a history of paying a consistently growing dividend is better than one that pays a consistent, but steady dividend. And the consistent but flat dividend is better than a company who has had to cut its dividend.
Cash flow is King. When it comes to dividend investing net income does not mean much. Cash pays dividends so operating cash flow per share is more important. Consistency of the cash flow is also important. A company that generates a steady or growing operating cash flow is better able to fund a dividend than a company that cannot consistently generate cash. A company’s dividend coverage ratio (operating cashflow per share divided by the expected annual dividend). If this ratio is 1.0 or better, there can be a relatively high degree of confidence that dividends will be paid in the foreseeable future.
The stronger the balance sheet the better. Stronger here meaning less bank debt. A company with no bank debt has a stronger balance sheet because it can borrow if necessary to support operations and the dividend if need be.

Firms at the NSE that I consider to be dividend stocks include EABL, BAT, Standard Chartered and Total among others. If you're looking for something that pays you a steady income stream, just like fixed securities (bills and bonds) you might be better off with a stock that offers a high dividend.

Tweak Post

2009-05-06T17:57:00.002+03:00

After contemplating this for a while I finally decided to change my blog template and do away with too much junk the old one carried. I picked this new look from Btemplate, a free blogger templates resource (I’m Kenyan; we don’t pay for things we can get for free – ‘Sare’). Only problem with this great looking templates is that the back end sign-in bar disappears and you have to go through other normal blogger sites to get to your own back end (so if you get me trespassing, I’m just trying to get into my own house). Hope it will serve me well.

Suicidal Fan:
Just learnt that a die-hard Arsenal fan hanged himself after Man-U beat them to the UEFA final. Sad happenings indeed…but is it worth it?

More beer: SABMiller Plc, the world’s second- biggest brewer, plans to build its fourth factory in Tanzania at a cost of $55 million by November, boosting beer production by 22 percent. The firm, through Tanzania Breweries (owns 52.8% stake), is also spending about $24 million to upgrade its Arusha and Mwanza breweries.

Trump coming to Kenya: US property tycoon, Donald Trump, is one of the 44 parties interested to invest in the multi billion shilling Nairobi Golf City development located on a 73-acre land that currently belongs to Kenya Railways. Other interests are from Commercial Bank of Africa, Associated Motors, Spencon International, TPD Serena, Premiere Flour Mills and Actis.

Prepaid power: KPLC is set to commence the first phase of the prepaid metering project. This will see consumers shift from the current postpaid system, giving them control over power consumption and avoiding several inconveniencies from the electricity monopoly supplier (sigh)

The Real Jay Z

2009-04-25T20:25:00.005+03:00

*I’m write this while watching (on Aljazera) Zuma deliver a painfully slow speech at a press conference in Pretoria*

As greatly anticipated Jacob Zuma (or Jay-Z as he is nick-named down south) has easily cruised to victory and is now poised to becoming the next president for Sub-Sahara’s strongest country - South Africa. Now we wait to prove the divergent and controversial sentiments the man has elicited across the continent and the world at large.

Despite his popularity in SA, the man is known by the outside world for all the wrong reasons. Unabashed polygamist, uneducated freedom fighter and a canny politician with a way around justice are some of the few (cruel) words used by TIME and The Economist to describe him. Some consider his presidency a big gamble for SA that may back fire.

Power has a way with revealing the inside persona (we saw it with our own kibs in 2003). So now we wait and see who the real Jacob Zuma is.

Scangroup Peek

2009-04-16T19:10:00.009+03:00

Scangroup Ltd. has announced its FY08 results indicating that:

- PBT went up 24% to Ksh.437 mln;
- revenue rose 21% to Ksh.1.4 bln;
- Net asset/share increased by 60% courtesy of WPP investment;
- EPS grew by 20% to Ksh.1.79
- Free Cashflow up 98%

I had the honour to listen to Lowe Scanad (K) Ltd.(a Kenyan ScanGroup subsidiary) MD, Sameet Ambegaonkar, delivered an invigorating presentation yesterday on strategy and tactic at the British Council – leadership forum. The guy has vast experience and knowledge (29 years in strategic planning for major FMGC firms that has seen him work with Amu – India, Tata, Coca cola –India n Kenya, EABL, Safaricom) in advertising.

The Group, in a joint venture with Hill & Knowlton, has also launched a new public relations firm known as Hill & Knowlton East Africa. (51% Scangroup, 49% WPP – which still owns 27.5% in Scangroup)

More scanned info @Grains of Masala

e-book - It's Our Turn to Eat

2009-04-09T18:03:00.005+03:00

This email is on behalf of my friend who is a friend to Michela Wrong who is a friend to Githongo (So I'm a friend to Githongo!)

April 9, 2009

Dear All,

Harper Collins have finally come up with an e-book of "It's Our Turn to Eat", which has been widely circulating in pirate form on websites and mailing lists in the last few weeks because of a boycott by Kenyan bookshop owners nervous of being sued. So Kenyans can now buy and download a legitimate PDF file of the book, by clicking on (thanks steve for the link correction):

We've tried to keep the price as low as possible - you'll see that it is a lot cheaper than the hard copy. We're also hoping to make this something Kenyans who don't own credit cards can buy on M-Pesa, but at the moment that's proving a logistical nightmare.

Please spread the word. There’s no reason, now, to circulate or download bootleg copies of the book.

Michela Wrong

Consider this my Easter present. Happy Easter guys!

Equity Bank Suspended!!

2009-04-08T13:33:00.005+03:00

Kenya's Central Depository and Settlement Corporation (CDSC) has suspended Equity Bank as a stocks agent for two weeks, it said in a letter to stockbrokers dated Wednesday...read more

up-date: this was later in the day revised by CMA after Equity banks appealed. (Something does not sound right here)

Subaru Kenya: Courting Disaster

2009-04-05T11:00:00.004+03:00

Nairomour has it that Subaru Kenya (currently under the management of ECTA (K) Ltd.) may be going the Marshals E.A. way with the withdrawal of Subaru products from its chain of business. Toyota Kenya is fighting hard to get the Subaru dealership from ECTA, citing economies of scale as it general reason.

The rivalry between Toyota Kenya and Subaru Kenya is said to have stem when ECTA poarched a high level manager from Toyota. The Toyota manager in the eye of the rivalry is said to have been very instrumental in Toyota Kenya’s business development. In a bid to get back to ECTA, Toyota Kenya management, who are fellow country men (Japanese) with Subaru, decided to under cut their Kenyan competitors by convincing their bosses in Japan to cease the Toyota dealership with ECTA and sign up with them

As if that’s not enough, poor management decision has seen ECTA hire too many highly paid top managers since the passing on of the founder and neglecting the little small workers. Their Shock absorbers competitor, Robbs, has capitalized on this mistake and has launched an aggressive campaign to poarch some of the best, experienced workers from ECTA by offering them almost double their salaries and a better working condition. Right now things are looking really bad for ECTA.

March Tweeter

2009-04-03T22:28:00.005+03:00

Ok, I agree with you, I’ve not written anything coherent on this blog for a very long time. The recent few have been more of announcements than blogging, just to keep the blog alive. March was my tweeter month of the year (and one very hectic month). Tweeter is simply a micro-blogging platform that makes it easier communicate with other people (Tweeps, tweeples, tweeterers) over the internet. It’s sort of a chat room that goes beyond that and has more functionalities than simply chatting – tweetpic and so many other things I’m still learning more about.

My journey on tweeterville has led to meeting great people. some I never knew before like @kahenya – the fire tracker, @pinkm – the excel expert, @louizah, @kaboro, @paulakahumbu – the wildlife expert, @EdObie, @JustDes and others I knew before – some personally some just over the net like @bankelele, @RyanShenHoover, @Cho1 and @ConceptAdvisory. Despite the time its taken me from meeting some deadlines and neglecting Kainvestor blog, its a great experience that you can carry around in your mobile phone, keeping you busy in a boring situations (not in cars or matatu’s – it can be dangerous depending with type of phone and route taken)

My quest on tweeterville continues as I learn more tricks to answering one simple question, ‘What are you doing?' in only 140 words.

Global Bug Bites: 25% Lay Off @ Zain

2009-03-30T17:17:00.004+03:00

Thanks to @louizah tweets

I’m informed that Zain has announced a plan to lay off 141 workers in its Kenya subsidiary as it restructures to wedge off the expected effects of the global economic recession on the African continent. The firm also plans to outsource some of its functions including network building, operations and information technology systems, and make some strategic acquisitions on the continent. The Group has set aside USD1-2 billion for its Africa’s operation in 2009.

Despite Zain Kenya's growing subscriber base to 3.07 million (18% market share), the mobile service provide registered huge losses last year. its main competitor’s – Safaricom, has over 13.3 million subscribers or 77% of the market.

Enter the Kingdom

2009-03-25T21:23:00.005+03:00

Cooperative bank has finally sealed the coffin for Bob Mathews Stockbrokers by buying the troubled broker off (was the Ksh.20 million part of the deal or a song buy?). The bank has acquired 60% of the brokerage firm, taking with it the 12,000 accounts and the entire Bob's staff (excluding the owner). The bank now takes over full management control of the brokerage firm and has already rebranded it to ‘Kingdom Securities Limited’. The deal has not yet been approved by CMA and coop bank shareholders.

Mulika Mwizi: Pyramid Schemes Die Hard

2009-03-19T16:51:00.008+03:00

Thanks to Rafiki Kenya tweets

Even after several Kenyans lost millions of hard earned money to shoddy investment schemes such as Deci and Sasa, pyramid schemes seems not to be dying out. There is a new con artist in town (The Net Wealth) who even targets post-election violence victims as its model clients. Any one reading this should please keep off such schemes that promise heaven and earth. If its too good to be true….then it isn’t. Guess I’ve done my part in the mulika mwizi (spot a thieve) campaign.

Wikipedia has a detailed analysis why pyramid schemes don't work, but this illustration summarises it all:

Safaricom Robbery: Shape Up or Shape Out!

2009-03-17T14:48:00.005+03:00

I almost missed this mail from a reader who is so annoyed by Safaricom's service that he had to say something about it. Many of us may have fallen victim to this injustice but never noticed or blamed someone else. No wonder they make billions as their competitors make more losses.

Dear Editor

I am writing this on Wednesday March 11, 2009 at 11:30pm. I am worried because I have had a very strange occurrence which I have never imagined can be happening in this era of IT. In the course of the day I loaded my safaricom number with Kshs. 400 only. I made various calls to my friends, relatives and enemies. I used the same to browse the web for my mails and other information I wanted from the web, which I believe helped me keep in touch with my environment.

However towards the time at which I am writing this mail, I made a call which lasted 3 minutes and 49 seconds, which according to my tariff (Ongea) should have cost me Ksh. 30.54.

However due to abnormal reduction of my credit balance I was forced to call customer care. The first time I called, I was told that there is call log update time lag of 10 minutes. I did wait for the proscribed 10 minutes and called again. This time I was lucky because the log was now complete and I was given a complete audit of how my meager 400 bob was spent.

Believe it or not the aforementioned call of 3:49 long cost me Kshs. 70.62. I am just wondering whether this is a thing that regularly happens at Safaricom. Is this the main contributor towards the billions they are going to post at the end of the year?

As a hustler trying to make ends meet in this economic near melt down era, I have lost confidence in this service provider. The Customer care service executive I talked to promised me that she has forwarded my complain (She never told me to who) and that I shall get my refund within 48 hours. I told her that I hope I shall receive what is justly due to me.

I am perplexed because it took them only 3 minutes and 49 seconds to get Kshs 40.08 from me which was not due to them. Why should it take them a whole 48 hours to refund me the same? How many unsuspecting Kenyans are undergoing this kind of robbery without noticing while imagining that its their wayward sons, daughters, spouses and siblings misusing their handsets?

I do feel that Safaricom should come clear and inform the public of what they are doing to ensure that the public gets quality service at an affordable price. So far they are the most expensive even though I have remained loyal to them.

This incident has been a loud wakeup call and safaricom should be sure that should they not a visible move towards thinking of me (Clients) before the billions and silverware they will bag, then one day not so much in the future they might find themselves in the Panpaper Webuye paper Mills Ltd Situation. It would be a shame on all of us and an example of greedy executives not caring about their clients and investors.

Thank you.

Yours faithfully
E. O. Otipa

Gates Back at the Top on Forbes Rich-List

2009-03-12T10:23:00.007+03:00

Forbes magazine has released its annual list of the world's richest people, most of who have been hit really hard by the global financial crisis. Total net worth of the 2009 list is US$.2.4 trillion - down from US$.4.4 trillion in 2008. Total world billionaires reduced to 793 from 1,125 in 2008, as more billionaires fell off the list with the crisis. The average net worth per billionaire on the list dropped 23% to US$.3 billion from 3.9 billion dollars in 2008.

According to Forbes, the top 10 richest people in the world and their net worth are as follows:

Name	Company	Net worth US$’billions’	Change in Net worth compared to 2008
William Gates III	Microsoft	40	-31%
Warren Buffet	Berkshire Hathaway	37	-40%
Carlos Slim	Telecom	35	-35%
Larry Ellison	Oracle	22.5	-10%
Ingvar Kamrad	Ikea	22	-29%
Karl Albrecht	Aldi	21.5	-20%
Mukesh Ambani	Petrochemicals	19.5	-55%
Lakshmi Mittal	Steel	19.3	-57%
Theo Albrecht	Aldi, Trader Joe's	19.3	-16%
Amencia Ortega	Zara	18.3	-9%

Billionaires by region:

Region	Billionaires	Net worth US$.’Billions’
US	359	1,100
Europe	196	655
Asia-Pacific	130	357
MidEast/Africa	58	156
Latin America	50	175

Changes in the world billionaires list: 44 new billionaires joined the list (including a Mexican drug lord), 656 dropped out of the list and 52 didn’t change in position.

Bob Mathews: Obituary of a Reincarnated Broker

2009-02-27T22:19:00.002+03:00

Bob Mathews Stockbrokers seems to have failed to learn from its past and has once again been suspended from trading at the NSE for 10 working days. A limited liability company, Bob was incorporated on 6th April 1994 and licensed by the Capital Markets Authority (CMA) on 1st July 1994 and become a full member of the Nairobi Stock Exchange (NSE) and Central Depository Agent (CDA) of the Central Depository and Settlement Corporation (CDSC). Due to liquidity problems Bob only managed to operate for one year before closing down (suspended) in 1995.

13 years later, in 2007, Bob Mathews (surprisingly) reopened its doors to the public in the middle of a bull-run. As tradition would have it the broker (among other five) was once again faced with liquidity problems a year later after failing to fulfill some very basic requirements for license renewal by the CMA. Bob was let off the suspension hook at the last minute. Fate has finally had its way and now the broker faces a threat of being permanently suspended from the NSE once again.

Open Letter to Micah Cheserem - CMA Chairman

2009-02-23T17:46:00.004+03:00

Dear Mr. Cheserem,

First, I would like to congratulate you on being appointed to the Chair of the Capital Market Authority (CMA) of Kenya. Despite others approval, I personally I find it disturbing for a man of your caliber to head an institution that has been rendered powerless by cartels of market insiders. You have done ‘great’ thing before, but I’m afraid this is not the time or place to repeat history.

I have decided to detail in this open letter my uttermost disgust and fear of what our Nairobi Stocks Exchange (NSE) has become. I believe by doing this I address the concern of many NSE investors like me and touch on the principal causes of concern of each one of us.

Following the unfortunate turn of events at the stock market, two stockbrokerage firms have collapsed, one placed under statutory management and others left with questionable characters. In all this we investors have bared the brunt. And all we have received from the people we entrusted our hard earned money to is excuses, from the mundane ones like computer errors on the CDS statement to the Global financial crisis.

Is this thing we call NSE just another legal pyramid scheme where investors can loose their investments and no one is prosecuted? All we get is press statements from the concerned authorities (CMA & NSE) and promises of instituting tough regulations, while the perpetrators of the ‘crimes-against-investors’ go scot-free.

I would want to believe that you are more knowledgeable of the above details and much more that’s contained in the Nyaga-PWC audit that has been kept secret from us. Nevertheless, I would like you to do some drastic changes lest the NSE collapse before the end of this global financial crisis. Starting with demutualization of the NSE, reduction in family ownership in brokerage firms or just constitution of a parallel/new securities market.

If none of this can be done, then simply close down CDSC, outlaw all (remaining) brokers and revert to share certificate and open-out-cry method of trading. At least then I will trust that my shares are safe under my mattress.

I wish you well in your work to clean up this mess called the NSE.

Yours truly,

Kainvestor.

Business Daily Focus on Blogs

2009-02-06T15:41:00.005+03:00

Kenya’s Business Daily has today produced a special report on the blogging culture in Kenya. As much as the pieces on blogging we interesting to read, I find the impression given in some articles about blogging to be utterly uninformed. Like this which says:

“If you are looking forward to entering into the business of blogging, please don’t. There was a time when it made millions, that is now gone….”

I don’t think in the 21st century anybody would get into blogging for the money – adsence or any other kind. There is no money in this blogging world, just some few pennies here and there that don’t count much. its all about what you love and expressing yourself unconstrained by rules. but either way one has to be careful with the kind of information you post.

And in Kenya, blogging is not a very serious information source to warrant a threat to the main stream media; not even with the fibre optic landing this June. But it’s still great that more and more corporate blogs will grace the Kenyan blogosphere soon.

Radio Africa Holdings IPO

2009-01-29T10:08:00.005+03:00

Radio Africa the holding company to several Kenyan fm radio stations is seeking to have its IPO on the NSE this year to finance its expansion plan. The Group owns Classic 105, Kiss 100, East Fm - 106 fm (for the Asian community) and an additional three new radio stations namely Jambo Fm, X FM and Smooth Fm. The targeted amount for the IPO has not yet been disclose ( to be up dated).

The group also publishes the daily newspaper, Nairobi Star (I call it the gossip paper). The Nairobi Star, which acquired its own printing press, is set to expand to the rest of the country in the course of the year. Before acquiring the print press the paper was being printed by Nation Media Group printers. The paper does not separate its employees between radio and newspaper, with most of its radios presenters doubling up as its columnists e.g. Caroline Mutoko’s Monday column where she says whatever she likes. The paper also employs other renowned personalities as their columnists’ e.g. Aly khan Satchu’s (Stocks – Star Portfolio) and Tajudeen’s - Bio (Commentaries).

Initially the paper got some very harsh reviews but over time it has managed to prove that it's a champion in solid grapevines. On lauching the paper sold over 50'000 copies in a day but its has since dropped. Competition from Nation Media's Metro did not manage to dumpen demand by its target market of between 18 to 35 years olds.

Radio Africa Holdings IPO would bring the number of listed media firms on the NSE to three, after Nation Media Group and Standard Group. Surprisingly, neither the Group nor its subsidiaries (fm radio’s and newspaper) websites are up and running. Something, I think, they should act on before going into an IPO.

The End of Cheap Money

2009-01-26T12:47:00.005+03:00

Revelations that many Kenyan banks are in trouble over loan defaults are continuing to deepen with a recent indication that most of the personal loans given were mostly to individuals under 30 years of age. Unconfirmed report indicates that over 50% of the loans were given to young persons to finance their quest to owning cars and homes in major Kenyan cities.

These young borrowers end up not able to repay their loans and have to choose between paying their mortgages or loans, with most of them opting for the mortgage. They then take a loan refinancing option that consolidate all the other loans and end up with one huge monthly installment due to the even higher interest to be paid to the refinancing bank (mostly KCB). Tough economic times that have seen some employees being laid off have worsened the situation even further.

Bank loans sales agents (loan hawkers)

Many of these young borrowers were as a result of loan hawkers who were keener on getting higher commissions than the quality of borrowers they got. The end results may be an increase in volume of non-performing loans, which may force the central bank to react by increasing the banks cash ratio – rescinding an earlier decision to lower it. The only options for the banks are in rescheduling the loans repayment periods without increasing interest costs to the borrower or resort to external credit collectors, who may see many borrowers in court.

I’m surprised that the government’s revolving funds, such as the youth and women’ funds, have performed better than commercial banks’ unsecured loans.

State of Kenya's Telecoms Industry

2009-01-22T13:02:00.007+03:00

I stumbled upon a research report by Budde Communication Pty Ltd. on the state of telecoms, mobile and broadband in Africa in 2008. Though I couldn't access the full report due to the cost implication here is a summary of what the report said about the state of Kenya's telecoms industry:

"Despite the civil unrest which cast a shadow on Kenya at the beginning of 2008, the fundamental transformation of its telecoms market continues. A consortium lead by France Telecom acquired a 51% stake in the national telco, Tekom Kenya. The IPO of the country’s leading mobile operator, Safaricom, went ahead very successfully in April, which is an encouraging sign for Telkom’s planned IPO. A new, simplified licensing regime designed to increase competition was introduced mid-year. Several competing wireless broadband networks and national fibre backbones are being rolled out, and several international submarine fibre optic cables are expected to launch from 2009. This will bring bandwidth prices down and open the Internet up to the mass market. The country’s GSM mobile market finally moved beyond a duopoly at the end of 2008 when Econet and Telkom Kenya launched services as the third and fourth players. Convergence is ever-present in this dynamic and fast growing market with voice, data and video/broadband TV (triple play) services, the introduction of 3G mobile services and mobile banking empowering the largely un-banked population."

Read more on other African countries here

On a light note: What exactly does Orengo mean when he says this

“I have said that at a certain stage if things continue the way they are, then some of us will be prepared to say things that probably as a member of the Cabinet, may be inappropriate for me to say,”

Just say it like it is Orengo!

Obama Phone Launched in Kenya

2009-01-15T15:09:00.003+03:00

Handset vendor, Mi has launched a Barack Obama branded mobile phone for sale here in Kenya - the home country of the President Elect's father. The handset is co branded with the Obama colours and logo and is being sold for Ksh.2,500 (≈$30). Read more

We Are Not Alone

2009-01-06T18:30:00.003+03:00

Welcome to 2009

2009-01-02T14:37:00.001+03:00

2008 is finally around the corner and we are in the New Year 2009. 2008 was quite a busy year, but as time goes by it will only be a fading memory. I took the liberty of writing a final annual summary for the business year 2008 and some things I expect in 2009.

The NSE

The NSE was full of surprises in 2008. First there was the biggest ever Safaricom IPO that went sour, ushering in the bear run and brought back some sanity to our over-valued securities market. The Cooperative bank IPO that followed was only 81% subscribed a sure investor confidence reality check. Unilever got de-listed, Uchumi did not get re-listed, and some two rights issues from KBC and Housing finance graced the NSE during the year.

Broke Brokers

Yet again another market player, Nyaga stockbrokers, went under and several other were put on the warning radar. Discount Securities was put under statutory management following some internal squabbles and one of the biggest securities agent Tsavo was also in some trouble of its own. The depressed market was not doing any good to the brokers as commission revenues diminished.

Strange Deeds

2008 was full of strange things in the Kenyan business cycles. the resignation of Centum’s CEO, Peter Mwangi, and a month later NSE Boss, Chris Mwebesa, a few months after reappointment. The former ended up replacing the latter on the NSE seat, making it seem like it was all choreographed by the big boys. Mwebesa later went back to his former job at CFCfs, leaving a begging question if he was pushed out?

Then there were several share manipulation allegations that rocked the market, particularly the Crown Berger and East Africa Portland Cement cases. Despite CMA’s efforts insider trading is still very rife in our bourse. In good light though, the Uchumi insider trading case was opened where former KCB CEO, Terry Davidson, was charged.

Facing the Bear

Finally, after the perpetual bull ride that had characterized the NSE for the last few years, the bourse was hit by a full blown bear run. Investors are still counting their paper losses, while the searching for the elusive bottom. Every time the indexes hit a ‘decisive point’ analysts are in haste to say that the market will not fall bellow that (NSE 20 – 4000, 3500 or 3000), but every time it just keep on dropping. The market index has dropped 43% from a high of about 5,445 in December 2007 to as low as 3,106 in December 2008.

Investor’s Goodies

In light of the changing investors’ sentiment, investment firms and also the government have come up with better investment packages that target the low earners. Old Mutual launched the Toboa investment scheme that allows investors to invest as low as Ksh.7,500 per months in their different unit trust combinations. Similarly the government lowered the minimum investment in Treasury Bills, to attract small investors and also help the blotted government to raise the much required funds.

Acts of God

The year saw some major changes both in Kenya and the world scene. Kenya opened the year on a bad note with the post election violence rocking every sector of the economy (some firms are yet to recover?) most importantly the political terrain. The Global financial crisis could not have come at a worse time, with the oil and food prices sky-rocketing everything went to the dogs. Obama’s win was a lifting moment from all these misery.

Expected in 2009

I’m not very optimistic about this New Year. However I expect the following to occur during the year:
- A few more IPO’s from Nakumatt, K-rep and some de-listings or suspensions on the NSE (Eveready? Marshall E.A.)
- the NSE will either plateau at between 3,500 and 4,000 or drop even further with most of it pegged on the listed financial firms
- the global financial crisis may get worse in the first half of the year before getting any better
- new regulations by CMA will reign some sanity to the market and in the process some brokers may fold

Why I blog about Africa

2008-12-22T20:40:00.003+03:00

Bankelele tagged me to share my reasons for blogging about our beloved continent, Africa.

As an African blogger, I consider myself lucky to be born in this ‘virgin’ land of hidden opportunities and vast potentials. For these I tell the untold story of the millions of voiceless Africans that are caught in the straggle for survival and the inequities we’ve all been subjected by the few and foreign.

I blog for Africa as my chronicle of the happenings in the business Africa that few know but many participate without knowing. To tell the stories that others don’t have time for, but yearn for unconciously. It’s my secret sense of pride to speak for the black soil my fore fathers stood steady on, fought the wars and drew blood to shape my destiny and for those that will come yonder. I speak of African issues from an African boy's view and not the negativity and misrepresentations i see in the foreign media that i don't and can't relate to.

I blog about business and finance, among many other salient and puny issues, in Africa to widening my scope of thinking and learning about the Africa frontier markets. To share out my wild thoughts and let other invade them with their own. I share what I’ve gathered in the asymmetrical African financial world, where the story of the stockbroker and fund manager is told with a bated breath and not for the investors that oil the wheels of the markets.

In this assimilated African blogging sphere, I’ve met and made many friends, associates and acquaintances – some faceless, others nameless but all in all making this journey worth taking. I thus tag the following African Bloggers: Savvy Investor, UG Investor, Kenyanomics, Business in Focus, Concept and Emerging Africa Capital

Shoes: Another Weapon of Mass Destruction

2008-12-15T13:31:00.000+03:00

Is Standard Group Acquiring Radio Simba?

2008-12-11T14:51:00.007+03:00

Nairumour (as Bankelele puts it) has it that Radio Simba is winding up its operation in preparation for a take-over by a leading Kenyan media house in the New Year - 2009. Could this be the Radio station Standard Group mentioned they were in the process of acquiring for Ksh.250 million in a press release earlier in November this year?

In the Standard Group’s November press release it says:

“…. The Standard Group wishes to announce that it is at advanced stages of concluding negotiations that would lead to the acquisition of an entire interest of a company that holds radio frequencies covering most of the country. The modalities of these transactions are being worked out and the timing of commencement of operations and related details will be announced at a later stage. The Standard Group plans to invest within the next one and half years an estimated of Kenya Shillings Two Hundred and fifty Million only (Kshs 250 million) inclusive of the acquisition cost and in the development of a robust infrastructure.”

Radio Simba is a joint venture between Toads Media Group Kenya and FM holdings who own Radio Simba Kampala. In Kenya it operates from Nairobi.

Nakumatt Express (Up date)

2008-12-11T14:00:00.005+03:00

I spoke too soon about this in the previous post. It has now come out that Nakumatt has decided to go the convenience stores (better known as C-Stores) way to capture a wider market base. The Kahawa Wendani Nakumatt Express is just the pioneer of many to come in several (mostly Nairobi) estates.

Related stories:
- will their 2009 IPO materialize?
- Nakumatt wins Planet Retail’s innovation award

Government Goodies

2008-12-09T13:17:00.009+03:00

Lower TB cap

The Central Bank of Kenya (CBK) has finally agreed that the Ksh.1 million cap on Treasury Bills (TB) investment in the primary market is a little too discriminating and kills the alternative investment avenue that its supposed to create. CBK has now lowered the threshold to Ksh.100,000, which is a bit affordable to retail investors. Over concentration of investment in stocks mostly by local retail investors has over the last few year lead to the NSE getting overvalued.

KRA public auction

Kenya Revenue Authority (KRA) will tomorrow conduct a public auction of several imported goods abandoned at their JKIA custom service department over the year. The same will be conducted at Kilindini harbor on 23rd of December. Several items ranging from wines, cloths, computer accessories to cars will be on offer at both ridiculous and competitive prices. These can come in handy as gifts to friends, relatives and loved ones this festive season. I 'm planning to attend it for the first time just out of curiosity.

Nakumatt meat & poison

Last months has the Nakumatt supermarket on Thika Road was brought down the owners , lead by the Nakumatt Operations Director Thiagarajan Ramamurthy and many shoppers complained that the government was being unfair and not encouraging investment in the country from the way they selectively conducted the demolitions along the highway.

Demolition of Nakumatt Thika Road

It seems the demolition of Nakumatt Thika Road was a blessing to some (these guys and me) as they are now planning to open a new outlet called Nakumatt Express in Kahawa Wendani (at the former Uchumi Wendani premises – a few meters from my landlords house) to capture their customers along the highway. Renovations and even carpeting of a previously very bad road are underway.

Nakumatt Express launch preparations

Carpeting of the road

This plan may have been already in place and has only been accelerated by the demolitions, since Uchumi closed shop in Wendani August last year.

Related story: Nakumatt Mega goes 24 hours

Econet/YU Crazy Tariff

2008-12-01T18:23:00.003+03:00

YU has launched today one of the craziest tariff I’ve ever seen in Kenya. Apart from charging the cheapest calling and sms rates in the market of Ksh.7.50 per minute (billed per second) and Ksh.2.00 per sms across all networks, subscribers to this network get a 75 cents (Ksh.0.75) bonus airtime per minute every time they receive a call from any local network! Are these guys serious? How long will this ‘bonus offer’ last? And you can still reserve your 'old' mumber with their 0750 prefix.

Econet also plans to introduce a mobile phone money transfer service in conjunction with Opal Pay(to compete M-Pesa) and a 3G internet service.

1st Tujuane Mixer Roundup

2008-11-23T21:08:00.008+03:00

The 1st Tujuane Mixer, dubbed 'The Road from Employee to Employer', was held in Nairobi on the evening of Friday 21 November 2008, at Anhui Restaurant, Loita house. To say the event was great does not even begin to explain how fantastic it was. The event began at around 6.30pm. The networking mood was caught right from the reception with every guest having a name tag with their hobby labeled on.

There was plenty of time to network as more guest streamed into the Chinese restaurant. The place was filled with all sort of professionals and entrepreneurs; academicians, bankers, IT techs, insurers and even Bloggers! Each one of them pitching for their own products or services, and trying to network with as many people as possible. And the food was great (though mine came in a little late).

The event was opened with an introduction from Liko Makatiani, Nairobist.com Founder and Strategy Director, currently based in Boston USA. From the brief introduction he gave I picked that Nairobist was founded in July 2005 as an "information packaging" outfit that aims to gather online content and network Nairobians (and East African in the major towns of Dar es salaam and Kampala) through its different components that include Tujuane (the networking section), Nairobi Kilakitu (a Nairobi business directory) and the Stocks & Market section.

As guests waited for the key note speech to be delivered by Dr. Mulengani Katwalo, the director of the Institute for Strategy & Competitiveness (ISC) at the Strathmore Business School, each group/table was given an entrepreneurial question to discuss and come up with points that were to be presented later on after the key note speech. My group deliberated on when do one (as an employee) know that its time to quit and move to your own business. These discussions proved to be the biggest ice breaker, as they got guest to talk more freely.

By the time Dr. Katwalo was being introduced to make his presentation every one in the restaurant was already thinking like an entrepreneur. And he did not disappoint us either. He gave an eye opening and entertaining talk on six key pillars of entrepreneurship that local entrepreneurs need to learn in order to become the best. Bankelele has done a great piece on the speech, so I would just point out the main points. The speaker opened the talk by mentioning that over 60% of new businesses fail in there first year of operation. To avoid this, local entrepreneurs should learn to embrace the following six pillars:

a) Skills/Training
- make sure you fill in the skill gaps that would enable you do your business professionally
- take short curses and read related books
- entrepreneurs should contribute more in driving the agenda to higher education has they understand what is needed in the field

b) Innovation
- get involved in research & development in order to get new ideas
- engage in the process of buying and selling knowledge
- copying from the best = bench making (economies like China grew on this, Tata too and Nyayo buses project failed for not doing it)

c) Culture
- local entrepreneur need to develop better legacies (it take a lot of effort to do this)
- They should also understand that customer service is not a favour. Its what attracts and retain customers
- Adopt a reading culture – most local entrepreneurs are ignorant even to the happenings in their own industries

d) neighborhood/market
- Know your market well it will help you know opportunities that exist beyond your business spheres
- See the greater market – don’t just concentrate in Nairobi/Kenya (30 million people), there is a bigger market (100 million people) in the greater East Africa and far much more in the greater Africa region.
- The perception we have of what we see or hear helps in expanding the horizon of our business

e) Competition vs. Cooperation
- the age of cut-throat competition is over (Cooperation + Healthy Competition = Coopetition)
- entrepreneurs should learn to cooperate with their competitors in order to grow their businesses and the larger industry
- knowledge exchange with competitors is good for your business

f) Working in linkages/networks/co-operations
- Entrepreneurs should network with related industry players - forums like Tujuane are doing a great job in achieving this
- Networks open new opportunities for your business and making working on deals easier.

The event ended with some guest winning 'early Christmas gifts, while others floated their questions to the chief speaker about the talk and asking if the Tujuane mixer could be made a monthly event. It was clear to all that we have been missing a lot. The doctor did not commit himself but promised to look into the honorable request. More networking went on as guest left the event at about 11pm.

I can’t wait for the next Tujuane Mixer.

The 1st Tujuane Mixer

2008-11-20T12:30:00.005+03:00

My favorite stocks analysis and contend site, Nairobist.com, will be hosting a networking mixer evening event tomorrow Friday 21 November 2008, for both their Tujuane Network member and other professionals and entrepreneurs interested to network with a cross section of professionals and budding entrepreneurs from Nairobi. The event will be held at Anhui Chinese Restaurant, Loita Street from 6.00pm to 9.00pm. So for you professionals in Nairobi who don’t have plans for Friday evening consider yourself invited. I’m sure you’ll find the Tujuane Mixer both entertaining and professionally fulfilling. Talk of an evening well spent! Anhui Restaurant is the place to be this Friday evening. See you there.

If you miss it, don’t worry, I will blog about it here.

Here is the official invitation from Tujuane Network.

No Country for Foreign Investors

2008-11-10T12:55:00.006+03:00

When it comes to investment in the stock market and other business issues Kenyans are renowned for their ingeniousness. In fact residents of most East African countries have come to both revere and despise Kenyans particularly for this reason. In the most recent IPO’s in Tanzania and Zambia, Kenyans and other East African’s (who are always considered as local investors in Kenyan IPO’s) have been left out on flimsy ground of nationalism and in some cases (Celtel Zambia – IPO) only foreign institutional investors were allowed but still some Kenyan fund management firms got nothing.

The Safaricom IPO in Kenya was the last stroke that broke the horse back. In this ‘mother of all public offers’, all and sundry were invited to participate including some dubious ‘foreign investors’ who dumped shares at first instance of a profit. Tanzanians were not allowed by the Bank of Tanzania (BoT) to buy into this IPO and they are happy now that they didn’t do so. For Ugandans who risked to invest in it painful results followed and some of them have sworn never to invest in Kenyan offers, while some legislators who now want a law passed to stop Ugandans from investing in Kenya and vice versa.

It seems we are reversing on the pledge of having an East African Securities Market any time soon. Although Kenya firms such as KCB Group are will and in the process of cross-listing, joining others like KQ and Jubilee Insurance which have already done so, our partners in regional bourse integration seem to have sinister ideas of the same process.

Last year I had mentioned of some cross border IPO’s that were expected to materialize but were delayed due to reasons well known to the offer advisors (including Dyer & Blair). Eventually only the NMB IPO in Tanzania came to pass – and Kenyans were kept out, with the following impressive results:

NMB IPO results and performance

The NMB offer was over subscribed by 300% with Tanzanians forking out over Tsh.189 billion ≈ Ksh.11.8 billion for the offer that was expected to raise Tsh.63 billion ≈ Ksh.3.94 billion only (Tsh.48 billion ≈ Ksh.3 billion or 76.2% for Tanzanian investors and the rest for the bank’s employees). Despite the listing offering the banks existing 20,264 shareholders an exit mechanism, the huge appetite for NMB shares was carried forward to the DSE when they started trading last week on Friday with the counter jumping 70% to close at Tsh.1,020 ≈ Ksh.63.75 from the listing price of Tsh.600 ≈ Ksh.37.50 per share with a minimum of 100 shares per applicant (Ksh.37,500 – which I think is reasonable pricing compared to the Safaricom disaster). The share is expected to continue increasing in price, as its demand is so high, given the prospects that NMB was the most profitable and biggest bank in Tanzania's banking industry and is considered undervalued at the current price.

NICL IPO (Uganda)

This IPO has been postponed three times now since the last time I wrote about it. I’m still waiting to see if Kenyans and Rwandans will be allowed to participate in it after the recent development. Tanzanians are technically out of this one.

Salute to Miriam Makeba

A minute of silence for a fallen hero.
REST IN PEACE MAMA AFRICA.

President Elect Barrack Obama!

2008-11-05T12:38:00.006+03:00

This is an historic moment we are witnessing. One we may never see in our lifetimes . . . . the first black president of the United States of America. Congratulation Obama! And make us proud in your presidency. After the jubilation settles, the whole world will be watching you.

Watch and read the winning acceptance speech here and here

Centum CEO Quits

2008-10-16T15:34:00.005+03:00

It’s being reported that Centum’s (former ICDCI) CEO, Mr. Peter Mwangi, has thrown in the towel and immediately replaced by the company secretary, Mr. David Owino, in an acting capacity. After working in the investment firm for over eight years and raising to the highest position it come has a shock that he just decided to quit? The reason behind the move is yet to be made public but I guess it will be known soon. (Updates to come)

The firm has further postponed the AGM and the issuance of dividends that had been scheduled for today, to January next year. This will do no good the company’s share price that’s now at Ksh.18, especially with the already jittery market following the recent unfolding.

Mobile Wars Continue: Part III

2008-10-13T17:50:00.004+03:00

(Part I & II)

Safaricom

After the IPO, Safaricom has gone silent and it no longer cares about their subscribers or how aggressively its competitors are wooing them. In the face of very stiff price wars from Zain and ‘New Telkom’ (with Orange – secret ingredient) the Giant is still asleep. But I think it’s a matter of time before it jumps in to save face (subscribers’ base). Apart from their innovative ‘M-pesa’ service, every other service Safaricom has is facing stiff rivalry.

Update: The Giant has reacted with a rather confusing offer.

Zain

These guys have changed ownership, name and management so many times until we’ve almost forgotten they used to be some inefficient, overcharging per minute firm called KenCel. No price is too low for them in their bid to woo subscribers. Zain has launched an aggressive price cutting war that hits both existing players (Safaricom) and new entrants (Telkom and Econet). This has been cited has being unfair competition backed by oil money. The firm seems not to care much about profits after last year dismal performance in Kenya. Their IPO in Zambia was a big success. This is the firm to watch.

‘New’ Telkom (with Orange – secret ingredient)

The one shilling rate offer has just put them in a different light. But this does not really sound sustainable – it’s a gimmick/mirage to me. But Orange, the new Telkom owner, has acted fast to launch their presence into the market, unlike Econet which has been coming for ages now. Plagued by an almost dead fixed line system, gross government mismanagement and non-performing employees it will be a near miracle if this giant catches up with the top two any time soon. They have outsourced their customer care department to Kencal – something I always hoped Safaricom should have done a decade ago.

Econet

The 49% stake they sold to Essar Communication Holdings does not seem to help much. The only thing it’s done is to rekindle the old promise of launching soon. The deadline was June 31st, and then moved to September 30th and now nobody is talking about any deadline. They have however recruited staff, got dealers and even talked of partnering with an existing service provider to ride on their infrastructure in readiness for the roll out, but all these have just been an anti-climax. When will this firm roll out?

DSL under Statutory Management?

2008-10-13T16:39:00.002+03:00

I’ve read (here and here) that a Kenyan stockbrokerage firm, Discount Securities Ltd., has been placed under KPMG’s management for what is now called “corporate governance challenges”. There have been several complaints against this stockbroker for a while now. It comes as no surprise that they been placed on what I can simply term as a ‘friendly’ statutory management.

And they are not the only ones, other players are also rumored to be in financial distress. Is this market going down due to the players inefficiencies and crooked ways of cartels?

Safaricom 3’s

2008-10-08T12:34:00.005+03:00

Safaricom shares seem to be the black sheep of the NSE. The counter has bee hitting new lows every day. It hit a new low of 4.05 today with a supply that’s over 8 times the demand. It seems investors (banks that gave loans for the IPO?) have decided to get out at any price and cut back on their losses. I anticipate that if this goes on tomorrow it may be in the Ksh.3 range by the time the NSE opens next week. An earlier valuation of this counter by some pessimist indicated it should have been listed at about Ksh.2.50 per share. So the down wards spiral is not stopping now.

Market Halt(Update)

There has been a market Halt in today's NSE trade after the index went down by more than 5%, this is in accordance with clause 9.4.1 of the Trading Rules. (source: rich.co.ke - live data feed)

Astrology and the Bear Market

In India, astrology is being used by many stocks investors to gauge the market trend. Like this astrological analysis of the Bombay bourse that indicates that the bear market will persist up to the end of this year. I don’t know how true this is, but I was wondering if our own ‘prophets’ can tell us when this NSE bear will end. Apparently Suntra’s MD, Mr. Murugu thinks that when the market hit 4004 two weeks ago the bear runs was about to end. But I think he’s so wrong, this beast from the pole will be with us for a while and we aren’t seeing anything yet.

Pic of the Day

This one made my day. Lol!

Missing TEDAfrica 2008

2008-09-30T14:08:00.004+03:00

After hearing, reading and watching stories from TED Africa conference 2007 in Arusha, Tanzania, I was so much psyched for this year’s TED Africa 2008 in Cape Town, South Africa. I saw a tip off from White Africa (read more here) and I rushed to apply. I even went further to mark my outlook calendars (something I rarely do) for the entire period - September 29-October 1, 2008 - that event was to take place, just incase I forgot. But on May 18th 2008, the event was canceled, dashing my dreams and hopes of ever attending this phenomenal conference.

Time went by and I totally forgot about it. But yesterday, my outlook started posting notes on my screen. So I thought, why not remind everyone of an opportunity we missed and let’s hope that the next one (if it ever be) will be planned well in time.

Online Reminder: I’ve been in trouble many times for forgetting some major events and anniversaries. Can someone please suggest to me a good online reminder application that one can use easily?

African Securities Markets Feel the Pinch of Global Linkages

2008-09-24T09:45:00.002+03:00

For the last two months, investors at the Nairobi Stock Exchange (NSE) have watched in horror as the market dropped to a three years low. The NSE 20 shares index, which is used to gauge the general performance of the market, dipped to a 4,000 low from about 5,400 in mid July (a 26% decline), a level last seen in 2005. Market analysts have attributed this to among other reasons the financial crisis in the United States of America (USA) that has seen financial giants like AIG, Lehman Brothers and investment bank Bear Stearns go belly up or get bailed out by the US government.

Several other African bourses have experienced the same decline, with the Nigeria Stocks Market being the worst. The Nigerian market has seen a six months free fall in share prices that has worsened the liquidity crisis in the country. This has forced the Nigerian federal government to institute harsh measure to curb the crisis.

Apart from factors such as inflation and increased oil prices in the international market, the link between African securities markets and the financial crisis in the US is not quite clear. Could African markets be facing their own crisis? Are the effects of the US crisis more direct than anticipated? It would be prudent to understand the relation between our markets and the developed markets.

Africa has been a closed continent to the rest of the world. Little is said of the vast investment opportunities in the continent that have attracted big fund managers from the developed countries. As they seek to diversify from their saturated developed markets, investment firms such as Morgan Stanley and Goldman Sachs have injected colossal amounts in Africa and even participated in public offers like the recently concluded Safaricom IPO. This can be said to be the most direct linkage African bourses have with the developed markets, especially the US.

Most of the money invested in Africa’s stock markets also comes from Africans in the Diaspora. Many Africans have over the years left their countries to go for ‘greener pastures’ in the developed world. They usually send huge amounts of money to their families and relatives in Africa for personal use and investment. Most of the investment money ends up either in real estates construction or in the stock markets. A clear example is the Nairobi Stocks Exchange where about 30% of the money injected in comes from the Kenyans in Diaspora.

The ongoing US financial crisis which is termed as the worst since the Great Depression of the 1930’s has seen Africans in the diaspora laid off fro their jobs and sources of income reduce. Many Africans in the diaspora do odd jobs to make ends meet and have something to send back home. Such menial jobs have been the first casualties of the US crisis as every sector seeks to down-size and break even during this period. The stream of investment funds from the diaspora has consequently reduced considerably as some of them sell their investments to pro-up their declining incomes. This can be said to be an indirect linkage between African bourses and the developed markets.

Another indirect connection is from the ‘Aid industry’. With the possibility of the US financial crisis turning into a global phenomenon, the amount of aid funds that have been the driving force in most African government budgets are set to dwindle. Humanitarian aid may continue trickling in as development aid reduces to the bare minimum. In the one-day conference on Africa in New York, UN Secretary General Ban Ki-moon issued a plea for US$ 72 billion per year in foreign aid if Africa is to reach any of the Millennium Development Goals (MDGs). Without this funding, the economic outlook of most African countries is bleak and this will definitely affect the continent's securities markets.

African economies as well as other emerging economies around the world have been feeling the effects of the ups and downs of finance in the U.S. and other developed markets. When commodity prices were high, mobile global capital flowed into Africa and pushed asset prices up, making capital cheap and fueling growth. With the opposite cycle in place, a reverse in economic growth for many African countries is expected. That is why Africa should not depend on aid for development.

(My recent article in the African Executive online magazine)

SA Investors’ Confidence shaken as Trevor Manuel Quits

2008-09-23T17:26:00.004+03:00

After diligently promising investors that he will not quit, Trevor Manuel – SA finance minister quit office today along side 10 other minister in support of Mbeki’s resignation. This is likely to have a devastating effect for the economic stability of South Africa, Africa’s most powerful nation. Although he says he will be ready to serve the new government in any capacity, Manuel’s resignation has shocked many investors who had put a lot of trust in him. In reaction the JSE has been faced with a case of panic sales that will affect it negatively before investor confidence returns to the bourse. The rand had depreciated sharply today.

It’s sad enough that the strongest country on our continent faced xenophobic related violence earlier in the year; political instability in SA will affect the continent adversely. Countries in the southern region will be negatively affected, due to their dependence on the continent’s economic powerhouse. I hope this political transition does not degenerate into something else – violence.

see more on this:

Will “New” Telkom Edge Out Safaricom?

2008-09-22T15:32:00.003+03:00

(Mostly from Ratio Magazine)

After Orange acquisition at the end of 2007, the “new” Telkom launched its mobile services in Kenya officially on September 17th 2008. The market is now full of new and revamped service providers (Orange, Econet and Zain) that are looking to eat into Safaricom’s near-monopoly 80% market share. “New” Telkom is targeting 1.5m mobile subscribers in it’s the first year of operation, which transplant to about 10% of the market share assuming it grows by the same margin in 2008-2009.

France Telecom won the bid to acquire 51% of Kenya’s Telkom at the end of 2007 and has now launched its Orange brand with an integrated services offer. Telkom Kenya is currently said to have 600,000 customers across all its old services. The Orange brand launch has introduced the mobile service in Nairobi and Mombasa, and aims to cover all major towns in Kenya by the end of the year.

But will the “New” Telkom edge out their former partner Safaricom as they paint a rosy outlook? Here are some of the issues to watch:

• Integrated Services: In contrast to its competitors, Orange can draw on the full range of services that Telkom was already offering its customers – mobile, fixed line and internet. Telkom had introduced the wireless CDMA technology to supplement their fixed line network. Zain and Safaricom have both introduced internet services through portable modems, but Telkom Orange claim to be the only provider who offers real broadband.

• Quality: In the immediate future, Orange will only run the wireless network under its brand. The fixed line network, as a result of years of neglect and vandalism, does not yet meet Orange’s quality standard. As new CEO Dominique Saint-Jean stated, Telkom would have to both improve the physical infrastructure and retain the trust of customers before integrating it into the Orange range of services. Can they live up to this quality focus and extend it throughout all services?

• Customer Service: In their launch presentation, Orange executives placed a lot of emphasis on their intention to offer superior customer service. If they manage to fulfill this promise, they will certainly earn bonus points from customers: Not only is customer service generally a headache with most service providers in Kenya, but it is also an area where Safaricom has been less than distinguished, especially in their prepaid service. Orange has outsourced their customer service to Kencall, a local call-centre company, which is encouraging. However, it remains to be seen whether the interface between Kencall staff and Telkom is sufficiently well established to resolve customer complaints.

• New products and services: Even though they are trying to keep a very low profile with this service, Safaricom’s M-PESA mobile money transfer service has been a milestone. Similarly, the removal of roaming charges within Zain’s entire network across Africa and the Middle East had been a global first. Both companies have tried to match the competitor, with Zain introducing Sokotele money transfers, and Safaricom signing agreements with other operators in the EAC to mimic Zain’s One Network. Orange is expected to launch Orange Money, a service currently being trialled in Cote d’Ivoire that allows transfers as well as bill payments and payments to retailers. In addition to confirming that Orange had signed the usual roaming agreements, Sain-Jean also alluded to a not yet specified ‘special offer’. This indicates that both Safaricom and their parent company Vodaphone as well as Zain have set new standards that other companies feel some pressure to live up to.

• Regional expansion: Saint-Jean was guarded on the details, but stated that Orange did indeed consider Kenya a regional hub from which new country operations in the region would be launched. Zain already has operations throughout the EAC, and Safaricom has signed co-operation agreements with other operators.

• Local branding: The use of a pan-African campaign and art work turned into a headache for Zain: As Safaricom CEO Michael Joseph already noted, Kenyans are ‘peculiar’, and one of these peculiarities was that the Kenyan public disliked the models in Zain’s campaigns as ‘not Kenyan looking’. Seemingly not a very substantial issue, it has nevertheless cost Zain – and Safaricom’s more pedestrian art work has served its purpose well. Telkom Orange management stated that while they would respect the global format of the brand, it would be adapted to the respective local environment.

NSE 20 Share Index beckoning 4,000

2008-09-16T17:19:00.005+03:00

Listed stocks on the NSE have taken a thorough beating in just two days of this week. The NSE share index is already nearing the 4,000 mark (which some skeptics expected it to reach by the end of the year). Most of the counters are trading at prices last seen during the post election crisis period. The NSE 20 share index is now at 4,093.82, after falling 131.71 points. It seems we are not so immune to the global financial crisis that has seen financial giants in the US see red.

Safaricom Trading Below IPO Price

Finally Safaricom shares on the NSE have started trading below the IPO price of Ksh.5 just two months after it started trading. The share was today trading between Ksh.4.55 (a new low) and ksh.5.55, with a turnover of 236 million. The counter finally closed the day at an average price of Ksh.4.70. At some point when the counter was trading at Ksh.6.20 it was said to be widely undervalued, so what’s making it to go even lower than the IPO price?

Rumor mills: Another Broker in Financial Distress?!

Rumors are going round that another brokerage firm in the Kenyan financial market is in distress and may bite the dust if stern actions are not taken soon. The undisclosed ‘investment bank’ is said to be trying every trick in the book but the bearish trend at the NSE is not helping the situation. I’m not sure how true this is, but I think it would be wise to check with your broker that everything is ok. It’s better to be safe than sorry.

KCB Woes

2008-08-28T13:12:00.003+03:00

Kenya Commercial Bank (KCB) has this week been in the media for all the wrong reasons. The bank seems to have opened another branch in the courts, where it’s fighting to win some very big cases against ‘Grand Corruption’ and its former boss was in the dock for insider trading.

Mugoya Constructions: According to this article from the Standard, a case by KCB to put the famous Mugoya construction under receivership for a debt amounting to over Ksh.2.7 billion (over 30% of KCB non-performing loans) was thrown out after the AG entered nolle prosequi on the case. Is this another case of ‘Grand Amnesty’? Apparently while the case was going on, Mugoya paid KCB all the money it’s being sued for…so the case was thrown out. Since when did this become a remedy in Kenyan law?

Terry Davidson Woes: KCB’s former CEO, Terry Davidson, was yesterday arraigned in court for insider trading on the Uchumi shares before the supermarket collapsed. After the good work Davidson did to turn around KCB from a loss making parastatal to a profit making giant, its unfortunate that he’s being arraigned in court for insider trading. hope this will restore some sanity in the NSE.

Kamlesh Pattin’s Woes: KCB has also been stopped from liquidating Pattin’s assets following a court injunction. (To be updated)

Other info on KCB

KCB Rights 221 million new shares started trading on the NSE on Monday this week at Ksh.28 per share but latter on dropped to 26 and its now edging up slowly. The rights issue was oversubscribed by 47% after it received Ksh.8.1 billion in applications against a target of Ksh.5.5 billion needed. The bank is on an aggressive expansion plan and was recently approved to set their branch in Rwanda. The bank future prospects look good in the medium to long term and I still hold a strong buy on its shares.

Facing the Bear

2008-08-13T17:52:00.006+03:00

The NSE has been on a downward trend for a little over a month now; I’ve even forgotten the last time my portfolio made a reasonable gain. All but one counter (Stanbic UG) are in the red now and I’m wondering if my investment strategy is working. At some point last months I almost put into practice Aly Khan’s Safaricom stop loss strategy on all the stocks in my portfolio, but decided otherwise since I couldn’t see any fundamental reason to do so. I consoled myself that I’m a long term investor (every stocks investor does this at one point or the other), but how much decline can I take before I wedge in?

Several explanations have been given as to why the market is looking so bearish. Optimists see a correction, pessimist see a bear run. But all agree that things are tight in this market. The last time the NSE was this low was during the January post election violence. So what could be causing this now with everything looking fine except for the high inflation.

Talking to a friend the other day I found myself with little to say about the market outlook, the only thing I kept on saying was that the market will rebound sooner than later and the depression in share values present a good opportunity for getting in. I think this make me an optimist or simply in denial. But I want to believe that this will be the case and not the opposite.

Like many other investors I would like to face the turn in market trend boldly. This has driven me searching for a simple solution for any investor faced with a bear run in the stocks market. Many investor at the NSE are used to invest in a bullish market, where you buy stocks expecting their price to rise above you buy price for one to make some capital gain. This scenario has turned many retail investors to mere speculators, in for a quick gain here and there without focusing on the long term. And there is where our entire problem lies.

Investing in a bear market is far much tricky than one can imagine. MainT of KCIG recently gave some survival strategies for investor in such a market. It’s during a bear market that you’ll differentiate the big boys (true investors) from the kids (speculators). In such a market, the more free & fluid your cash flow the better, since you will be able to position your self and buy at ridiculously cheap prices from bullish speculator scampering to leave the market and save face.

Panic in not any investor’s pal. That’s for chicken investors who get slaughtered on their way out. The only thing to do in such a market is keep a level head and seek as much information as you can. It’s at such times that many investors see the importance of investing through an advisor, even if it cost a dime. Good information is worth more than gold in a bear market and will help you a great deal in making strategic moves that will eventually grow your investment, even if its only marginal growth. Be happy with low returns, it could have been worse.

Don't feed the bear!

Brokers are known to be very witty and will only advise you to buy in a bear market citing that most shares are selling at a bargain. In most cases that’s not true, the only thing the broker is concerned about is his transaction fee when you trade and will care less when you burn your fingers. You’ll be better off holding cash. Equally, selling at a loss in one counter to jump for what you consider a bargain is a very wrong decision. Although there will be some bargains in a bear market, often it will be a case of catching a falling knife, with only painful results.

Some of the industries to invest in a bear market include banking, construction and petroleum, which are most likely to gain from the re-emergence of the economy and in effect the stock market. Hey! This is not advice to buy; it’s only a suggestion that has been proved to work before in bigger and better markets. But for our NSE it’s wise to be patient and wait the correction (bear?) to reach the bottom. For how long it will take for the market to bottom out nobody knows.

Blaming Petrol Prices & Post Election Violence

2008-07-31T17:26:00.002+03:00

KPLC thinks we are morons: In the late 90’s, during the frequent blackouts/power outages, KPLC used to give us flimsy excuses of how the water levels had fallen in the dams due to ‘drought’ even when it was raining heavily, or how sedimentation is reducing the level of power output (during Elnino) or any other thing they could come up with. Now they have just found another excuse, in the name of ‘high petrol prices’, to blame the high electricity bills on. Figure this out; you get a bill reading month consumption – Ksh.454 while the petrol charge is at Ksh.645. Does this mean you consumed more petrol than electricity? So what’s the benefit of using electricity?

Sameer Africa (almost) sees red: Sameer Africa pre-tax profit dropped by a whooping 96% in their half year announcement. The company’s earnings dropped to Ksh.2.8 million compared to ksh.84.2 million in the same period last year. Once again this has been blamed on post election violence and increase in production cost due to high oil prices.

Econet roll out deadline moved to September: it seems we will have to wait much longer for Econet to roll out their network as now their roll out deadline has been moved to September 30 from July 31, 2008. Once again it has been blamed on post election violence, but I have a strong feeling they will not be rolling out any time this year.

To be launched on August 1^st

Celtel will officially changed its name to Zain
Nation Media New Radio station that will have Nyambane as its morning host is set to be launched tomorrow.

Almost rhetoric: What’s the probability that Britak and Equity Bank directors won’t offload their stake in the bank after the lock in period is over?

Equity Bank 2008 H1 Numbers: More Surprise!

2008-07-25T08:58:00.001+03:00

Equity Bank has done it again! If you thought last years result were marvelous then this year’s result will be a great shocker. Though I expected such a performance due to the role the bank played in the Safaricom IPO, I still didn’t expect the bank to hit a near 200% profit increase (197% to be exact). The bank CEO, James Mwangi, attributes the jump to ‘a delicately balanced growth, profitability and good control systems’ (whatever that means)

Summary of results:

Profitability tripled to Ksh.3.087 billion from Ksh,1.037 billion same period last year.
Total assets grew by 143%, from Ksh.29.9 billion to Ksh.72.5 billion
total operating income increased by 156% to Ksh.6.58 billion
Total overheads increased by 128% to Ksh.3.5 billion.
Consolidated loan book increased by 153% from Ksh.14.3 billion Ksh.36.2 billion (probably Ksh.15 billion from IPO loans)
Despite the post election violence non-performing loans only increased by 3%.
The bank has 2,456,982 deposit accounts (over 45% of all deposits accounts in the banking industry) and 510,768 loan accounts.
Equity still remains the biggest bank in terms of market capitalization.

My Mid 2008 Green List

2008-07-24T16:34:00.006+03:00

Mid 2008 Green List

I’ve been procrastinating on this list for a while now. Of late I’ve been unsure of the future of the NSE and its listed stocks. The market has been on a slump. With one of the highest inflation rate of 29% (from 31% last month) in Kenya, a cash crunch from the Safaricom IPO and rising interest rates the market is facing one of the toughest times since the 2005/2006 bull-run. Some 'strong' counters such as KQ and Safaricom are proving to be anything but the darlings of the market.

last years Green List performed far much better than the market average. In this year’s green list I will mainly focus on counters that show considerable prospect of growth and are undervalued in this respect. The following four stocks will form my 2008 green list, although I still hold my reservation on some:

Equity

Never say die for Equity bank. The bank has proved all its critics wrong and there’s not stopping now. At above Ksh300 and a PE of 44, it’s considered one of the most expensive company among the financial stocks on the NSE, followed by Housing Finance. But I still think there is room for this company to improve. The recent acquisition in Uganda and with a very innovative and aggressive expansion plan the bank has some more surprises to give. There have been some insightful analyses of this counter and a share split is more than eminent at Ksh.350. I expect a very impressive half year result announcement soon. Although the lock in period for Equity directors ends this August, a green light is still shining on this stock.

KCB

KCB has one of the most aggressive expansion strategies, almost similar to Equity but a little bit inefficient in their service delivery. Their operation in Rwanda was recently approved and the just ended rights issue is a sure over subscription. Although the additional new shares are small in number, I expect the share price to drop considerably once they start trading. Ksh.26 or anything below is a buy position for this counter. The share will be trading in mid 30’s by the end of the year and probably 40’s in the 1st quarter of next year.

Safaricom

Safaricom is no Eveready. The hyped IPO pulled in some very strange shareholders, especially the so called ‘foreign investors’. At the moment speculators and loan-investors who bought in this counter during the IPO are selling in panic that the share will drop further for them to make their quick gains. This has dampened the share price as supply is far much more than demand. But in a matter of a few months the speculators would have cashed out and the share will resort to its true value, which is Ksh.10 and above. This is the time to accumulate this share and in six to nine months time it will be a sweet story.

I believe Safaricom is no penny stock. Even with the new entries of Econet and Telkom, safaricom’s market share will remain more than intact, if not increase from the new cheaper calling rates. Their 3G internet provision is a good addition although still plagued by their poor customer service. Safaricom is the price setter in this industry and it will take some years before its competitors catch up.

Barclays Bank

BBK has been hovering around ksh.68 for some time now. Despite their unimpressive Q1 results this company has great potential to perform. Any price at Ksh.70 and below is a bargain. I believe is just a matter of time before this counter move to mid 70’s and then into 80’s. Its one of the strongest long term counters I can ever advise a serious investor to buy. The sooner you get on board the better. The banks expansion strategy is a bit conservative but generally good. They have opened sales canters in almost all corners of Kenya and have some of the most aggressive sales and marketing agent in town.

Others to watch:

National Bank
Total Kenya
Athi River Mining n Bamburi

Disclaimer: the Green list is a personal list of my preferred stocks in the market. It does not indicate certainty

New CEO for Celtel Kenya

2008-07-10T17:27:00.002+03:00

Former Tigo-Tz CEO, Rene Meza, has been hired as the Managing Director (Not CEO) of Celtel Kenya after the recent exodus of Key staff from the mobile service company, including the former CEO who left in January. Rene brings to Celtel ten years of experience from Managing Tigo in Tanzania. Last year, before he left Tigo, he introduced the Tsh.1 per minute calling rate that revolutionized the mobile service in Tanzania.

It’s now official that Celtel Kenya will change its name to Zain as from August.

More from Bongo

Tanzanians are planning to use the Kimunya saga in Kenya as yard stick against which their own grand corruption victims will be prosecuted.

KCB Rwanda Approved

KCB has been given a go ahead by Rwandan authorities to start operating the bank branch in the country. The bank plans to open at least five branches in the country.

Tornado in Kenya?

Apparently, according to this story, there was a tornado in Kenya and funds are being raised to support some victim in Mwamanga village. How come a tornado hit kenya and nobody told me?

It’s not about Safaricom or Celtel

2008-07-05T11:40:00.003+03:00

The mobile services wars in Kenya is getting hotter by the day, with Celtel introducing a ‘free’ call service and an internet service, while Safaricom are taking their customers by storm with their hot spot internet service (supported by 3G technology). However what seems to be tight rivalry for the market share between the two has little to do with competition. It’s all about the entry of Telkom (Orange) and Econet who are set to roll out their services by the end of this year.

Even Celtel, whose customer base reduced by 23% last year, seem to be fighting for their share in the market (albeit a confused marketing strategy) and hoping to technically eat into Safaricom’s market share. I like what is happening since only the consumers stand to gain for all these reduced prices and new-better services. I want to believe that by time Econet and Telkom will be fully in business the highest calling rate will be Ksh.5 with the internet going for Ksh.1,000 p.m. lets wait and see.

Even higher food prices:

As if the 50% rise in food prices in Kenya is not enough, a law that all food products sold in Kenya should bear an approval mark from KEBS as from October, is going to increase food prices even higher. I appreciate the noble intentions of the regulation but the timing is so wrong. For a generation that was raised on substandard goods and services – where even the education system was compromised – the KEBS fee can wait for another day.

Mid 2007 Green List Performance

2008-06-27T15:47:00.002+03:00

Last year I picked some stocks that I expected to perform exceptionally and placed them into my ‘green list’. A year later out of the four stocks I picked only one performed dismally while the other three have performed exceptionally, surpassing the market average of 12.30%. In fact they are the best performers for the period. They performed as follows:

Stock

Start

price

End

Price

Gain

Other

information

AccessKenya Group

13.35

35.00

+162.17%

The only post election effects survivor

Equity Bank

139.00

300.00

+115.83%

Eminent split

KCB

24.00

31.50

+31.25%

Issuing rights

E.A.Cables

46.00

41.50

-9.78%

No known activity

1,000 shares in each counter would have made you Ksh.185K richer, a whooping 83% gain. Who ever says last year was a bad year is a speculator. Considering the little effort it took to analyze the stocks I picked for the green list, then only a speculator could have made losses last year by buying stocks blindly. All an investor need to do is understand the counter he intend to buy in – management, business strategy and numbers (though I’ve discovered that historical numbers don’t count that much)

Soon I will post "the 2008 green list" after some analysis. I feel that after the Safaricom IPO there is a small ‘breath’ in the market that may lead to a correction like the one experienced in 2007 March. But no cause for alarm, I could be wrong.

{Disclaimer - this is a personal market opinion and list of my preferred stocks. It does not indicate certainty and anybody reading this should consult their investment advisor/ broker before making any investment decision}

The Last Man Standing

2008-06-27T14:03:00.003+03:00

I have no words for this guy...............................................

Celtel/Zain on the Roll

2008-06-11T15:10:00.001+03:00

Celtel Zambia has started trading on the Lusaka Stock Exchange (LuSE) today concluding the company’s IPO. The share rose 13.3% to highs of 725 kwacha (Ksh.12.50) for the listing price of 640 kwacha (Ksh.11). The IPO was 150% oversubscribed. Allotment preference will be given to the Zambian Public and Zambian institutional investors. On offer were one billion shares, 20% of Celtel Zambia, at a price of 640 kwacha (Ksh.11) per share. Applications for the ordinary shares were for a minimum of 700 ordinary shares and thereafter in multiples of 100 ordinary shares.

Zain, Celtels parent company, is seeking to buy 3 African mobile operators after concluding a US$5 billion IPO in an unspecified European stock exchange. There are possibilities that the multinational may be targeting the South African and Egyptian markets, which are some of the richest on the continent. Zain’s Q1 2008 results indicated that their customer base reached 45.7m, while their net profit rose 10% to US$270 million. Their borderless roaming services, where customers do not pay any premium for using their phones when roaming in certain African countries in East and Central Africa is something watch.