Items by bankelele

bankelele

• Educating Taxpayers

  Posted: February 9, 2012, 12:32 pm by bankelele

  Do you have questions about taxes? How to calculate Value Added (VAT), Withholding, or Pay As You Earn(PAYE) or other taxes? When to assess them, and where to pay them? It's not just large corporations who are unsure on how much tax to pay, but such questions also apply to small business owners & ordinary citizens who are all taxpayers.
  
  The Kenya Revenue Authority (KRA) has seminars and sessions for taxpayers almost every week. There are two kinds of these, one for their online system held on most Thursday's in all the major towns (Nakuru, Eldoret, Naivasha, Meru, Kericho, Malindi, Machakos, Embu, Nyeri, Kisii, Thika, Kakamega, Kisumu, Mombasa, Nairobi) and others for new taxpayers held in the same towns as well as Bungoma, Lamu, and Voi with emphasis on introduction to VAT and income tax rights and obligations.
  
  The classes all have Q&A sessions in which many questions are asked. This is very useful as it's better to ask them there, without consequences, than ask them when you have a tax inspector visit your business premises!
  
  Right now KRA is running dual systems - manual and online with different taxpayers using either method to file various tax returns, monthly, quarterly, or annually. It's their intention to make more online filing mandatory for taxpayers and this will be done in a phased manner.

  The goal of this is to have a more efficient tax collection system and because it's more effective to get taxpayers to cooperate than to coerce them. Also getting more people to file their tax returns online from cyber cafes or from their business premises, will result in fewer people having to queue to pay taxes at KRA offices.
  
  Business people who bank with National Bank, Cooperative Bank and to a lesser extent KCB also have some filing advantages as these banks have invested in systems that are compatible with KRA's and so payments made at these banks are automatically reflected as their tax filings.

• Guide to Port-au-Prince

  Posted: February 7, 2012, 7:51 pm by bankelele

  guest post on a visit to Haiti, two years after the earthquake where it's an odd mix of NGO's, dollars, insecurity and voodoo
  
  Getting There: Only British Airways gets you there with change over stops in London, New York (or other US airport), then on to Haiti for about $2,500...always with a one night sleep over and 22 hours flight time in total. You can use Kenya airways too via Dubai, Paris, Miami then Haiti and for that you use a UK Visa
  
  The airport (Toussaint Louverture International Airport) is pretty fast as long as you have your visa... You require a UK visa or US Visa to be admitted in to the country. Unique: They have a band playing all the time to welcome you into the country. They also have uniformed casual laborers who offer to push your trolley from the clearance office to the pick up point about 200m for a small fee.....however the trolleys at the airport are not free like in Kenya...its $10 for one.
  
  Getting around: Locals mostly use matatus which are called tap tap. Taxis are not readily available and they are not colour coded or marked or parked in a certain areas..... They are few private vehicles, and take these at your own risk.
  
  There are parking boys are on the streets and when there is traffic they dust your windscreen and car with a dirty dry rag and expect you to pay something small.
  
  They have two main highways. Also there's no parking lane on the streets. The roads are very narrow so people park half on the kerb and half on the road that causes mad traffic.... but the President is escorted everywhere by local police and UN police.
  
  Insecurity Getting around you feel very insecure as riots are the norm and you see people walking with placards and complaining about the president, political affairs or the NGOs. This is because foreigners are targeted - so if you don't speak fluent French, and look exotic, you're advise to walk with a local or use a driver wherever you go. Basically, if you work for an NGO, you’re a hostage (biggest targets for kidnapping) who rarely walks more than 100 metres.
  
  Business & economy: The country is run by 1% of the population... and there's an absolute divide between the poor and rich. Its not surprising to see an Aston Martin, and rich people withdraw money from the banks on Friday because they are scared they might collapse over the weekend - so by Friday afternoon you cant find money in the bank!
  
  You can use dollars or gouds (Haitian currency) to trade, but the ATM's do not dispense dollars. In October 2011, dollars started disappearing from the country as people were hedging against inflation and it became so bad that from December you could not get any dollars from the bank - and some organizations had to send money in from neighboring country and then have G4S transport it here so that they could pay for their expats and operations.

  As is in most places, suburbs are next door to the slums and they have mass graves due to the earthquakes. Its mountainous and hilly and houses are built on the hills in an unfathomable way.
  
  Two years after the earthquake, there are still camps (in the form of tents) in the middle of the CBD where the displaced people stay. e.g. in the park next to Hilton Hotel. Gangs have been formed in the camps and they are responsible for kidnapping of NGO staff to solicit for money from the NGOs. The gangs are so good and efficient that if your wallet is stolen in the city, and you know a gang member in that area code, they will get it back for you for a fee with everything intact!
  
  Communications My roaming line is expensive its like Kshs. 180 per minute without taxes (post paid), and local calls to Kenya cost about $2. They are hotspots in a few expatriates restaurants.
  
  Where to Stay: Hotels are like $140 -160 and these include Le Manoir $140, El Rancho $130, Ibolele $155 while Karibe, a 5 star is $320. Electricity is very unstable and generators are used a lot.
  
  Customer service: is a thing of the past it takes at least 40 minutes to get your order in most restaurants... and once you finish eating they clear the table and don’t present the bill....and when you ask for it, it takes another 30 minutes.....so you're advised to ask for the food and the bill together ..Walking out without paying is also an option as it actually takes them long to notice as its not an area of priority. Despite this food is expensive, and for a nice meal the cheapest is ~$15. The main local dish is Rice and beans and beers cost about $2.
  
  Shopping & Sight Seeing: The ladies mode of dressing on a day to day basis leaves nothing to your imagination....Maybe its Caribbean culture or the weather which is hot and hummmmid!!!. Also an interesting sight while walking around is seeing pharmaceuticals hawked on the street - with medicines taped around big basins.
  
  French Is the main language here and all the newspapers are in French or creole. There are beaches & animal orphanages, but very few malls and nothing much good to shop.
  
  They are 4 big groceries/supermarkets (like Nakumatt) where many shops and they also have very high end shops which sell some very expensive French designer stuff. Popular gift items are some very good paintings and pictures which are hung on the streets and in the cultural centres.

  Odd points: Voodoo is the order of the day its their culture and people carry anointing oil. It's no surprise to read in the papers or watch news of someone found walking with skulls. They have festivals and carnivals to celebrate it. and they drink a liquid which makes their eyeballs turn back to their heads and then parade in the streets doing their rituals. Creepy stuff! As with all Caribbean countries, reggae is the in- thing, but there is even voodoo music which plays in all the clubs (at a faster beat with drums and chants).

• Idea Exchange: Pivot, MobileWeb, TEDx

  Posted: February 5, 2012, 4:12 pm by bankelele

  All Africa Business Leaders Awards from CNBC Africa is open for nominations in the following categories; business leader of the year, young business leader of the year, businesswoman of the year, entrepreneur of the year, and lifetime achievement award.
  
  Cartier Women’s Initiative award targets female entrepreneurs engaged in creative for profit initiatives and prizes may be up to $20,000 per year.
  
  The IDS Knowledge Services Open Application Programming Interface has technical grants of up to £3,000 in two categories - plug-ins and innovations. Details here.
  
  Mobile East Africa: returns to Nairobi on February 22 and 23. When the event was last here two years ago, it was an eye opener on the presence mobile advertising, mobile learning, smart phones sales, social media potential, gaming, and software standards.
  
  Persephone Miel Fellowship from the Pulitzer Center & Internews, is designed to help media professionals (journalists, writers, photographers, radio producers, filmmakers; as well as free-lancers and media professionals) outside of the United States do the kind of reporting they've always wanted to do, and comes with a travel grant, payments and distribution arrangment.
  
  Pivot East: Entries are open for this year’s edition of Pivot East (previously known as Pivot25) scheduled for June in Nairobi. Categories this year include financial services, business & resource management, entertainment , mobile society and utilities and the competition is open to companies and individuals in Kenya, Uganda, Tanzania, Rwanda, South Sudan and Somalia.
  
  The Poptech social innovation fellowship is now open.
  
  The Stanford Africa Forum forum on February 25 (source Ken Opalo)
  
  TEDxPreparations are also on for the next edition of TEDxNairobi.

  Here’s a favourite video from the last TEDxNairobi with students from the Bishop Lawi Imathiu Secondary School in Meru performing a classical music selection in September 2010.

• Kenya’s Simple Debt

  Posted: January 30, 2012, 5:46 pm by bankelele

  This interesting graphic of the US debt translated into a family’s mortgage has been making the rounds on Facebook.

  How does Kenya’s debt stack up? Drawing on various internet document & newspaper sources and converting tax revenue, the last budget and government debt it breaks down as:
  
  Annual family income: Kshs. 609,000
  Money the family spent: Kshs. 919,000
  Annual debt payments: Kshs. 32,000
  Outstanding debt: Kshs. 1,400,000
  Budget cuts: Annual announcements of travel cuts, freezes on new vehicles, are offset by ever increasing salaries and new government structures
  
  Is this accurate? Corrections on figures are welcomed

• Kenyan Vitalstatistix

  Posted: January 15, 2012, 2:57 pm by bankelele

  Sample these common humorous quotes about statistics: Definition - the science of producing unreliable facts from reliable figures; 98% of all statistics are made up; statistics are like bikinis - what they reveal is suggestive, but what they conceal is vital

  As Kenyans celebrate the open data movement of 2011, some in the finance and planning department of banks, and many companies and offices involved in analysis are probably lamenting the loss of one of the most useful statistical publications that the Kenya Government used to put out – the Monthly Economic Review from the Central Bank of Kenya.
  
  The document was a treasure of vital information such as from GDP growth by sector, monthly inflation comparisons (over several years), overnight & inter-bank rates, bad loan positions, Kenya's monthly exports & imports (numbers and sectorial components), tourist visitor numbers, manufacturing output, vehicle imports, Kilindini port volumes, composition of Kenya local and foreign debt, gold holdings, money supply etc. that many found to be very useful.
  
  The last report put out was in August 2011, and while there's little doubt that such information is still being collected, for some reasons it's not being shared anymore. And this may have coincided with the shillings’ haywire.
  
  The report compiled reports form diverse parts of the economy and published them in a nice easy to use format compared to some difficulty obtaining the same from the official Bureau of Statistics or having to wade through speeches of Ministers or Permanent secretaries for the information.

• Cheque Truncation Part III

  Posted: January 12, 2012, 6:10 pm by bankelele

  The much vaunted cheque truncation may be here at last after a notice at the bank branch that it will be in effect from Monday - January 16 - six months later than scheduled. Cheques may now take as little as one day to clear. However the notice also reminds & cautions bank customers that even cheques they write will hit their account within a day of presentation - and that they should watch that they don't get inconvenienced .i.e. issue cheques that bounce (bad for them, good for the bank which will hit them with more charges)

  Having cheques clear faster is also a matter of necessity for banks if they hope to have cheques remain relevant and preferred for small payments. The number of cheques used in Kenya in 2010 (15.7m) and 2011 (16.7) was lower than the 16.8 million used in each of the two years before - and having a cheque book is less of factor when people open personal accounts.
  
  The volume of transactions and money moved by M-Pesa and other mobile money systems show they are the preferred way for instant payments. Banks did not help themselves in this by relegating banker's cheques (previously the preferred way of paying school fees) to a slower clearing cycle - same as other regular cheques (to guard against fraud), even before direct deposits (to school accounts) and M-Pesa established themselves. By having cheques clear faster ensure they don't go the way of the travellers' cheques.
  
  More on cheque truncation in Part I and Part II

• Blogging in 2011

  Posted: January 8, 2012, 1:07 am by bankelele

  Last year was a very busy one, but which meant there were fewer blog posts. However, there was more collaboration and guest posting, as well as more travel tales, but with limits in what to write. While there were many more events to attend (sometimes two a day), there was some difficulty in finding what to write that was not better expressed on in short posts on twitter.
  
  Fortunately, life as a consumer of goods, services, and information was an data source of posts - and here are the most read posts (published in 2011), some of which had links to others in the top 25.

  1. Mututho a.k.a. the new Alcohol Law in Kenya was the most read post of the year.
  
  2.Kenya bank rankings was a list of the top Kenyan banks for 2010.
  
  3. Farewell Mars Group was written when this Kenya anti-corruption watchdog group suddenly shut down it’s website (but it's now back online).
  
  4. Prepaid Electricity meters were rolled out by the Kenya Power & Lighting Company and many people who were in the dark searched online for information about the new system.
  
  5. A post about Overlappers and bad driving was the most popular motoring post.
  
  6. Pepsi in Kenya was about their quiet re-entry to this market. Somewhat related was a link to my guest post about KFC in Kenya (No. 24) that was published in the UpNairobi magazine.
  
  7. Banks introduced a new cheque design & clearance system. But did it flop? (No. 23)
  
  8. Guide to Accra by @Coldtusker was the top in the series of African capital travel series write-ups.
  
  9. Another of the travel series was the Guide to Addis Ababa by @Kahenya which proved very useful as it gave me a last minute reminder not to fly to Ethiopia without a yellow fever certificate. Other popular travel tales were from the Hague (No. 19), Gaborone Botswana (No. 22) by @MarvinTumbo and Asmara in rarely visited Eritrea (No. 25).
  
  10. More driving tales rounded up the top ten – this one focused on Thika Road as did another a guest post wondering how Kenyans will maintain Thika Road (No. 13) when the Chinese contractors leave.
  
  11. Unplanned Infrastructure in Nairobi was the most popular real estate one, along with other posts on sector developments (No. 14), Tatu City (No. 20), and other Golf Resorts (No. 21)

• Fun with Wordle

  Posted: January 6, 2012, 4:20 pm by bankelele

  Inspired by Rookie Manager, here's a Wordle snap of some top words contained in this blog;
  
  

• Boeing 787 in Nairobi

  Posted: December 27, 2011, 9:48 am by bankelele

  Boeing brought a new 787 aircraft to Nairobi as part of their Dreamliner World Tour in mid-December.

  Boeing were presenting the plane to their customers who had ordered the plane in record numbers, but then had to wait for a few years more for delivery due to delays in completion of the plane. It's first flight was scheduled for 7th August 2007 (07-08-07) but this took place in 2010 and while airlines like Kenya Airways were supposed to have received Dreamliner planes in September 2010, currently there are still only 2 Dreamliner planes in customer service (both with All Nippon Airways Japan. And while Kenya Airways (KQ) had billboards and newspaper adverts showing the 787 plane in their corporate colours, it was a Boeing coloured jet that was flown in by KQ's Captain Paul Mwangi after a similar presentation in Addis Ababa.
  
  There was a dinner held at the KQ headquarters the second night that the Dreamliner was in Nairobi that I was fortunate to attend. It was also a treat to meet many of the 40 staff Boeing staff who accompanied the plane on the tour through Africa and the plane attracted hundreds of visitors including local CEO's, passengers and even a Kenyan born Rolls Royce engineer.
  
  MC Jeff Koinange started the evening off with his tales of how he used to be a PanAm airline steward making on board announcements and this led to the discovery that his voice would take him into journalism, and later Prime Minister Raila Odinga talked growing up in UK (Kisumu) where he watched amphibious planes land on Lake Victoria (flying routes from Europe through Benghazi, Khartoum, Juba, Kisumu, Salisbury, Johannesburg) and later recapped a sequential history of Boeing aircraft development. He later spoke of KQ which rose out of the grounding of East African Airlines, it’s early loss making years as a state airlines, the heavily debated decision to privatize it, the repayment it has made to Kenyan taxpayers, and plans to make Nairobi for an African hub with a new terminal to be built next to presidential pavilion and a second runway (reason for Syokimau demolitions)

  KQ Expansion: The Airlines CEO, Titus Naikuni, spoke of the group's turnover of Kshs 90 billion and plans to double the fleet from 34 to 68 aircraft in five years (now ordered 787 and Embraer and 777-300's which can carry 400 passengers towards that). But he cautioned that there are not enough pilots in the country (that days' newspapers had KQ ad's seeking new pilots for Embraer jets) and that the airline may hire foreign pilots' out of necessity . He also said that they are happy that the airport (JKIA) is now showing construction progress and commended the Kenya Transport ministry for bilateral negotiations that have enabled the airline to fly new routes in Africa.
  
  Ethiopian vs. KQ: As KQ prepared for their Dreamliner arrival & party events, Ethiopian Airlines ran some in-your-face ads in Kenyan newspaper with the caption that the first 787 landing in Africa was at Addis Ababa, and flown by an Ethiopian pilot. True on both - as Ethiopian Airlines which is a much older airline than Kenya Airways, with a longer history with Boeing and closer relationship in terms of customers, maintenance, training etc. Ethiopian was the first African Airlines to order the 787, (and they have even ordered Airbus A350 which is yet to be built)

  Dream Flight?: There was some expectation over the three days that invited guests of Kenya Airways would get to fly on the 787 over Kilimanjaro and Mombasa but that was not to happen. The flight took place with on the last days with only a few Kenya Airways staff on-board, and passengers will have to wait till the end of 2013 to fly on KQ - or given the local African rivalry, Ethiopian may use one on the Addis Nairobi route to feed off our impatience!
  
  Read more on the 787 Dreamliner

  .

• Top Kenyan banking stories of 2011

  Posted: December 20, 2011, 4:53 pm by bankelele

  Agency Banking took banking to your neighbourhood as kiosks became a bank - pioneered by Equity Bank, and followed by KCB (Mtaani) and Co-Op (Jirani) - mainly enabling cash deposits and withdrawals. Read more.
  
  Cheque Truncation promised so much in new, more secure cheques, that would take a 1-2 days to clear compared to the current one week (four working days). However the launch was put off by a delay in printing of new cheques at several banks, and when the program rolled out a few months later, cheques resembled the old ones, and still cleared at the same old pace.
  
  Fraud: There was increasing fraud reported as a result of faster, easier, banking through real time gross settlements and mobile banking, and there were more tales of thieves being arrested with dozen’s of skimmed ATM cards -
  - so watch your statements every month
  
  Mobile Partnerships: Banks surrendered on making customers use their own platforms for mobile banking, and instead opted to partner with Safaricom's M-pesa. In 2011, there were 8 banks that account holders could move money from their bank accounts to M-pesa and back - and these included large banks like Barclays, Co-Op, Equity and KCB. Also electronic banking is now dead as a premium products, and many of the same banks now have these as a free addition to their customers, saving them from the expense of having to print and mail statements to customers.
  
  Super Profits: Did banks profit from the Central Bank's mismanagement of rates leading to weaker exchange rates? The Central Bank Governor said five banks did, but then refused to say who they were. Parliament continued to push and came up with a list, but could not prove the claims that the banks made super profits at the expense of the shilling.
  
  Executive Suites: Management changes at KCB resulted in top managers leaving the bank - and moving to rivals like Family Bank and Jamii Bora where they cut equity based compensation deals based on performance (modeled after the Co-Op one of a few years ago).
  
  Interest Rate Hike: Late in the year, there was an about turn in the monetary policy - to rescue the Kenya shilling that, and this came in the form of cut back in liquidity. From that, banks drastically raised their loan rates e.g. Mortgages at Equity bank went from 14% to 25% and many banks offered new loans at +30%. To stave off defaults, some banks held their existing loan rates steady, but with extensions of loan maturity periods. The Kenya Banker's Association then proposed other measures (PDF) such as limiting repayment rate hikes, not penalizing early payers and (unlikely) asking banks to absorb costs!

• Guide to Lilongwe

  Posted: December 19, 2011, 3:06 pm by bankelele

  A guest post by @chiefnyamweya, an Artist, Web-enthusiast, and Comic Creator.
  
  Getting there: You can use Ethiopian Airlines at a cost of Kshs 62,500 (~$735) (and Kenya Aiways too). You have to have a yellow fever certificate. On arrival, you face the risk of losing checked in baggage, and as there is a severe fuel crisis, a taxi into town could cost $50

  Getting around: I didn't pay much attention, as we had access to a private vehicle. But on the flip-side to the fuel crisis, there are no traffic jams!
  
  Speak English, as Swahili is useless there, and you'll endear yourself if you learned a little Chichewa. The one phrase I picked up (since it was said a lot to me) was "Musojela!!" or "You'll get Lost!" Take any normal precautions as you'd take in Kenya, and I never once saw an AK-47 wielding cop here.
  
  Hotels: You can get some very decent accommodation at Kshs .4,000 ($47) per night. Electricity is patchy, like Kenya, but a bit worse.
  
  Dining: Excellent fish. They eat Ugali too, and their pineapples are sweet, but without the sting.
  
  Communications: This was problematic. Roaming was expensive, and it was better to call Kenya, than have someone call from Kenya as you'd both be charged - and this was at about Kshs 25 per minute.
  
  Shopping & Sight-Seeing: For shopping, there is Shoprite in both Blantyre and Lilongwe, while the two sights I got to see were Lake Malawi and Mount Mulanji. A local legend I heard about was about (people) disappearing on Mt. Mulanji.
  
  Surprises: - Excellent roads here
  - Women kneel in the presence of men when serving food or washing their hands (among other perceived gender inequalities)

• Guide to Bamako

  Posted: December 19, 2011, 2:59 pm by bankelele

  Getting There: Kenya Airways has direct (7 hour) flights to Bamako on Sundays and Wednesdays. Ethiopian Airlines also comes to Bamako but through Addis Ababa, and these costs about $1,000 - $1,200.
  
  Getting Around: The airport is small hence has low traffic. Most people get visas upon arrival at US $40 and a taxi from the airport to hotel is about $50.
  
  Motorbikes are the main mode of transport and they are driven both by ladies and men. There are old Ford model matatu-like minibuses with benches, but not doors or windows - and people crowd in there with their goods.
  
  This is a French-speaking country with the local language being Bambara
  
  Hotels: Most hotels offer and charge for bed-only, no breakfast.
  
  Shopping & Sight-Seeing: Popular tourist buy items are local fabrics called Bazin. However, the market is not for the squeamish, as among the foods, fabrics, and artisans selling their wares, you may also find people skinning & selling monkeys, snakes lizards rats and dogs - mainly for voodoo. Also influenced by Benin, dogs are sold & eaten.
  
  Odd sights: There are many instances of double births, and you see women begging on streets with small kids who are twins.

• Urban Inflation Index: December 2011

  Posted: December 16, 2011, 3:52 pm by bankelele

  What a year it has been, mostly not for the better with petrol and dollar prices setting records, and accompanied by other shortages. The Kenya government started a military anti-terror expedition in Somalia, and as war expenses can drastically alter government spending budgets, it was recently decided to bring the mission to the United Nations and have them offset the war cost to some extent.
  
  On to the index comparing prices to three three months ago and year ago!
  
  Gotten Cheaper:
  Foreign Exchange: 1 US$ equals Kshs. 84 compared to Kshs 95.6 three months ago and 80.5 a year ago. That snapshot does not capture the roller coaster quarter the shillings has hard, dropping to an unprecedented level of Kshs. 107 to the dollar (and being ranked as one of the worst performing currencies in the world) before the Government instituted an interest rate hike and cut back liquidity to the banking sector. While the shilling was in free fall, and few could explain why, a World Bank blog post revealed that Kenya's exports were (at the time) not enough to meet the country's fuel bill, (Three years ago it cost Kshs 79 /$)
  
  Staple Food: Maize flour, which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2kg pack costs Kshs. 113, down from a record high of 119 in September, but still almost double the Ksh.s 69 cost in December 2010 (Three years ago it cost Kshs 97)
  
  Other food item: Sugar : A 2 kg. Mumias pack which was Kshs. 385 in September is now 375, but still almost double the Kshs 195 of last December. In other news Kenya seems to have applied for another extension of a COMESA import cap, denying consumers the option of cheaper sugar imports to protect the largely uncompetitive local producers who have trouble ensuring adequate supply of sugar into supermarkets.
  
  About the same:
  Communications: These are largely unchanged though Safaricom announced a modest price increase by of voice call tariffs (which Orange are itching to follow) and @Kahenya says that corporate m-pesa tariffs have also been increased.
  
  Beer/Entertainment: A bottle of Tusker beer is Kshs 180 ($2) (at a local pub) , unchanged from three months ago. The alcohol sector has a lot of competition now with the new brands being launched (Miller Genuine Draft) and others revived/getting new marketing pushes (Redds, White Cap Light, Heineken, Windhoek, Sierra) in a realignment of brands and owners between East African Breweries (EABL) and SAB Miller.
  
  More Expensive
  Fuel: A litre of petrol was Kshs. 124 up from 117.7 in September and 94.3 last December. Two days ago, in reaction to threats of transport operators to go on strike during Christmas week, the Energy Regulatory Commission (ERC) announced the first ever price reduction since the introduction of the price control regime - and for Nairobi the cost of petrol will be Kshs 119 (~$6.2 per gallon) till January 15 2012. (Three years ago it cost Kshs 92.7)

  Utilities: Pre-paid electricity is about Kshs 2,500 per month (up from the regular purchases totaling 2,000). There are rolling blackouts as seen in the ads run by the Kenya Power company, spreading the shortfall across the country.
  
  LPG - Cooking gas has been in short supply in different parts of the country, with many sellers in Nairobi not having any stock to sell for weeks. Those that do are selling them at increased prices - e.g. cylinders that used to costs Kshs 2,500 for 13KG, are selling at between Kshs 3,200 - 5,000 if you can find them.

• 2011 Kenya Bank Rankings

  Posted: December 16, 2011, 12:53 pm by bankelele

  Comparing to last year with the 2010 top banks
  
  11. NIC and National Bank (No. 7 last year) both with Kshs. 70.2 billion ($790 million) in assets and profits of about Kshs. 2 billion as at September 2011. National Bank falls from No. 7 as it has been passed by some fast growing banks on the list. Quiet year, NBK has grown it's loan book by 52% compared to a year ago, but had less profit than last year which is odd for most banks. NIC is about 28% larger than a year ago in asset and will have about 3.75 billion in profit for 2011
  
  10. Citibank Kenya (9. last year) September assets of Kshs. 71.6 billion and profits of 3.25 billion in another quiet year for the bank.
  
  9 Diamond Trust (10) September assets of Kshs. 74.6 billion and profits of 2.4 billion deposits up 35% and loans up 45% from a year ago but with expenses growing at a slightly faster pace than income .
  
  8. Commercial Bank of Africa (8) with September asset of Kshs. 75.7 billion and profits of 2.04 billion. Corporate bank made new came under political rad on the banking side, opened new branches in new malls in Nairobi like Junction, Galleria and then has re-branded in October with new logo. as excepted a rights issue is planned to right a capital adequacy position
  
  7. Investment & Mortgages (last year 11) September assets of Kshs. 79.5 billion and profits of 3.2 billion in a quite year for the bank except for its' rapid growth and entry into mortgage finance.
  
  6 CFC Stanbic (6) September assets of Kshs. 145.2 billion and profits of Kshs. 2.38 billion. The bank just announced a rights issue. Earlier in the year, has some board changes with new Chairman, and this is the first year of separation of the assets of the insurance from the banking
  
  5. Standard Chartered (4) September assets of Kshs. 165.7 billion and profits of Kshs. 5.49 billion. This is one of the few banks to have a lower profit than a year ago (Kshs 6.1 billion). Opened new headquarters, but it's automation of customers service has led to some customer frustration - retail and corporate
  
  4. Cooperative (3) September assets of Kshs. 167 billion and profits of Kshs. 5.45 billion. East African Newspaper this week announced that they will withhold divided to finance capital growth and postponed a planned rights issue to 2013 - and it was awarded best bank in Kenya by the Financial Times of London
  
  3. Equity (5) September assets of Kshs. 172.6 billion and profits of Kshs. 8.25 billion. Another award winning year for the bank who pioneered agency banking model which has been followed by KCB and Co-Op. In the news doe accolades for their CEO, a deal to collect park fees for the Narok Council in the Masai Mara, becoming the latest Kenyan bank to diversify to Rwanda, but also for an about turn with the rest of the banking sector when they raised their lending rates from 15% to 25%
  
  2. Barclays (2) September asset of Kshs. 180.9 billion and profits of Kshs 8.9 billion. A quiet year of modest growth for the bank in danger of being overhauled by Equity
  
  1. KCB (1) September asset of Kshs 273.9 billion and profits of Kshs. 8.6 billion. Increased it's gap from Barclays, and matches Equity’s reduced growth rate. Emphasized connectivity across East Africa, had a management shake up - and with i's regional presents, it has assets of Kshs. 322 billion ($3.6 billon) and profits of Kshs. 9.1 billion ($103 million)

• Guide to Bangui

  Posted: December 14, 2011, 1:54 am by bankelele

  A guest post by @Anahi_Ayala who visited this CFA-zone country, that was home to the infamous former Emperor Bokassa, and which now has another grandiose project from a modern-day self-styled emperor - Gaddafi
  
  Getting There: From Nairobi, you can take a direct flight to Bangui that's just over three hours, and a round trip costs about $1,000. Alternatively, you can fly with Ethiopian Airlines. However this is a longer flight - with stop over in Addis Ababa of 4/5 hours, then another flight to Douala (Cameroon) where passengers proceeding to Bangui are not allowed to disembark during a 1hr 30min) and then you take off to Bangui - and so the entire trip including layovers, is around 12 hours.
  
  Visa's are done before hand, and the process is pretty easy and they usually give 3-month visas. There is no tax to on arrival, but to leave the country you pay a 10,000F tax (~$22 USD).
  
  At Bangui Airport, the customer system is pretty meticulous: They search the bag of each person, and if you have goods that they think you have to pay extra for they will start shouting crazy prices - But you can settle it down with some bargaining and perhaps paying a bribe.
  
  Getting Around: A taxi to town costs around 1500F ($3). People normally use shared taxis (which fit in as many people as they can) and there are also buses which leave from the main bus station in Bangui and go almost everywhere in the country. These take long time to arrive due to crazy conditions of the streets and sometimes break down along the way. Another way to do long distance travel, is using cargo vans (People sit on the top of the cargo. Some of the destinations (like the north of the country) take around 4 or 4 days to get there, while others like Obo can take around 7 days.
  
  I was always going around by myself and had no problem, but one needs to be careful anyway since here in CAR poverty is at the extreme: a teacher salary is around $200, meaning that a normal person get around $50 a month. So if you go around with $100 in your pocket and people see it, is not good. I have friends here that got robbed in the street, but never anything violent: people just take your money from your pocket when there is a crowd.
  
  Corruption is also widespread so if you get stopped by a policeman and you are doing something illegal this can cost you a lot of money. The interesting part of this is that the local population gives you advice in the street if they see you are doing something stupid – like someone told me to remove my phone from the back pocket to put in the front, or at the airport they came to tell me that my luggage did not have a padlock and that it was advisable to get one.
  
  Security outside Bangui is another issue. The road from Bangui to Obo (South East of the country) is often attacked by the LRA (Lord's Resistance Army), so no one really uses it (you can take a UN flight to go there, twice a week, which costs $100 per ticket and you need to reserve to see if they have space – maximum $15 per person). The route from Bangui to Bambari (North) is also often attacked by bandits - normally there is no violence involved, they just rob you, get money & anything valuable and then let you go. The entire 5 regions in the North of the country are controlled by different rebels groups and the government suggests not to go there. Only private charters go there and there are no humanitarian agencies working in those areas, only visited by the Diamond Mines people (who have no problem going in and out).
  
  Getting around, you spend around 8000F (including eating outside) in Bangui ($18). Outside Bangui not more than 3000F ($6)
  
  The local language is Sango, but each region also has a local dialect. The national language is also French, but outside Bangui, few people can understand it and it is rare to hear them use it, and no one understands English
  
  In Bangui there are around 3 newspapers published which publish not more than 500 copies: the quality is horrible, as they are all politically driven and the news is distorted in order to favor the political side take by the newspaper. Also there are no newspaper in English.
  
  Business & Infrastructure: Where to Stay: There are several hotels in Bangui, all very expensive and with terrible services. One of the best one is the J&M hotel, which cost around $100 a night for a single room. They claim they have internet but it does not really work properly. They have 4 different locations: the J&M one is the best one, the others use the name but have a lower quality of services and rooms.
  
  Another hotel is the Hotel du Centre or Hotel Central. It also costs $100 a night and the service is terrible: rooms are dirty and everything is broken. The hall of the hotel looks like an old school pub and it smells old.
  
  There is a super luxury hotel that is being built by Gaddafi (well, was Gaddafi). It is supposed to be super fancy, with swimming pool and super nice rooms, but I have no idea how they think it will stay open as there is simply no way they can sustain the costs as there are not that many people that need a hotel in Bangui!
  
  Another possible place to stay, is a center managed by the Nuns, and is part of the main cathedral of the city. The center is supposed to be for the missionaries that come to work in the country, but they also host guests for short time. It costs around $50 for a single room, the rooms are super simple but clean and they also offer breakfast with the room. You can have lunch and dinner of you want too for an additional $10. The nuns are very nice and dinner, breakfast and lunch are all served in a common room and at a common table (fixed hours: 7AM, noon and 7PM).
  
  Electricity is not reliable at all, and it often went away in the middle of the day and during the night. Every office here has a generator to survive. I counted in my office and on average the electricity goes away every 30 minutes or one hours, sometimes for short periods, but sometimes for hours. Outside Bangui there is no electricity in the main cities or in the villages: everything works with generators and normally around 6pm, depending on the places, everything turns dark. Likewise, with water provision, there is no water in the houses, and everything is taken from water pumps.
  
  Communications: Safaricom has roaming here but I did not use it to tell you how much does it costs. You can register with Orange and Telecell for them to activate your SIM card, but this may take more than 48 hours for the activation to actually work. If you want to use a USN bundle for this, you need to find a unblocked one (Orange had no bundles available anymore when I was here). All those bundles are second hand Huawei modems: You may buy a broken one, a blocked on and so on - and once you manage to have one that is working, you need to go to Orange or Telecell with your modem, the SIM card and the computer for them to set up the parameters. For Moov they said you just need to send an SMS, but I will only believed it if I see it then, since here everything is different when you ask then when you actually do it.
  
  Overall, the cost of an international call is around $1/minute and using data on your mobile phone is a nightmare with local SIM cards.
  
  Food & Life (Bars): The main dish is fish (capitain) and something very similar to Ugali, but done with Tapioca. They eat a lot of meat - goat, chicken and beef, but almost no vegetables. The local beer is called Castel but they also have Sudanese beers and Mocop Beer from Cameroon. One beer is 1000Fc ($2.5) in Bangui and around 500FC ($1.75) outside Bangui.

  Shopping & Sight-Seeing: The main shopping area is the market in the center of the city called Marché Central and it is just blocks from Bangui's port. They have beautiful clothes and very good handcrafts. There is no such a thing as a shopping mall in the all country.
  
  One place to visit in the country is the Les Chutes de Boali (Boali Waterfalls) which is around 2 hours away from Bangui. In Bangui there is the Musee de Boganda (Boganda Museum), which offers artifacts of the Central African Republic's history, and a collection of musical instruments. Another thing to see is the Place de la Republique, at the very heart of Bangui, with its large white arch were built as a monument to Jean-Bedel Bokassa, the corrupt dictator who was overthrown in 1979.
  
  Shockers: How poor it is, how miserable, how there is absolutely nothing and how devastated it is, and the fact that they eat dogs, cats, and rats. That’s weird.

• First World Problems in a Third World Country

  Posted: December 12, 2011, 9:18 pm by bankelele

  Ory (@kenyanpundit) reigned some of us with a recent comment that people are complaining on twitter about a lack of parking at the Junction Mall in Nairobi, while there are people near there who don't have enough food to eat.
  
  I realized that it's something that happens a lot. Today I spent the whole morning searching for cooking gas (LPG) which has been in short supply in Nairobi for about a month. Is that a superficial or a genuine subject worth ranting about?

  Other common complaints on twitter include:
  - Not having tap water or being caught in darkness when the electricity distributed by Kenya Power goes off (including both at Jomo Kenyatta International Airport - JKIA)
  - MPesa downtime which are almost a weekly routine with Safaricom
  - Bad service issues at the bank or with an internet service provider
  - A delayed Kenya Airways flight
  - Newly done roads that develop potholes within a few weeks
  - Companies that don't respond to email
  - Satellite TV that cuts off when it starts raining
  - The increasingly bad traffic (and bad driving styles) around Nairobi
  
  These are hardly life altering situations to tweet or complain about - and seem like trivial first world problems in a third world country. But they are unnecessary inconveniences for busy people with plans and appointments who have become accustomed to things like having regular electricity & internet connectivity, the ability to send money by phone at any time to any corner of the country, the convenience of boarding a flight to Mombasa and arriving in time for a court case or business appointment & return to Nairobi the same day, not having to pay a bribe or tip to get good customer service from a government or private office etc.
  
  They have expectations of service that, when not met cause a un-anticipated re-deployment of resources usually precious time e.g. six hours driving around town, burning (sometimes scarce) petrol in search of (LPG) cooking gas or having to call in a previous favour to accomplish a routine matter.
  
  The sad thing about this is that (at least in Kenya) politics is the missing link, and people here become accustomed to have low expectations about political class (Sonko) and their decision making. This is a fatal assumption as the 2007 election period showed and as we grapple with unnecessary & expensive challenges of infrastructure, distribution, under-employment, inflation, corruption, taxation, the solutions require the adherence of the political class to leave the third world

• 2011 Africa Awards

  Posted: December 9, 2011, 5:12 am by bankelele

  The award ceremony for the Awards took place in Nairobi on December 8. Sponsored by Legatum and Omidyar, this is the fifth year, and they received 3,300 entries from around Africa. Kenya has had numerous winners (AAR, Bio Deal, Colour Creations, Craft Silicon, Virtual City) , so it was not surprising that of the ten finalists, only one was Kenyan outsider (in financial services). Also it was nice to see and read about small and growing companies from other African countries that are not necessarily in the technology space
  
  Criteria for eligibility consideration was the companies had to have a turnover of $1 - 15 million, a profitable track record of 2 years, at least 10 employees, not be subsidiaries of other companies, among other rules.

  The overall prize of $100,000 went to Securico a woman founded security company that has thrived (edit) in inflation wracked Zimbabwe. It is an ISO certified company, with a turnover of $13 million and engage in diverse fields of security a workforce of 3,400 employees
  
  There were six winners of $50,000:
  - Chocolate City group which has a record company
  - Expand Technology makers of smart card solutions from Mauritius. Their Kenya projects include Kenol cards and KWS Smart cards
  - Pepperoni Foods from Nigeria
  - SoleRebels from Ethiopia makes shoes, and are now available through Amazon.com
  - Unique Solutions of Gambia which has grown from a cyber café to an ISP with reach in rural Gambia
  - Victoria Seeds which grows seeds and has developed and trained a network of farmers in Uganda

  Other finalists were:
  - Cellular Systems of Senegal
  - First Atlantic semiconductors from Nigeria
  - Investeq Capital Kenya
  The Africa Awards website has more info on the finalists.

• Celebrating the Cocktail Napkin

  Posted: December 8, 2011, 9:06 pm by bankelele

  In Nairobi, there are thousands of conversations that happen at restaurant lunches or over evening drinks in bars. Most are mundane, sports related, money driven, contemplation of sex, and sometimes they are about business.
  
  A lot of conversations don’t go anywhere beyond the bar. But out of a few of these, some will - through a chat, watching TV, or other exchange of idea - experience a moment of clarity (Think Pulp Fiction) - a realization of logic, or a plan or an urgent action to be taken.
  
  However, by having one more drink or a new conversation, the idea is forgotten, or shot down or entrepreneurial innovation is mentally discarded as being unfeasible

  One way to transform the moment of clarity into action is by using a cocktail napkin – i.e. sketch out ideas, plans, or action points to be taken after the bar session. Some great ideas initiatives around here, are the products of cocktail napkins like Praekelt and SwiftRiver.
  
  So how can we celebrate the cocktail napkin? Kengeles Pub used to have a bell that they would ring, when a bar VIP walked in - perhaps the person who has had the million dollar idea can use it to signal that (i) he is not to be disturbed or distracted (ii) he has to dash out to start working on his life-changing plan (iii) he will settle the bill on his next visit!
  
  Also bars can avail pens & classy note pads for aspiring people to jot down their ideas. This will help when (the next morning) the entrepreneur empties his pockets to find a crumpled, soggy napkin with illegible writing Also the note pad paper will look important enough that the spouse or maid about to do the house washing, will not throw it into the trash.

• Guide to Dakar (Senegal)

  Posted: November 22, 2011, 9:52 pm by bankelele

  A guest post by Angela (@Honoluluskye)
  
  I will preface this entry by saying that this was a very short trip for a conference, held at a luxury hotel. Being very busy with conference events, I was unable to travel out of the hotel environment more than a couple of times. Hence, I know that this is a skewed perspective of the country, but hope it helps!

  Getting There I flew the most direct route available from Nairobi to Dakar via Kenya Airways. We stopped in Mali on the way over and stopped in Ivory Coast on the way back. Including the one-hour stop to refuel, the entire flight from Nairobi to Dakar took approximately 9 hours. The roundtrip flight cost of $1,450 was more than it costs me to fly to the US from Kenya!
  
  There were no unexpected taxes upon arrival. As an American citizen, I was lucky in that I also did not need a visa, and they simply stamped my passport upon entry. It was not as easy for my Kenyan colleagues as some had not arranged for a visa’s prior to leaving Kenya and therefore had to leave their passports at the airport. But at least they were able to enter the country! Not sure if they had to pay some fees on their way out…
  
  Language: French is used everywhere. There is also mother tongue for many people though and I heard some Wolof being spoken in downtown. I believe there may be an English newspaper though I did not see one. It was difficult for me to communicate because I don’t speak French and most don’t speak English.
  
  Getting aroundI had a free hotel transport van waiting for me so don’t know the real cost of taxi from airport. But I found out that from the Radisson Blu back out to the airport via taxi, (flagged down from the hotel), was about 5,000 CFA (~ 10 USD). I know that this was expensive, and it’s the maximum that you pay.
  
  I hired a taxi to take me to the various markets in Dakar for three hours. The driver started out saying 20,000 CFA; we haggled and he was pretty stubborn, until we finally agreed to 12,000 CFA. But he accompanied me around to all of the markets and also acted sort of like a bodyguard/escort the entire time, which I appreciated. Therefore, I ended up giving him 18,000 CFA for about 3.5 hours of driving around. Usually, reasonably short, one-time, taxi rides should cost about 1,000 CFA (and if you can speak French you can probably get it down to about 850 CFA).

  Popular transport for locals are walking and also a matatu-looking bus (see picture). These are usually brightly painted, and the doors open up on the back of the vehicle making them sort of look like police vehicles. I am not sure the French name for these vehicles…
  
  It felt very safe walking around, even at night, as is the case in many Muslim countries, however the advice given was to take a taxi. There were also many MANY joggers/runners alongside the beach during sunrise, and sunset and you’d observe many practicing Muslims, washing their feet and faces in the street.
  Business & Infrastructure
  - CommunicationsInterestingly enough, upon immediate exit from the airport, all of the touts waiting outside were trying to sell… ORANGE SIM cards for mobile phones. I had a Safaricom line, but did not activate it for international use, and so it did not work in Senegal. The Wi-Fi in the hotel was not as good as I would have expected.
  - Roads: They were smooth tarmacked roads, with NO TRAFFIC! Woah! And it’s 4 pm on a Wednesday! How is that even possible??
  - Hotels: I stayed at the Radisson Blu which was incredibly expensive, in the range of 200-450 Euros/night. It had reliable electricity, but I don’t know if it was run on a generator.
  
  Shopping & Sight-Seeing: Some of the major shopping markets are Cour des Maures, Sandaga, Tileene, Colobane, HLM. Sightseeing places were the National monuments and Institut Francais. The beach is two minutes out of the airport, and as soon as you get off the airplane you can smell the salt in the air… nice!
  
  Getting around, I spent 10-20 USD on food and about 100 USD on gifts. I learned that Senegal has very nice silver jewelry. Here is an artisan/jewelry maker whom I was impressed with by his creative designs and reasonable prices.

  - Food & Drink: The main local dishes were fruits, vegetables, and rice. There are some nice French places to eat as well.
  
  Summary: Similar to Cairo but more African/French.

• Guide to Kampala

  Posted: November 19, 2011, 10:25 am by bankelele

  A guest post by a visitor to the exotic land of Museveni and Matoke!
  
  There are several airlines flying daily to Entebbe (the international airport is an hour’s drive from Kampala) and these include Fly540 and Kenya Airways which cost about $250 and $300 respectively for a round trip. There is also Air Uganda which just celebrated its fourth anniversary this month.
  
  Getting There: Entebbe Airport was fantastic, well organized, manned, signed, and even though we landed at midnight, it put JKIA to shame. The best thing I like about it was that there were no forms to fill!. The taxi was $35, but I think we got taken for a "ride" - we were approached by the official airport taxi guy and shown those rates, but were sat in another taxi and he didn't even give us a receipt! Maybe we were easy targets as the last people leaving the airport that night.
  
  Getting Around: Most locals walk and take matatus and boda bodas. Boda bodas are popular because the traffic is so horrendous. We got around in a car provided by our clients, and our driver was the owner of a car hire company that our clients use often. He drove a Rav4 and said it costs about 60,000 Ugandan shillings per day to rent, which is about $25. I'm guessing this does not include the cost of fuel.
  
  Kampala was very secure, I walked around in the evenings too , and there were army and police guards everywhere. However, many have really bad attitudes and are clearly on power trips. Also, I didn't venture into the kind of places that might be more prone to crime.
  
  Hotels: Serena was overbooked and bumped us! So we paid $150 at Imperial Royale for a single B&B, which is just behind Serena. The hotel was nice, spacious and clean, but they didn't have hand towels which was weird. I didn't have time to shop around and ask about other hotel rates. There were a few power cuts everyday I was there, but I didn't pay attention because I was in places where they had generators.
  
  Communications: I roamed with my Safaricom (linked to MTN Uganda), and the reception was terrible. Incoming text messages came in days late and I went hours with no reception at all. My colleague got a local number while he was there and it wasn't better at all. I'm not sure about costs. Internet speeds at the hotel we stayed at and at the offices and even with a 3G Orange SIM card in an iPad were slow.
  
  I used English because I mostly interacted with professionals, but I took a small taxi and the driver spoke to me in Swahili. The local English newspaper was a joke! - clearly censored heavily by Museveni's cronies and full of shallow stories.
  
  Bars & Restaurants: The local dish is MATOKE, MATOKE, MATOKE! People eat Matoke for all 3 meals! There is a dish called Luwombo Lumbwana (I think) that is delicious - it is chicken, fish, or beef wrapped in Matoke leaves (surprise, surprise!) and slow cooked with groundnut sauce. The groundnut sauce is also served with most meals and it quite delicious and healthy. I didn't have the opportunity to drink a beer.
  
  I was surprised that they spoke a lot about Museveni. Most people complain about the kind of things we complain about (in Kenya) - roads, corruption and unemployment. However, I think Ugandans are tired of fighting and war, so although they complain, they have resigned themselves to the fate exerted by the rich and powerful. This might explain why Uganda didn't join the Arab uprisings wave after Museveni stole the election.
  
  Sight-SeeingI think Gorilla trekking is getting popular. There is a small hotel called Casia Lodge that someone recommended highly, as a gorgeous place. It's alright and the view is nice, not stunning. Kampala is a green city and the lake is huge, so all the fixings of a nice view, I guess.
  
  Biggest Surprise: Sooooo....there is an interesting place called Honey's Pub near Pride Theater, if I remember correctly. Now, I don't know how to even begin describing what I saw there! Some Ugandan tribes have girls who, from an early age, certain parts of their bodies are stretched. A lot. More than you can imagine. I'm not talking about breasts. It was freaky! So many of them become exotic dancers (which you and I both know is just a euphemism for "strippers"). It was definitely something a lot of businessmen, especially from Europe, were keen on seeing and were floored by!

• Guide to Tel Aviv

  Posted: November 18, 2011, 9:12 am by bankelele

  Land of the Bible, History, and personal fitness!
  
  Getting There: Ethiopian Airlines is the fastest way from Nairobi for now, cost is between $800 - $1,200 with a stop-over in Addis Ababa. In Tel Aviv, clearing out of the airport takes four hours minimum as there are many security checks, and it's a very busy airport (over 50 flights were taking off to various destinations on that one night). Also, the airport staff are not very friendly
  
  Getting Around: The cost of taxi trip from/to town is approx $50 and taxi's are the way to go, many locals uses cars, bicycles & motorbikes. You feel very secure walking around, and there are no specific restrictions, electricity is reliable, and you spend about $100.
  
  Accommodation & Communications: The Hotel which cost about $170 per night had Wi-Fi (spots are not too common in town) and fixed line calls from the rooms. International calls were available on particular cell line bundles, but I was not able to use a personal (Safaricom) line.
  
  Food & Drink: Meals consisted of various meat dishes, preceded with handsome quantities of salad. Beers cost about $7 a pint in a restaurants, or $4 in a corner shop/ supermarket.
  
  Most of the conversation are in Hebrew, but the locals we interacted with wanted to know about our country etc. and vice versa. Local legends include Ben Gurion (who the international airport is named after) and Raoul Wallenberg. All mainstream newspapers are in Hebrew, but the Hotel also issued a leaflet in English
  
  Shopping & Sight Seeing: The main shopping areas for tourists are Allenby St Market and Dizengoff Centre and they mostly buy Jerusalem mementos, and jewelry. Sightseeing included Jerusalem City, and the Dead Sea
  
  Biggest surprises about the city: The obsession with fitness and healthy eating. Lots of people can be seen jogging in the evening, or riding, and all meals are served with lots of salads first. Fitness levels of the citizens are high, with no potbellies in sight, and even people in pub all look like athletes!!

• Real Estate Moment: Not about Syokimau

  Posted: November 17, 2011, 2:59 am by bankelele

  I don’t own land outright, but I know people who do and have worked on some securities that relate to land. So here are are five trends in real estate deals that drive lead to good & bad outcomes
  
  1. Not all land deals are equal: There is greed & fraud among buyers and officials including government (county & ministry) who will approve incorrect land & building transactions, valuers who will inflate property prices, contractors who will undercut on building materials & costs etc. There can be fraud anywhere, but mostly it is with developers who will score deal after deal and move on from a controversial piece of land. A good tip is to look out for prime, but idle or under-developed land (open parking lot, cheap Mabati (iron roof) pubs & eateries) - which mean that there's probably a story there about ownership that deters those who know from investing too much in structures on the land. But such deals are the minority and should not deter people from investing in land. Note - these houses in Syokimau were being advertised at last month's homes expo at a cost Kshs. 4.8 to 9.2 million.
  
  2. Land is finite: Land is still one of the best investments, for the simple reason that its quantity is not increasing. It’s uses are changing with generations, migration and population changes resulting in different demands for land use (e.g. forest, agricultural or rural to residential, commercial or urban) but the amount of land available is the same (the rare reclamation of land by dredging notwithstanding)

  3. Banks have failed: By banks being prudent as lending institutions, this has resulted in a situation where there are very few mortgages in the country – about 20,000. This means that (i) banks have not convinced Kenyans that they are perfect partners in the construction or purchase of houses (ii) people are building out of savings, other income or unsecured loans (iii) by not using a bank for land deals, buyers & builders miss out on the professional advice that could be helpful in the land buying process.
  4. Herd Mentality: Investment group, savings club, SACCO’s and other collective vehicles have been popular ways to invest in land. They have worked with, or as developers themselves to scope out, purchase, sub-divide, and sell land to their members, and other interest parties.
  
  Buyers then flock to these developments because groups and peers who have invested convey security and more so as word spread fast via ads in the newspaper, or whispers in bars and church. While initial investors in these schemes may have been quite cautious with calculated risks, later investors will have seen the value of plots (and their entry price) triple and watched as other members put finishing touches to lovely houses that they are still dreaming of - and this can lead to a temptation to rush in without doing the usual land checks. But what if the original land deal was fraudulent? Does anyone check for the mother title or original drawings & approvals? If they took a loan or paid for professionals to assist, they may find out that the deals were not as good.

  5. The Government is not Stupid or Evil: The government creates and keeps records, and the government does not issue title deeds in a casual way. Many properties are built without a title deeds or without owners having got all approvals. But the government has an institutional memory and does not forget. You won’t sell a property without clearing arrears on land or paying stamp duty.
  
  The government also does not forget that it owns land and as Syokimau owners found out the way, the government may sit idle, but it will act when it’s convenient or necessary. Legend has it that Ugandans soldiers discovered Migingo Island when checking for insecurity points ahead of the 2006 commonwealth summit (CHOGM), and now, while KAA has tolerated the Syokimau houses for years, now that the country is at war with Somalia, the proximity of the houses to Nairobi's international airport (JKIA) may have escalated security concerns.

• Idea Exchange: TED Global, Richard Branson, Student Opportunities

  Posted: November 17, 2011, 2:26 am by bankelele

  The 2011 Africa Awards ceremony take place in Nairobi on December 8 and reward entreprenual excellence & efforts. This year the odds are strong that the winners of the total $400,000 of funding prizes won’t be Kenyans as the nominees shortlisted are soleRebels, - Ethiopia, Unique Solutions – Gambia, Expand Technology - Mauritius, Chocolate City Group , FASMicro, and Pepperoni Foods (3 from Nigeria) Cellular Systems International – Senegal, Victoria Seeds – Uganda, Securico - Zimbabwe and InvesteQ - Kenya.
  
  The Awards are held in conjunction with Convergence Africa also in Nairobi on the same day and which features Richard Branson among other speakers and leaders.
  
  Africa Leadership Academy: The world famous school in South Africa is taking on the next crop of students leaders. Application details are online and the Deadline is 12 December 2011.
  
  Africa Enterprise Challenge Fund: Has a new round of financing for renewable energy and climate adaptation technologies. It is aimed at for-profit companies with eligible projects in the East Africa region and Funding will be in the form of grants and repayable grants of between US$ 250,000 to US$ 1.5 million. Details here.
  
  Google Photography Prize: Google + is seeking photographs submitted in ten categories (main ly by university students). More details.
  
  NetFund: Identify individuals, educational or community institutions with project, initiatives or campaigns that contributes towards environmental management and are worthy of an award. Details here and deadline is January 30 2012.
  
  Reuters Business News Workshop Fellowships: This is a five-day course in London next year, that is open to as journalists or regular contributors to print, broadcast or online media organizations. D/L November 25 (Found at Yipe)
  
  TEDGlobal 2012 takes place in Edinburgh, Scotland in June 2012 with 50-plus speakers and performers from all over the world. See registration details.
  
  Edit
  
  
  Australia Awards: The Government of Australia has scholarships to Kenyans in priority development sectors. They include masters levels (D/L Feb 28) and short term professional development (D/L 16 December). More details here.
  
  Chevening Scholarships: The Chevening Scholarship Programme for Kenya 2012-13 is now open for applications. It facilitates post graduate study program in the UK available for up to 12 months or for short courses or research. details here and the deadline is Jan. 23, 2012.
  
  CNBC Africa: Top Trader is a new reality television show that will in 2012 follow the trials and tribulations of Africa’s top amateur traders> The competition is now open to public; there are more details on CNBC Top Trader and the D/L is Jan 21.
  
  FiveByTwenty program of the Coca Cola company to create five million women entrepreneurs in the coca cola ecosystem by 2020. The pilot had 100 young women trained in Nairobi in financial & distribution training and become sales partners and more are invited to apply to coca cola 5 BY 20 technoserve as producers, suppliers, farmers (project nurture) etc. if they meet some criteria.
  
  Google Africa Internships: This is a continuation of their summer internship program, now open for new applicants, and more Google Internship details can be found at the Africa blog.
  
  Pasha: Latest round of funding from the Kenya ICT Board. Details here and D/L is Dec 3.
  
  CNNMultiChoice African Journalist 2012 Awards. Details here and D/L is Jan 26.

• Guide to Dar es Salaam

  Posted: November 15, 2011, 2:09 am by bankelele

  A guest post by Josiah Mugambi - @JMugambi to a neighbouring coastal city with good manners and good food, proper Swahili and while Ujamaa is strong, so is government corruption as in Kenya
  
  Getting there: Transport options from Nairobi include road (driving a car or taking a bus for the over 900KM journey) and air with Kenya Airways / Precision Air which is a 1:15 duration. There are at least two flights each way daily, with a return ticket going for about 410$.
  
  The Julius Nyerere International Airport is smallish, and when busy, the queues for arriving passengers waiting to clear with immigration can be long. However. they seemed to be able to handle the large number of arriving passengers reasonably well. On this day, there was a large number of people waiting buy their visas on arrival, however I did not need one as East African citizens ordinarily do not need a visa for stays of less than three months. Visa requirements are easily found online
  
  Once out of immigration, it is possible to change money at one of the few forex bureaus at the airport. (1 USD was equal to about TSh 1770 at the time of my stay)
  
  Getting Around: Taxi's are readily identifiable, mainly white with yellow or green stripes. A cab (most if not all are not metered) from the airport to the Oyster bay area costs about 35-40k Tsh (approximately 20-25 US$) meaning that one to town would be slightly less as it is closer from the airport.
  
  Most people use the "dala dala" public transport vehicles to get around; which are clearly distinguishable. The 'City Bus' operates several routes, which are clearly indicated on the front and side, with fares (nauli in Swahili) starting at 300-450 Tsh ( ~ $0.20) for most city destinations.
  
  'Bajaja's - three wheel Bajaj scooters are another popular form of transport for those who want added flexibility without paying for a taxi. They are however sometimes driven rather recklessly. For shorter distances, some may opt to walk but the hot and humid weather can be a disincentive.
  
  Communications: I was able to use both my Kenyan phone lines in the country. I avoided roaming data (usually expensive anywhere in the world) as much as I could. For internet access, one can get a data modem from any of the four local mobile operators (Vodacom, Airtel, Tigo, Zantel) with Wi-Fi available in some locations (mostly restaurants). I noticed that the mobile market in Tanzania is more evenly spread among the four major operators: Vodacom 37%, Airtel 30%, Tigo 25%, Zantel (Zanzibar focused) 8% (2010 stats from CGAP)

  Vodacom Truck

  Where to stay, What to eat If you are at the central business district for business, it would be probably wiser to stay closer to town. Reasonable hotel rates start at $100-150 depending on location, and hHtels around Sea Cliff area tend to be more expensive. I stayed at the Colosseum Hotel & Fitness Centre mostly because of the state of the art gym. I also liked the Mediterraneo after visiting it briefly with friends.
  
  Any (modern) economy is heavily reliant on electricity and Tanzania is no exception. I noted that the hotel I was staying at had a backup generator that seemed to go on nearly every night, implying that demand for electricity at peak hours was very high.
  
  One thing that I loved about Dar was the quality of food. Many Kenyans go to Tanzania and say that things happen slower there, but when it comes to food, it's probably for a good reason as most of the time, the food is freshly cooked and delicious (and served in good quantities too!).
  
  I loved the Mshkaki (a form of Kebab, either roast beef or fish) which one can order with lightly roasted bananas - absolutely delicious. If there's anything I miss from Dar it is this! I'm not one for beer, but the average price of a bottle starts at around 1500 TShs ( less than $1), and some (familiar) sodas (Coke, Fanta, Sprite) are sold in 350 ML bottles.
  
  All in all, daily one can expect to spend anything from $10 to over $45 depending primarily on your mode of transport and choice of food.
  
  Language, Stuff to do: Being from Kenya it was not too difficult to communicate in Swahili to locals, though their grasp of the language exceeds that of most Kenyans. I had an interesting conversation with a traffic police lady (after we got pulled over for a routine check) and she said that they (Tanzanians) get really amused about how Kenyans speak Swahili. They are very conscious about grammar while in Kenya we tend to gloss over poor Swahili (unless one is doing an exam of course).

  Mlimani City

  I visited the Mlimani City Complex which is an interesting development bordering University of Dar Es Salaam, with a office complex hosting multinational firms, a shopping centre and a residential park. This is a popular shopping location outside of the city centre with a large supermarket as well as a theatre and several banks. The Sea Cliff area is popular especially for tourists who buy African art, and Tanzanite stones.
  
  I noted that many security guards are armed with a shotgun which lent some semblance of security (unlike in Kenya where your ordinary watchman would have at most a piece of wood to defend himself). Walking around is not advised in lonely places especially on the beach.
  
  As with many coastal areas, the main leisure activity would be visiting the beach. I especially liked Kunduchi beach, situated north of the city centre, with its white beach and from which several wind surfers took advantage of the excellent conditions to show off :). A weekend excursion would be to tale a short trip to Zanzibar by boat, but I was not able to do this.
  
  Economy and Society: In Kenya, there is a lot of talk about corruption, but even in Tanzania many of the locals complain about the corruption that is rife in government. There have been several corruption scandals lately and my taxi guy was rather emotive about the subject.
  
  Mwalimu Julius Nyerere is still highly regarded by many, though some say that he held back economic development somewhat (compared say to Kenya). I however admire the level of social integration present. Unlike in Kenya, there is a distinct sense of unity (possibly due to Julius Nyerere and Ujamaa) and 'negative ethnicity' is virtually unheard of - Something Kenya could learn from its neighbour!
  
  Also, unique, I noticed children holding 'School Children Crossing' signboards at the zebra crossings helping fellow students cross the road, and that drivers respected their right to cross :). Tanzanians are generally courteous and respectful, (a sign of ujamaa?), and generally follow traffic lights and rules - another thing I liked about Dar.
  
  All in all, a good place to visit, especially on holiday.

• Shares Portfolio November 2011

  Posted: November 12, 2011, 9:23 pm by bankelele

  Comparing changes to three months ago and a year ago, investor confidence has dipped further, and the Kenya shilling is even weaker, having fallen past the Kshs. 100/$ to the dollar before last week's drastic rate hike by the Central Bank brought the rate back to to 95, but which also pushed most commercial banks loan rates to 25%
  
  The Stable
  Barclays Bank ↓
  Bralirwa Breweries (Rwanda) ↑
  British-American Investments (Britak) ↓
  Diamond Trust Bank ↓
  East African Breweries (EABL) ↓
  Kenya Airways (KQ) ↓
  Kenya Commercial Bank (KCB) ↓
  Kenya Oil Company (Kenol) ↓
  Scangroup ↓
  Stanbic (Uganda) ↔
  Uchumi Supermarkets ↓
  
  Review: The Portfolio is down 2% in the last three months as is the NSE 20 Share Index, which is also down 2%.
  - Best performer: Bralirwa 24% (only share that has appreciated in this Qquarter)
  - Worst performer: Britak -38%, Kenya Airways -25%
  - In: Britak
  - Out: None
  - Increase: KCB, KQ
  - Decrease: None
  
  Other
  Splits: None
  Bonus: None
  Dividends: Interim from Kenol, and Barclays, and it was pleasant to be able to encash a Bralirwa Rwanda dividend cheque over the counter at KCB in Nairobi - unlike with Stanbic (UG) Uganda, that takes about a month clearing and the bank charges can take a huge chunk out.

  Events:
  - Safaricom shocked with a 47% drop in half year profits to September 2011.
  - Kenya Airways got shareholder approval for a rights issue to finance fleet expansion in the next few months (Said to be at Kshs 21/= which is about where the share is now.
  - Tanzania has the Precision Air IPO and Tanzania Breweries sale but the mixed signals - welcoming/shutting out East Africans, and not getting proper approval from Kenya’s capital markets means there's likely to be little cross-border participation once results are announced.
  
  Data: The NSE now has a shares app for Android mobile phones and signed a partnership creating two new FTSE NSE indices.

• African Business Travel Writing

  Posted: November 9, 2011, 1:51 am by bankelele

  The African travel writing series (tag 'Kenya Domestic Tourist' is one that is about a couple of months old now. It’s origin was a conversation with a banker friend who had worked in Nigeria, and talked of people flying with ‘delicious’ Brookside milk from Nairobi to a land where every food item was imported and there was little in the way of a local health scene.
  
  These, and other fantastic bar tales, may have been exaggerated, but it was an interesting led to query to inquire & get the feedback of ordinary Africans (not professional travel writers) who were visiting other African countries and get them to write about their travels, business climate and observations of life there.
  
  So we have posts from Botswana, Cameroon, Eritrea (not a failed state), Ethiopia, Egypt & Tunisia (after popular uprisings in 2011), Zambia, Ghana, Mauritius, Morocco, Nigeria, and others in the works like Zimbabwe (described like visiting a relative who used to have money) and Senegal. A few more posts have fallen by the wayside but they may be completed one day...sometimes you have to persuade people to chat over a round of drinks, instead of an omelette breakfast.
  
  By no means are the rules of observations absolute, as they are the varied experiences from people making unique trips. They have encountered situations like amazing courteous service, hostility for saying the wrong thing, unexpected airport taxes, varied ease of changing currencies & making phone calls home, free seating on some West African flights (no boarding passes issued), and seen beautiful & historic sights. They have also proved quite useful going by comments received (& most recently for me as a crucial last minute reminder to carry a yellow fever card to Addis).
  
  Thanks to the various contributors to the series so far including @CarolMusyoka, @Coldtusker, @G33kmate, @Kahenya, @KKaaria @MarvinTumbo, @ZackMukewa (the latest one is from Indonesia which is not in Africa, but is an interesting popular tourist destination to benchmark against) and a couple of other contributors. These are all interesting, hardworking people (do follow them on @twitter) involved in other business endeavors and hopefully they will share more travel tales until trips to capitals of all African countries are covered.

• Guide to Jakarta

  Posted: November 9, 2011, 9:46 pm by bankelele

  Tales of kindness, Spa’s, Obama, smoking, the largest McDonald’s in the world, all in a guest post by Zack Mukewa. (Note, The Indonesia Rupiah is Rp. 8,900 to 1USD. So fairly Rp 100 to One Kshs. is fine).
  
  I had a very low opinion of Jakarta and Indonesia in general before going there, but I was pleasantly shocked in Jakarta which is the capital of the expansive Republic of Indonesia
  
  Getting There: From Nairobi to Jakarta, you can take two or three flights, three in some cases depending on the airline, e.g. Emirates, Qatar, Gulf Air – and cost about $1,300 - $2,000. On average it takes five hours from Nairobi to Dubai and a further 8 - 12 hours to Jakarta dependent on route and airline. This matters as some passengers may have to wait for up to 8 hours for a connecting flight from Dubai. But not to worry, as the duty free airport at Dubai is interesting enough. Just avoid 'The Gallery Lounge' near Gate 210 – where in an attempt to kill time the Kenyan way, I regrettably had a single Heineken for US$29!
  
  There are several countries who’s residents are allowed to obtain visa to Indonesia at the terminal on arrival, including South Africa and Egypt from Africa. However, for others, they have to get visas at embassies in their home countries.
  
  This is a short process, 15 minutes though there are few points where queues can delay you. Beware of some Airport crew ready to make a quick buck if you seem clueless, as happened to a Ugandan pal (pun intended).
  
  Getting Around: Outside the airport you will find two types of taxis... Blue and Blue/Green both of which are metered. Green taxis are thought to be the safer and are quite cheap. Indonesia produces its own oil (hence lower fuel costs) so for a distance like Karen - City Centre - Westlands you will pay fairly 15,000 Indonesian Rupia...about Kshs. 150! Most Cab guys speak some English...not so good but you can communicate. Useful words are Selemat Pagi/Maalam/Sore - Good Morning/afternoon/evening and also Terima Kasih/ Thank you. Say those and mention English, they will find someone good at it to help.
  
  Jakarta City is beautiful... Much like New York in impression. It’s fast, as they have lanes for public shuttle buses that arrive every minute, and they fill to the brim. No one pickpockets here, and they were shocked when I told them about our Nairobi bus stop tales. Jakarta also has extremely high humidity, and with temperatures in the 32-38° range, you should dress reasonably.
  
  Hotels: Hotels are varied; I stayed at the NAM Center and at the Aston Hotel – and at commercial hotels in Indonesia, it’s common to find everything ensuite. Also they have karaoke bars which are a big thing over there, piano bars, spas, gyms. However beware of the spa...especially if the attendant asks your marital status..that is all!
  
  Jakarta is a big City, with a total population of about 12 million people. Observing, the streets you can quickly gather the leaders of corporate Indonesia are based here. Lot’s of black cars are dot across several islands, and there are boats at most coastlines for those who wish to rent, some yachts too belonging to those with offices in the city .

  Shopping & Sight-SeeingThere are many places to visit in Jakarta, starting with the National Monument . From high up there you can see the State House, many Capitol Buildings and other interesting sites in Jakarta. You can also visit the school which (US President) Barack Obama attended, and they have a monument erected there. Being a black man in Jakarta, it seemed expect everyone wanted to take a photo with me – and I never saw any other black people other than those in the group I came with…Maybe I should pull an Obama senior stunt, in that side of the world :-)
  
  The City has high end shopping zones and your basic shoppers zones. For comparison, if you go to Indonesia Shopping Mall in upmarket Jakarta, you will buy their national shirt called Batik for Kshs. 10,000, but if you go downtown at Block M, you will get it at Kshs. 1,000.
  
  Being in an earthquake prone zone, the city is built to accommodate earthquakes. Yet they also have high rise buildings as high up as 60 floors, and are building a subway under the main road infrastructure.'
  
  Food & Bars: Sad to say, the food is horrible! I ate rice and spaghetti for all meals, breakfast, lunch, dinner, and I was thin by the time I left. The food does not have soup and is cooked in a funny, typical South Asia stuffy way. Not to worry as there are other (pricey) options, including one of the largest McDonalds outlets in the world which is found in Jakarta, and a whole lot of Pizza Huts and KFC outlets too. For sports bar fans, check out Manchester United Sports Bar... it is said Sir. Alex has been there. Sorry, Arsenal fans, I didn’t see anything for you - guess all the fans there hanged LOL!
  
  People smoke a lot in Indonesia - Remember the stories in the news & internet about a 6 year old chain smoker? That was from there; Samata Island! As a matter of fact, in most social places you will be given free cigarettes after buying a beer. Heineken costs about Kshs. 300-700 in most places I visited.
  
  Summary: I could easily not stop writing about Jakarta, and will have some more tales at my blog. Keep checking here though, for a guide on Bandung and Bali which will l be uploaded soon.
  
  Jakarta is a beach capital, its a corporate capital, its a shopping capital. It has the kindest of people, really, the kindest human beings are from Indonesia – and it has absolutely hot women. Jakarta is out of this world! Indonesia Airlines has a tagline that says Indonesia, Unforgettable! – and it is true. Unforgettable.

• ALN 2011 Day 3

  Posted: November 7, 2011, 2:33 am by bankelele

  The final day of ALN, brought calls to embrace politics, more lessons in banking & political leadership, an update on the status of the network, and appearances by 50Cent and African royal(think ‘Coming to America’)!
  
  (Excerpts, not the full day proceedings)
  
  Needs and Leads (N&L): This was a mid-morning session for attendees to find tangible ways to collaborate with other ALN members. Each speaker had three minutes to talk about their work and their needs, without using slides or PowerPoint to make a connection. They included
  
  - Mike of Fenix International said that they (in partnership with MTN) had developed a solar power set in Uganda, which small businesses could use to charge other batteries and devices for members in a community. It retails for ~$150, and can break even for the owner/investor in about 6 months. They hope to scale up and introduce the device to millions of others in Rwanda and South Africa and are looking for entrepreneurs to distribute the devices.
  
  - The second N&L speaker was from a private equity business in Johannesburg that has a team of over 400 programmers working on customer development & billing application software for the private sector, telecommunications companies, large SA banks, and the Government (SA’s revenue agency). They are seeking to grow into Kenya by finding leads into Kenyans businesses in software development, telecommunications and the government.
  
  - Lindsay of Sanergy talked about the slum residents in Nairobi who don’t have access to sanitation. So her company builds toilets for them, collects sewage, and converts this to fertilizer and energy - making money as an independent power and fertilizer producer. There is great potential in this and she is seeking fertilizer distributors, Kenya government officials (in sanitation & standards) and micro-finance banks and institutions.
  
  - Laila runs a property firm in Nairobi and is the Chairlady of the Kenya Property Developers Association, and focuses on urban development in cities. They have mobilized $25 million to develop middle class properties, and with an IRR of 30% where they have exited - and they are seeking to mobilize $100 million as risk capital and mezzanine finance to develop low costs housing, budget hotels in East Africa, as well as senior private equity professional, to become a partners & board members.
  
  - Arjuna from the Omidyar Network, lives in Silicon Valley and, is looking for people who want to change lives in Africa to bring their ideas forward.
  
  - Ann is working to establish meaningful social games for change and reach young people to work on projects around wealth and prosperity, and she is looking for experienced African in games design, and social innovation projects as well as partners, investors, and interns
  
  - Andy from USAID spoke about the overlap of needs and mutual interest between Africa and America and are they are seeking young people to engage with, and help them craft meaningful, impact-ful programs for Africa and be sounding boards of feedback
  
  - Joseph from Congo, grew up in a refugee camp in Uganda with limited schooling & learning resources, and is now a graduate of the ALA. He, and other refugees, co-founded a youth organization - Coburwas which looks at the common needs of refugees which are common across and now want to expand the education program and help kids finish school. By 2010 85 students, and 15 were competing A level, including 5 girls - the first ever to complete school from the camps. He was need mentors to advise on foundation decisions, and need $13,000 of funds to take 100 kids to high school for the next one . Within 10 minutes, another attendee (Colin Gayle of Bounce Back Media) got on the stage and told Joseph, that a benefactor (Curtis Jackson, a.k.a 50 Cent) had committed to fund the entire $13,000.
  
  - Debbie of Aecom/Stanford Business School focuses on entrepreneurship and innovation in emerging markets, especially on bottom of pyramid, helping people to deal with poverty issues that can scale. They are seeking entrepreneurs (in Africa, Asia, Latin America) who would want assistance from Stanford and are willing to case studies for research
  
  - Swaady from Cote d'Ivoire has set up luxury tea company and is seeking customers, funders, partners.
  
  - Isis from inMobi spoke of the scalable potential for mobile advertising to the 500-600 million phone users in Africa as that will be the main way people access the net. She is seeking talented women to work at the company.
  
  - Nuradin a former Somali refugee now Dutch citizen is the MD of a company that distributes Massey Ferguson tractors in Africa. They plan to set up agriculture learning centers in Africa, on 100 hectare model farms to teach farmers how to use tractors and implements and he is looking for partner dealers in Africa.
  
  - Monica has set up an agro processing company working on alternative foods (non-Maize) for the larger population , and is seeking people to assist in branding, supply chain & distribution strategies.
  
  - Nena of Blackbox noted that there is little research done on young women consumers in Nigeria, no one knows them, or how to market to them. So they want to do a study for women 0-18 what are they doing, needs, gaps in services, and data from this will be used for brands to do product development, governments to provide better service. They are seeking funding for the study, people interested in buying the study, and other who may wish to run similar studies in their own countries.
  
  - Oliver from LGT Capital invest $200,000 - $1 million in expansion business models in education, health, resource management. They have invested in Bridge International an institution that is growing for-profit schools (now 38) in low cost areas in Kenya at a student cost of $4 per month. They are primary investors but are looking for capital from Africa to invest, entrepreneurs with ventures, and partner who can bring expertise to the group.
  
  - George of Angels Finance spoke of a project he's developing in Uganda where people can donate a portion of their phone airtime to charities – and he is seeking mentors, a bank to be the trustee, and developers to put it on phones
  
  - Brian (a co-founder of Seacom who recently stepped down) has founded Black Rhino that invests in infrastructure in Africa. He notes that such developments should have social inclusion, smart financing (governments should not put crippling liabilities on their balance sheet) and smarter (transformational) technology. They are seeking people with experience in social work, and environmental work especially French-speaking ones.
  
  - James of Dahlberg talked about the long history of philanthropy in Africa. They want to identify and celebrate champions of philanthropy across Africa, mapping out high givers of interest, and create platform for collaboration, and acknowledge their efforts.

  - Arthur, the deputy prime minister of Zimbabwe, said that despite his background (McKinsey, MIT, Rhodes) he felt lonely as there were no other political leaders present. He urged ALN members to make sacrifices and take a plunge into politics, (become political gangsters) in order to be true continental leaders.
  
  Don’t ignore Politics: This was under-scored by another speaker Tutu Agyare who lamented that while most in the room comfortable with big positions, or making money from foreign corporations, they had to take more risk to build their countries as they could do better jobs than the minister in our countries. Also it was important to take more risk at the young age as you don’t have to be 70 years old to run an African country
  
  ALN Award The inaugural ALN Award was given to James Mwangi, the CEO of Equity Bank. He talked about the large price and sacrifices you have to make - like he did in 1992 when a mutual fund (Equity Building Society) in his village was about to be closed by the Central Bank (CBK)for insolvency (no funds, no trail balance for 3 years and other governance issues) and he was approached to intervene. He did, but the CBK Governor asked him to take over the society’s management as a condition to keep it going, and he foolishly did, going from a top bank job earning Kshs 400,000 to about Kshs 50,000, and with the additional danger of losing his house which he had bought through the society.

  He also talked about need to have a belief in something like the society (now bank), not just an interest, to transform it from 2,000 to 7 million customers (more than the number of people who voted in Kenya's presidential elections). Also that, while success is not always celebrated, having a belief enables you to do things like persuading villagers to convert their society savings into investment in the society and they have been paid back to a point that the village Nyagatugu maybe the richest rural village per capita in Africa.
  
  He also mentioned the need to focus on innovation and use it to develop communities & societies. Equity is edging away from branch banking to mobile phones & agency banking model to a point that 40% of their transactions are being done by shop keepers, as well as distribution of relief food funds in Kenya and they sell more policies than all insurance companies in Kenya. Also that next week, they will launch the first free transfer from the diaspora to the continent in partnership with MasterCard.
  
  Talk from a King: The closing Keynote was given by King Kgosi Leruo Molotlegi II of the Royal Bafokeng Nation in South Africa.
  
  Who’s the King? He’s an tax payer, architect, and a trained pilot who’s worked with the SA air force and reads on culture & economies which helps him run a $4.5 billion fund. He said the issues that leaders face are universal, problems are generic and that prosperity is partly about finding the right formula, but mostly its about having the will to act and maintain a vision.
  
  He spoke of the people of Bafokeng migrated to their current homeland around the year 1450. Their then king forged friendship with colonial leaders and noted the interest in their land and decided to obtain title to the land to avoid land grabs. Bafokeng citizens went to work in the Kimberly diamond mines, and portions of the money they earned was saved - and the King got help from a missionary who they asked to buy the land in his name and hold it in trust for the Bafokeng community.
  
  Later in 1925, platinum was discovered under the land that the Bafokeng owned, and despite clashes over land rights with mining companies and the government, courts have sided with the Bafokeng as genuine owners of their land. As such, they have derived income from mineral extraction for 60 - 70 years that has funded many of their expansion plans and brought wealth to the nation.

  However they are aware of the resource curse and the challenges it brings such as population influx, crime, unmet expectation, social ills, complacency and corruption – for the nation of 150,000 people (in 29 villages) are something of an island of prosperity ($300 per month average income) in a sea of rural poverty.
  
  The Kingdom has a Plan35, a detailed blueprint for the next quarter century (to 2035) and their portfolio is now 60% in mining, and 40% in property, communication oil gas - though holding firms, enterprises, education, and sports firms that ensure sustainability.
  
  He was asked (and answered questions) about the supreme council of elected leaders who help run the state (are elected, and are now more representative with women and youth among them), welfare programs (dependence on the state), the need to develop entrepreneurship (a big challenge as there has not been an incentive to work for 70 years and some people have the mind-set since everything is given to them) and communal land tenure (which is an obstacle to enabling people to obtain development loans).
  
  State of the network: Acha Leke and Fred Swaniker spoke about ALN whose membership is now a mix of South Africa (25%), US/UK/Europe (17%) Nigeria (17%) Kenya (11%) and other countries but weak in Arab and Francophone Africa. It is also male, 28% female, and dominated by the private sector (heavily finance & consultancy) 89%, and non-profit's are 6%, against a goal of having 30% from the public sector.

  In 2012 they will grow in the above areas that are missing, as it is not meant to be a business network, but a leadership one. They will target to have two events a month cross Africa - regional gatherings, from which a lot of where membership tends to spring from - next in Cairo, Dakar, Abidjan, and Luanda. Also they will take a group of ALN leaders to visit China, and, after two years in Addis, Ethiopia, will have next year’s event at a new venue in Accra, Ghana

• ALN 2011 Day 2

  Posted: November 3, 2011, 3:10 am by bankelele

  Day 2 of ALN brought out the importance of observing trends & change, understanding markets, engaging with partners, appreciating the arts and making tough decisions as leaders
  
  Imagining the Future: Dr. Chris Luebkeman of Over Arup, spoke of trends that will drive the future which were;
  
  1. Change is constant - no matter where you go, the context, or the duration it takes, and it is important to stop and look up every once in a while, and not do things forever without thinking. Think STEEP (social, technological, economic, environmental political) most make decisions based on three of the five
  
  It also matters where you’re standing, as an exercise he concluded showed; While most ALN attendees believed that the driver of the future in Africa were education infrastructure and the influence of china, outsiders views on Africa were that the main issued would be corruption, education infrastructure and water.
  
  Tools he advocated for assessing future trends & decisions are STEEP modeling (social, technological, economic, environmental political), as well as population pyramids which all thinkers should analyze for their countries and your cities.
  
  2. The future is fiction; no one knows what will happen tomorrow. It is a story each one writes, the outline, characters. Visions can become reality. E.g. A former MIT professor had a vision those 15 years ago that you’d grow organs, and this year at the TED conference, a kidney was printed,on the stage.
  
  3. Participation is what shapes the world - so stay active.
  
  Avoiding the Resource Curse: Oxford Economics Prof. Paul Collier, spoke about the opportunities Africa faced in terms of resources and how to avoid resource curse pitfalls.
  
  As much as the continent is known for mineral & resource wealth, it has still been barely searched, and there could be much more to find. However the history of such resources in Africa is sad in that rather than transforming economies, they have been plundered, not saved or reinvested,
  
  He listed five decisions & steps for resources to be handled right
  
  1. In terms of discovery of natural assets (already been done wrong) geological information has to be made public before government's call in the private companies (manage discovery)
  2. Have a good taxation system to benefit the society – the history is one of missed revenue, and misaligned contracts so it is important to get the right contracts
  3. Involve & manage the locals – avoid Niger delta problem
  4. A substantial portion of income should be saved rather than consumed
  5. save in what? Africa needs sovereign development funds, not sovereign wealth funds. However Africa does not have much of this capability, and there is a need to build capacity, i.e invest in investing to manage the resource depletion and erratic commodity prices.
  
  There is a natural resource charter document that is a guide for these steps.

  China in Africa: China expert Buddy Buruku and journalist Adama Gaye shared their views on the state of China–Africa relations
  
  Buddy talked of the difficult finding consistent data on China's investments in Africa, but that about 3% of global investments were coming to Africa, with the largest recipients being were South Africa, Sudan, Nigeria, Zambia, Algeria, Tanzania, Mauritius, Egypt, Madagascar (no Kenya in the top 10)
  
  China's trade with Africa has been growing exponentially, and their main imports from Africa mineral were fuel and ores. The top importer from China is South Africa (19%), while Angola is the top exporter to China (41%) as well as the largest trade partner in terms of combined exports & imports.
  
  It is also difficult to quantify they type of Chinese aid, as a lot of it is bundled. However it mainly takes the form of concessional loans with China issuing $31 billion worldwide - and Africa getting 22 billion of that. Other (smaller) forms of aid are debt cancellation in-kind aid and grants.
  
  It is also tough to track what is pledged versus delivered in terms of Aid & trade, but that contrary to expectation trade is not just about oil, e.g. Their main focus Zambia is on manufacturing, in SA there was the large finance deal via an investment of $5.5 billion in Stanbic Bank, in Nigeria it is manufacturing and EPZ, while in Mauritius, Tanzania and Ethiopia the investments have been for manufacturing capacity.
  
  She added that Africa should look at china as a resource, and the onus is on Africans to engage with China in a mutually beneficial way - use access to capital, and access to markets. In terms of capital: no other country is providing debt & equity to Africa as much as China, and the $5 billion China Africa Development fund is the continent's largest, seeking out infrastructure and renewable energy projects for which they have extensive capabilities and history.
  
  Adama said that China’s interest in Africa is a transformative force, that may give Africa the chance it many never have for centuries. However this is not a new engagement, and they have prepared for this for decades, and they will engage with Africa as long as there is some gain or disappear (he cited DRC crisis in 2009 when mines were closed)
  
  Adama said African countries can come up with the same (joint venture) demands that western companies got faced when they wanted to go to China, insist on waived tariffs and access to the 1.4 billion population China market, require transfer of know how and technology, but that instead of negotiating as 54 small countries, regional blocks should step forward for that. He also said countries should appreciate & utilize African who were trained in the 195'0s on engagement with China, and their diplomats who worked there.

  Making Phones for Africa: Alpesh Patel, the founder & CEO of Mi-Fone, spoke of his company which is making a luxury brand of mass market phone for Africans who earn less than $200 a month.
  
  With 800 million people in Africa, and only 5% have internet access, the phone screen is the most potent real estate in Africa - capable of delivering banking, music, sports, entertainment, email web loyalty, mobile advertising, social media etc.
  
  In just over 3 years, they have revenue of $15 million, have partnerships with 9 GSM carriers in 12 countries, and they have done branded phone like the Mi-Obama phone which sold 10,000 handset in Kenya and Uganda the day he was inaugurated. They have also done Western Union handsets, formed partnerships with local musical artists (like Kenya's Liz Ogumbo) and will soon launch the first Facebook phone in Africa and an application store for mass market consumers
  
  Leadership in Africa: The keynote speech was given by Dr. Donald Kaberuka, President of the African Development Bank (ADB). He talked about the failure of leadership in rich countries to address the financial problems they are facing now which constitute the worst crisis since World War II – with some potential impact on Africa – but having to undertake harsh structural reforms that African countries undertook a few years ago
  
  He said leadership was about making tough decisions – like Helmut Kohl accepting to exchange East Germany's currency at ten times it's value in the interest of reunification, Gorbachev ending communism and Mandela ending apartheid and reconcile SA, and not the kind of leadership that watches the next elections.
  
  In Q&A:
  Leaders he admires? He believe in Institutions! So they should be built & strengthened as leaders go bad; but he admires Ellen Johnson Sirleaf
  
  What will it take for ADB to go back to Cote d'Ivoire? He lamented that Kenya, Cote d'Ivoire, Zimbabwe, and Madagascar were all on their way to middle income, but were re-railed by political setbacks. He said they may go back to their CIV headquarters soon, and when the Bank governors decide
  
  Integration for Africa? Economic integration is not new - East Africa had one currency, central bank, airline etc. China is one, Brazil is one, and India which is very diverse in terms of people & religion is one. But many African countries have too small GDP's, while others have some resources. African countries combined have 400 billion dollar in reserves, which more than India, where many countries go to borrow.
  
  Helping Countries Avoid the Oil Curse?. He said Diamond-rich Botswana has shown that it is possible to do this. Oil exporting countries have made mistakes but recently when an African country (he did not name) discovered oil, ADB went to see the President and if they could advise. The ADB is helping countries through a legal support facility to help countries negotiate good contracts, as the bad deals they previously signed became difficult to wiggle out without damaging investor confidence.
  
  Advice for countries?: When he worked in post-conflict Rwanda, he knew they would be aid dependent for a while as tax base was low; still they insisted on some budgetary support for domestic resource (tax) mobilization and it worked. Also it is important to fight corruption to the core, which is not just a moral issue, but a is a break on development. Rwanda did not even create an anti-corruption authority, as they emphasized that the existing institutions be functional, and he also said that leaders should show that they are sacrificing.
  
  Employment in Africa: Chinezi Chijioke of Mckinsey said that while there are more school, more jobs, unemployment has dropped, and discretionary income is up across Africa, 2011 has been one of the most tumultuous years in African history.
  
  So is economic growth lifting all boats? how inclusive has it been? There are frustrations due to:
  
  - Unmet expectations, with more schooling there are higher unemployment (North Africa tertiary education graduates have the highest unemployment)
  - The excluded: consumer class has grown, no of household that are exclude not participating has grown
  - The vulnerable & the unemployed. While there is 9% unemployment, another 63% are considered vulnerably-employed and the combined figure of 70% is scarily high (Latin America is 30%)
  
  It is therefore important to address:
  
  1. Accelerate creation of jobs: Countries should move from mere economic growth targets to economic growth & job creation strategy; they should try and understand which sectors will catalyze jobs promote entrepreneurship in those sectors. mining and finance sectors don’t create jobs unlike those in retail, hospitality, agriculture, government social services that do.
  
  2. Improve labour supply - Ensure there are people who are job ready (Many companies have trouble filling jobs as candidates are not job ready - have no technical, soft ,experience or schooling).
  
  3. Match those two. E.g. a study found that in Nigeria small enterprise will create job, while in Kenya middle and large enterprises are the engines for jobs
  
  Solar for Africa: Asif Ansari of Suntrough Energy spoke about power generation which is crucial as a world bank study found that a 1% increase in power generation, 3% on GDP. However power infrastructure was a very complex process, combining servicing debt vs. fuel. E.g. a 100MW power plant may cost $100 million to put up and one can get a bank to finance, that but it will cost $1 billion of fuel during the life on the plant. He advocated that sustainability requires the use of some indigenous fuel - anything available locally - biogas, solar water etc. and we cannot be held back by climate change advocates, since Africa did not cause that, and needs energy now.
  
  Africa is one of the wealthiest regions in the world - but the tremendous resource is underutilized so far, noting that 5% of Sahara desert can power the world for 24 hours a day – and solar is half the cost of natural gas (diesel costs 25c, wind 9c, gas 9c, coal 6c , hydro 6c, and Morgan solar 5c)
  
  In terms of funding, multi lateral banks are there, but its takes time to get a loan going, so you should structure something can be financed by private equity such as middle east investors or local sovereign equity.
  
  They use Morgan solar technology and there are also employment opportunities in developing standardized solar hybrid plant 10 - 20mw. you can actually bring them here early and fabricate them in Africa. power plans expectancy of 50 years
  
  Invest in the Arts: Cobhams Asuquo a music producer an the CEO of CAMP (Cobhams Asuquo Music Productions), spoke of challenges in the indigenous arts including the low premium placed in the arts, high infrastructure costs, piracy, pressure to adapt to westernize styles, and little regulatory assistance from bodies to market & sell African arts. he urged more people to invest in the arts in sectors like film distribution, and this was followed by one of the artist on the CAMP label, Bez Idakula who gave some great, Stevie Wonder-ish, performances.

  Deputy PM Wows ALN: Few people outside Ethiopia can name another leader besides their Prime Minister, Meles Zenawi. But at a dinner at the historic palace of Emperor, Ato Hailemariam Desalegn, the Deputy Prime Minister and Minister of Foreign Affairs engaged in a Q&A session on various topics put by ALN members. His fast answers included;
  
  - Plans to open up communications sector They are focusing on completing inland national fibre backbone first, and when complete they will now talk to private sector players (who are biased toward urban rather than rural consumers)
  
  - Advice Kenya on Somalia? Kenya tolerated Al Shabab for too long and now has disturbed tourism sector. The movement must be defeated at all costs to help Somalia find some stability after 20 years and Kenya is right by international law of self defense
  
  - Gibe dam impact on Lake Turkana communities: All infrastructure has some impact but this was assessed by internationals standards and found to be minimal. The dam has the support of Kenya and Uganda governments, and the noise about the dam is caused by NGO’s who have politicized the debate. Ethiopia may later sell power to Uganda, Sudan, Kenya and Djibouti .
  
  - Do Funders impose conditions? Domestic saving not enough for all the loans they have sourced funds loans unconditionally from China, South Korea, Turkey, Brazil and India.
  
  - Lessons for other Africa countries? The western model of development for Africa from Bretton woods is dead, so they got examples from Asian tigers and are pursueing development state model where the government intervenes in some sectors cannot. They focus on agricultural and manufacturing and this ensures that Ethiopia has a low gini coefficient (equivalent to Scandinavia) through growing high value crops like Denmark and New Zealand, building capacity building in textiles, and the deployment of 62,000 agricultural extension worker show advise farmers kaizen bench markets seeks out export markets.
  
  He also said that African leaders should be drawn from productive private sectors (not rent seekers interested only in wealth accumulation from land taxes government contracts and corruption who are disruptive elements)
  
  - Plan to join East Africa community? He hinted that another country was not comfortable with an 80 million population country joining, but will start as observer member before going for full membership. Regional integrations is the way to do – under Nepad, south Africa pioneer transport integration and Ethiopia will do power integration as a start with Gibe.

• ALN 2011 Day 1

  Posted: November 1, 2011, 2:17 am by bankelele

  Day 1 of the Africa Leadership Network's (ALN) Annual Gathering on Addis Ababa, Ethiopia, was spent reconnecting the network - making new friends, learning about Ethiopia's investment & agricultural potential, and learning about the arts & corporate succession

  Investment opportunities in Ethiopia: The country with 85 million is larger in size than Spain and France combined. Zemedeneh Negatu of Ernst & Young explained that it is the fifth largest economy in Africa (behind south Africa, Nigeria Angola, Sudan), and as one of the fastest growing economies (with an annual target of 11%) it is poised to, by 2025, be the third largest behind Nigeria which will be tops, and mature South Africa.
  
  This is due, in part, to the large young population (now 85 million, but projected to reach 120M in the next decade), and the potential there as Ethiopia is one of the least urbanized, and they have a target to electrify 75% of the country in next decade – following the path that the Chinese and Indians followed.
  
  Sectors with large potential for growth include agriculture (a lot of Indians and Chinese are investing here after the Government allocated 3.6 million hectares of arable land for foreign investors (size of Belgium) – but he qualified that, adding that while this was about 5% of arable land in Ethiopia, NGO's had latched on to that as a land grabbing
  
  Others were manufacturing (Ethiopia’s average manufacturing wage is $80 compared to $430 per month in china and there is a lathe industrial park being set up outside Addis to capitalize), infrastructure ( $155 billion), mining, oil & tourism.
  A big source of funds are Asia (China, India), then Middle East, then Europe and then US and he mentioned two large beer deals had been recently signed by Diageo and Heineken. The Ethiopian diaspora investing but not substantially, yet.

  Later the head of Omega Farms, a returnee from the Diaspora, spoke about the potential of Ethiopia's agricultural sector where there is good availability of fertile land that can produce year round, and a variety of climates in the country, that meant that every conceivable green food could be grown. But he also spoke about the current paradox of her & other African countries that grow fruit, but buy juices packed in Dubai or of knowing that some foods are exported from Ethiopia to Europe, only to be re-packed and re-exported to west Africa.
  
  - The future is bright with at a time when the air boundaries are reducing with Ethiopian Airlines able to reach the Middle East, Europe and most COMESA markets with short flights (They recently ordered 777 freighters that can carry 90 tons or fly non stop to Beijing), or 12 – 18 days by sea to most world markets. There are also opportunities to produce flowers, fruits, nuts, and seeds for exports and local markets (next to Mexico, Ethiopia is one of the largest growers and consumers of corn and chili)
  
  - Incentives available to agricultural investors include tax holidays of 2-7 years, lease based land acquisition (up front costs are low), duty free importation of agricultural capital goods (100% tax free) and up to 70% development bank project financing.
  
  Mo & Me: In the afternoon Salim Amin previewed his award–winning movie Mo & Me about life with his father, the late photo-journalist Mohammed Amin. It was poignant because it was in Ethiopia where Mo Amin's powerful footage brought him his greatest fame, but it was also where he lost one of his arms (and the film we learn that this probably affected his later career), and he made his final flight from here as he died when an Ethiopian Airlines flight was hijacked and crashed into the Indian Ocean.
  
  Salim Amin was an only child who worked, reluctantly, with his father and after Mo’s death, he inherited the company, which he runs to this day. Salim spoke quite a but about this and you have to admire that he has kept the company going for 15 and used Mo’s film to introduce a new worldwide audience to his late, distant, Dad.
  
  Perhaps, as an only child he had that obligation, but time has played into his hands as the content that his dad accumulated (3 million photos and 20,000 hours of video over 30 years) is a massive archive that may have immense value once he completes the challenge to digitize, caption, archive and re-produce it in meaningful ways, perhaps in the educations sector.
  
  ((Sadly, for me, another large company I was familiar with is facing the auctioneers hammer less than two years after the death of the family patriarch & founder.)).

• Guide to Mauritius

  Posted: October 26, 2011, 2:12 am by bankelele

  A guest post by @kkaaria after a visit to the land of the Dodo & bargains, and where good life & driving habits are the norm!
  
  Getting There Air Mauritius offers the best rates for direct flights from Nairobi’s JKIA, but double check as prices vary during the year. It can cost as low as Kshs 85,000 during off peak and as high as Ksh125,000 (now ~$~1,250) in peak seasons. The weather in Mauritius with no extreme changes in temperature coupled with its vibrant offshore business sector makes it (depending on your vacation or business interests)- a year round destination. The Air Mauritius flight from Kenya is a once -a-week flight that fills up quite fast so you’re advised to book in time.
  
  Sir Seewoosagur Ramgoolam (SSR) Airport is quite hassle-free as a recent agreement between the Kenyan and Mauritian government ensures that Kenyans do not require a Visa to visit Mauritius. While there are no unexpected taxes, you will need your yellow fever card. Also, life is pretty good in Mauritius which means they aren’t all that crazy about strangers infiltrating their haven so be prepared for more thorough procedure than at most Sub Saharan Africa countries. They might ask to see your accommodation reservation and return ticket so print & keep them close to show at immigration if asked
  
  Business & Infrastructure: Mauritius is a pretty small Island of about 1.2 million citizens and it will take a little over an hour to cross from one end of the country to the other. Hotel airport transfers will cost you about $90 for one-hour drive. If you have not arranged for hotel transfers, taxis are available at the airport. There is always room to bargain but make sufficient allowance for you taxi trip.
  
  Money: Change your money before travel. I could not find Mauritius Rupees (MRU) in time in Kenya so consider either transacting in dollars once you get there or travelling with another major currency (Euro, pound) currency and changing it once you get there (The Rand is also widely accepted).. The exchange rate was $1= ~MRU 28/29 which translates into circa 1MRU= Ksh 3.5. Most major banks are present in Mauritius so with a Visa card you should be able to get money (dispensed in Rupees).
  
  Accommodation: Mauritius has some of the world’s finest hotels and resorts, golf retreats and spas . Hotels fill up very fast and tend to be a bit pricey compared to Kenya. ‘Cheap’ accommodation here will cost you at least $100 half board, while the bigger resorts (4/5 star) will cost upwards of $350 per person for half board. Depending on your reason for visiting and your schedule, you might want to look into all-inclusive packages that cover all meals and unlimited supply on selected drinks( alcoholic and non- alcoholic) as this saves you considerably on cost.
  
  Electricity: - is very reliable in Mauritius, and you will notice that in the major towns, most houses are fitted with solar panels. There are no power outs in Mauritius (I'm looking at you KPLC). And a family of 5 (from my asking around) pays an average of Rs 1500 per month for power. They use 220/240 volts AC. Plugs vary from two round pins to three square pins Kenya-style but take an all-purpose adaptor just in case.
  
  Communications - Get a local line if you are not roaming - those who were roaming (from Kenya) came back to ridiculous bills *muaha*.
  
  - Orange and EmTel are the two networks in Mauritius. I got an orange line for 100 rupees, which comes with Rs86 of airtime. You can buy reasonably priced data bundles after that.
  
  - Most hotels come with Wi-Fi as part of the package so make sure your package includes Wi-Fi. I didn’t see any cybercafés primarily but they don’t appear to be a vibrant feature compared to Nairobi. Note that, hotel phone calls can drive your bill pretty high. A 5 minute phone call will cost you about Rs800….which is ridiculous. International text messages cost RS0.60 and you can buy airtime in denominations of Rs50, Rs100 etc.
  
  Getting Around: The transport system is quite efficient in Mauritius albeit pricey. There is no overcrowding in public transport, buses run on time, stop only at designated spots (I'm looking at you Citi Hoppa), drivers are very disciplined & courteous and observe traffic lights even at 5 A.M when they are the only car on the roads and you are running late for your flight! So you will need to check your Kenyan road issues at JKIA and pick them up when you return!
  
  Most locals get around by bus, personal means, motorbikes or taxi. There is little traffic, every town/city has a bus service and pensioners (over 60 years) and school kids ride for free. Quite a number of folks drive around or ride motorbikes (Riders and passengers must wear helmets too). They drive on the left, give way to the right just like Kenya so it’s easy to rent a car and drive around for more flexibility and to cut costs.
  
  There are lots of minivans shuttling tourists around. Since the minivans double as personal transport, it might be easier to get a good bargain compared to the regular taxis although prices tend to be in the same range. As always, and while Mauritius is pretty safe, be careful about what transportation you choose. Designated taxis are always recommended and you will find plenty of these outside hotels and at Taxi ranks. As of September, gas prices were for circa RS 49/litre or ~ $1.75/L.
  
  Food & Drink: The staple food is ‘Farata’; a pan-fried flat bread served with various spicy curries. Food in Mauritius is as varied as it’s ethnic mix, derived from a population that is 60% Hindu 22% Christian 1% Franco Mauritians 3% Chinese and 13% Muslim.
  Expect lots of spices, curries, chutneys, mutton, chicken, vegetables and of course seafood. Make sure you try the millionaires salad made from palm hearts. Yummy! Smoked marlin is another must try.
  
  The main Mauritian local beer Phoenix is widely available in supermarkets, and also has lemon flavored variant. A 330ml bottle goes for about RS 25 and a 500ml bottle goes for about Rs40. The same bottle will cost you about Rs350 and up in a 4/5 star establishment. Another (less popular) brand is Blue Marlin.
  
  Mauritius grows a lot of sugarcane and makes some good industrial and agricultural rums in their distilleries so DO try Mauritian Rum as well. They have a wide assortment of really good rums (rum cocktails/rum desserts are delish) as well as some local grape juice wines.
  
  Depending on where you eat food can cost as little as Rs50. A single course meal at big hotels will go from Rs 450 and up. Cocktails at the larger hotels will cost upwards of Rs400 and beers upwards of Rs 300. A bottle of water in the supermarket costs Rs20-30 so budget accordingly depending on what you are up to.
  
  Getting Around English is the official language, but Creole (derived from French) is used by everybody, and French is the most commonly spoken language. However, you will get by with English. Their major paper; ‘L’express’ contains a small English section with the major news of the day and ‘News on Sunday’ is a full English edition newspaper every Sunday. Others are Le Defi and Le Mauricien.
  
  Mauritians are nice and friendly. In conversations, they will want to know about you, where you come from etc. and in turn they will freely volunteer any information you seek. They are also very up to date with their current affairs so a quick chat with the waiters, drivers and staff will give you a balanced opinion of ‘the news’ everyday. They receive a lot of tourists from South Africa so they tend to assume that every black person is from SA…and it can get a bit vexing! Through no deliberate effort on my part (I swear), they were willing to talk very openly about HIV/AIDS and not minding as I furiously jotted down statistics on my phone. Nice ☺
  
  Transportation: A 4km distance journey on a bus will cost Rs 22 (Ksh70-80) while the same distance using a taxi will cost anything from Rs400 (Ksh 1500) and up. A full day car rental cost Rs3000, with an extra Rs1000 per day for a driver, and the car rental company will ask for your driving license and ID.
  
  Mauritius is very secure, very friendly. You should be quite safe there but as usual, take the necessary precautions. Most hotels come with safes where you can keep your valuables and travel documents so make use of those.
  
  Shopping & Sight-Seeing There’s plenty to see in Mauritius. While their beaches are littered with Coral; making it quite unpleasant to fully enjoy the beautiful blue waters and low tides, there are plenty of places to visit.

  7 Colored earths, Chamarel

  These include the famous 7 Colored Earths in Chamarel, Blue Penny Museum, Chinatown (yes), Sugar Factory Museum, Botanical gardens/Pampalemousses, Balaclava ruins, Shivala, Grand Basin, Rochester falls, Back river Gorge etc. Do have someone experienced take you around and make use of guidebooks to get the best out of it.
  
  Make sure you take the Catamaran cruise to Ile aux Cerfs Island. The Cerf is a small island perfect for swimming, snorkeling and parasailing. It has a white sandy beach and bluest water I have ever seen my entire life. Plan with your guide so you get a chance to swim with dolphins in the ocean! It’s exhilarating!
  
  Finally, watch a Sega dance in the evening. (a Mauritian dance with colorful flowing skirts to beautiful music by very attractive to marginally attractive ladies☺)
  
  Depending on what you get up to, there is no limit to how much you can spend in Mauritius. It is a beautiful place to shop so heavy shoppers might spend more, and you might shop till you drop in Mauritius. There are tons of shopping malls in Port Louis (the capital) Curepipe, Grand Baie etc. If you want a good bargain, make sure to stop by the Grand Baie Bazaar where it is easier to bargain.
  
  There are plenty of famous brand names at duty free prices in the malls if you’re into that stuff but the smaller markets also offer amazing stuff and souvenirs at great prices (again, Bargain!).

  Grand Baie Bazaar

  Plus there’s lots of Chinese and Indian stuff. You will get plenty of cashmere, rum, spicy teas, pearls, diamonds, hand woven silk & wool etc. for what I found to be truly decent prices after bargaining for about two hours . Also when getting souvenirs, get some Dodo bird inspired items - Dodo snow balls, Dodo fridge magnets, Dodo key holders etc. to bring back as gifts (The Dodo is a now extinct not very clever-ergo extinct- bird that once inhabited Mauritius).
  
  Surprises in the country?: - Bargaining Again, things like car rental could be less if you can bargain harder with Mauritians who despite the free education insist that they need the money to pay for their children’s private schooling or after school tuition. I do drive a hard bargain but they were a tough nut to crack. Good luck with that.
  - This is not Coke Country, but Pepsi. You will find Coca-Cola in some areas, but when you ask for a Rum & Coke that means Rum-Pepsi and when you ask for a Sprite, be ready to receive a 7Up.
  - Also, dare I add, the suspender clad Mauritius policemen are very hot!! And speaking of policemen, littering in Mauritius will earn you an instant fine of Rs 1000.
  - I am used to hotels serving ladies first then men second. I *think* I observed male waiters serving men first then women, while female waiters serve women first then men. I stand corrected but that is the norm at Le Meridien and a couple of other places I visited.
  
  Summary: Mauritius is a lovely place. The weather is fantastic, not as humid as the Kenyan Coast. But their beaches are awash with Coral which puts Kenya way ahead on the beach experience; however Mauritius makes up for that with incredible service and security - a thing Kenyan establishments and staff at the Coast could learn from. So make time to visit Mauritius!

• Real Estate Moment: Expo II, Land Bills, Timeshares

  Posted: October 20, 2011, 9:52 pm by bankelele

  US$1 is ~ Kshs 100
  A second homes took place in Nairobi over the weekend, and this came less than six months after the first in April. It seems unusual to have two expos in one year, but here's a recap of some of the housing, appliance, banks, and other companies at the expo.

  Banks: There were the usual mortgage providers there including Housing Finance (whose Treasure account comes with up to 50% discount at KWS parks and 10% at Jolly Roger, Village market, Gertrude hospital) who offer finance of up to 90% at a variable mortgage rate of 14% loan.
  
  Other banks offering up to 90% included Standard Chartered and National Bank. NBK and Barclays both give loans of up to 20 years for individuals (NBK at 13%, BBK at 14%). A recent entrant in the mortgage sector is Family Bank who also launched m-kodi, which is a way for tenants & property owners to make and process rent payments by mobile phone. CBA and Family Bank also give mortgages of up to 25 years, and for Kenyans in the diaspora, Family will give mortgages of up to 15 years for 90% property finance.

  Properties Nairobi - Le Mac was introduced at the earlier expo as a 24-storey tower complex with apartments, malls, shops, offices, bank, restaurant, gym on Waiyaki Way and Mark Properties are only selling studio apartments for Kshs. 12.7 million, 1 bedrooms for Kshs. 16 and 2 bedroom apartments for Kshs. 21M
  - The gateway 3BR apartments in Kileleshwa for Kshs 14.9M starting in December 2011 with 20% offer, 80% on completion from Bluebell
  - Long-standing properties that have featured at a few expo's include Jacaranda Gardens on Thika Road which have 2BR for Kshs 6.6M and 3BR for Kshs 7.6M and another at Phenom Estate IV in Langata (controversially located near Wilson airport), and Sidai Village with 3BR maisonettes costing Kshs 6.5M from Chigwell Holdings
  Nairobi Outskirts- Athi View on Syokimau cost Kshs. 4.8 to 9.2M are just off Mombasa Rd. (by SJR Properties), Skyline Apts,which are 3BR off Airport North Rd that cost Kshs 5.8M, and Twiga Hills in Ongata Rongai which are 3BR apts. for Kshs 6M (also have 2BR ones). Also in Kitengela, there are 1/8 acre plots from Optiven that range from Kshs 0.5M (Silver gardens) to Kshs 0.98M (Imani gardens) with immediate financing from Equity Bank.
  
  Coast: The Baobab Development Group has been pushing fractional ownership of an upcoming property in Malindi as luxury apartments at a 'affordable' cost of Kshs 2.5 million (time share properties are new in Kenya). Also Sunset Paradise apartments (700M from Serena Beach) are selling 2BR for Kshs. 7M ($80k), and the 3 BR and 4BR are in two sizes with the larger of each costing Kshs. 10.2M ($140k) and Kshs. 11.9M ($160k) respectively.
  
  Gated properties: News ones included Iluluwe golf estate development in Athi River, now offering an 1/8 acre is Kshs 0.95M and 1/4 acre at Kshs 1.8M and Longonot Gate which will be at the foot of Mt. Longonot and now have 200 1/2 acre plots going for Kshs 3.5 million (later 4M). Buyers will also become members of a Kingdom golf club in the gated resort city at Longonot.

  Interiors, Finishes, Appliances: There was also companies like Mabati for roofing choices, Flamingo for floor tiles Solaris for water heaters, Chloride Exide for solar water systems and power backups
  
  Elsewhere: Knight Frank, at the expo or in the newspapers, had Windsor Green in the Mbuya suburb of Kampala for sale starting from $76,800 upwards and they and are also offering 7 acres near Wilson Airport, Nairobi for Kshs 100 million.

  Land Ownership: The Government of Kenya's Ministry of Lands has published draft land bills for public discussion. Matters of interest include spousal rights, pastoralist rights, partitioning, appeals processes, use of land, and notes that the land registrar shall make information in the register accessible to the public by electronic means, among many other changes.

• Kenya Airways 2011 AGM

  Posted: October 17, 2011, 6:01 pm by bankelele

  Having not been to an AGM in 2011, I decided to take an hour-long peek at the Kenya Airways (KQ) one as a shareholder and for sentimental reasons, including the love of aviation, because a KQ AGM was the inspiration for this blog.
  
  There's not been much change over the years: KQ, which has over 70,000 shareholders, has been generous with SWAG to shareholders over the years and this has ensured that they always have some good attendance (they also provide free transport from town to the Bomas venue of the AGM) - however this also means that their meetings are long and drawn out, with lot's of time wasting (Chami), and inane questions (@ChrisKaranja 90% of all questions are related to umbrellas and food)
  
  Some notable points
  
  Investments: Regarding their Precision Air investment, (It's now in the middle of an IPO) a shareholder noted KQ which owns 49% of Precision, posted a loss of Kshs. 188 million for the year to March 2011 on their investment - and looking at the Precision March 2011 ones, their pre-tax Kshs. 250 million profit was halved by forex loan revaluation adjustment of Kshs. 125 million (so the current shareholders in Precision swallowed the loss before the IPO). On their dormant investments, the KQ Chairman said one of them would be revived soon (Probably Flamingo Air, or one of two cargo companies)
  
  - The March 31 annual dividend will be paid on 16 November...
  
  Board- Amb. Denis Afande was retiring as a director, but there were no fireworks as in previous years - as this time, the board has settled on his replacement. Amb Denis Awori, a former Kenya rugby official and ambassador to Japan, and currently Chairman of Toyota Kenya was introduced by the KQ Chairman. He spoke briefly on his passion for the airline; he studied aeronautical engineering, was a trainee at East African Airlines (EAA was the precursor to KQ) and as ambassador to Japan participated in promoting the airline as it featured heavily in tourism promotions that were run.
  
  Rights Issue: The Chairman spoke about their need to acquire more aircraft and pay for them including 10 Embraer 190 aircraft. The airline settled with Boeing in April on the delayed 787 aircraft (some of which were to replace Boeing 767) and the first one that was expected in October 2010, will now arrive in fourth quarter of 2013 when they anticipate loads will have increased significantly.
  
  KQ are getting permission from shareholders (and closing the books) so they could go to the Capital Markets authorities in Kenya (& Uganda & Tanzania) but they were yet to determine the size or price. One shareholder (Mr. Karanja) cautioned that it was potentially dilutive (4X), came at a bad time (share price is low - a market price of 26 compared to NAV of 50 per share) and that a convertible bond or cheap overseas loans were better options. (FC) Karanja agreed with this, adding that they had not yet set the date, price, and structure, except that the funding plan would be a mix of debt and equity and that the new shares would create capacity for when the board decided the time was right. The KQ Chairman noted that both the principal shareholders - Government of Kenya and KLM supported the increase in capital and rights issue.

• Guide to Douala

  Posted: October 12, 2011, 3:14 pm by bankelele

  A guest post
  Note: A Kenya shillings converts to ~ CFA 5 (closer to 4.5)
  
  Getting there: Kenya Airways flies three times a week to Douala and to Yaoundé. The Nairobi-Douala trip has a 45 minutes stopover in Bangui (CAR). Speaking of which, Titus Naikuni should have the staff on this route training the rest of KQ staff on the other KQ routes as they were really, really good.
  Kenyan citizens need a visa to get into Cameroon. You have to make arrangements with your host for a visa before you get there. The visa application fee is 5,000 CFA (approx. 1 USD= 450 CFA).
  
  Some tips:
  • Ask your host to mail you the approved visa form by mail if possible. A scanned copy works, but the officials will require the original at the airport.
  • Have with you two copies of the photo page of your passport as the visa processing officials at the airport (in Douala) will ask you to make photocopies of this for your visa processing.
  • The visa itself costs CFA 50,000 (approx. $100) for a single entry visa that is valid for up to 30 days.
  • You must have a Yellow Fever card. If you don’t, they will re-vaccinate you. The Santé desk had a number of poor unfortunates who didn’t have their cards who had to get jabbed again.
  • You will need CFA 10,000 for exit visa / stamp duty to leave Cameroon. Note that there is no visible information on the exit visa fee (not in the visa application, or the immigration desk, or in the airport). To be fair, it is visibly posted next to the desk where you pay this stamp duty, which is at the EXIT gate. So, please reserve CFA 10,000 for exit stamp duty.

  Douala Airport

  Getting Around: For the intrepid, there are many boda bodas (called “okadas”) that will take you pretty much wherever you want as there are no restrictions on where the boda bodas are allowed to go. A quick scan showed matatus, but these were few and far between in Douala. More common are cabs, which will be painted yellow to show their PSV status.
  
  Also, there's the unfortunately blatant, shameless shakedowns of the PSVs by cops. The driver slows down at the traffic checkpoint, the tout jumps out and gives the cops money and runs back to the car, then the driver then moves on.
  
  Cameroon is super green and lush. If land were a woman, Cameroon would be this woman. Seriously beautiful. The roads, at least the ones from Douala to Limbe & Buea, were smooth, with no worries. Do check out the rubber and palm oil trees especially if you've never seen one and only read about them in Geography class or in the works of West African writers in English literature.
  
  Business & Infrastructure: Money: You need to get dollars, and the airport has many hawkers selling and buying dollars, but you’ll get a better rate in the forex bureaus in town. Also, Cameroon restricts the amount of Cameroonian Francs (CFA) that you can leave with so make sure you change these back to dollars in town as the airport rates are quite awful. The hotel rates are even worse (e.g. 1USD:CFA425 in the hotels as opposed to 1:485 in the forex bureaus). To the best of my knowledge there is also no forex bureau in Nairobi that will change the CFAs into Kenyan shillings, so you’re stuck with CFAs if you don’t do this in-country. Standard Chartered and EcoBank have a presence in Cameroon but the StanChart ATMs dispense money only to StanChart Cameroon cardholders.
  
  Electricity: They use 220 volts and you need a two pin circular plug for your electrical equipment. This is easy to get in Nairobi ( I got mine at Technophile Kenya)
  
  Accommodation: Within Douala, hotel accommodation ranges from the CFA 20,000 slightly seedy and not quite clean variety to the CFA 130,000 Hotel Akwa Palace and the Ibis Hotel in Douala for a more up-market stay. However Hotel Akwa Palace has the nerve to charge you for breakfast (CFA 10,700 at their lousy 1USD: 425 CFA exchange rate) despite charging about $300 per night for a single room.
  
  Weather: Douala in September/ October is hot, humid and thus hellish. It’s perhaps like going to a sauna in the coast while wearing a woolen three-piece suit, stockings and a wig. This weather will make you more irritable than a black mamba (it would make the Dalai Lama testy) so just remember when you find yourself losing it over some trivial stuff that it’s the weather. For this reason, you need an air-conditioned hotel room. Please note, you don’t want a room with A/C, you need a room with A/C. A bit out of Douala, I was given the choice of a room with a door lock that didn’t quite work, or a room with A/C. I chose the room with A/C over a functioning lock. Yes. It is that serious.
  
  Food: Seafood in Cameroon is a must-eat. Try the Poisson DG (fish) with dodo (fried plantain). I also predated on the predators of the sea by eating barracuda (Delicious). Also, try the shrimp/ prawns , which Cameroon is famous for (the name Cameroon is derived from "Rio dos Camarões" or River of Shrimp in Portuguese).

  Douala daytime

  Shopping: Unfortunately, there are no Chantal Biya wigs despite asking everyone I knew where to get them. You can however reproduce this look with 4 strategically placed lace front wigs, one placed about 2 inches below the other!!

• Guide to Cairo

  Posted: October 11, 2011, 1:46 pm by bankelele

  A guest post by @g33kmate who made a recent visit to Cairo, Egypt for the Maker Faire Africa 2011 event.
  
  Getting There: Several airlines fly to Egypt from Nairobi including Egypt Air, and Kenya Airways at a cost of ~Kshs. 70,000 (~$700) for a return ticket, as well as others, that may be cheaper, but not direct such as Gulf carriers and Ethiopian Airlines.
  
  At Cairo Airport, clearing at the airport was pretty fast, there was no hassle; in fact it took less than 15 minutes from disembarking from the plane to being out of the airport.
  
  Getting Around: There are two main types of taxis - those with meters (painted white with checked stripes on the side), and those without (usually painted black with a white line). The taxis with meters are cheaper, costing about 5 Egyptian Pounds (~Kshs. 125) for 4 KM. The ones without meters tend to be more expensive as the drivers decide on the pricing. Other transport options include government buses, as well as hotel taxis, which are very expensive (not the buses), mostly ranging from US$20 (~Kshs. 2000) and prefer to be paid in dollars.

  Cairo scene

  Cab drivers will try to convince you that the streets are insecure just so you can take their cab service but having walked around, I did not feel any sense of insecurity, apart from the evenings when all you find in the streets are crowds of men, but everything else looked calm, with no incidents.
  
  The local language is Arabic with just a handful of English speakers. Most if not all of the printed press I saw was in Arabic.
  
  Keeping in Touch: For communication, I was able to use my roaming service on both Safaricom and Airtel but ended up getting a local SIM card as it was cheaper to use. With a local provider, Mobinil, local calls cost me 90 Piastre per minute, an equivalent of ~Kshs. 22 and for international costs, there was a day I called Kenya for 4 minutes and spent about 50 pounds which is an equivalent of ~Kshs. 1,100.
  
  As most people use their Blackberrys for internet, there are a few cyber cafes, unlike like the hundreds in the streets of Nairobi.
  
  Where to Stay At the Baron Hotel, which is a really nice hotel that costs $150 per night. There was also Wi-Fi at the hotel.
  
  Shopping & Sight-Seeing: Getting around each day cost about 20 pounds (equivalent of about Kshs 500). The main shopping area is downtown Cairo was at the mosques and the Pyramids and the other site to see besides the Pyramids, was at Alexandria City.

  Pyramids & Sphinx

  Business & Infrastructure: Electricity is reliable, and it was there every single day with most parts of the city well lit. I hear it’s cheap too and solar is not very popular!
  
  Most of the architecture is very amazing and very old ancient Egyptian. Also, it’s amazing that the tallest building I saw was about ten storeys.

  Camel in Cairo

  Food & Bars: The Local dish is Koshary, which is a very interesting dish of pasta, rice, macaroni, peas and a few other ingredients mixed and served with tomato, garlic and vinegar sauce. Beer is not very popular especially being a Muslim community but they take bitter tea and smoke cigarettes a whole load! The talk now is about the revolution and the life that is going to come or what is expected after Mubarak.

  Koshary meal

  Local legends are everyone who was in the revolution!
  Shockers: The separation of the sexes. Men are more open to hanging out and working with men, but you hardly find any women in the midst of men. Men hug and kiss on the cheek every so often before and after a conversation and the best they give with women is a handshake. This also applies to the women.
  
  The other big surprise is how friendly everyone is. Egypt is depicted as a very unfriendly country especially as most of them don’t believe they are in Africa, but the people in Egypt are all very nice and welcoming. One word AMAZING!

• Reading the Precision Air Tea Leaves

  Posted: October 10, 2011, 5:18 pm by bankelele

  Precision Air (now PLC with a 126 page prospectus at their site) was incorporated as an LLC in 1991. It flies to all major towns in Tanzania Mwanza, Tabora, Musoma, Shinyanga, Kigoma, Kilimanjaro, Zanzibar, Mtwara, Arusha and Dar es Salaam) and internationally to Kenya, Uganda, South Africa, and Comoros. Kenya Airways (KQ) became a strategic investor in 2003, acquiring a 49% stake.
  
  Air Industry: There are 27 air operators in the country, and Precision is the second national carrier of Tanzania with a 59% market share, followed by Coastal Travel 14%, others with 21% and Air Tanzania with 6% (via TAA stats). It is also the only Tanzania carrier operating scheduled international flights and member of the IATA clearing house (ouch!)
  
  Tanzania is a large country with a service industry that contributes 43% to GDP of the country, and id that has increasing air industry opportunities thanks to mining, tourism, but challenges include a lack of staff. Precision has been a local pioneer in e-ticketing (which cost $1 compared to $10 for paper ones), frequent flyer programs and online check-in.
  
  On Offer: Unlike past cross border listing like Bralirwa (Rwanda), Stanbic (Uganda) and Safaricom & Britak (Kenya) which have been available to nationals of all East African countries, the Precision IPO has only Tanzanian and non-Tanzanian categories for retail and corporate investors (no East African category). 51% of the shares are reserved for Tanzania nationals in the case of an over-subscription, Tanzanians can't buy on behalf of non-Tanzanians, and 3% of the shares are reserved for staff of the airline.
  
  If dividends are paid, they are taxed at 5% for both Tanzanians and Non-Tanzanians (shareholders of unlisted companies are charged 10%). Historically, they have paid dividend of about Kshs. 7 million and shareholders equity tumbled in 2011 thanks to a hedging reserve hit of Kshs. 615 million.
  
  58 million new shares are on sale at a price of ~Kshs 29 (TzS 475 each), with a minimum application amount of 200 shares, then multiples of 100 thereafter. The offer runs from 7th to 28th October with results announced on November 11 and listing at the Dares Salaam exchange on December 8 2011.
  
  The IPO has had some delays such as by a small a lawsuit and (threat of) a winding up petition. However the only material litigation mentioned are two (lightweight ones) of a passenger who lost luggage and sued for about $50,000, and some former employees suing for overtime pay of $150,000 which the Precision lawyers note are unlikely to lead to winding up proceedings.
  
  Valuation: With a re-worked earnings per share of 10, the price advised by NIC Capital works to a historical P/E ratio of 50, which is seen as high (see Transcentury [KE] for a similarly listed share)
  
  Cost of Offer: The IPO will cost about Kshs 64 million including payments to Ernst & Young (transaction advisors - Kshs 5M), Orbit (stockbroking - Kshs 3.5M), Stanbic (Receiving bank- Kshs 3M) and the receiving agents (stockbrokers, branches of CRDB, and Stanbic banks all budgeted at Kshs 37M)
  
  Use of Proceeds: hoping to raise about Kshs 1.7 billions (TzS 27 billion or ~ $16 million) and Kshs 700 million will go to fleet expansion, Kshs 400 million for ATR spare parts and the balance in systems, training, equipment and working capital.

  
  

  Background on Transaction: Michael Shirima, the Chairman had had 1.37 million and KQ 1.32 million shares each. Their shares were split 50 times giving Michael Shirima had 51% (68m) shares and KQ had 49% (66m) and they will retain those shares, alongside the newly created 58 million shares, but which will reduce their holdings to 35.5% and 34.1% respectively
  
  Early partners in the airline's history include Mtengei Materu, Hillary Ngaleku, The Tanzania Venture Capital Fund and East African Development Bank, but at this stage it's only MS and KQ. The company does not own land but has leases from Kilimanjaro Airports Development Company, Kilimanjaro Native Cooperative Union, Quality Plaza Limited and National Insurance Corporation.
  
  Fleet: Comprises 2 ATR 42-320 (All Owned), 4 ATR 42-500 (2 Owned and 2 Leased) 5, ATR 72-500 (All Owned) and 2 Boeing 733: 2 (Leased). ART 42 (4 in fleet) and ATR 72 (5) use 700 litres per hour, with which they fly almost almost 700,000 and forecast flying about 1 million passenger next year. The 737's are maintained by KQ.
  
  Banking: Their arrangements include Citibank ($127 million) who are financing the purchase of 7 ATR aircraft, Stanbic ($6 million) one aircraft and a KCB $6 million) taking over an EADB loan for hangar construction (at Nyerere International airport). They also have letter of credit and guarantee facilities with Stanbic Tanzania.
  
  Human Resource: Precision has 657 staff, but a SWOT in the Prospectus notes that a weakness of the industry is a shortage of pilots and engineers. The Managing Director, Finance, Information Systems and Commercial directors are Kenyans, seconded from KQ who provide manpower development, and training of Precision staff who are attached to KQ. Also at Precision, 4 pilots have been trained from scratch, 12 technicians have been trained at Toulouse by ATR and 5 senior managers are also enrolled in MBA's at Toulouse.
  
  Ground Handling: 150 were employed after the company got approval in 2009 to do their own ground handling - and hope to employ more if they get permission to do the same for other airlines. They do self-handling at Nyerere International Airport (Dar es Salaam) and Kilimanjaro International Airport (Arusha)
  
  Governance: Precision has a lean board with only one independent director and only one committee (audit & risk) that each meets four times a year. As long as they own 20% KQ must be consulted by Precision and agree on the appointment of Managing Director and Finance Director, entry into alliances, new routes, acquisition & disposal of fleet, any issue that dilutes shares, taking on debt. same for MS who holds 20%. KQ and MS have the right to appoint one director for each 10% they have and replace their directors. The IPO also provides for some rights for a minority shareholder who ends up owing 10% shares in the company.

• Investors Vs. Spenders

  Posted: October 7, 2011, 2:59 pm by bankelele

  A guest post by Wanjiru Kamau of Capital Registrars
  
  As I read and write about personal finance, I try to establish or cultivate an investor habit rather than the spender habit with people. Where do you fall?
  
  First, you should understand the difference between an assets vs. flossets!. An asset creates value, while flossets makes you look like you have money! You know them – they include the latest car/TV set/clothes/expensive phones etc. Like a job interviewee with impeccable dressing and good English (well don’t hire those!), a flosser looks like he/she has money and are attractive to many!
  
  Now, in understanding the difference between an investor and a Spender..
  
  1. Interest: An investor earns interest. A spender pays interest. The Central Bank issues Treasury Bonds and Treasury Bills every so often. You can check their website on the Central Bank of Kenya. While investing in these are for big players with millions to spare and an eye for after tax interest , they are now available for investors with as little as Kshs. 50,000 (~$500)
  
  However, fund managers such as Zimele, and a number of collective investment schemes licensed by the CMA pool funds from many small players and credit interest on accounts every quarter. The spender on the other hand funds his many expenses with loans, and is always paying out interest.
  
  2. Capital Gains vs. Losses: The main aim of an investor is to make money not lose it – and he/she earns capital gains on investments like stocks, land, businesses and other investments. However, a spender quickly loses his capital every day on his flossets e.g. a car’s value, which goes down the minute it leaves the showroom.

  3. Type of Phone calls: The investor receives phone calls from people who want to create more value or deals that he may make money in; while the spender receives phone calls from shops or friends that want to sell him/her the latest clothes, phones and other gadgets. While these items are not important, changing your phone every time there is a new model, is not financially healthy unless you your balance sheet allows it.
  
  4. A Savings Culture: The investor saves money to build an emergency fund or capital for business. He knows that little by little, with a discipline, he can build a fund that is large enough to sustain him in case of income loss. In contrast, the spender hardly saves. He always has too little money to save even if he has a good income, as he is always servicing high interest loans or paying for more Flossets that his salesmen friends arranged for him.
  
  5. Insurance policies: A smart investor maintains important insurance policies to avoid losing assets in a fire or to thieves. They have taken the time to understand, the somewhat difficult insurance jargon and marketing practices to subscribe to policies that provide some protection to their businesses and families in the event of some losses. A reckless spender may engage in unwise decision like driving a new car for a night out before arranging insurance.
  
  Where do you fall in the Investor vs. Spender divide?

• KFC is here, so what?

  Posted: September 28, 2011, 8:11 pm by bankelele

  My article on the opening of a new Nairobi KFC restaurant that appears in the current issue of Up, a free magazine on interesting things happening in Nairobi. It was edited by Bikozulu.

• What Can We Do?

  Posted: September 22, 2011, 8:02 pm by bankelele

• Urban Inflation Index: September 2011

  Posted: September 21, 2011, 3:59 pm by bankelele

  One year after the euphoria of a new constitution, the direction of the economy is uncertain as seen in the weakening Kenya shilling, tangles in implementation of the constitution, and rising food prices. It has been a year of some price controls in the fuel, and possibly in the food sector whose parliamentary price control bill was signed into law last week by the President.
  
  Comparing prices to six months ago and last year. On to the index
  
  Gotten Cheaper: Nothing really.
  
  About the same:
  
  Communication: All Kenya’s mobile phone companies have call rates of about Kshs 3 shillings ($0.03) per minute to call across networks. It is unclear what will happen with call rates, as the smallest company in the market, Yu, launched free daytime phone calls, Airtel Kenya lost a CEO, and Safaricom has indicated that they may raise their call rates, as has happened in Uganda with MTN . The real battle is in data, where prices have not really dropped but companies are offering more speeds for less. The market here is divided between the companies with 3G (Orange & Safaricom) who compete on speed, and those without 3G(Airtel & Yu) who offer cheap internet rates of about Kshs 50 (~$0.5) per day for unlimited use.
  
  Another communication developments that, in a way, lower the cost of business include the launch last week at G-Kenya of GKBO, which encompasses free website creation tool, domain registration, and site hosting for small companies by Google in Kenya.
  
  Utilities: The bill on pre-paid electricity is still at about Kshs 2,000 ($21) per month, and getting about 30 – 35 units per buy via M-Pesa. However that is expected to go up after notice was issued for rates to go up 22% per kwh unit. So what alternatives are there? In a somewhat timely move, Samsung launched the NC215, a solar powered netbook laptop last week. It gives 1 hour of power for every 2 hours of charge in the sun, has a 15-hour battery life, and is able to charge other devices by USB even when it is off.

  Also got a gift of a solar phone charger (T2126 Hemera from Hirsch) that works quite well; it takes about 12 hours to charge in the Sun or 2 hours via USB, has a flash light and can charge a variety of phone models.
  
  But when you look at the rapid advances in laptop batteries and cell phone batteries over the lasts decade, you get the feeling that there has been a lag in the pace of solar devices, and that more solar based solutions and advances should be emphasized.
  
  More Expensive
  
  Fuel: A litre of petrol fuel, which is regulated by the Government, now costs 117.75 (~$5.6 per gallon) in Nairobi. Regulated fuel has proven to be more expensive than unregulated fuel, and while this can be attributed to the weaker shilling and fluctuating oil prices, the formula used to arrive at the price remains vague, and the limit on margins (stipulated buying and selling price of petrol, diesel, kerosene in each town) appears to have hurt small oil industry companies, more than large ones. However, among the listed companies, Kenol appears to have weathered the regulatory regime better than Total, by having diverse operations in other countries in East and Central Africa that remain unregulated.
  
  Staple Food: Maize flour, which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2kg bag which cost Kshs. 80 six months ago, and Kshs 65 a year ago, is now Kshs 119, the highest it has been in the short history of this index.
  
  Other food item: Sugar : A 2 kg. Mumias pack which has hovered at about Kshs 200 for the last years, now costs Kshs. 385 (90% more than last year) and . The sugar sector has really gone full circle causing many to questions its relevance, recurring shortages shortage (why all factories close at the same month for maintenance), why sugar is grown in a food producing area and how many items we can consume without having to use sugar as a sweetener e.g. tea without sugar, or use of honey as a substitute.
  
  Foreign Exchange: 1 US$ equals Kshs 95.6 compared (now 96.8) to Kshs 80.8 a year ago (and 83 in June 2011) - a loss of almost 20% in a year. It’s unclear of this has been a concern to the Central Bank which has made other confusing policy moves as related to interest rates at a time of mounting government debt and their laxity has enabled banks to spot and take advantage of an arbitrage opportunities to trade with government money.
  
  Beer/Entertainment: A bottle of Tusker beer is Kshs 180 ($1.9) (at a local pub) a slight increase from compared to Kshs. 170 a year ago. However beer has become out of reach for many poorer Kenyan who have resorted to drinking unsafe local brews, which in some unfortunate cases have resulted in blindness or even death.

• Are Kenyan Engineers Capable of Building Thika Road?

  Posted: September 20, 2011, 1:37 pm by bankelele

  Yesterday’s post at the Thika Road Blog sparked a response from @BridgeMkr
  
  Having grown up in Kenya then gone to the US for college and worked there ever since in bridge design, I would say that the Kenyan education system was more than adequate in preparing me for engineering school and a career as bridge engineer.
  
  Based on that, I would say that the civil engineering graduates from Kenyan Universities have the basic tools to succeed as engineers in this world.

  
  

  I read a comment that Kenyan universities are preparing students for 1980’s style construction – and if that is true, then I would say that is a good thing. If one clearly understands how to design structures built in the 1980’s then they understand the basics of design and construction.
  
  There are buildings and bridges built in the 1900’s that are still standing. Over the years, the basics in design & construction have remained the same, with the difference being how well/accurately we calculate the design loads, and how well we design the structure to withstand these loads, the safety factors we apply to them, and the materials we use to construct them. If one understands the basic principles, then the next step of understanding modern design factors, codes, and materials is very simple.

  I would rather have an engineer that can design a bridge using the old code by hand, than one who can only design the bridge using modern software packages, (and who does not know how the program comes up with the solution).
  
  China has over a billion people therefore they will have way more engineering graduates. The way forward for Kenya and Africa, is to continue to produce civil engineers who clearly understand the basics in design and construction. Some of these graduates can then go to universities aboard to get their masters and post-graduate degrees, and who can later transfer this additional knowledge back to Kenya and Africa. The graduates that remain in Kenya upon graduation should go work under the direction of more qualified engineers, who can give them guidance on how to design various basic structures at first, with the complexity of the structure increasing as their career progresses. In engineering, like most things, experience, with the ability to learn, counts the most. Those graduates that went abroad, on return to Kenya can start out designing more complex structures based on the experience gained, but should still work under the guidance of more experienced engineers.
  
  It may surprise a few people but today in the US, there is a debate raging on whether a master’s degree in civil engineering should be the minimum qualification for someone to be a registered civil engineer. It is felt that the current undergraduate programs are not adequate, especially if the pay for civil engineers is to go up.
  
  In order for Kenyan and African engineers and companies to compete for, and design, major construction projects like the Thika Road Project, there needs to be a requirement that Kenyan and African engineers and companies be involved in the design and construction of these projects. This can be done by requiring some portions of the project to be designed and constructed by local engineers.
  
  Another requirement, which would add to the cost of projects, but would ensure the transfer of knowledge, is to have independent designs done by local engineers. This means, having Chinese /European/American design firms design the complex structures but at the same time have local engineers and companies independently produce designs of the same complex structure. The local firm’s designs can then the compared to those produced by the foreign firm. Another problem with design & construction in Kenya and Africa is having adequate QA/QC procedures in place to ensure that structures are designed correctly and constructed according to the engineers design using the specified materials.
  
  Through this process, current local deficiencies (if any) would be revealed, and at the same time the local firms would learn how things are done differently by foreign engineers/firms. This design exercise cost is very small, compared to the actual construction costs and I have been involved in projects where two independent designs have been produced.

• Tatu City & Vision 2030

  Posted: September 16, 2011, 3:28 am by bankelele

  Tatu City was endorsed as a Kenya Vision 2030 project and an event was held in Nairobi to celebrate the signing and also clear up some misconceptions about the project.
  
  The Future is Urban Mugo Kibati said urbanization is the future, the world over, and it will happen without proper planning, Vimal Shah said that while Kenya is currently about 30% urbanized, by 2030 Kenya (which is just 212 months away), this will have risen to an urbanized population of about 75% urbanized. Are they going to stay in poorly planned cities or better articulated developments?

  What is it? Dr. Gituro Wainaina, who is one of the Vision 2030 secretariat directors said that the message must get out that Tatu is not a gated community, it is where you work or where you sleep. Lter it was mentioned that it was a brand new city, that will complement, not replace Nairobi, and at completion will be worth $5 billion - the single biggest FDI injection. It looks new and different form other projects (every toilet in Tatu City will flush with recycled water. Every roof should harvest rainwater!) and the Ruiru Council has embraced the project, are building capacity to manage with Tatu and are are going to reap the benefits of the project, which might lead other municipalities and counties to do that.
  
  Vision 2030 is not about Government Projects: Mugo Kibati said that Vision 2030 is not about government projects and they envision that the majority of projects will be by private investmentors or government partnerships with the private sector. He said that the Government is only meant to be a facilitator that provides incentives - adding that with Tatu on one hand and the government’s planned technology city in Konza on the other, he is watching the race to see which will complete theirs faster – the public sector or the private sector?
  
  Nairobi needs 10 Tatu Cities: Tatu will do create 3,000 houses a year in a country that has an annual housing shortage of 35,000 to 40,000 per year. Nyagah said that Nairobi needs another 10 Tatu’s to barely satisfy the demand, and that they welcomed other mega housing developments that have been inspired such as Migaa, Thika Greens, and on other towns like Eldoret (Sergoit)
  
  Is Tatu is Destroying Farmland? At a time when the country can't feed itself adequately, this has been partly attributed to the use of land has been attributed to land use Mugo Kibati said that current 60% farmers in Kenya, are feeding about 80% of the citizens. In future, the government would have to make some harsh decisions about denoting land as agrarian, commercial, residential etc. (in a Land Use Masterplan). Having a 70% urban population in 2030 will still leave 30% in rural areas which is still high. The current subdivision of arable land is un-sustainable, and the government has to get more people out of farms and find them employment in other sectors; this will leave arable farming to farmers, who will mechanize, and invest in agro business; i.e. Farming should be done by professionals, as it is in developed countries like the US that are able more than feed their countries and export surplus with less than 5% of thir population being farmers.
  
  M-Tatu Mortgage?: Nyagah challenged James Mwangi, the absent chairman of vision 2030 (who's also the Equity bank CEO), to create to create a mortgage, where someone can be repay a daily amount e.g. kshs 500 per day and buy a house and name it M-Tatu.

• The Total Motor show took place this ...

  Posted: September 12, 2011, 12:24 pm by bankelele

  The Total Motor show took place this last weekend in Nairobi (Friday 9th to Sunday, September 11, 2011). It was interesting as usual, but this time it was at KICC unlike the last one that was at the Ngong Racecourse. With the weaker shilling, and higher petrol prices, there was a noted change in some vehicle prices and more companies offering more efficient vehicle management solutions.
  
  Some notable moments:

  Companies like CMC (Ford, jaguar, Volkswagen) and Toyota did not display prices, but it was a shock to hear that a Toyota Corolla 1.8, cost Kshs 3.3M ($36,000) which is about three times the price people pay for used import models.
  
  Public Service Vehicles: Companies like General Motors have their Isuzu's ready to ride on the Government’s plans for larger PSV vehicles and they had a pimped out matatu – the NPR that costs Kshs 4M ($43,000), and an Isuzu FRR model (Used by many Citi Hoppa’s operators and which costs Kshs 5.8M ($63,000) and an 62- seat bus that was Kshs 9.4M

  Trucks: These were a plenty, but the the truck king of the road is the Mercedes Actros; new models of these can be bought via D.T. Dobie at a cost of €93,500 (~Kshs 12.2 million) and each order is customized to the buyer’s requirements before it is built. The popular Mitsubishi FH215 is Kshs. 5.1M
  
  Luxury: Head to head in the luxury department were BMW (from Simba Colt) and perennial market leader Mercedes (from DT Dobie) who had a range of cars, priced with and without duty/tax (an option for diplomat’s, Government and NGO buyers). BMW had the X3 at €60,000 )Kshs 7.8M) while Mercedes had the ML350 for €110,000 (kshs 14.3M). BMW had the 3-series for €47,000 (~Kshs. 6.1M) while the C200 Mercedes was €60,000 (or €34,000 duty free), and BMW also had the 5-series on show for €60,000 while Mercedes had the E200 for €78,000 (~Kshs 10.1M) or duty free for €48,000 (~Kshs 6.25M)
  
  Pick-Up/SUV: DT Dobie has the Nissan NP 200, launched at the 2009 motor show at Kshs 1.2 million, but which now costs Kshs 1.87 million and CMC had a new Volkswagen pickup that was not priced. Mitsubishi had an L200 double cab at Kshs 4.1 million, an update of the popular Pajero at Kshs 6.5 million, while Mahindra had pickups ranging between Kshs 2.4 - 2.9 million.

  With rising fuel prices, fuel saving solutions on offer include Stoic (touting to save up to 40% on fuel prices) and Fuel max (sold by Kiprin Enterprises - and enticing with savings of up to 50%). Other energy savers were Solar powered lanterns called Total Sola from sponsor Total. Better driving solutions were offered by Glen Edmunds driving school for defensive driving while Scania had one for long distance truck drivers that are purported to save 6 litres per 100 kilometers driven (from the current average of 40 litres over 100 kilometers) and which also brings better tyre and break wear
  
  Other: Toyota also sell Yamaha motor bikes including a 106CC model which comes with a free helmet, reflect jacket, registration and one year warranty (or 6,000 km)
  
  Car Tracking : Companies included Rivercross tracking (who also install a fuel fuel monitor that warns when truck drivers may be selling diesel from their trucks) as were other companies like Retriever, and Cyber Trace.
  
  Online Classifieds: Car buyers and sellers had cheki and dealfish (which is free for buyers & sellers)
  
  Banks: Banks in the auto finance sector were represented at the show including NIC, KCB, Equity, Imperial, Co-Op, Chase and CFCStanbic. Co-op have PSV financing (aimed at Sacco’s) and school bus financing (unique application requirement are board of governor approval and minutes, and ID, fees structure of school.
  
  Apprentice: A motor show surprise was a twitter conversation with @karuoro and @mediamk on the prevalence of former D.T. Dobie mechanics who are specialists in Mercedes.
  
  - @bankelele: I know about 3 garages run by ex-DT Dobie mechs (it's like a badge of honour)
  - @mediamk: those mechs are amazing, I wish this was the case across different industries (as) apprenticeship is a good way to grow an industry.
  - @karuoro: "The industry leader is obliged to be a net supplier of talent to the industry" - Linus Gitahi (@LGTwits) ...I think quite a number are licensees

  .
  

  The D T Dobie apprenticeship mechanic program is open to all Kenyans, male & female, who are less than 22 years and obtained KCSE C+ in English physics and mathematics. Though subsidized it will cost Kshs 50,000 ($550)per year for three years after which staff will be bonded for 3 years. They also accept self sponsored applicants who will pay Kshs 140,000, and the application deadline is 30 April 2012.

• NSE Goes Android

  Posted: August 30, 2011, 11:14 pm by bankelele

  The Nairobi Stock Exchange now has a free Android app. Developed by Verviant, it is rather basic (download page), but show's the the equity day’s prices changes, and summary of some announcements. Still, it's a good start, and should be a work in process, and maybe investors will be able to track their portfolio's (still empty) and drill down to read more comprehensive announcements, and bond prices too.

  Nairobi Stock Exchange Android app

  The Exchange probably needs to address the issue of large PDf statement that companies fax in their announcements and which the NSE scans to their site - and replace these with some basic documents that they can upload to the main and mobile site.
  
  Another NSE geared app is the Rich app (from the Nokia Ovi Store), that is however designed for the Nokia E-7.

• Education Moment: Is Our Children Learning?

  Posted: August 27, 2011, 1:42 am by bankelele

  The post is based on random thoughts on education in Kenya spurred by events like the Loreto Msongari bus accident, to talks with school administrators, observing universities take over libraries and nursery schools to expand their class sizes, reading blogs, and getting lots of press releases some of which touch on the education sector in Kenya .
  
  Who will build schools?: With the cost of real estate going up in Nairobi (Kshs 100 million [$1.1 million] for an acre in some parts) it is getting harder to imagine how more schools can be built to cater for the young growing population.
  Former Nairobi nursery school, now a university campus
  
  Schools like Makini (profiled in this story in the Business Daily ) have grown from having 8 students to over 1,000 after many years of hard work and success, that they now have eleven (11) streams of primary school pupils. Also, due to demand for places, some nursery schools have long waiting lists, and advise parents to register/book places for prospective students , before the children are even born.
  
  Value in education is found in other places, like the recent Hillcrest settlement, which concluded a decade-long running bank receivership by way of new investments by a venture capital fund and a private school chain (Rose of Sharon) who will continue to run and expand the school.
  
  What about old schools?: This post by Rookie Manager further points out the waste of resources that parents throw by enrolling their children in newer private and expensive private schools and wonder if by channeling the same funds towards rehabilitating old existing public schools would go a lot further. These old schools have the advantage of being located in established neighbourhoods and have ample space for various educational pursuits
  
  What about new parts of the city? Nairobi is growing driven by private sector housing developments, notably in the Kitengela and Southern parts of the City, but this s not being matched in terms of education.
  
  One touted solution comes from the Bridge International Academies who offer a low cost school model designed to quickly roll out in low-income areas and offer quality education at a cost of about $4 per month for each child. However a blog post was written that offered s contrarian assessment about the system and this elicited a comment in response and explanation of the program from the co-founder.
  
  The anticipated demand for schools has also become point of controversy in China with a investment fund that plans to build 1,000 schools in Africa.
  
  In terms of Curriculum & research, G33kdiary has a post on the current hunger situation in Kenya and she notes that Kenya’s food security is unlikely to improve as long as schools don’t teach agriculture and emphasize & promote farming livelihoods, while White African had another on the lack of Africa ICT research
  
  Recent Financial incentives: recent ones of note include:
  
  - South Sudan is offering to pay loans for her nationals in the USA provided they have completed their education (bachelor’s degree, master’s degree or PhD.) and are willing to return home to work (The pilot program is called the South Sudan Student Loan Forgiveness Program - SSSLFP)
  - Eagle Africa (former AIG Insurance) recently launched a low cost insurance plan to protect kids from road accidents playground incidents – the entire time an
  insured student is in the hands of the institution including travel to and from the school
  - Having adequate savings to fund education is one constant constraint, and financial funds like British American (who just had a 60% subscription in their IPO) is one of them; Britak offer education savings plans - called Super E plus, Elimu Bora, and Invest Plus, which all offer a variety of savings, insurance, and investments.
  
  Use of technology: Encyclopedia’s for schools was the theme of a recent talk by a visiting Wikimedia team at the iHUb. They covered the need to spread knowledge to the offline population – such as to remote schools with few textbooks (but perhaps a computer), and offered a solution in the form of a single DVD from Wikimedia can hold over 1 million articles, as well as a free software tool called Kiwix which enables the articles to be read offline to teach students in remote distant parts
  Wikimedia in education
  - iPads and Kindles : E-readers will change the way the developing world reads is an argument put forward in this post based on observations from Ghana, to Kilgoris. However a follow up report notes that Kindle rule changes from Amazon mean that content cannot be loaded across multiple devices at one time and each kindle has to be tethered to its own account - both of which limit its potential as a mass education tool.
  
  The absurd: The above post title comes from an infamous Bush-ism or slip of the tongue by former American president George W. Bush.
  

  And finally, in the news today, is a Kenyan Member of Parliament who is about to lose his seat – because a one of the allegations leveled was that the MP could not articulate himself in English and Kiswahili and may have falsified his language proficiency exam results.

  
  
  
  

• Dividends Payments across East Africa

  Posted: August 19, 2011, 2:03 am by bankelele

  Having bought shares in recent East African IPO's (Uganda: Stanbic Bank and Rwanda: Bralirwa Brewers), there appears to be some progress in addressing one of long standing problems of buying such shares - and this is the bank charges associated with receiving and having to process dividend cheques that are paid in currencies that are fractionally weaker than the Kenya shilling
  
  With Stanbic, the Kenyan arm of the African bank has shown little interest in facilitating this even though a significant number of Stanbic Uganda’s 25,000 shareholders are Kenyan. In fact, the staff pension funds of Kenya Airways and Central Bank are listed among the top 10 shareholders of the bank.
  
  At Bralirwa, the dividends are issued by KCB Rwanda and via a late message, KCB Kenya state they are paying/cashing the cheques up to RWF50K (~Kshs 8,000) across the counter. ( If higher the cheques will be sent for to Rwanda).
  
  While the next step should be for East Africans to receive cross-border dividend payments by mobile money such as mpesa dividends this is only available to Kenyan shareholders. For now, the facilitation of affordable across-the-counter dividends, and other cross border trade & investment payment options is something that banks, not just KCB, with a regional footprint like Equity, Stanbic, Diamond Trust, and NIC should also take up.
  
  
  EDIT: New communications from the banks show new options for Kenyans who have invested shares across East Africa as follows:
  
  Bralirwa: Any cheques of less than RWF 50,000 (~Kshs 7,750) can be cashed at the counter of any KCB Kenya branch at a fee of RWF 200 (Kshs 31) on production of an ID or a passport
  
  Stanbic Uganda: no certificates will be issued for the 1:1 bonus, and no physical annual reports will be mailed. But shareholders can now elect to receive dividends by electronic funds transfer, or mobile money (airtel money or m-pesa) after confirming their details at Comprite (Uganda) Registrars whose Nairobi office is at Marakwet House, Elgeyo Marakwet Road.
  

• Award Season: Graduates, Mashujaa, Networks, Nature

  Posted: August 12, 2011, 10:38 am by bankelele

  African Union Kwame Nkrumah Scientific awards. D/L 15 September.
  
  Arthur B. Schultz Foundation grants aimed at non-profit groups involved in women’s empowerment and disabled mobility solutions.
  
  Changemakers.Org Details here on awards for citizen media ($5,000) and health, excellence, opportunities, other.
  
  DStv: Eutelsat Star Awards are open to 14-19 year-old students in 42 countries to write an essay or design a poster on satellite technology and how it can assist further development of their communities, country or the African continent. D/L 26 August.
  
  Infodev: Piloting virtual incubation seeks organizations in East Africa ad. D/L is August 15
  
  National Museums of Kenya: For design of a Mashujaa national monument. D/L is 9 September and prizes are of Kshs. 300,000, 200k and 100k.
  
  Orange: African Social Venture with prizes for digital projects in e-health, mobile banking, digital /mobile applications for education or agriculture that address needs of the ‘bottom of pyramid’. 3 winners will receive financial grants (25K€, 15K€, 10K€) and a 6-month mentoring program. D/L September 15
  
  Pan-African Awards for Entrepreneurship in Education. Details here and has prizes of $10,000, $5K and $2K.. D/L is 10 October.
  
  Standard Bank / Stanbic: graduate management program - D/L is August 15.
  
  UN Awards for Young Innovators (aged 18 – 25) and digital innovators (non profits). D/L is September 15
  
  Western Union is on the hunt to find the most globally networked individual. It is open to anyone with a facebook account and the site also lists some entering remittance figures for the 200 countries where Western Union is represented.

  WWF KENYA / NETFUND Nature Challenge Africa from the Worldwide Fund for Nature (WWF) Kenya and the National Environmental Trust Fund (NETFUND) is a green business competition for entrepreneurs and targets businesses engaged in conservation, biodiversity and livelihood programs, that are seeking finance in the range of US$10,000 - 1 million.
  
  EDIT
  
  More found at Savvy Kenya blog
  
  Tandaa Digital Content Grant: The Tandaa Local Digital Content Grant is a grant to support ICT in Kenya. It is like seed funding for companies entering new media and ICT. In particular, the grant seeks to support products and services developed for the Internet and mobile phone. D/L 22 August
  
  Nokia Create For Millions App Competition: Submit your best Series 40 Java or web apps in Nokia’s ‘Create for Millions’ contest to win your share of cash and prizes, worth 1 million euros. D/L September 1

• Shares Portfolio August 2011

  Posted: August 10, 2011, 10:07 pm by bankelele

  Comparing changes to three months ago and since then, investor confidence has dipped following rising food & fuel prices, power rationing and a sliding shilling.
  
  The Stable
  

  Barclays Bank ↓
  Bralirwa Breweries (Rwanda) ↑
  British-American Investments (Britak) ↔
  Diamond Trust Bank ↓
  East African Breweries (EABL) ↓
  Kenya Airways ↓
  Kenya Commercial Bank (KCB) ↓
  Kenya Oil Company (Kenol) ↑
  Scangroup ↓
  Stanbic (Uganda) ↓
  Uchumi Supermarkets ↓
  
  Review: The Portfolio is down 5% in the last three months while the NSE 20 Share Index is down 12%
  - Best performer: Bralirwa 33% (this Q), then Kenol 22%
  - Worst performer: Uchumi -39%, Diamond Trust -26%
  - In: Britak, Safaricom
  - Out: None
  - Increase: None
  - Decrease: None
  
  Other:
  Splits: Barclays
  Bonus: Diamond Trust , Scangroup, and Stanbic Uganda
  Dividend: KCB, Diamond Trust, Bralirwa, Kenol Scangroup, Stanbic
  Events:
  - Uchumi re-listed after five years of suspension.
  - Took on the new IPO from Britak IPO (results on August 23), but passed on other new listings from Transcentury and Bank of Kigali. Meanwhile there are no privatizations on the table from the Government of Kenya
  - NSE companies are making efforts to clean up their shareholder registers, with a view to applying dividends that have been unclaimed for several years to their reserves, otherwise they will have to be surrendered to the Government
  
  Data: The NSE has stopped sharing free price lists, which now makes it harder to access daily market data. Meanwhile the CDSC has stepped up with investor awareness, and you now get a SMS notification of trades (shares sold/bought)

• The Future of the Post Office?

  Posted: August 5, 2011, 9:37 pm by bankelele

  I’ve had many recent trips to the post office, tracing lost dusty packages, new keys, dividend cheques and other mail which 85% of which are bills & statements, and 10% are marketing materials & junk. Very rarely do you get a personal letter in the mail, and that's usually around Christmas.
  
  The post offices are run by teams of (mostly) older workers, who are well trained, dedicated, and honest in their work. However they work in a rigid bureaucratic environment and that means that almost every process has to be cross-checked & triple check, with signatures to be obtained by several people seated a few feet apart.
  
  When Equity Bank released their half year results last week, their CEO James Mwangi spoke about the bank having reached the maximum productivity that could be attained from physical bank branches. They were now shifting to a whole-hearted embrace of agency banking model, which they had initiated in Kenya and sold to the Central Bank.
  
  With agency banking, Equity has been converting small kiosks, cyber cafes (which are dying), pharmacies, garages into mini banks (open you own bank). Equity envisions having 5,000 agents (2,300 are now operational) and also have them sell insurance, airline tickets, and other services.
  
  For Equity they only pay commissions per transactions that agents complete as opposed to the fixed cost of operating their branches with. And for agents, the current agency rules means that they can't be mutually exclusive (like phone dealers and m-pesa agents tied to Safaricom). This means a pharmacy can offer agent banking services for KCB, Equity, even smaller physical reach banks like DBK and Giro.

  Mailboxes at Nairobi Post Office

  While these new agents have to overcome weaknesses of customer service, training, security (physical & cyber), the post office already has many of these attributes taken care of, plus they have steady foot traffic for letters, and parcels in their well known & guarded premises, and with ample space to expand.
  
  The local post office currently acts as (non banking) agents for the among others; the Kenya Revenue Authority (parcel are opened and tax is assessed has to be paid before release), Old Mutual (mutual fund), Safaricom (airtime), Airtel Money (mobile money transfer, pensions (posta), salaries (for school teachers), and several utilities - DSTV (satellite TV), Nairobi Water, Kenya Power, Kenya Charity sweepstakes (Lotto) etc.
  
  A new addition is acting as bank agents for KCB customers who are depositing or withdrawing cash. And that could be the future of the post office - as a financial supermarket for several banks, financial and utility firms.

• Guide to Gaborone

  Posted: August 2, 2011, 2:18 am by bankelele

  A guest post by Marvin Tumbo, the CEO of Socialight Media
  
  Getting There: Kenyans don't need visas when flying to Botswana, nor do they need yellow fever vaccinations, which several African countries require. But if you are traveling via Johannesburg, you might be required to get yourself a transit Visa. I have not experienced this, but know of friends from Nigeria who on several occasions, have not been able to fly via Johannesburg because of issues with transit visas.
  
  It costs around US $700 for a return flight to Botswana, and for travel from Nairobi, the ideal flight to take is Kenya Airways, which flies directly to Gaborone 3 times a week. However, there have been occasions when KQ flights to and from Gaborone have been canceled on short notice as was the case when I returning this time.
  
  An alternative route, is to fly via Johannesburg and then take Air Botswana or South African Airways onwards to Gaborone. However, while it is only a 35-minute flight between Johannesburg and Gaborone, a problem may be the connection time as you may have to wait 4 to 6 hours for the connecting flight.
  
  The last time I came to Botswana, the Sir Seretse Khama International Airport was still under construction but now after two months, they are finishing up and most of the Airport is in operation. Currently, there are no shops at the Airport yet, just a restaurant. I had been told that, prior to the upgrade, the Airport had the best perfume shops, which sold world-class perfumes at a fraction of the price – and maybe these will come back.
  
  The airport is not as busy as Oliver Tambo Int'l Airport or JKIA so checking in and out is pretty fast with no hassle at all.
  
  Getting Around: The local money is called Pula and it has the same strength as the South African Rand. The largest denomination here is 200 Pula.
  
  There are many taxis from the Airport and it costs between 60 and 100 pula ($6 to 10) to get to the city. Some of the Hotels usually provide for your transport back to the Airport for free when leaving like Cresta President.
  
  If you have meetings within the city, you can use Taxis, which will cost you between 20 and 40 Pula (less than $5). There are no traffic Jams here so going to and from the Airport and around the city is not a hassle at all. The roads are in great shape and there is a healthy respect for the law here, which means no funny (bad) driving.
  
  Gaborone is a very secure city, and Safety-wise, it is very safe to walk around any time of the day or night. I saw very few police officers for the duration I was there locals will tell you that there are no horror stories like robberies and muggings or worse. You even feel that the place is very safe without being told.
  
  Botswana also has our version of Matatu’s plying various routes. I did not get to use these but compared to the Matatu's in Nairobi, they look more organized and respectful.
  
  Hotels: While there, I stayed at the Cresta President Hotel, which is one of the best Hotels in Botswana. It has good Wi-Fi and is located at the centre of the City, a mere 15 minutes drive from the Airport, and is also within walking distance of every office you will probably need to visit. Similar 3* and 4* hotels cost between $100 and $130 per night
  
  Communications: Orange, MTN, and Mascom are the leading providers in Botswana with Mascom being the largest in terms of subscribers. However, you cannot roam with Safaricom here but can do so with an Orange line, and while phone calls are cheap, they are not as cheap as in Kenya.
  
  Language: The local language is Tswana but everyone speaks English as well so there are no language barriers here. You will hear the word Dumela a lot which is how you greet people in Tswana. – and you also reply by saying ‘Dumela’ as well. The local newspapers are all in English with the most prominent ones being Mmegi and the Botswana Guardian. There is also the Daily News, which is a free newspaper published by the Government.
  
  Sight-seeing & Shopping: If you really want to see what the country has to offer, the Okavango Delta in the Northern part of Botswana is the place to go. Game shooting is allowed here but only for certain animals – (and not) the Big Five which are heavily protected.
  
  If you want to buy anything to take back home, remember there are no shops at the airport yet. Instead try the variety of malls in and around the city as well as craft fairs, which are the equivalent of Maasai Markets in Kenya. These are open everyday but only a few them will be on Sundays.

  Food: There are many places where you can eat and for as little as 20 Pula or as much as 95 Pula ($10). To eat local foods, ask to be taken to The Station and there you will find the best local food for just 20 Pula. At high-end restaurants, good local food will cost 60 to 100 Pula (10 to 15 USD with drinks). Make sure you check out Cattle Baron and Beef Baron, and try their specialty which is the Beef Schnitzel or T-bone with baked potatos, papa, Seswaa – the Botswana National Dish. Try out Morogo as well. The local beer is called St Louis and they offer it as a Lager or Export, and the latter has a better kick to it.
  
  On any given day you will spend between $40 and, and on the higher side, $100 having meetings, lunches, dinners and a couple of drinks in the different parts of the City.
  
  Business & Infrastructure: As a business destination, this place looks God-sent. There are no issues with electricity or water for that matter. Registration of a business is pretty straightforward and costs roughly 500 Pula to register and 1,500 Pula for a trading license so in total, this amounts 250 USD.
  
  When you look at your normal day in Nairobi and compare it to here, there are immense business opportunities here. However, all the above is the insight of a local lawyer who will be handling our legal issues here. We are just finishing setting up shop and I can update this later based on experience. Our lawyer also warned us about xenophobia in Botswana though this is not something I have experienced yet. Most of the people I met were really receptive and excited about meeting a Kenyan and talked positively about Kenya and Nairobi.
  
  Shocker One thing to note is that almost all drivers in Botswana respect the law as far as driving is concerned. There are no traffic police here to direct traffic, and if you have been to Nairobi or Lagos or even Kampala, it’s a shock how organized the traffic is. People adhere to road rules even if they are the only ones on the road, and there is no running through red lights even if it is at 2 A.M

  Summary: On the face of it, Botswana is a great place as both a tourist and business destination. You will hear and read a couple of corruption cases, but the legal system here will give you investment confidence because of their conviction rate. A friend at the AG's Chambers informed me that regardless of who you are, there is no escaping the law. At the end of the day, my deciding to set up my business there also means I am a convert!

• 5 ways to protect your NSE shares from irregular sales

  Posted: July 26, 2011, 2:24 am by bankelele

  We all hope the days of collapsing stockbrokers at the Nairobi Stock Exchange (NSE) are now a thing at the past. However new share offering such as Britak, Family Bank and Bank of Kigali, and other personal finance initiatives such as the I’m a Cooperator movement are likely to convert some people into first time share buyers. So how does one ensure that their funds are not misused by an errant stockbroker or their employees? Read on

  A guest post by Shiroh
  While it takes a lot of sweat to save for investments, many investors have found themselves in a tricky situation when unscrupulous dealers engage in irregular sale of their shares. While this practice cannot be tolerated for all involved, it is important that one takes proactive steps to avoid losing your investments. These can include;
  
  1. Subscribing to the Central Depository System Alert Service: The mobile phone has truly revolutionized many industries in Kenya. For a nominal amount of Kshs. 10, one can receive alerts to their mobile phone anytime a transaction is made from their CDSC account. For more details, check the CDSC Kenya website.
  
  2. Freezing activity on CDS Account: Since getting mobile phone may not be possible for people residing abroad, freezing any activity on a CDSC account can be done. These instructions are communicated to the CDSC and activity can only resume at the request of the account holder.
  
  3. Constantly monitoring your activity of your account at your preferred Stockbroker. Many people don’t bother to check the activity of their accounts once they make the investments only to get a shock of their lives when they want to liquidate them. A broker is under obligation to provide investors with a statement of account through which they can monitor the movement of their investments.
  
  4. Developing a personal relationship with a dealer or broker. While some personal relationships work to the detriment of the investor, sometimes having a specific person who can address any enquiries that you have can be a great plus.
  
  5. Finally, you should report any fraudulent sale of shares to the Complaint Handling Unit of the NSE.

• Guide to Tunis

  Posted: July 18, 2011, 1:05 am by bankelele

  A Guest post
  
  Intro: Despite the changes sweeping across North Africa, business analyst and columnist, Carol Musyoka took some time to visit Tunis and kindly agreed to do a guest post
  
  Getting There: You have limited choices, flying to Tunisia and have to go through the Middle East or through France. Tickets from Nairobi start at about $800 on Emirates, Eqypt Air, or Qatar Air (which I used).
  
  The airport (process) is horrendous as Visas are issued on arrival. Though, my hosts had already pre-arranged for the visa, the officials at the airport were rude and sleepy – and despite arriving at 6 A.M, I only left the airport at 9 A.M. Also, they only accept payment in Tunisian dinars (which no one carries) and you have to be given a pass to walk out of the Arrivals terminal to go to a foreign currency bureau to get it.
  
  Getting Around: Tunis has a very good public transport system in the form of buses. I used a cab once or twice, but it's too hot to walk around since temperatures were in the forties!

  Mediterannean from the hill atop Sidi Busaid

  Security was good pre-Ben Ali (Abidine Ben Ali was ousted as President in January 2011) and has slightly deteriorated. However I never felt any danger because it was summertime and the streets would be packed past midnight.
  
  Language/Communication: The language you need here to get around is French, not English. I didn't make any calls but used my Safaricom roaming to send text messages for the two days I was there, only to come home and find a bill of approximately Kshs 5,000/- ($60) for two days of texts!
  
  Food & Life: There are different kinds of hotels as Tunis is a big tourist destination. Also an important point to note about African cities these days is that the electricity supply is very reliable.
  
  Main local dishes are couscous and lots of Middle Eastern food. very delicious for the adventurous palate. Beer and alcohol was available and is now available to the locals unlike during Ben Ali’s time when there were restrictions on how much they could buy at the supermarket.. Imported wine costs horrendously as they have a protectionist policy to promote local brands
  
  Much of the street & bar talk at this point is about life post-Ben Ali especially as there's so much freedom now that the secret police have been disbanded.

  Ancient City of Carthage

  Shopping/Sight-Seeing: The beaches and of course the ancient city of Carthage. There are lots of shopping areas, but I loved Sidi Busaid the most. Tourists buy tons of knick-knacks made from porcelain and camel leather.

  Exclusive Sidi Busaid suburb where by-laws require all buildings to be white with blue trimming

  Biggest surprise about the country: That it feels like you're in a European country with an Arab population. Also, and even more amazing, was finding that they have black people from the South! One odd sight was that there are tons of men who just hang out at cafes smoking cigarettes and shisha pipes all day.

• NSE Moment: Britak, Transcentury, Kigali Bank, Stima SACC0

  Posted: July 17, 2011, 1:58 pm by bankelele

  This week we were reminded that there's been no IPO at the Nairobi Stock Exchange (NSE) since 2008 (Co-Op Bank) and the events in the last few days were the fulfillment of initiatives that companies like Britak and Transcentury had initiated earlier in the year.
  
  Britak: The British American Investments Company Kenya kicked off their IPO this week. The group had Kshs 9 billion in income, and pre-tax profit of Kshs 2.8 billion in 2010. With group assets of Kshs 25 billion, it is second only to the ICEA at 27 billion.
  
  They are being sold at Kshs 9 with an allocation criteria of 30% East Africa retail, 30% foreign, 37% institutions, 3% employees, agents, and individual policy holders and can be obtained at British American branches, Equity bank , Standard Chartered (and partner Postbank), NIC, CBA banks and stockbrokers.
  
  The minimum for retail investors is 2,000 shares (Kshs 18,000 while for institutions it’s 10,000 shares (Kshs 90,000 or ~$1,000). The IPO is budgeted to cost Kshs 320m ($3.5M) with estimated payments to transaction advisor 24M, sponsoring broker 6M, legal costs 9M, selling commission 87M, CMA 9M, NSE 1.5M, PR 67M, and advertising 90M.

  Insurance Opportunities

  Of the Kshs 5.9 billion to be raised, 1 billion will be for regional expansion (Tanzania, South Sudan, Rwanda), 1.2 billion will be for Kenyan operations (set up a frontier investment fund, new branches), 2.5 billion for the housing & mortgage sector aimed at affordable housing models, and 750 million will go to pay off a loan at CBA bank that was used to purchase shares in Equity Bank (Britak own 11% of equity and 16% of housing finance banks).
  
  The Britak IPO runs from 12 July to 5 August and they have also reached out to bloggers, with forums and their own blog posts such as this tale of their CEO's initial investment.
  
  However, there are some concerns that with their 45-year history and strong brand name (-pay Kshs 18 million a year to British American), this is a retail magnet IPO and the sale of 650 million shares (30% of the company) is likely to be over-subscribed, and the dividend paid (Kshs 200m in 2010) is likely to be safaricom-ish (small)
  
  The company has also called for the Government to extend current tax incentive for newly listed operating companies to also include holding companies (like Britak)
  
  Transcentury: The investment group which has had a spectacular climb and string of investments, most notably with East African Cables listed their shares at the NSE on July 14.
  
  Their shares had been trading at an OTC exchange and were listed at the NSE at Kshs 50, which worked out to a P/E ratio of 38

  RVR Coach

  The Group also has a Mauritius convertible bond issued to finance the restructuring of Rift Valley Railways and investment in geothermal and other energy projects, but which also has the potential of diluting investors shareholding by over 1/3. (150 million shares available to bond holders over the next 5 years prices between 40 and 50)
  
  Still, Transcentury has been am inspiration to other investment groups, albeit not as well connected to initiate projects with more risk such as energy real estate, and offshore. The introduction is budgeted at Kshs 20 million (220,000 - CMA 5M, NSE 1M, advisor 8M, stockbroker 4M) and the PDF prospectus is 'protected' so you can't copy sections of it.
  
  Family Bank: Their long dalliance with the NSE is about to be fulfilled as their shareholders will next month approve a listing at the exchange. They will also vote on an ESOP for managers and 1 % transfer of shares of the company to the new CEO. It has since emerged that he is purchasing the shares at a discount as part of his employment package.
  
  Stima SACCO: Away from NSE is Stima SACCO that is in the process of raising funds of about Kshs 500 million ($6 million) . They have advertised in newspapers (even on TV), which may land them in trouble with the CMA, for selling shares to the public without adequate information. At Kshs 100 per share, individuals can buy 200 shares at a minimum (Kshs 20,000).
  
  Kenya Airways: Nothing yet from the airline who were expected to approach shareholders for new funds. The government has allocated funds to invest and defend their 26% stake an the airline which has since signed a deal for new Embraer aircraft to grow their African footprint.
  
  Bank of Kigali: The Bank of Kigali is aiming to raise $62 million from new investors in an IPO that runs from 30 June to 29 July. The Bank control 25-30% of the banking sector in Rwanda; it had profit of 8.6 billion francs ($14 million) in 2010 on assets of 197 billion francs ($324 million) - equivalent to a smaller mid-size Kenyan bank
  
  300 million shares are on offer, and the minimum is 200 shares per person at 125 francs per share ($0.075 or Kshs 18.65). They are open to cross-border investors and the allotment will be to 27% retail East Africans, 2.4% to employees & directors, 15% – East African institutions, 15% to Rwanda institutions and 40% to international investors.
  
  The Rwanda government owns 66% of the bank, and the other 1/3 are owned by the social security fund of Rwanda. 16 billion francs ($27 million) will go to the Government for reduction of its shareholding and 20.8 billion francs ($34 million) will go to the bank to reduce its assets & liabilities maturity gap and grow its loan book and operations (from 33 to 60 branches). This will result in new shareholders owning 45% of the bank, the government 30% and the social security fund with 25%
  
  Other: The IPO prospectus lists
  - lawyers acting for the bank, number of cases they have and prospects of loan recoveries
  - lawsuits filed against the bank by name (former employees, debtors opposing auction)
  - list of subcontractors and related partners such as visa card providers, SMS partners, providers of credit reference and lines of credit etc.
  list of properties owned and rented by the bank and rent amounts. Also Rwanda depreciate building over 5 years, after each revaluation
  
  Risks & Exposure - one of the operational risks is scarcity of qualified personnel in Rwanda
  - commerce restaurants & hotels account for 46% of the bank portfolio while construction was 29%. Also 11% of loans were to a single group and records of large are available for review to persons who sign non-disclosure agreements
  - Kenya is the country's largest trading partner: Rwanda exports 33% to Kenya and imports 16% back.
  
  Staff: - All staff are entitled to bonus and in 2010 this totaled 8% of profit, which that was shared by 441 staff (out of 454), and the average award was $3,200.
  - The bank also runs an in-house dispensary and provides full medical cover to staff and 4 dependents
  - The oldest director was born in 1960, the youngest in 1977. At senior management, the managing director is the oldest employee at 54, while the head of finance is the youngest at 31.

• E-Government Moment: Part I

  Posted: July 8, 2011, 10:55 pm by bankelele

  Parliamentary Transcripts: This week the, the National Council for Law Reporting - [NCLR, a state corporation charged with publishing the law and judicial opinions of the High court and Court of appeal) in partnership with Google Kenya launched digital versions of the Kenya Parliamentary debates - or Hansards dating back to 1960. These are the official records of debates in Parliament and enables historians, scholars, researchers, students, and citizens to read up on mundane debates and historic moments – such as January 15 2008, when parliament was re-constituted for the election of a speaker and the swearing in of new members, with a lot of unprecedented procedural side-shows

  .
  Typical government records registry

  The publication of the Hansards on Google books radically changes the ease with which information on parliament is obtained. The Business Daily has an article on the challenges of obtaining Hansards previously. "Until Thursday, they were only available to the public in hard copy at a fee after a visit to Parliament’s library. One also needed to have prior knowledge of the year and month in which that issue was discussed and the edition of the Hansard in which it was recorded."
  
  Now about 2,000 editions of the Hansard comprising 134,000 pages have been converted into 8.5 GB of data on Google books and is indexed and searchable, while still in magazine style & original font of the current Hansards for easy accurate browsing & navigation.

  Digital searchable Kenya Hansard on Google books in original font

  Government Bible: Also, two months ago, (in April 2011), the same partnership resulted in the publication on Google Books of over 100 years of the Kenya gazette. This is the ‘bible’ of the Government with gems of information such as government appointments, issuance of land title deeds, proposed land use updates, mergers, anti-corruption reports, notices of intent to acquire private land, inheritance of estates of deceased persons, bankruptcy orders, winding up & de-registration of societies and companies, applications mining, broadcasting, aviation, communication licenses etc. The collection has indexed over 190,000 pages of Gazettes from 1899 to 2011.
  
  Summary: While concerns have been raised about the ability of foreign bodies like the World Bank and Google to get access to data, the end product is world class and un-precdented on the continent. In addition the cost for each of these to the tax payer has been marginal - at about Kshs. 2 million ($25,000). There are no restrictions on the use of the content on Google books which can be linked and shared with a single click and will be be available on an API for more adaptations.

• Other Constitutional Minefields

  Posted: July 7, 2011, 6:05 pm by bankelele

  Kenyan parliamentarians were shocked last month when they realized that voted in last August contained a clause that required leaders to pay tax.
  
  What other clauses in the new constitution are going to raise some headaches in the next few months and years?

  1. Automatic Citizenship: Dual citizenship is allowed - and a born Kenyan does not lose citizenship by becoming one of another country. Also citizenship can be acquired an orphan who under 8 years, or by marriage to a citizen for 7 years, or by having lived in Kenya for 7 years. The 2009 census revealed an interesting dimension to Kenya citizen origins including the Somali Kenyan and other African numbers.
  
  2. Political Parties are Irrelevant/Term Limits ill end Career Politics: Many members of Parliament have set their sights for 2012 on becoming Governors, but these carry term limits (maximum of two). There are now term limits for the Presidents (& Deputy), county, judiciary and government officers e.g. the Inspector General of police will can serve only one 4-year term (which is not enough time for an ambitious leader to carry out reforms), but oddly, there are no term limits for parliament.
  
  Also, in running for any of these offices, independent candidates can avoid messy, expensive, party elections by running without joining a political party; all it requires is obtaining 1,000 signatures for MP and 2,000 for Senate from their constituents. Political parties have one year to comply with political parties act or be disbanded (and time is almost up)
  
  3 Amnesty for corruption: Parliament is yet to enact creation of an ethics and anti-corruption commission, which should be able to review un-ethical actions such as conflicts of interest actions. However for all the talk about extradition of Anglo Leasing and KPLC cases, suspects can’t be tried for acts that were not offences in Kenya, or under international law. These may include corruption-related crimes, which were legislated - in 2003 (for economic crimes) and 2010 (for money laundering). The it wasn't a crime at the time defence has already been brought up.
  
  4. Raise Local Taxes to support Counties: There will be 47 County Governments that will receive and share at least 15% of revenue raised by the state. Using the 2011 numbers announced this week, based on tax revenue of Kshs 634. billion ($7.5 billion), the county governments will split Kshs. 95 billion. Counties may collect property, entertainment and other taxes approved. However, while counties like Mombasa, Nairobi, Narok etc., have significant sources of revenue from (permits, tourism), many counties governments are not currently, self sufficient and will have to obtain new revenue streams. County government may take loans if their assemblies approve, but only if the national government guarantees them.
  
  5 Civil Servants can’t own Matatu’s or Kiosks : Corporate governance is set to improve as the number of state directorships is implied and directors can’t be involved in politics (e.g. chair a company and a political party). Also a person who has been removed from a state office for a violation is not eligible for any other and crucially state officers will not be allowed to have other gainful employment - is this a repeal of the (controversial) Ndegwa Rule that allowed civil servants to engage in private business?
  
  6. Land Use Restrictions: There was a story in the newspapers this week about a land grab in the Tana Delta. The new constitution requires that Parliament ratify concessions of land and mining agreements. This effectively puts an end to the practice of Desert states, foreign universities and corporations signing up farmland for their own food production. Parliament will also set other rules on land investment, minimum and maximum land holding, matrimonial sharing and inheritance

• Is Wealth a Disadvantage to Health?

  Posted: July 6, 2011, 6:25 pm by bankelele

  A guest post by Joshua Arimi of Arimi Foods
  
  It is now widely accepted that there are ‘diseases for the rich’ or ‘western diseases’ and ‘diseases for the poor.’ A World health organization’s (WHO) 2011 report published in June 2011 which analysed the top ten killers in the world showed that, the rich are most likely to die from strokes and heart related diseases, while the poor are likely to die from pneumonia and diarrhoea.
  
  Also in June, Kenya’s Daily Nation newspaper published an article derived from the WHO data with a catchy title ‘The rich more likely to die from heart disease’. Does it mean wealth is a disadvantage to health? No! - The ‘real wealthy’ are not the victims of heart diseases but the ‘average rich’.
  
  When health and wealth are put in the same sentence, it is very important to differentiate between those that are in high income, middle income and low income categories. According to WHO report, highest number of those that die from ‘western diseases’ are from medium income countries as opposed to high income countries. This is contrary to the notion that wealth per se is the risk factor for heart diseases.
  
  Out of 1,000 deaths related to strokes and heart related diseases;
  
  • 39 were from high income countries like United Arab Emirates, United Kingdom and United States of America.
  • 179 were from middle income countries such as South Africa, Nigeria, Thailand and Tunisia. i.e the number of people from middle class category that will die from ‘western diseases’ is three times higher than that from high income category.
  • ‘Kenya together with Zambia, Zimbabwe and Tanzania are on the low income category and the majority will die from pneumonia and diarrhoea’ says the report. Ideally, a high number of the so called ‘the rich’ in the low income countries fall in the middle class category globally. This may explain why the rich among the low income countries have the highest prevalence of ‘western diseases’.
  
  The WHO also found that while the USA is in the high income category, the majority of Americans who succumb to strokes and heart related diseases are the less wealthy. Other University research in the US found that when they compared wealth and prevalence of obesity, hypertension and related diseases, there was an inverse relationship between wealth and these diseases - meaning that less wealthy were more likely to suffer from them than the wealthy.
  
  To understand why the middle income populations are most likely to suffer from stroke and heart related diseases, it is essential to outline the key major and contributing risk factors. Major risk factors are those that have been proven to increase risk of heart disease and these include high blood pressure, high blood cholesterol, diabetes, obesity, overweight, smoking, physical inactivity, heredity and age. Contributing risk factors are those that doctors think can lead to an increased risk of heart disease, but their exact role has not been defined and these include stress and alcohol.
  
  Clearly, the major and contributing factors of heart diseases are results of lifestyles. The poor cannot afford these lifestyles, however, as they say, ‘poverty is not permanent’.
  
  • Low income populations work extra hard to get out of the lower income cadre, while envying lifestyles of the middle income populations.
  • As soon as they join the middle income category, they desperately imitate what they perceive as lifestyles of the rich. That is; eating on the go, consume fatty foods, processed foods, ready to eat foods, smoke, have high alcohol consumption, and assume sedentary lifestyles.
  • On the other hand, the high income countries have always enjoyed these foods and lifestyles while in the middle income category and they have witnessed first hand the adverse consequences among their populations and peers. The rich countries are cutting on deadly foods such as high saturated fats, processed foods, high alcohol content drinks and sedentary lifestyles. Meanwhile, the emerging economies and the middle class among rich countries are embracing these renegade lifestyles full throttle.
  
  For example, the biggest supermarket in UK and Ireland, Tesco does not stock any solid cooking fat or hydrogenated cooking fats which are associated with high trans and saturated fats. On the other hand, solid cooking fats occupy the biggest shelf space in supermarkets in Kenya. Also beer drinks sold in developing countries have higher alcohol content than their counterparts in developed countries.

  ‘I have to enjoy life’, ‘I don’t have to live a boring life’, and ‘I have to live like a rich man’. These are common justifications among the middle class when engaging in life shattering lifestyles
  
  

  It is not true that the rich are most likely to die from heart disease. ‘Out of 13 million people who died from stroke and heart related diseases worldwide in 2008, 1 million were from low income countries, 2 million were from high income countries and 10 million (5X higher) were from middle income countries’ adds the WHO report. And, in the high income countries, it is their low income population that is at the highest risk of heart diseases. In the middle income countries, the majority are at risk. In low income countries, the so called ‘the rich’ are at the highest risk.
  
  Overcoming Risks Posed by Wealth to Health: Many will argue that with wealth you can afford the medication. However, health is not a financial muscle competition and prevention pays dividends than struggling to cure.
  
  Understanding the consequences of different lifestyles brought about by wealth is key to coping well. The majority who move from low to middle income category of wealth are ill-prepared to cope with what wealth throws at them. It is important for governments and other agencies to educate their people on relationship between health and wealth and if possible entrench the course in school curriculum.
  
  Simple lifestyles tips to opt for include cutting salt intake, a adopting regular exercise regime, cutting back on fatty foods (in particular saturated and trans fats), moderating alcohol consumption and balancing between work and social activities.

• Guide to Casablanca

  Posted: June 29, 2011, 3:40 pm by bankelele

  Guest post by MVQ on travel to Casablanca and Rabat in Morocco
  
  Intro: If you decide to do a coastal tour of Morocco, then Casablanca is a good landing place and trains connect most cities so it is pretty easy and economical to travel around.
  
  Some highlights/tips:
  
  Getting there: The major carrier for the country is Royal Air Maroc and typically flights on this carrier are the fastest way into the country. Alternatives can turn what should be a 4 hour flight into a day long journey that can take you on a tour through Europe or the Middle East.
  
  Flying from Nairobi to Casablanca, the choices are Air France (via Paris) for $1,000, EgyptAir (via Cairo) for $1,200, Emirates and Turkish for $1,500 and KLM for $1,800 and KQ/Alitalia via Rome for $3,000
  
  Upon arrival customs is actually pretty seamless and the airport is fairly modern and easy to navigate. From the airport there are two options—a taxi or the train. The train into Casa takes about an hour and costs 35 MAD (~USD 4), while a cab will run you somewhere north of 100 MAD. I took the train and it is a pretty smooth trip—as long as you don’t miss your stop (don’t be afraid to ask people for help.) Depending on which train you are on and where you are going, to get into Casablanca you will get off at Ain Sabaa (for transfer to Casa Port) or Casa Voyageur. The ticket to Rabat is only MAD 5-10 more, and the distance from Casablanca to Rabat takes about an hour to cover by train. There are food carts on the train for all destinations where you can grab food and water so don’t worry too much about getting a snack from the airport.

  Cliffs at Rabat beach

  Getting around: Casablanca and Rabat are both walkable cities (during the day) but please watch your things and only carry bags that zip (try to minimize what you carry around as pick pocketing is not uncommon.) When traveling long distances there are two cab options, the Mercedes cabs and the colored cabs (blue for Rabat, red for Casa.) I overwhelmingly prefer the colored cabs as they are metered (ask for them to “turn on the counter”,) cheap, and generally safe. One thing—the cab system is, err, “over optimized.” Cab drivers will pick up multiple fares along the way so don’t be alarmed if random people hop into the cab during your ride. This scared me at first but is common practice (and helps keep cab ride costs low.) For ~10 minute rides expect to pay less than MAD 20, for longer rides (~30 minutes) expect to pay MAD 50.
  
  Language/ Communications: The principle languages in Morocco are French and Arabic. You can get by with English but this will be a challenge so get a friend or a phrasebook! Even for just a stay for a couple of days I recommend getting a local SIM card. The card costs MAD 30 (I believe) for 2G and MAD 60 for 3G (this enables you to get online.) There is no registration requirement for SIMs and the whole process of getting a SIM and credit takes less than 2 minutes. Maroc Telcom is the most ubiquitous provider and you can find a shop almost everywhere (train stations, strip malls, markets, etc.)
  
  Lodging: You have the option of Riads and hotels. I didn’t stay in a Riad but as I understand they are very similar to upscale hostels. You will find that many are family run, and some of the best traditional restaurants are in the Riads. As for hotels, most major chains exist. In Casablanca I stayed at the Sheraton, which is walkable to the Casa Port train station (gare), and only three blocks from the Medina/ old city and the central commercial area. In Rabat I stayed at the Royal Tulip. The hotel was great—there is reliable internet, a nice gym that overlooks the Bouregreg river, and it felt very safe.

  Fish sandwich vendor in Rabat Medina

  Food & Bars: Try your best not to buy food in the hotels. You will pay 10x the cost of buying food outside and there is always a food option nearby. Street food is decent and you can get a fish sandwich in the street for MAD 5-20 ($1-4) depending on where you are. Also, in Casa you can pick up a Beignet for MAD 2-5 (less than $1) In Rabat I recommend Villa Mandarine—they have the most amazing Tagine and (like in most places) you can get great cous cous on Friday nights. In Casa, I would skip the Pizza Huts and KFCs that are ubiquitous and try out a local restaurant near the marina. Rick’s Café is very popular, I didn’t go there but feedback is that it is very expensive and only worthwhile if you are a huge Casablanca (movie) fan.

  Rick’s café in Casa

  Shopping/Site Seeing: Overall, Rabat is much more exciting than Casablanca! In Rabat I recommend the following:
  • Medina: Check out the old city, pick up locally styled outfits and other souvenirs, and get a sense for the buzz of old Rabat. You can spend 1-2 hours exploring the windy streets and checking out stalls. If you decide to buy things always haggle—the starting price is typically 1.5 to 2x what you should actually pay. Never accept the first price!
  • Oudayas: Across the street from the Medina, you can walk through the old fort and the iconic white and blue painted walls
  • Beaches: Near the Oudayas are several beaches. Bring your bathing suit and enjoy the waves! You can get surfing lessons if you are more of an adventurer or just relax.
  • Other destinations in Rabat: Royal palace, Grand mosque, Dar Es Salaam golf course, gardens
  Mosquee Hassan II in CasaIn Casablanca be sure to check out their Medina (very different from Rabats!) and the Hassan II Mosquee (when you tell the cab driver, say “moskay” they won’t understand “mosque” and can take you to the wrong place!
  
  Summary: Morocco is a fascinating place and just visiting Rabat and Casablanca certainly doesn’t do it justice! You must get to Marrakech, Fez, Agadir, Oujda, etc. Wherever you go though, get to know the locals (they are generally quite kind and open), try the food (including the street meat!), and enjoy yourself!
  
  Also Morocco in Pink from Digital African

• Real Estate Moment: Golf Resorts, REIT's & Collapsing Buildings

  Posted: June 28, 2011, 7:07 pm by bankelele

  Much has happened since the last real estate post and there is a lot of construction in Nairobi with towering cranes all around in many directions. Here's an update of what's in, and what’s out in the real estate sector.
  
  In
  Cheap Cement: In July 2009, a 50kg bag of Bamburi cement at Kshs. 780 (~$10), and today it is about $8 thanks to new entrants in the competitive cement sector.
  
  How to profit from real estate: Is a story by MP Cyrus Jirongo who has a colorful history, but writes about his real estate success and says it was not due to strong political links in the 1990’s.
  
  Golf Estates: The latest is Sergoit Resort in Eldoret town . Others are Green Park, Thika Greens, Tatu and Vipingo Ridge.
  
  Hotels: The East African newspaper has an article this week which notes that there are at least 10 new hotels in Nairobi are planned, which will add about 2,500 rooms to the City.
  
  Luxury Apartments: Most vivid is the English Point Marina apartments in Mombasa that will cost above Kshs. 50 million (~$555,000). They have been running ads in a few newspapers (but some of which need to be put through a spell check)
  
  Investment Groups: The Kenya Finance Minister's Budget speech in early June, proposed recognition to real estate investment trusts (REIT's) as an investment class under the capital markets act. Rules for REIT's include membership must be at least 25 people, no one member shall own more than 12.5%, and dividends will be taxed at 5%.
  
  Universities: University campuses now occupy or own many buildings in Nairobi and other town - and when Standard Chartered Bank moved out of downtown Nairobi earlier this year, their building was sold and is expected to be leased to a University campus.
  
  Social Media: @Kenarchitect (of the Architecture Kenya website) is one interesting person to follow on twitter, and here's a re-cap of observations on real estate happenings from around Nairobi in the last month:
  
  - Watching (Special Programs Minister) Esther Murugi on @citizentvkenya saying that they've given IDPs Kshs 35k ($400) to rebuild their houses. What kind of house can you build with 35k?
  - The more we entertain the myth of rural richness, the more we delay in getting the solutions for the city - A case for rural urban migration
  - Kenya needs 410 houses daily. I have been supervising 350 houses for the last 2 years. 144 will be ready by Dec. Its a tall order.
  - Tena estate sewage crisis, its too serious. NWSC must do something about it.
  - Believe it or not, these rental houses in Ruaraka are way cheaper than those mud/paper walled rooms in Kibera. http://twitpic.com/57e9lr
  - Bill to Tame Rogue Contractors http://wp.me/pUg5Q-pf
  - Who owns Hotel Boulevard? With better decor and good service, they will give Norfolk a run 4 their money. http://twitpic.com/58omyk
  - Architecture of Kiambu. 200 by 200 mm columns. Four floors. No slabs. But the building will not collapse....... http://twitpic.com/59ye50
  - Containers are quickly gaining popularity as the new form of construction. Lets wait and see what the future has http://twitpic.com/5akxpm
  - Would you live in a ten-storey apartment block? Many of these are coming up in Pangani. http://twitpic.com/5awxd3
  - Winners Chapel on Mombasa Rd, will be the largest auditorium in Kenya with capacity of 30k. Crowd control?????? http://twitpic.com/5ax3nd I cant stop tweeting about this church set to be Kenya's largest auditorium. Its capacity rivals Nyayo Stadium. http://twitpic.com/5eph3n
  - Kenyans rarely ever consult architects. The thinking is that we are expensive consultants. NCC does the approvals and enforcement. But corrupt inspectors use the inspection exercise as a money collecting scheme.....
  - There were people between the slabs. Check the other photo, someone being pulled from under a slab. http://twitpic.com/5bj1gr
  - Karen is rapidly shifting in2 a half acre neighborhood. Karengata seems to have given up the control fight. http://twitpic.com/5d6ytm
  - #ChineseContractor, how do you do these massive retaining using blocks without reinforcement? #NewTechnology. http://twitpic.com/5hlbzk
  - Wall clad at Rahimtulla Towers started falling off, they had to remove it all. Ugly spikes remain. #PoorDetails http://twitpic.com/5hmrjs It was a case of poor detailing an fixing by the architect and contractor. The tiles were falling and could have hurt people.
  - Swimming in this cantilevered pool at Sankara is like displaying your 'items' to the street below. Would you? http://twitpic.com/5i21q7
  
  Out

  A building next to Nakumatt Wendani (via SavvyKenya)

  Building Standards: There have been a few building collapses in the last few months, which has been followed by public complaints and Government promises of stern action to be taken including demolition of sub-standard or un-safe buildings. This column in the Standard points to process flaws in the building industry, noting;
  
  It is not a secret the so-called site engineers and contractors shown on site boards planted outside upcoming buildings are mere decoys. The actual ‘contractors’ are some shady and opportunistic characters that promise to cheaply put up the floors required in two months and claim to know their way around City Hall
  
  To get things done, they file different sketch plans and specifications with City Hall, and claim they can compromise on costs and materials without affecting safety and durability. That is why there are no lifts in all five-storey-plus buildings in Eastlands.
  
  Farm land: Farm land is losing out to housing in prime agricultural parts of Central and Rift Valley. However, he's an opportunity from (fellow blogger) MainaT - land for sale- 145 acres, 2 kilometres from Namanga at Ksh100,000 ($1,110) per acre that is suitable for dairy or wheat farming or speculation.
  
  Cinema Halls: Like dry cleaners, repair shops, and cyber cafes, another business whose time seems to be passing is Cinema halls who have been struggling with low attendance and high prices (~Kshs 500) relative to bootleg DVD’s of new movies that cost Kshs 50 (~$0.55). (Read Biko Zulu’s article lamenting the end of cinema going era)
  
  A couple of Nairobi movie halls converted to churches and meeting halls, and Silverbird Theatres went out of business a few months ago, leaving one main movie chain - Fox E.A. However, there are some investors who believe there is still life in movie theatres and the former Silverbird halls are currently being re-opened and screening new movies.
  
  Tax benefits : In reviewing ways to bridge Kenya's budget deficit, there have been quite a few suggestions to re-introducing a capital gains tax in the country, which would also touch on real estate. Right now the state collects a stamp duty based on the value of property (4% for urban, 2% for rural) at the time property is transferred.
  
  

• Missing the 2011 AGM Season

  Posted: June 26, 2011, 11:21 am by bankelele

  May and June are the season for corporate annual general meetings (AGM) , but I’m yet to attend any except from one for a savings & credit society (SACCO).
  
  SACCO’s: are getting more recognition in acknowledgement of their significant deposit holdings and loan portfolios and now have a new regulatory agency to oversee the sector.
  
  In an variation from corporate AGM’s, at a SACCO one members have to first approve the chairperson’s report, supervisory report, accounts and budget before discussions can be held. Also at SACCO AGM’s, the rules allow members on the floor to contribute to a much higher degree, but this also means time has to be spent clarifying (from the by-laws) on exactly what proposals from the floor can be entertained e.g. how much they can vary the the amount that will be paid to the management committee (honoraria).
  
  This year, there was much debate over the last starting time of the AGM and if those members who were late in arriving at the meeting were entitled to payment of an attendance lunch allowance of $25.
  
  Other country perspectives:
  
  Rwanda: In Kigali, Bralirwa held their first AGM - after the company had converted to a public company and had an IPO last year. No writing has come from that meeting, but it is likely to have been quite similar to a Kenyan AGM, seeing as how much Kenyans have contributed to the structure and regulation of the capital markets system in Rwanda.
  
  Also
  - Shareholders were expected to approve an increase in capital a few months after the IPO.
  - The standard auditor's statement page has an extra clause noting that we (KPMG) have no relationship, interest or debt with the Bralirwa, and …… we comply with ethical requirements (of the) International Federation of Accountants’ Code of Ethics for Professional Accountants, which includes comprehensive independence and other requirements..
  
  India: The Economist wrote about the Reliance AGM - at Reliance company run by India’s richest man. It is remarkably similar to a couple of Kenyan ones - (and was) a ceremony for retail shareholders, with hero worship of an international icon and family that transformed the company to an international conglomerate. It was interesting to note that shareholders apply to speak ahead of time and get approval.
  
  USA: Noted investor and blogger Eric Jackson wrote on the Yahoo AGM . He noted (on AGM’s) that big shareholders stay home and it is mainly those who live nearby, that attend for the free food & coffee. Also that the Q&A is tame with short answers to questions, no big news expected, and the only exciting thing was going to be the board election.
  
  He has been very critical of the board and the current CEO and wrote elsewhere in Forbes on his preferred nominees to be the next Yahoo CEO .
  
  Others twitter comments;
  - What a downer! $YHOO “@TechCrunch: Angry Yahoo Shareholder Confronts Bartz And Asks For Her Head (Audio Clip) tcrn.ch/l9hHYJ”
  - Terry Semel was let go by the Yahoo board ONE week after it backed him at 2007 shareholder mtg. They now back Bartz.
  - $YHOO consensus estimate is it will do $4.55b in 2011. By my estimates, Alibaba Group (incl Alibaba.com, Taobao & Alipay) will beat that
  - Here is my first 21CBH article on Jack Ma: http://is.gd/PsTaz4 $YHOO

• Urban Inflation Index: June 2011

  Posted: June 21, 2011, 6:20 pm by bankelele

  Comparing changes to three months ago, last year and June 2009 in an interesting quarter with price swings in food, currencies and fuel.
  
  Less Expensive:
  
  Nothing really that's being measured
  
  About the Same:
  
  Communications: Cell phone rates are still low, and while Safaricom appear to have survived the Airtel-initiated price war, recording a marginal full year profit drop of 12% down to ~$220 million on increased revenue of 12% to ~$1.1 billion, the government is getting anxious about the price wars and impact on mobile companies and tax revenue.
  
  Last week, Kenya’s President seemed to direct for an end to the mobile price wars in Kenya . Also Essar’s Yu Mobile has denied they are considering an exit from the Kenyan market while Safaricom and France Telkom (Orange) are about to sign a tower sharing agreement.
  
  More Reading - The Economist has an interesting article on the India mobile phone market which may explain the vision the direction that Bharti Airtel is taking in Africa.
  
  Other food item: Sugar (2 kg. Mumias pack) is at Kshs 190; a year ago it was 200, and the year before was 175. It will likely stay the same until the COMESA sugar import ceiling ends in 2012.
  
  More Expensive:
  
  Fuel: A Litre of petrol fuel is now Kshs 114.93, which is 26% higher than a year ago and 58% higher than two years ago. The fuel sector is characterized by accusations and allegations every other week about favouritism, manipulation of prices & shipments, corruption, capacity etc. - all while the price continues to rise.
  
  Staple Food: A 2 kg. Unga pack (maize flour), which is used to make Ugali that is eaten by a majority of Kenyans daily today costs Kshs. 130 at Uchumi. This is 83% higher than the 71 of a year ago - and two years ago it was 92, the year before it was 73. The price fluctuations may have some artificial influence by maize farmers holding on to their crop in the hope of a better price from the Government and millers. Shrugging this off, the the Government today waived tax on maize that will be imported between June and December 2011 to avert a food disaster in the country.
  
  Foreign Exchange: 1 US$ equals Kshs. 89.37 compared to 80.6 last year and 77.9, two years ago. It is reported to have not seen such lows since 1994 when Goldenberg scandal exploded and shook the Kenyan economy. However while focus is on the US dollar (which this month exchanges for less than a Canadian dollar) other currencies are also at levels not seen in years - like the Sterling Pound at 146, Euro at 129, and South Africa Rand at 13.
  
  Utilities: Electricity: Many customers of KPLC have been converted to pre paid electricity and the only to get a breakdown of costs is by buying a token at a Kenya Power office. It's much more convenient to re-load or top up electricity by mobile phone payments (M-pesa or Airtel money) and a payment of Kshs. 500 obtains 29 units of electricity - compared to 51 units for the same amount two months ago, - implying that electricity costs 43% more!
  Meanwhile the city’s other major utility provider, the Nairobi Water Company also plans to convert some of its customers to a pre-paid billing system to stem illegal connections and improve revenue collection.
  
  Entertainment: A bottle of Tusker beer (at local pub) costs Kshs. 140 ($1.55). However the recommended retail price of a Tusker bottle went up to Kshs. 95 in April (after last being hiked by 38% to Kshs. 90 after the June 2010 budget speech) and beers currently sell for between Kshs. 150 – 220 in most Nairobi pubs.

  Old and New Tusker bottle

  Tusker was re-launched in new bottle in April, but that rebrand has received mixed reviews with some patrons calling the bottle a Probox after a Toyota station wagon that has a similar boxy shape.
  
  EABL is also in the process of severing ties with SAB Miller a rival South African brewer, after many years of a cease fire & cross ownership - and and they are expected to soon renew their beer battles in both Kenya and Tanzania.

• Cheque Truncation Part II

  Posted: June 4, 2011, 8:15 pm by bankelele

  The deadline of new cheque modernization passed this week, on June 1. Yet many bank customers had not yet received new chequebooks, and many more were not fully versed with the process, which entailed a change of chequebooks.
  
  The Kenya Bankers’ Association (KBA) left the public relations of the process to its’ member banks resulting in low awareness and did not communicate till May 31 with adverts in the newspapers re-assuring customers and the public that the old cheques will be used for an indefinite period. This paled in comparison to the introduction of mobile number portability (MNP), in which the regulator (CCK), service providers, and mainly mobile companies carried numerous advertisements about the transition to the new service. (Mobile companies ran extensive promotions to retain their customers or win over their competitors’ subscribers).
  
  There are still many unresolved questions, even with the extenstion:
  
  - Old chequebooks were issued though the month of May, but customers then had to get the new chequebooks at month end. Who bears the cost of printing books that were about to be phased out?
  - Do the new cheques clear faster? e.g. 1-day for Nairobi cheques? Speed is important for payments in the age of M-Pesa. The last statistics from the Central Bank (CBK) showed that in 2008, about 50,000 cheques were being cleared daily. Many suppliers now insist on getting paid by M-Pesa (which takes less than a minute) or by real time gross settlement (RTGS a.k.a corporate m-pesa done by banks - but this also carries a high risk of fraud risk of fraud - at 69% of bank crimes)
  - What happens to post-dated cheques? These are used for debt repayments and for motor insurance loans (some banks use these for collateral over up to 10 months)
  - There is no apparent difference in the design of the old and new cheques. So what has changed to warrant the exercise?
  - Are cheque printers (mainly De la Rue) able to print enough chequebooks for a smooth roll out next time?
  - Some banks said that old cheques will still be honoured in-house i.e. if drawn to people who also use the same bank, while others told their customers they would not be honored. KBA should communicate a clear deadline when all banks & customers must switch.
  
  For now, the old and new chequebooks are in circulation, but more information has to be provided to resolve the cheque truncation process.

• Guide to Lusaka

  Posted: June 4, 2011, 6:26 pm by bankelele

  A guest post by @digitalafrican
  
  Getting There: The cost to travel to Zambia is extremely high, and each ticket is around $700-800. Kenya Airways pretty much has a monopoly on travel to Zambia, and the route takes you through Lilongwe, Malawi. Once there, you can get a visa right at the airport with no hassle e.g. $50 for American visitors.

  Everything at the airport is pretty straightforward. There aren't any unexpected taxes once you arrive although when you leave there can be a $25 tax that is levied. (though I didn't experience this).
  
  Getting Around: You can use matatu's, private cars and of course walking. Lusaka is pretty small and easy to get around. The cost for a typical taxi is around 100,000 Zambian Kwacha (equivalent to around $20).
  
  Zambia is an incredibly peaceful country. Many people enjoy long walks and jogs around the city. There are some very well built pedestrian walkways and Zambians usually follow the rules of the road so it's is relatively safe.
  
  Communications: Coming from Kenya, Safaricom doesn't seem to work here. However the two most popular services are Airtel and MTN, and it is pretty easy to get a SIM card and the rates are affordable. There are very few Wi-Fi hotspots, while decent cybercafés are rare.
  
  Language: English is the primary language, and most locals speak it fluently.
  
  Business & Infrastructure: - It may be hard to get accustomed to the currency, as you are dealing with thousands of Kwacha. One (US) dollar is around 5,000 Kwacha, so you can imagine trying to buy a soda.
  
  - Hotels : Cost from $100+. Excluding, this you might spend about $40.00 per day out & about.
  
  - Electricity: There is plenty of electricity, and no power cuts in Zambia due to plenty of water flowing through the Kariba Dam and Victoria Falls. The streets are also well lit.

  - Opportunities: Zambia is also known for its natural resources such as copper and hydroelectricity so there are huge opportunities there as well. Also, I would say anything within tech and the digital space would be a great investment in the country.
  
  Food & Bars: - One thing to get accustomed to, is the drinking culture, which is a prevalent part of the social culture, and may take some adjusting to depending on where you are from.
  
  - Arcardes and Manda Hill are two popular spots in Zambia. The food is incredible but the service is incredibly slow. Make sure you pack a lot of patience when you come to Zambia.
  
  - Some Local foods to try are Shima (a version of Ugali), fish and green vegetables, while the local Beer is Mosi.
  
  - Football and politics are popular topics of conversation. I would say the biggest legend in Zambia would have to be Kenneth Kaunda (KK), the first president of Zambia. After serving as president for 27 years, KK has left an impression on the country.

  Shopping & Sight-Seeing: - In Zambia, the two most popular sightseeing destinations are the Kariba Dam, one of the largest dams in the world and Victoria Falls, which is a beautiful spectacle of natural life. A trip to either is one that you can't miss. Zambia has incredible nature and wildlife areas that are unbelievable; it is not rare to see wildlife while driving through the main highways. We were able to spot many elephants and deer during my time there.

  - Wooden crafts and Fabric are very popular gift items. Compared to all the countries I have traveled to in Africa, wooden crafts are Zambia's strong point.
  
  Biggest surprise about the country: I would say that the country seems empty and spacious. There is not a large population and they have preserved a lot of their natural resources

• Guide to Lagos

  Posted: June 2, 2011, 10:09 pm by bankelele

  Guest post by MVQ
  
  Intro: Lagos is not the most tourist-friendly city in the world but it does provide a good taste of West African culture and is a "must see" destination for anyone looking to do pan-African business. As locals will tell you, there aren't many sites to see, there are only a few beaches that are tourist-friendly, and the congestion can be quite overwhelming. But if you can get over that, you are in for a cultural treat, an enviable nightlife, and a peek into one of the most dynamic African markets.
  
  Getting There: I took the KQ flight from Nairobi to Lagos and it was actually quite nice and relaxing. Lagos' airport is a blast from the past, it appeared as if it hadn't been updated in decades and upon entry the only sign of modernity is a large monitor with adverts near customs.
  
  The customs process though was surprisingly efficient. Mine was the only flight to have arrived at the time and there were 5 customs counters, with 3 for non-citizens that moved fairly swiftly. You need to get a Nigerian visa in advance to get through customs (give yourself 2 weeks to get the visa, as you must hand over your passport, pay ~$100 for US/UK, $50 for other countries, and prove that you have a destination in Nigeria.) You will also need a yellow fever card
  
  To my surprise I was able to get through customs in about ten minutes - and based on the reaction of my friends though, this is a rare occurrence. Apparently customs is a major pain and you must pay for expedited service (there is some rumor that the expediters and the customs agents may be in cahoots.)
  
  Despite not wrapping my luggage, it came out in one piece. Later I was warned by frequent travellers that Lagos airport is one of the more risky destinations for "open" luggage, so my advice is to try to get your luggage shrink-wrapped before flying into Lagos.
  
  Getting Around: When I got out of the airport, the cab drivers were quite aggressive, and I ended up riding in to the city with a friend. My advice is to try to get your contact in town to send a car for you to avoid the aggressive cabbies. If you can't get a car, then you should expect to pay 5,000 Naira for the 30 minute to an hour long ride into the city.
  
  When in the city the best way to get around is via a car service or taxi. Try to link with a reliable driver, and for newcomers, Red Cab is generally a pretty safe option. Each cab ride should cost you between 2-3,000 Naira ($13-20) if traveling in the Lekki, VI, Ikoyi, or Yaba areas, and you should clarify the price up front.

  Do not walk around by yourself at night and take caution during the day, and look out for the Okadas, ("kamikaze moto taxis") which are the fastest, but most dangerous means of transport around Lagos.
  
  Communications: The best way to communicate is via mobile phone, and you can buy a SIM card for prepaid minutes upon arrival. Most people here have two phones from different carriers as the services are known to go out every now and again. I signed up with MTN and was reasonably happy with it; I plugged it into my Ideos Android phone and used the prepaid airtime for voice, data, and to create a wifi hotspot for my laptop. Other major players are Airtel (Zain), and Etisalat.
  
  Hotels: The hotels in Lagos are very expensive as the mid to high end hotel market is sparse. The Sheraton Four Points, Radisson Blu, Southern Sun, Eko, and Federal Palace are probably the most tourist friendly and range in price from $300 to $600 per night.
  
  Getting Around: The people in Lagos are fairly aggressive, but they all mean very well and are generally quite kind. I found that I received amazing hospitality from friends and colleagues in Lagos. The Nigeria pride is real!
  
  English is the primary language in Lagos, though you do hear Pidgin, Hausa, Yoruba, Ebo, and other languages. The best paper to get while here is "The Punch" – and , though there are about 4 mainstream papers, expect about half the pages to be filled with full page ads and "congratulatory" statements about public officials.

  Food & Bars: You must try the local food when in Lagos, and specialities like Fufu, Melon Seed, Okrah Soup, Suya, and Pepper Soup are staples. If you like spicy food then you will love the food in Lagos.
  
  Star beer dominates, and you can get a large bottle for 800 Naira ($5.) I strongly recommend Star over Gulder (the other local favorite), as it has a good taste and is fairly ubiquitous.
  
  Electricity: Be warned - power transmission is very unpredictable in Lagos. Even in the most affluent neighborhoods one power outage a day is not uncommon and some areas will go for weeks without power. After the first two outages you will get used to it - just make sure that your phone, laptop, etc. are always charged up!
  
  Summary: Overall, Lagos is a great experience. The frenzy, the opulence, the fashion, the food, the traffic, the beaches, the hospitality, and the excitement are all palpable. Enjoy your trip!

• Award Season: Legatum, Pivot25

  Posted: May 31, 2011, 3:59 pm by bankelele

  Legatum 2011 Awards: The 2011 series of the Africa Awards for Entrepreneurship was launched today in Nairobi. Kenya has produced more finalists and winners (including Virtual City, Colour Creations, Craft Silicon, AAR Health, Bio Deal Labs) in the short history of the awards, which have grown from 454 entries in 2007 to 2,700 in 2010.
  
  For 2011, entries are open to companies in all African countries and are expecting over 5,000 entries from companies either directly at their AfricaAwards web site, or via nominations and awareness resulting from a press campaign across Africa (including ads on CNN).
  
  The overall winner will get US$100,000 and five others will get $50,000 and to be eligible companies should have turnover of $1 - 15 million, a profitable track record of 2 years, at least 10 employees, not be subsidiaries of other companies, among other rules.
  
  A committee will short-list these down 15 semi-finalists who will be visited and interviewed. 10 finalists will then be selected, and invited to Nairobi to make presentations make presentations as well as participate in a 1-day conference on entrepreneurship called Convergence Africa. The winners will then be announced at a gala dinner in Nairobi on December 8 2011.
  
  Past (runner-up) winner John Waibochi of Virtual City spoke about the impact that the award had on his company. It gave them a reality check and a chance to audit themselves and their position in a competitive market, appreciate the skills and weakness they had as a company, and most important forced them to define their scope and package their story in a 7- minute pitch that has paid dividends in their subsequent participation with in the Africa Enterprise Challenge Fund and Nokia's Growth Economy Venture Challenge where they won $1 million. He added that participation in these awards had been an immeasurable marketing and PR coup for the company and given them access to $2-3 million of very affordable funds to grow.

  
  

  The AfricaAwards prize is unique in that funds are not given to the company, but instead go out to pay (supplier) for what the winners set out to achieve in their pitches. The funds enabled VirtualCity to invest in non-operational expenditure areas, such as performance management systems, financial systems, and training, that they would not have done out of their cash flow.
  
  The Legatum Institute, the Omidyar Network, Kenya Airways (official airline) and Google are partners for the 2011 Awards which are now open and run till the submission deadline of August 24.
  
  Pivot 25: It’s about two weeks to the Pivot25 event, which still has a few tickets remaining for attendees. They will see twenty five companies competing for five prizes, with the winner in each of the five categories getting a cash prize of US$5,000. Here are the short-listed finalists in the categories of (i) Entertainment, Gaming & Utilities (ii) Business and Enterprise (iii) Government, Agriculture & Education (iv) Health (v) Mobile Payments & Commerce.
  
  Edit
  
  The Kenya Government's National Council of Science & Technology has;
  
  (i) (20) Competitive Research Grants in the fields of geothermal, solar, wind, bio-energy, hydrogen, or fuel cells. Grants will be of Kshs. 15 million (~$175,000) over three years
  
  (ii) 20 Science, Technology, and Innovation grants. These will be for Kshs. 1 million over 1 year for commercialization of prototypes.
  
  (iii) (15) Post-Doctorate Research Grants in Pure & Applied Science, Mathematics, Engineering, and Technology. These will also be for Kshs. 1 million over 2 years.
  
  The deadline is June 28 and application forms will be available at both the
  NCST and ministry websites.
  
  Ernst & Young: (E&Y) Entrepreneur Of The Year is open to applicants from Ethiopia, Kenya, Rwanda, Tanzania, Uganda in two categories (i) Master Entrepreneur category(companies that are 5 - 10 years old and have turnover of at least $50 million) and (ii) Emerging Entrepreneur category (companies that are 2 - 3 years old and have annual turnover of at least $5 million). D/L is 15 June 2011.
  
  Google: Android Developer Challenge accepting applications in three categories (i) Entertainment / Media / Games (ii) Social Networking / Communication (iii) Productivity / Tools / Local / Geo. D/L is July 1.
  
  Internews : Innovation Grants for New Media projects that range from $5,000 to $30,000 and open to local NGOs, software companies and/or mobile phone operators, local media outlets and individuals from various regions. D/L 30 June.
  
  Tanzania: Entrepreneur of the Year. D/L is 30 July.
  
  Standard Chartered: consumer banking graduate program for both graduate (those with masters degree) and fast track program (those with undergraduate degree)
  
  FitzGerald prize for young African journalists. Details here . D/L July 31
  
  Nestle Prize is still open till June 30. Last time, Kenya had the second highest number of entries after USA

• Medical Investments in East Africa - Part II

  Posted: May 30, 2011, 11:45 pm by bankelele

  Rising Prices: In November last year, AAR Health sent a casual letter announcing some new medical insurance services they would be offering such as extending the membership age to 80 years, free basic health checks on appointment, out of country cover extended to 90 days, psychiatric benefit increase, a 24 hour help line, and ATM (forced) robbery compensation.

  Ambulance in Lamu (picture courtesy of @azthedance)
  

  Their CEO also noted that in the last three years there has been a consistent increase in costs of drugs, medical equipment, hospital charges, and doctor’s fees that after an actuarial review they would marginally adjust the premiums
  on an age-band basis is.
  
  However the sticker shock came, this month with a renewal notice letter that was 67% more than last year - shocking given that there were no claims. It has not been clear what caused this and various from AAR include, doctors fees have gone up, the enhanced payments will go towards the new services, the company was hit by several claims last year, they have to pay for their own clinics & ambulances unlike other insurers etc.
  
  But a rival CEO on twitter wrote that increases should not be more than 25% a year, and this is borne out by Government and other insurers statistics that indicate changes & inflation in the sector are about 20% per year.
  
  Money going in to healthcare: A previous post touched on the finances and the Nairobi Hospital surplus and how their financial picture is much healthier some of than its patients.
  
  The medical sector has also attracted a some recent investments including:
  
  - A few days prior to the AAR November letter, a Dutch company - Investment Fund for Health in Africa (IFHA) took up a 20% stake in AAR at a cost of Kshs. 750 million (then about $10 million). From media reports on the deal, IFHA will over the next two years increase its stake to 60% and exit by way of an IPO at the Nairobi Stock Exchange in about 5 years
  
  - TBL Mirror Fund has an investment in Meridian Medical Centres
  
  - In January this year, Resolution Health which had 2010 revenue of Kshs 1.12 billion and income of Kshs. 208 million sold a 25% stake in the company to a German private equity fund Africa Development Corporation (ADC), for KES184m. Resolution, which has 42,000 members, is also eying a stock exchange listing.
  
  - In this week’s East African is a story of a new Aureos Health Fund that is being set up.

• Guide to Addis Ababa

  Posted: May 27, 2011, 9:56 pm by bankelele

  A guest post by @Kahenya who made a recent visit to Addis Ababa, the capital city of Ethiopia on a philanthropic mission. He also says that this blog is blocked from Ethiopia and that 1 birr is equivalent to about 5 Kenya shillings.
  
  Getting There: When I arrived in Ethiopia, it took me about 30 minutes to clear at the airport, and here Kenyan citizens don't need a visa. However a Yellow fever certificates is mandatory and they will quarantine you for not having one.
  
  Getting Around: Normal prices for a taxi can be anything between 100 Birr to 250, but the guesthouse I was staying in sent their shuttle to the airport (to pick me). Most locals use either a matatu (big taxi) or small taxis which act as a matatu, and sometimes they even contract taxis.
  
  I use the matatu (big taxi) and contract taxis as do many locals, and I also hired a car with a driver to take out on the , since it worked out cheaper than a contract taxi and the guy waited on me.
  
  I have never felt unsafe in Addis - whether it's day or night. It's out in the desert where things tend to go wrong. My advice, is don't travel at night outside the city, especially into the desert, as that's time territory.
  
  Language: With English and like about 2 words of Amharic, I am always able to find my way around. There is no local English newspaper but my favourite English magazine there is Whats'out Addis.
  
  Communications: I have an Addis line, and I just plonked in the SIM-card and it worked. Mobile internet works, quite well now, unlike last year where I was barred from it. There are many Wi-fi hotspots, especially in the guest houses, hotels, and coffee shops, and they are usually free. I did not pay for internet this time round, but I believe it varies from .50c to 1 Birr per minute. Making local calls is easy, as are international calls, but I did not check the cost.

  
  

  Hotel: I stayed in a guest house [La Source Guest House, located on Gabon Street In Meskel Square behind Adot-Tina Hotel] where usually I get a double room for about 400 birr, but this time round, I stayed in the penthouse and it was 600 birr a night. I have been staying in this guesthouse since the day they opened, in the early 2000's, so I get very preferential rates. I am still confused by this place almost 10 years later because though the place is quite clean, and located in a nice place, the price remains very affordable. It has always thrown me off, but as they say, take it with a smile. You can also make booking online, and while I only confirmed my booking 3 hours before takeoff, I found everything ready & in order when I arrived.
  
  Food & Bars: The local dish was injera (which I do not really like) but I had a lot of tibbs, bread, pizza, and (strangely) sandwiches.
  
  St George Beer (my favourite there) was 35 bob (due to price caps) which made it very difficult to find - in fact, finding beer was a mission! I did not quite interact with strangers this time round, but mostly we talked about May Bread, African politics, Gaddafi some bullshit, girl talk etc.
  
  Shopping & Sight-Seeing: I always go to Merkato, as do many tourists. The leather stuff in Addis is always a plus and as are the imported original Italian Suits (which I don't wear) that are priced that much better than in Nairobi. Most tourists buy local wear, artifacts etc.
  
  Also go to Langano and Awassa to enjoy some lake side action, and Gondar & Lalibella for history. But, ironically, I've never been to any of these places, but my opportunity will come one day.
  
  Business & Infrastructure: - Electricity is not very reliable. There are major blackouts during the day and a lot of people have backup generators if they can afford it. The guest house I stayed at had a generator, so we were not in the dark for more than two minutes which was nice.
  
  Opportunities?: Addis is ripe for construction and infrastructure development. If you can get in on that, or even technology work, then you are in a good place. Local product development that can be exported (I hear) is also a big hit, with the government helping with fulfillment.

  
  

  Shocker: - Last year, (the economy) was good, and there was a lot of activity, but now it seems to have slowed down. With the price cuts, and shortage of food items, like sugar, cereals, and cooking oil, the economy seemed to have reverted back to the old days.
  
  – But the construction boom is insane, and property prices I noted are quite high. In short, property prices don't match up to the economy.

• Cutting the Big Deals

  Posted: May 26, 2011, 5:09 pm by bankelele

  A guest post by Shiroh.
  
  Many people ask me how to make money especially because I work in an institution that helps people make money. I don’t know the answer, as I have little wealth myself, but I can give a few tips that I have learnt from those who do.
  
  1. Read widely: Most people get information when it is no longer useful. Information is power, so the adage goes. Get information when it is hot. Don’t buy a share when the owners have already issued a good dividend - instead monitor the activities of that particular company for a period of time. Read the financial statements and its notes. The likelihood of making money when the dividend is announced is almost zero. Instead, read about the acquisitions/mergers the company is making. For example, what is the impact of Kenya Airways buying new planes? What is the effect of the international debt that Kengen and Safaricom keep taking periodically, on the company’s future profits? In short, do your research, and stay extremely informed.
  
  Also read personal finance books and blogs. If there is one book I thank the heavens for, it is Rich Dad, Poor Dad. This is the book that introduced me to personal finance. These books are available everywhere, and have a look at them as ignorance is not bliss.
  
  2. Have the money ready: If you are like any other Nairobian, you live from one pay slip to another, or you are on the verge of taking a credit card because the money is no longer enough to last a whole month. When deals come, it is your ability to pay for it, mostly in cash that counts. If you’re considering taking a loan, interest rates are quite high, so the returns will be wiped out.
  
  You have put money away so that when an opportunity strikes, you will be in a position to take advantage of it, so Save! Save! Save! . If you cannot save Kshs. 2,000 ($24) per month, then you are unlikely to be able to Kshs. 20,000. Also consider:
  
  - Joining a SACCO (Savings & Credit Society) if you don’t have the discipline to save.
  - Have standing orders with your bank that automatically place money in savings accounts (which are not easily accessible).
  - Resist the urge to spend on things you don’t immediately need.
  
  3. Diversify your income: There is always something you can do outside of your job that could give you the extra money. You can read more on this here.
  
  4. Use Professional advice: Many people think they can do everything without professional advice. Get a good lawyer, accountant, and financial advisor to before embarking on major steps. Just like you go to a doctor when you are sick, or a lawyer when you are making deals, also visit a financial advisor if you need to know how to invest.
  
  5. Network: The big deals are made in small smoky bars. This means that you need to align yourself with the right people who know where the deals are. If this means joining your local rotary so that you can get the right introductions, do it. If it means doing more social work, do it. In short, the world is unfair to those who don’t know the rules of the game.

• Guide to Asmara

  Posted: May 24, 2011, 9:48 pm by bankelele

  A guest post on a visit to Asmara, the capital of Eritrea, which turns 20 today. [See Wikipedia Eritrea]
  
  Getting There: From Nairobi, NAS Air flies direct once a week to Asmara. There are alternative, but longer routes such as KQ via Khartoum (connecting with Sudan Air) or through Egypt. NAS Air flies in on Saturday morning and returns in the afternoon, with a round-trip ticket costing ~$700. Also, a visa is required of Kenyans prior to travel.
  - Upon arrival in Eritrea, officials will record details of items in your possession such as computers, phones & electronic devices in a declaration form, which will be cross-checked when you fly out.
  
  Money: The local currency is called the Nakfa, which exchanges at about 15 to the US dollar. Though it is illegal for Eritreans to possess forex, there is a black market where the dollar exchanges for about 40 Nakfa.

  
  

  Getting Around : Asmara is a small town, and people walk around, or take bicycles or buses. They also they use horse drawn carriage for goods. For visitors, taxis are available for and are clearly painted in yellow.
  - It is possible to get around speaking English (which is more better understood than in Ethiopia). This is because, while the local languages (e.g. Tigrinya, Tigre) are taught in elementary school years, they switch to English for the latter years. Other languages spoken are Arabic and Italian.
  - It is ok to walk around, and while there are no armed police but army is visible.
  - For communications, hotels have phones and internet, and there are many cybercafés, though it appears Facebook is blocked. You can also hire a prepaid phone/SIM that costs ~ 1500 Nakfa per week .
  
  Food & Bars: Restaurants have good plentiful meals that are based on Italian cuisine - Spaghetti, pasta, lasagna etc. Meals may be so large, that you may end up eating only once a day, and these cost 200 - 400 Nakfa.
  - They drink lots of carbonated water, or Cola. There are local beers, wines, and spirits like Asmara cognac (125 Nakfa) and Asmara champagne (180).
  - Coffee is common, though their pot differs from Ethiopian one in that it has no spout. It is sold in 7 different flavours, depending on the number of times it is brewed, and the seventh flavour (brewed 7X) is the lightest /weakest blend.
  - They smoke a lot in bars and restaurants, so you may prefer to sit on the outside.
  - There is great love for football in the country. Kids kick balls in the streets, and English premier league matches are shown. There is a strong affinity for Arsenal football team because of the high number of African players [regardless that some of them are French] compared to Manchester United, [considered racist for the opposite reason]
  
  Business & Infrastructure: - It is an agricultural economy and they have three planting seasons, cultivating hardy crops like barley and millet, as water scarcity is a big issue in the country. The Government and the UN have built lots of water tanks for harvesting rainwater.
  - A Canadian company is mining gold which was recently discovered.
  - Roads are broad, but with low traffic levels.
  - All land is owned by the state, lease it to improve and no foreigners allowed to own any.
  - They hold Eritreans in the Diaspora in high regard, and celebrate their arrival back in the country.
  - Potential investment opportunities are in leather and wool.
  
  Sight-seeing: - Asmara, which is hilly and cool, is popular with Sudanese (North) as it is not as hot as Khartoum.
  - Sight seeing is on the Eastern escarpment, which has some rocky terrain. Also there is a a steam train, and buses/taxi's to the Red Sea, port of Massawa.
  - Weddings are done over a weekend; On Saturday, they dress in traditional outfits and attend the church ceremony, then on Sunday, they dress in western clothes for the reception portion, which are often held at hotels.
  
  Oddities: - The big-brother factor in the country; you can’t take pictures or stand near government buildings, [but you don’t know what is a government building?]. Also you are warned not to talk politics or talk idly to waiters, taxi drivers etc., as they will report to the government!
  - There is a distrust of the outside world and hate for Ethiopia, largely as a result of the war fought for independence during which they feel the Ethiopian side committed acts that destroyed family life for a generation. [It is not unusual to find older couples who married recently, or couples in their sixties with very young children]
  - Also, other plane passengers ask to you to help carry the load on the aircraft, but decline this...
  The above picture and many more, are from this site about Asmara

• Kenyan Guide to Accra

  Posted: May 20, 2011, 12:45 pm by bankelele

  Adapted as a guest post with input from Coldtusker
  (Pic via airliners.net)
  Getting There: Accra's Kotoka airport is small & dated [but efficient] airport but the corridors can be a challenge o navigate if you have lots of luggage. An interesting feature of the NBO-ACC flights are the traders [mostly women] with HUGE bags/packages [from shopping trips in Dubai or China] who you can't even see while they push their carts. It's like a moving wall of goods! These 'packages' are held together by well-sewn polypropylene [plastic gunias] material. Emirates flies A340, with larger cargo bays while Kenya Airways (KQ) lies much smaller 737-300s. Other planes on the tarmac include Delta & British Airways both which have daily flights.
  
  No visa is needed for Kenyans, but the flights are costly such as Kenya Airways (KQ) which is $1,000 - Ouch!
  
  Getting Around: A taxi trip from Kotoka to town costs about $5-7 but some hotels will provide transport if you let them know in time. The traffic from Kotoka to town even at the worst of times is much better than Peak hours in Nairobi. Taxis are the most common (for visitors) way to get around; they are easy to catch in most places, and unlike Nairobi, these guys drive around 'looking' for customers. The are 'painted' with AMA (Accra Metropolitan Area) zones & numbers and are easy to spot. Plus they honk at you if they think you need a ride. Fares are not fixed but negotiable. So negotiate! The 'quality' of these taxis varies from ramshackle taxis to new ones. Some have windows that don't open while others have AC. Always ask since Accra can get hot & humid. Think Mombasa. Boda bodas are available, as are matatus or buses. It is quite safe to walk around in many areas during the day, but at night, always use taxis.
  
  Money: Cedis [GHc] & Pesewas. US$ = GHc1.5 but some still quote the 'old' Cedi which is 10,000x the 'new' Cedi. You can change money in many places with few restrictions. Always confirm what you will get NET after all fees. There are several forex bureaus all over the place especially Osu.
  
  Hotels: Tend to be pricier than Nairobi. A nice 3-star hotel costs $120-170 for a single room! The pricier ones have WiFi, swimming pool, etc. and include a good breakfast. There are others at cheaper rates of ~$60 in 'busier & noisier' neighbourhoods which look/feel better than our River Road ones.
  
  Communications: Local calls are reasonable now that Airtel [lower per minute calls about US$ 0.06 per minute] is in Ghana, slightly more compared to Kenya. MTN is king, and while there are other options including Tigo, Airtel adverts are everywhere. You can use Airtel Kenya to receive calls at no charge, while SMS to Kenya were cost ~Kshs 5-10, which is very convenient. Local SIM cards used to be easy to get (from street vendors) but are now a hassle, as you have to be registered. Some hotels have WiFi, and there are many cybercafés.
  
  Food & Bars: - The local food varies with region but expect Yams, Cassava, Peanut sauce to be part of any 'local' meal & much more enjoyable compared to eating Italian, Indian, Continental [available anywhere in the world]. There are also lots of Lebanese restaurants as there are a significant number of Lebanese live in Accra.
  - Instead of bottled water, water is commonly sold by many vendors & firms in plastic pouches (costing Kshs 5/=). You ask for it as 'pure water,' which is useful for washing hands, or face in the heat.
  - Beers: depends on where you go but costs between $1-5, and is widely available - though there is a significant Muslim population there so watch out for Ramadan month. Guinness Breweries (Diageo) is #1 followed by Accra Breweries (SABMiller). Multiple brands of beer.
  - In bars, politics & business are common topics. Smoking is allowed indoors so you may prefer to sit outside. There are lots of small or regional political parties similar to Kenya, but since Ghana came out of a civil war less than 2 decades ago, they want 'peaceful' elections [but never say never]. Two-term limits apply but old presidents never fade away! Jerry Rawlings remains popular.
  - Football: is HUGE, and as in Kenya, Arsenal & Manchester United fans are everywhere, but Arsenal seem to be the overwhelming favorite. Of course, everyone looks up to the Ghanaian footballers in Europe.
  
  Business & Infrastructure: - There are problems with reliable electricity supply but projects are underway [by the Chinese] including thermal production. Just like Kenya, the hydropower plants face challenges with low water [Akasombo Dam]. Major hotels have diesel generators to alleviate this [good - as the weather is like Mombasa].
  - Tema Oil Refinery has same (or worse) problems as Kenya’s KPRL. Ghana Oil is listed on GSE, but majority owned by the Government. Total has a strong position in Ghana.
  - Nigerian banks seem to dominate the skyline but the largest bank is Ghana Commercial Bank [GCB] (similar to Kenya Commercial Bank). The bank is listed, with the Government as a major shareholder, and GCB is now going through a massive transformation.
  - They have had flyover roads for many years, and there is a wonderful cement/concrete road from Accra to Tema that was built during Nkrumah’s days. It’s a cheap toll road (about Kshs. 20/=) for a distance equivalent to Nairobi-Thika. The drainage systems are much better than Nairobi or Mombasa. Tema is their Thika - an industrial town, but it has a port too.
  - Newspapers: There are very many [English] papers but they are poorly written & seem rather sensationalist. Not as good as the Kenyan papers in terms of analysis, etc.
  - Business Opportunities? For everyone & everything... if they can compete with China, India, France, UK, etc!
  
  Sight-seeing & Shopping: Oxford St, in Osu, is very popular and has a vibrant nightlife. Seems relatively safe vs Nairobi's CBD. There are other shopping areas but not much to buy that you can't get in Kenya. Shopping in Accra tends to be very pricey since almost everything is imported but buy real [unsweetened] Cocoa as it is grown in Ghana. Daily spend is about $50 per day without hotel.
  
  For sightseeing, there is the Nkrumah Circle/Gardens & such. The Presidential Palace is shaped like an Ashanti Stool of the Asantahene [built/donated by the Chinese?] It is visible from the Road & is an imposing structure which includes many government offices.
  
  Shocker: Ghana imports milk! There is no 'fresh' milk but plenty of Italian & French UHT milk. Milo is also very popular, and is sold in small kiosks as well. Other imports include eggs.
  
  Summary: In some ways Ghana is the Kenya of West Africa but the 'socialism' attitude is still strong so businesses need to beware.

• Derivatives in East Africa

  Posted: May 17, 2011, 12:59 pm by bankelele

  On Monday May 16, Strathmore University invited Eduardo Schwartz a UCLA Professor and world-renowned lecturer, advisor, expert and author to give a talk on derivatives.
  
  Introducing the talk, Strathmore Director Jim McFie talked of the plan for Strathmore to be at the academic forefront for learning on derivatives in Kenya, which they are doing with the Global Board of Trade (GBOT) – and that for Kenya to compete with Mauritius as a financial centre, derivatives markets will have to be established in Kenya.
  
  McFie also mentioned a tendency for Kenyan parent to push their children into pre-formed careers at an early age, which was wrong, as he noted that Prof. Schwartz trained and started working as an engineer, before he branched into financial markets.
  
  Prof. Schwartz was giving his first talk in Africa on the subject and chose to give a Derivatives 101 talk, even as he knew there were investment bankers, and officials from the Treasury and Nairobi Stock Exchange present. He observed that it would be difficult to set up such markets given the economic challenges here, but that ultimately, development of efficient market necessary for economic development
  
  He noted:
  - You can have derivative on any variable that can be measured without discussion between the parties - e.g. rainfall, presidential elections, sports.
  - Popularity? Interest rate contracts are the biggest (390 trillion) followed by credit default swaps (which had rapid growth from 2006 ), then foreign exchange contracts, commodities and finally equity-linked contracts, in that order.
  - In any Wall Street Journal, you get a quick reading of all the major forwards e.g. quotes for the UK pound - 1, 3, and 6 months forward, and futures prices of metal & petroleum (gold, silver), agriculture (wheat corn orange juice, pork bellies, rice) interest rates.
  - Some arguments in favor for hedging: Companies can focus on main business and take steps to minimize market risks such as interest rates, by hedging, which also minimizes the probability for financial distress.
  - Arguments against /dangers of hedging? Shareholders are well diversified and can make their own decisions, it may increase risk to hedge when competitors do not (Southwest Air), and it is possible to take large positions with very little money (traders can change from hedgers to speculators)
  - You can get more reading of alocal perspective on derivatives here
  
  While he was said he was shocked that there no forward market in foreign exchange, in Kenya, there are forward markets for currencies, and for some commodities like flowers and fuel, which are done in private arrangements with partners, buyers, and customers, but mainly through large banks. They are not exchangeable, and there is no capital markets mechanism now for this.
  
  
  (via airliners.net)The most memorable one was Kenya Airways fuel hedging which they have employed for a number of years during rising fuel prices, but which resulted in a loss of Kshs 5.6 billion (~72 million) in 2009 (more)
  
  With time there could be a few more to deal with gaps such as the current situation where farmers are hoarding maize harvests to draw the government out into paying more for the crop.

• Shares Portfolio May 2011

  Posted: May 13, 2011, 1:42 am by bankelele

  Enjoying the fruits of some good 2010 performance in an uncertain 2011
  
  Comparing share performance to three months and a year ago.
  
  The Stable
  Barclays Bank
  Bralirwa Breweries (Rwanda) ↑
  Diamond Trust Bank ↑
  East African Breweries (EABL) ↑
  Kenya Airways ↓
  Kenya Commercial Bank (KCB) ↑
  Kenya Oil Company (Kenol) ↓
  Scangroup ↔
  Stanbic (Uganda) ↑
  Uchumi Supermarkets ↔
  
  Review:
  - Best performer: Bralirwa 11% (this Q), then East African Breweries 10%
  - Worst performer: Kenol (-4%)
  - In: Barclays
  - Out: Safaricom
  - Increase: Kenya Airways
  - Decrease: None
  - Performance: The Portfolio is down 1% in the last three months while the NSE 20 Share Index is down 7%
  - Uchumi, which is out of receivership, has finally got the green light from the CMA to re-list at the Nairobi Stock Exchange, though the date and conditions of re-listing have not been specified.
  - Safaricom’s 2010 results which will be released on May 18, are widely expected to show a drop in revenue and profit owing to the price wars in the mobile sector.
  - Kenol resumed its battle the Ministry of Energy after a quiet period as motorists grappled with an unexpected shortage of petrol (This inspired an innovative site called Find Fuel . The Kenol AGM was live streamed and can be found on YouTube.
  
  - Stanbic Uganda had reduced profits owing to bad loans combined with staff & IT expense increases.
  
  Events & Outlook:
  Looking forward to
  - Dividend payments from Diamond Trust, KCB, Scangroup, Stanbic (Uganda), Kenol
  - Bonus shares from Diamond Trust (1:5), Scangroup (1:5), and Stanbic Uganda (1:1)
  - New share listings: There's been no word yet from Transcentury and Britak. During the quarter, CFC-Stanbic spun off their insurance arm – CFC Insurance which is now listed on the stock exchange, and will soon to be joined at the NSE by CIC Insurance.
  
  - Why list?: The newspapers, this week had advertisements from the Capital Markets Authority (CMA) highlighting tax and other benefits of listing shares or raising capital in Kenya. These include;
  
  Newly listed companies will enjoy reduced corporates taxes if;
  (i) They list 20% of their shares, they will pay 27% income tax for the next three (3) years on profits (while other corporates pay 30%).
  (ii) List 30% and pay 25% tax for next 5 years on profits.
  (iii) List 40% and pay 20% tax for next 5 years on profits.
  
  Tax exemptions;
  - A tax amnesty on omitted past income
  - Dividend taxes paid to venture capital firms
  - Income to employee share option programs (ESOP’s)
  - Interest income on long term infrastructure bonds
  
  Also all East African nationals are treated as ‘locals’, not foreign investors in allocation of IPO shares and get (lower) withholding tax on their dividends. These and other tax deductible expenses including payments for credit-rating, listing & issuance costs, and some exemptions from stamp duty, can be found at the CMA site.

• Prepaid Electricity in Kenya

  Posted: May 10, 2011, 10:52 pm by bankelele

  Kenya Power & Lighting Company (KPLC), the national distributor of electricity is converting customers in many parts of the country from post use billing and payment to pre-usage payment.
  
  One KPLC challenge for many years has been revenue collection, but that has changed since signed they signed up banks and supermarkets (some at a cost of ~ Kshs 50 per bill paid) outlets like Uchumi.
  
  Changes
  
  Payment: You can buy electricity tokens from some KPLC offices, but it is easier to pay by mobile money Safaricom's 'M-Pesa' or 'Airtel Money' zap. You load money into M-pesa, send it to KPLC, and in about an hour you get a 20 21-digit number that you punch into the meter for an immediate update of electricity credits.
  
  Orientation: None at all! One day you come home and find workmen in the corridor doing a lot of re-wiring (at first I thought the landlord was installing fibre to the block, but it turned out to be KPLC's sub-contractors) and the next day, you come home and find the watchman with a booklet for you to read and study on the pre-pay system! The booklet has been quite useful, but it omitted a process where you have to call KPLC to link your old meter and new meter numbers – in order to activate the new meter.
  
  Cost: None to the customer, and the brochures say cost of usage should be the same, and so far I’m on par at about Kshs 500 ($6) per week.
  
  The meter also has some commands that you can use to check out your usage at any given time (a fluctuating 80W) and usage since installation – 100Kwh in three weeks. What I miss (for tracking inflation is a breakdown of usage, fuel surcharges and other taxes that form anywhere from 1/3 to 1/2 of every bill, and
  - [edit] cost of collection which may vary from Airtel to Safaricom) i.e it cost Kshs 20 to pay by M-pesa
  - In order to pay by M-pesa, you have to know your Meter No. (so save it in phone)
  - The cost of electricity has gone up by ~45% in a month i.e in mid-April a 'unit' of electricity cost Kshs 9.8 and in mid-May its Kshs 14.2.

• Corporate Blogging: from scarcity to abundance

  Posted: May 6, 2011, 4:36 am by bankelele

  Looking at the evolution of this blog over the last few years, and it has been one of transition from scarcity to abundance of events and subjects.
  
  A few years ago it was rare to find events to write about. I was shareholder of less than half a dozen companies and was attending as many AGM’s as possible, and I was able to reach out to family and friends like @coldtusker for proxies to attend a dozen more AGM’s or investor briefings of companies with small registers.
  
  Requests to company registrars for access to attend briefings were often stone walled and rejected with various answers like ‘what is a blog?’ ‘We only allow media’ i.e. TV radio newspaper. The distinction between blogger and journalists is not new and is not going away.
  
  The scarcity largely changed around 2010 as a new gatekeeper emerged, in the form of branding and PR agencies that handled ‘media’ relations for many listed and unlisted companies. This was common at those with budgets to push out their products from new tariffs, new shares & IPO's, new products, but also to re-brand old or existing products & services. They PR people were about awareness, and creating attention, buzz, and conversation about the brands they oversaw, and recognized that online space - blogs, and lately twitter were ways to reach a diverse audience.
  
  The agency that brands the company, and does PR recognize the online presence of an event or story for what it can do - better search placement, better archiving & retrieval for years to come) – and so the more press the better.
  
  A recent article this week point out to a trend in the US where, to some extent, PR is replacing news as the gatekeepers of corporate world. This also partly happens here where many newspaper stories are actually repackaged press releases, readily disseminated by PR teams and summarized from complex to simple phrases to be instantly re-broadcast in a variety of channels.
  
  The Probulica article lists the positives and negative of the PR vs. journalist trend, but for me, it means more opportunities than I can take up, several press releases, and invitations to events (sometimes 2 or 3 in a day) with the expectation that there will be some reciprocal coverage. I may not use everything, but I try and give feedback to the agency that monitors the brand or to the company itself. With the press releases, it may soon be a good idea to dedicate a blog area for press releases like Ratio magazine has done.
  
  Payoff? Nah: Corporate blogging does not pay the bills in this part of the world, but it does get access that can be vital. In addition, new (online only) platforms have emerged like Rich.co.ke and Ratio Magazine which demonstrate that well structured analytic platforms can attract audiences, advertising, and funding.

• Shared Technology Opportunities in Kenya Government

  Posted: May 6, 2011, 4:21 am by bankelele

  One of the platforms that the Kenya ICT Board is spearheading a shared services platform/master plan for the Government.
  
  They have studied the concept in the US, Australia and at large computer companies. They also appointed a consultant firm, Accenture, to carry out an assessment, and this week Accenture released a report this week on shared services (back office functions) use at various government levels.
  
  The findings were rather harsh and included:
  - GoK is not well positioned to support Vision 2030 through its platform, and for all the talk, IT spending is not a priority in government,
  - Low level of staff, low ability to execute projects,
  - Lack of standard process automation across government arms, few processes are automated - still heavy manual work, and use of outdated technology
  
  - Kenya spends 70% of IT funds on hardware (which can go out of date quite fast), with very little spent on people and software. This is below world standard which Accenture defined as near – 20% spent on hardware, 40% people, 19% software, and 20% outsourcing
  - Most IT projects are developed with silos within the different ministries or local authorities even within ministries and even if the current 80 large ongoing tech projects were completed, this would not lead to share services, e.g. because databases cannot talk to each other
  
  Nevertheless Accenture had bright spots & recommendations:
  
  - The low level little process automation presents a lot of opportunity for private sector to work with GoK in shared services
  - Best practices can be driven by single entity
  -The shared service goals can be achieved not by increasing current IT expenditure, but by refocusing it on items like automation and standardization
  - By developing IT career paths, Government can have access to the better people in IT
  - Accenture mapped out some current government process like obtaining a birth certificate and getting a passport - to the deal target scenario using shared services approach.
  - The cloud can be used to leapfrog other governments – i.e. enable citizens to use mobile phone and access services without visiting a government office
  - There are other opportunities for the private sector to develop end user services, applications, architecture, and capabilities.
  
  Other Comments
  - Information & Communications PS Bitange Ndemo said they had set out to fulfill presidential target to digitize four processes by this June 2011 – and mentioned the judiciary, land ministry and state law office (also Google Books has digitally archived the Government Bible - with 100 years of the Kenya Gazette now online)
  - Office of the President Administrative Secretary Sam Mwale it is government policy to share services, and asked that more services be translated to Kiswahili which is understood by the majority of Kenyans. He also said that for shared services to work, it was important to demonstrate to government staff that the services work, that they are in charge and they have not lost their jobs.
  - Catherine Gitau, the Director of E-Government, said government departments will have to share infrastructure, services, and must also share data (Article 35 of the new Kenya Constitution notes that the state shall publish and publicize any important information affecting the nation, and every citizen has the right to information held by the state)

• Real Estate Moment

  Posted: April 16, 2011, 1:29 pm by bankelele

  The 13th edition of the Kenya Homes expo is going on at KICC Nairobi this weekend. Here’s recap of that and other real estate on-goings. It seems larger than last year with more properties on display, along with energy, interior finishing, communication, insurance and media companies as well as several mortgage banks. Also some properties advertised last year were still on sale.
  
  Expo: Some notable property developments included;
  - Trident Park in Langata (behind Splash/Carnivore) 4 bedroom (4br) , all en-suite homes that cost Kshs 15.5 million [Kshs 15.5M or $193,000] (Trident Estates)
  - Diamond Park in South C which are 4br maisonettes that cost Kshs 12M (Diamond Park)
  - Tamarind Meadows are 3br maisonettes located in Mlolongo/Athi River with prices ranging from Kshs .6.5m – 9M (Tamarind Properties)
  - The 3rd phase of Greenspan Housing estate of 3br maisonettes in Donholm/Umoja that cost Kshs 8.5M (brochure says that some houses sod in phase 1 have achieve rental of Kshs 45,000 [$560] per month) (Greenspan Housing)
  - Residential plots sold by Ndatani Enterprises in Kitengela can range from Kshs 500,000 - 900,000 ($11,000)
  - Le Mac is a planned 24 story tower complex with apartments, malls, shops, offices, bank, restaurant, gym on Waiyaki Way, Westlands that was launched by the vice president a few weeks ago. Offices and showroom will cost 15,500 per square foot , while apartments that will include studios, 1, 2, 3 and 4 bedrooms will cost 16,500 per square foot – translating to Kshs 12.6M for 1br to Kshs 56M ($700,000) for a 4br duplex. (Mark Properties)
  
  Financiers: at the Expo were the usual banks present including Housing Finance, Barclays, KCB, and Standard Chartered.
  - Barclays loans start at 12% up to 20 years and 90% of home cost, or 70% of construction costs and they buy mortgages finance by other banks. A Kshs 10M loan taken over 10 years has repayment of Kshs 143,413, and over 20 years has monthly repayments of 110,039
  EDITCBA: Mortgages are payable over 25 years, and (they say) you can accelerate and pay off an entire home loan without being penalized.
  - KCB has mortgages up to 25 years and rates are 13.75% and finance 90% of mortgages for salaries people homes in urban areas, 70% for plots, and 85% for estate development. A Kshs 10M loan taken over 10 years has monthly repayments of 152,274, and over 20 years attracts a monthly payment of 120, 737
  - Housing Finance had their Makao Homes which are pre-designed homes they can build for anyone with a piece of land and range from a 2br bungalow that costs 1 million ($12,500)(ideal for 1/16 acre) to 4br maisonettes ideal for ¼ or ½ acre that cost 13.3 million ($166,000). A Kshs 10M loan attracts repayments of 155,266 over 20 year and 124,352 over 20 years.
  
  - Other finance from Houising Finance, includes plot purchase (70%), for investment groups (70%), for commercial office space/shops development (65%), as well as finance for incomplete or stalled projects.
  
  They were joined by newcomers including;
  
  - National Bank of Kenya
  - CFC Stanbic who last week launched a 100% mortgage facility.
  - I&M Bank – pay lesser amounts in initial years and higher amount in later years as your income grows (you think?), all loans have free credit card and free fire insurance. Loans are at 12, 14 and 16% and range from Kshs 2M -30M to finance up to 80% of property price with a maximum of 15 years. The brochure also indicates all the typical home closing costs – e.g. a Kshs 10M mortgage will attract valuation fee if 10,000, 1% on disbursement (100,000), processing of 0.5% (50,000), legal fee of 1% (100,000) for a total of about 3% (home buyers are advised to budget 5%)
  
  Other: - The Sameer Business Park has started leasing this week; it initially looked like white elephant its now available through property agents Knight Frank .
  
  Via @azthedance - This article by Brendan Barron titled Arrest this Development? points to some disparities in the sector such as;
  
  - The country’s average wage is somewhere around $4,500 a year, but the average mortgage was more than 12 times that, at $56,000.
  - Nairobi currently has no urban plan
  - There’s also no real Building Code to which technicians can refer to ensure new homes meet standards. There are, simply, no enforced standards.
  
  Edit: Here's a nice series of articles in the Business Daily by analyst and columnist Carol Musyoka, first on Kenyans obsession with owning property and a follow up on the
  investment risk of owning property, which has this paragraph.
  
  Given where today’s interest rates are at say 15 per cent, an average middle income house costing Sh10 million, will require a monthly mortgage payment of approximately Kshs126,000 after the buyer puts down a deposit of Sh1 million or 10 per cent on the 15 year mortgage. This is not an amount that is easily payable by the average Kenyan worker and requires a great amount of sacrifice on the part of the buyer, especially where the rent for a similar house would be about Sh40,000 or a third of the mortgage payment.
  
  The fact is that buying your own home is really not supposed to be an investment, rather it is a method of providing future security for yourself by having home ownership at the end of the mortgage period.

• Queues make you think

  Posted: April 15, 2011, 11:47 am by bankelele

  This week, I spent a crazy morning at another queue, this time at the Kenya Revenue Authority (KRA) trying to pay a monthly tax. When I arrived there, the line was about 12 people long, which was a relief because sometimes you can find more than 30 people.
  
  However that turned out to be a false hope because there was only one teller counter that was manned and serving customers, and at a very slow pace. We stood there patiently for about an hour, barely moving, as it dawned on us that some things were not right.
  
  One old man in the queue went go get a supervisor since there was none in sight to complain to except a G4S security guard, handing out forms to be filled. He came back after half an hour to find us pretty much in the same position. He had tales of being passed around from supervisor to supervisor’s in the next building but he would not relent until he reached someone 'senior.'
  
  Willing, but frustrated taxpayers: Kenya is ranked no 162 in this PWC survey on ease of tax payments - a figure I disagree with. KRA has made it simpler for other taxes to be collected e.g. Pay As You Earn (PAYE/payroll) taxes are paid at commercial banks where the employer has an account – the cash goes to KRA’s account instantly (no 4 day wait for this cheque). Today, I wished they would extend the same for other taxes too so that people don't have to comes to Times Tower (KRA headquarters).
  
  There are similar queues for driver licenses renewals of either 1 or 3 years, though sometimes some of the stickers are missing, so you can only buy the ones available that day. There alao used to be more for annual vehicle license renewals (calculated on a vehicle engine size), but that was changed a few years ago and built into the price of a litre of petrol and diesel.
  
  Staffing: This morning, the sole teller worked for about an hour by himself, next to six empty teller windows (which is a worse display of customer service than a certain large bank). It inspired camaraderie as we all shared battle stories from previous visits to the building.
  - 'This line is nothing, you should have seen the one last month'
  - 'The line was so long yesterday, I walked out and came back today'
  - 'I will train someone else in the office to come here next month'
  - 'There are so many unemployed boys, why not give them these jobs, if KRA is under-staffed'
  - 'They do about seven people an hour, I’ve counted…'.
  and
  - 'The reason these guys are slow is women should do the job. Men can’t type into computers & process payments like women. If women were given these jobs, there would be no queues as they’d process taxpayers do fast'.
  
  (So I jumped into Google and found this yahoo thread that answered that very query - and it listed counselors, coders, surgeons, child care, nursing care, as jobs that women can do better than men, but nothing about tax collectors)
  
  Queue management: Banks and the government have data collected by their systems and HR managers to know how many customers they have in any month. It can further be broken down into which days and which hours they get peak customer traffic. Supermarkets know this and match their staff shifts to customer numbers, but it can be extended further. I was also at a bank hall this morning and it was completely empty, with no customers waiting to be served. Why? Probably because it’s the middle of the month and many customers, who are dependent on monthly paycheques have no need for their banks mid-month.
  
  KRA likewise should anticipate dates like the 9th, 20th and 25th of each month will have peak volumes and deploy more staff to man front desk counters on these days, so they end up with long queues of frustrated small business customers and taxpayers.

• Your Bank, Your Neighbour

  Posted: April 13, 2011, 11:15 pm by bankelele

  Agency banking came of age today with launches of agency banking by both KCB (‘KCB Mtaani’ - translation KCB in your neighbourhood) and Co-Op ('Co-op Kwa Jirani' -translation Co-Op in your neighbourhood) which are the largest and third largest banks by assets respectively. They follow in the steps of Equity Bank who have had agency banking for several months
  
  Why Agency Banking? If 3 of the country’s 5 largest banks with the largest branch footprints chose to go agency banking. Agency banking expands the reach of the bank about 100-200 branches to anywhere from 1,000 to 20,000 outlets through the agent model Speaking at an investor briefing last year, Equity Bank CEO James Mwangi spoke of the extra reach would bring for them and which signaled an end to the rapid branch and staff expansion that the bank had been known for.
  
  Equity initially looked like they would partner with Safaricom’s strong M-pesa agent network (22,000 agents) for their banking extension, but that partnership seems to have hit a brick wall) and now the field is open to dukas, bookshops, and grocery stores, kiosks, hardware & phone sales shops, and others established shops especially in remote villages where banks are unlikely to open branches.
  
  The shops must fit the criteria set by Central Bank of Kenya (CBK) for bank agents (more here) - including that they cannot be mutually exclusive. (Not being tied to one bank can be an opportunity for established village business owners to act as agents for several banks)
  
  What can agents do for bank customers?
  Co-Op: Cash deposits, cash withdrawals, school fees payments, utility payments, balance enquiry, issuance of mini-statements.
  KCB: Deposit taking and withdrawals. In future, balance enquiries, loan repayments and requests for chequebooks & account statements.
  Equity Bank: Deposit taking, cash withdrawals, as well as origination of account opening & loan applications.

• Kenyan Guide to the Hague

  Posted: April 6, 2011, 6:49 pm by bankelele

  A guest post
  
  Arriving at Schipol, you can take a taxi to The Hague (around € 45) or for the budget conscious traveler, you can take the train (€ 7.90) to go to the Hague. Within The Hague, transport seems to consist of many, many cyclists, trams and cars. There are two bikes per Dutch person in the Netherlands, but despite knowing that the Dutch use bikes as the main way of getting around within the towns, it’s still a surprise to see all the people cycling to work, to the pubs, to the stores and pretty much everywhere.
  
  When crossing roads, keep an eye out for the bike lane, the tram lane, AND the car lane. And you might want to obey the traffic lights as well, as the pedestrians also wait for the pedestrian crossing light to turn green before crossing, even in the absence of incoming cars. When being driven within The Hague, you might decry all the “wasted” driving lanes that are taken up by the bicycle lanes, but there is no overlapping from drivers into the bike lanes as the cyclists also seem to have significant cycling rights.
  
  For accommodation in The Hague, there are a range of hotels to choose from. The Ibis hotel, part of an European chain is a pretty safe bet (€99 before tax), and is an environmentally friendly hotel , no frills hotel. Prepare for sticker shock for meals though as breakfast goes for €15.
  
  You can get around even if you speak no Dutch, as almost everyone in the service and retail industry speaks English. Window-shop in the Noordeinde area which has really high end shops located near the Noordeinde Palace. Make sure you soak in the old architecture while you’re there (Google says the Palace was built in the 16th century). The real shopping takes place in Grote Marktstraat where many retail electronics, clothing, shoes, bath and body retails chains have stores, and there are plenty of small shops that sell the distinctive blue and white Delft pottery.
  
  To get the full tourist experience, take a day trip to Amsterdam which has great shopping and tourist attractions. The Van Gogh Museum and the Rijk Museum are must sees. For sightseeing and shopping, a good place to start is Dam Square where shops are flanked by waterways, and with tourists attractions like Madame Tussauds . Many of the international chains have retails stores in this area. Amsterdam isn’t of course Amsterdam without a visit to the Red Light District, so if you can, try and see that as well.
  
  Biggest surprise about Holland? That the dikes aren’t brick walls that prevent the sea from flooding the country. They’re more miles and miles of mounds of earth. Oh, and this boy? He never existed as part of Dutch history. It’s an American children’s story!

• NSE Nairobi Investor Briefs

  Posted: April 5, 2011, 6:32 pm by bankelele

  new corporate activities at the Nairobi Stock Exchange include
  
  British American Investments - a.k.a. British American a 46 year old company in the country now planning an IPO at the NSE. They are also embarking on regional diversification as a group, which is best known for its British American insurance (Britak) – but has since added British American asset managers (formed in 2005) and Britam insurance in Uganda.
  
  In 2010 they had gross revenue Kshs. 4.5 billion ($56 million) (up from 3.9 B in 09) largely due to Investment & other income of Kshs 5.1 billion (09 was only 400k) and their profit before tax was Kshs 2.8 billion, compared to a loss of Kshs. 334 million the year before. This also included underwriting income in Kenya of Kshs 152 million (up from 80M year before)
  
  They are aiming for the IPO in 2011 to finance their diversification into micro-insurance and bancassurance as well expansion to Tanzania, Rwanda and south Sudan. They are yet to obtain shareholder and capital markets authority approval. Group Managing Director Benson Wairegi said they have alerted the CMA, but are yet to submit documents until their shareholders approve the process
  
  Kenya's capital markets rules require 3 to 5 years profitability before a company can list, though @coldtusker disagrees with that saying smart investors should be allowed to decide a company's prospects regardless of their recent profitability.
  
  Other: - Their balance sheet grew to Kshs 25.2 billion ($315 million) up from 16.3B. Assets under management by British American asset management (BAAM) grew from Kshs 8 to 17 billion
  - Expenses were up 8% compared to 16% for revenue
  - Paid a dividend of 200M (Kshs 6.67 per share) up from 120M last year (Kshs 4 per share)
  - Bank portfolio: they own 11% of Equity bank and 15.9% of Housing finance
  
  TransCentury: Also up for possible listing is TransCentury which was founded by a Group of prominent Kenyan investors who expand into the limelight when they acquired East African cables in 2004. Since then they have taken stakes in Development Bank of Kenya, Kenya Power & Lighting company as well as Rift Valley Railways
  
  Their 2010 highlights and 2009 detailed accounts show;
  - High finance costs eating into profits and need to pay down debt
  - Strong shillings bad for there profit 170m impact,
  - Kshs 1 billion invested in 2009, down to 50 million in 09
  
  Portfolio - Seem to manage regional diversification better than Olympia did and which Centum is now trying to do
  - Quoted shares in Metal Fabricators (Zambia) 20%
  - Unquoted in Rift Valley railways (34%) and Development Bank of Kenya
  
  - In 2010, added Cableries du Congo (Congo Cables)
  - Chai Bora Blended Tea (Tanzania) [Revenue of Kshs 714M, pre tax loss of 29M]
  - Kewberg Cables & Braids [Revenue of Kshs 781m, pre tax profit of 44M]
  - Tanelec (Tanzania) [Revenue of Kshs 772M, pre tax profit of 133M]
  - Avery East Africa (Kenya scale) [Revenue of Kshs 226M, pre tax profit of 21M ]
  - Participation in investment in funds include Kshs 200 million in Aureos (East Africa, South Asia, china), Helios (Kshs 350m) and Business Partners International (Kshs 43 million)
  
  In anticipation of a NSE listing, they made moves such as:
  - 10:1 share split in October 2008. Now has 263 million ordinary shares up from 20 million after bonus, split, and new issues
  - Paid a dividend of Kshs 13 million in 2009 (DPS of Kshs 0.05). For 2008, it was 29 million, which was part paid in '09
  - According to the East African in Feb '11, Transcentury shares were trade at an OTC market run by Dyer & Blair at Kshs 35 per share compared to Kshs 48 in 2010.
  - Seem to manage regional diversification better than Olympia did and which Centum is now trying to do
  
  Kenya Airways: Is likely to seek to raise capital from its shareholders this year on advice from their directors and CFC Stanbic who are their financial advisors.
  
  Regional: In Tanzania, Kenya Airways is ceding a steak in Precision Air, which is seeking to raise almost $30 million, in an IPO, but indications are clear that Kenyans will be locked out as will other non-Tanzanians.
  
  From Rwanda, we have the prospect of more share listings from two companies - Bank of Kigali and MTN Rwanda, and following in the footsteps of Bralirwa who's IPO was open to all East Africans.

• Kenya Bank Rankings 2010: Final Word

  Posted: April 4, 2011, 3:39 pm by bankelele

  From the earlier estimates now there’s a complete list of the published accounts for all commercial banks as at December 31 2010.
  
  1 (1) KCB: Assets of Kshs 223024 ($2.69 billion) [pre-tax profit of Kshs. 11.53 billion ($139 million)]
  2 (2) Barclays
  3 (4) Cooperative
  4 (3) Standard Chartered
  5 (6) Equity
  6 (5) CFC Stanbic
  7 (7) Commercial Bank of Africa needs to raise capital?
  8 (14) Investment & Mortgages overhauls Citibank, National Bank, Diamond Trust and NIC
  9 (9) Citibank
  10 (8) National Bank of Kenya
  11 (10) Diamond Trust
  12 (11) NIC
  13 (13) Prime Bank
  14 (14) Baroda
  15 (15) Housing Finance
  16 (19) Ecobank
  17 (16) Bank of Africa
  18 (21) Chase
  19 (20) Family Bank
  20 (17) India
  21 (18) Imperial
  22 (--) Kenya Women Finance Trust (DTM) new deposit taking micro-financed [assets of Kshs 18.9 billion and pre tax profit of Kshs 464 million ]
  23 (22) Fina Bank
  24(24) Development Bank of Kenya
  25 (29) Consolidated
  26 (34) Equatorial (acquired Southern Credit)
  27 (23) ABC
  28 (28) Giro
  29 (25) Gulf African (Kenya's first Sharia bank breaks even in third year)
  30 (31) Fidelity
  31 (26) Habib AG Zurich
  32 (30) Guardian
  33 (27) K-Rep
  34 (34) First Community Bank
  35 (32) Victoria
  36 (33) Habib Bank
  37 (38) Transnational
  38 (41) Oriental (boosted by other income)
  39 (37) Credit
  40 (40) Paramount
  41 (36) Faulu Kenya: (new deposit taking micro-finance institution) [assets of 4.3.9 billion and pre tax loss of Kshs 164 million ]
  42 (39) Middle East
  43(43) UBA: slow start in Kenya, but finally started lending
  44 (42) Dubai Bank
  45 (44) Jamii Bora: formerly city finance bank, and was acquired by microfinance company Jamii)

• Award Season Part Trois

  Posted: March 30, 2011, 6:48 pm by bankelele

  Following on part II
  
  The Anzisha Prize for young Africans (15-20 yrs) who have solved a problem /challenges in their community (via @kenyanpundit)
  
  The Android App competition. in the X.com dev. challenge participants can win prizes of up to $25,000. D/L is 14 May.
  
  The 2nd eLearning Africa Photo Competition runs through April 21.
  
  Facebook’s first hire in Africa - will be a growth manager in Nigeria (via @bellanaija)
  
  The 2011 Freedom to Create Prize main prize and imprisoned artist prize is open to 15 July (via @Kwani)
  
  Various jobs at Google East Africa .
  
  iHub Mentorship program. D/L is 6 April.
  
  Partial scholarships available to attend the 4th Global Forum on Innovation & Entrepreneurship. D/L is April 1
  
  Kenya Government Science & Technology scholarships (29) to study in China, for undergraduates and postgraduates in engineering, medicine, computer science, and pharmacy. D/L April 7.
  
  Connected Kenya Vision 2030 ICT awards from the Kenya ICT Board.
  
  Maisha Filmlab with free screenwriting directing camera sound and production workshops in East Africa. (via @mkaigwa)
  
  Mass Challenge a $1 million start up competition (via @egm_photo)
  
  Panos Eastern Africa media fellowships. D/ L April 6.
  
  Strathmore University’s Mobile Academy . D/L 31 March
  
  Winners of the Nokia Idea storm will have their ideas developed into phone apps. D/L is April 14.
  
  TEDGlobal 2011 takes place in Edinburgh, Scotland in July 2011. It moves from traditional Oxford this and 75 places available, and D/L is April 4.
  
  Africa Youth Trust Young Women Leaders funded by the UN Women Governance and Gender Programme. D/L April 15.
  
  Modern careers: Someone got hired via twitter
  
  Sports: The Watamu Triathlon takes place April 9 & 10 at the Kenya coast. D/L April 4.
  
  
  Photo is from a blog tracking a Cairo to Cape 12,000 kilometre bicycle expedition (equivalent to 4 Tour de Frances in 4 months). It’s now complete after a tough stint in Kenya.

• Motoring Moment: Thika Road, Commuter Trains

  Posted: March 22, 2011, 9:45 pm by bankelele

  Discovering Thika road: Took a road trip up Thika Road to hang with the Kuweni Serious crew last weekend. Chinese contractors are converting the road into a super highway and the dramatic transformation (follow Thika Road blog ) has plenty of soil hills, deep valleys, closed roads, missing roundabouts etc. It was a fun trip, but as it is said every day, don't drive on Thika Road if you're a stranger, or it’s dark, or the road is wet.
  
  The journey is made more dangerous by Matatu’s and some road regulars who make their way anywhere they see fit - by driving in the wrong land, making U-turns in traffic, over-lapping patient motorists etc.
  
  The highway defies belief, and when it’s done it will probably need other roads to be closed off or expanded. e.g Outer Ring Road and a bypass to Mombasa Road. The large volumes of traffic need to enter and exit cleanly and without delay otherwise there will be more situations like the one at Riverside Drive and (current) Museum Hill Roundabout where traffic waiting to enter these smaller roads spills over backwards onto the large highway causing more jams.
  
  The on-going rains make it more difficult and with all the un-drained water, some cars are probably washed daily only to end up covered in red mud. For users of public vehicles, the rains mean added journey times and increased fares on Matauts.
  
  More Commuter Trains: However there is some relief for commuters who live along Thika Road since Rift Valley Railways (RVR) has upped the number of daily consumer trains in Nairobi from 8 to 18 which collectively serve Kahawa, Dandora, Embakasi, Ruiru, Kikuyu, and Kitengela/Athi River
  
  The addition of the early morning trains has slashed some commuters’ fares by almost 2/3 e.g. some Embakasi residents who take the train paying Kshs 30/- per trip compared to the previous Kshs 70 – 100 per trip by Matatu. Also, the train is more dependable, and takes 25 minutes to complete the journey, unlike driving in a car or matatu, which usually takes over an hour in 'rush hour'.
  
  Ultimately having dependable train travel may lessen the burden on the roads (fewer Vitz card) and while there is talk of having a train to Jomo Kenyatta Airport, it is not a government priority or feasible in the short to medium term.
  
  Commuter trains aside, the reason that the concessionaire, Egypt’s Citadel (operating as Kenya Uganda Railway Holdings) invested was for cargo and the train transport while significantly cheaper than the Kshs 120,000 ($1,500) to transport a container by lorry from Mombasa to Nairobi ($3,600 for Mombasa to Kampala) needs to emphasize this aspect and demonstrate more reliability to business owners. This will relieve the burden on the roads.
  
  Oil Shipment: As the international price of oil is expected to go up owing to instability in the Middle East, in Kenya there is a small dispute between oil companies led by Shell and Kenol pitted against NOCK - National Oil Corporation (NOCK), a Kenya government state agency that imported the latest shipment of diesel on behalf of all the oil companies. After some postponed arrival delays, and tales of missing phantom ships [MT Volga, MT Adden, MT Ratna Sheruti, MT Ratan Namrata], which resulted in a partial cancelation by Shell, a shipment finally arrived on March 1.
  
  However that did not put the matter to rest since NOCK has announced that they would bill the oil companies using the higher March prices instead of the February price. And where is the diesel? NOCK says it has all been sold, but the other oil companies say they have not bought it, and won't be buying it owing to the higher price being demanded.
  
  Fuel Relief: Some slight relief for motorists comes from Kenol who have discounted the price of petrol and diesel by 2 shillings on Tuesdays and Fridays – so petrol today costs about Kshs 100 (~$5.30/gallon) under Deal Poa promotion, and for holders of Kenol corporate fuel cards, they enjoy a 2 shilling discount every day, which doubles to Kshs 4 on Tuesday and Friday
  
  In Car Beverage: My current in-car beverage is Nestea iced tea that you can make in a supermarket. How? (i) Buy a Kshs 20 Nestea satchet (ii) Buy a one litre bottled water for Kshs 40 - 60 (any brand) (iii) pour the sachet contents in the bottle & shake (iv) you have a litre of iced tea for less than $1.

• Award Season Part Deux

  Posted: March 17, 2011, 2:51 am by bankelele

  This is a continuation of a series highlighting some open awards, that may be about to close in the next few weeks.
  
  The Acumen Fund East Africa Fellows Program aimed at entrepreneurs or people working on ground breaking programs with social impact in east Africa and will receive training in leadership , and is modeled around an executive MBA. D/L is 15 April for launch in July 2011
  
  The Africagrowth Institute 2011 SMME Awards that recognizes \small, medium or micro enterprise (SMME)companies that are growing sustainably and contributing to economic growth. D/L is 30 June
  
  (For Women): The Anita Borg Agent Award for ladies who demonstrate use of technology to change lives. Sponsored by Google, it has prizes of $5,000 in travel reimbursement to attend the Grace Hopper Celebration of Women in Computing. D/L is May 2
  
  (For Women): The annual Business Daily Top 40 Women Under 40 award series in Kenya that recognizes women achievers in the world of business. D/L is 10 April.
  
  The Diageo Africa Business Reporting Awards that recognize outstanding journalists, editors, blogs, and other media that feature coverage of the African businesses scene. D/L is 27 March.
  
  (For Writers): The Golden Baobab Prize for Literature is a Pan-African literary award. Details here.
  
  The Nestle Prize that recognizes projects in the fields of nutrition, clean water, or rural development that create shared value. D/L is 30 June.
  
  The Shuttleworth Foundation for people ready to commit to undertake social change through innovation. They review applications in May 2011 for September intake.
  
  (For Journalists): The United Nations journalism fellows program Dag Hammarskjöld Scholarship Fund program aimed at developing country journalists with an interest in international affairs and winners get to travel to and report on the United Nations from New York. D/L is 6 April.
  
  (For Writers): The World Bank Essay competition open to people aged 18 – 25 to write about youth migration. Details here but the deadline is tomorrow – 17 March.
  
  EDIT: PIVOT 25 competition for developers in June 2011 with prize money of up to $75,000. Deadline is April 15.
  
  The Nairobi Stock Exchange young investors challenge whose registration period is on-going through April.
  
  Any other awards that can be highlighted here?

• Cheque Truncation

  Posted: March 16, 2011, 2:42 am by bankelele

  There’s an ongoing exercise within the Kenyan banking fraternity (KBA) to standardize cheques issued in the country under a process known as cheque truncation – and this will enable transfer of electronic images of customer cheques replacing the current process of physical of exchange of cheques by different banks at a central clearing house
  
  Odd and large size cheque will be withdrawn between March and May 2011 and replaced by standard size cheques that are 7” by 4” inches in size and with enhanced security features by June 1.
  
  The new system may halve the time spent in cheque clearing, which is currently about four (4) working days for most people. This has made cheques uniquely unpopular for small people, not just because of the cost of operating a bank account, but because of the cumbersome week-long time delay in the age of instant money transfers such as M-pesa.
  
  Why are cheques good? They are easy to use, offer verifiable proof, security, and credit. While some buyers wants to stretch payment, and sellers wants immediate payment, both buyers and sellers have been tripped up by the four day cheque clearing cycle, sometimes to the benefit of bank - and a reduction in the cheque cycle could mean more income for them. Of Equity Bank's income in 2010, Kshs 1.1 billion ($14 million) was from temporary overdrafts/un-cleared effects – which means you wrote a cheque, didn’t have cash in account, but Equity cleared (did not bounce) the cheque and charged a fee for the service.

• Going Postal

  Posted: March 16, 2011, 2:35 am by bankelele

  in a nice way
  
  Spent a couple of days at the post office trying to trace a large parcel for the Kuweni Serious program.
  
  It took several trips to the post office over about two weeks, e-mails to the sender, checking with the US postal service tracking system, and finally after a third visit to the local post office tracking department it was eventually traced in a cage where it had sat for almost a month.
  
  The parcel had been addressed properly with name and physical address of the recipient, but the American sender had not written the Kenyan post office box number - and this omission triggered this long process to locate the package at Posta
  
  Once it was found and tagged, with a (newly printed)ticket stub this paper, the carton and a sample item removed from the carton after it was opened for inspection, were probably handled by about a dozen employees, in the space of a few feet who all inspected & counted the goods, assessed them for taxation, and then signed off on the movement from one station to the next.
  
  It also entailed another trip to a bank down an adjacent street to pay taxes which are arbitrarily calculated - based on the invoice (if enclosed), shipping slip or the estimated insurance value declared on the package by the shipper.
  
  Still the staff were helpful courteous and honest. They are largely older people working in a system that does not seem to appreciate initiative. In another company, there would be a way to knock off lost or suspense items - and if a carton sat in a wrong office for a month, with a physical address on it, someone would use Google, and make a call to try and alert the proper recipient. And the office could probably run with a quarter of the staff
  
  Still the post office has so much potential to move packages from overseas, around the country etc. With computers you can only exchange words, images, sound, picture’s but to get actual goods & equipment, you need physical shipments. The 500 post offices around the country handle about 200,000 parcel items a quarter and moved 31.7 million letters in 2009 (via CCK stats ) - and while there are competitors like DHL, UPS and local variants are faster, but much more expensive.
  
  In short, the Post Office works when it’s open (the international parcels department is closed for lunch at 12:30 to 2 PM) and if your packages are properly addressed in a way they understand. But if you have a mule (not the drug kind, but known passenger able to fly with your goods) have them carry it for you, and pay the extra baggage cost, especially if its a valuable or fragile item.

• Urban Inflation Index: March 2011

  Posted: March 10, 2011, 4:05 pm by bankelele

  Comparing changes in the three months ago since December 2010 and just for memories sake, inflation last year and two years ago in March 2009.
  
  2011 has been an interesting year, with Middle East & north Africa instability, rain shortfall expected, noisy politicking in the country, but still banks have been posting record profits, IPO's are over-subscribed, and companies continue with regional expansion plans to conquer Eastern and Central Africa.
  
  changes in the last three months
  
  Gotten cheaper
  
  Communications: While the cost of calling has stabilized at ~Kshs 3 ($0.036 per minute) it remains to be seen if this is sustainable for all the mobile companies in the long run. Quality is suffering with issues like erratic internet service, busy lies, undelivered SMS, m-pesa downtime etc.
  
  Airtel continues to outsource, Yu chugs along with low price and no flash, Orange launch new unique products (iko pesa with Equity bank) but does not push it through with coherent marketing muscle, as does Airtel. Market leader Safaricom has lost a little market share, and has the additional weight of being the only listed mobile operator with few happy shareholders and friend & foe are either studying or chipping away at its M-pesa whose spectacular success has not been replicated by the company (Vodafone) or in any other country.
  
  SMS costs have come down from Kshs 3 to Kshs 1 finally, and the area of interest is mobile data in urban area where mobiles are taking up ground that few ISP’s have been able to cover. For comparison, for Kshs 250 ($3) you get 80MB on Safaricom, 200MB on Orange and 300MB on Airtel.
  
  Unchanged
  
  Utilities: At Kshs 1,750 ($21), last month’s electricity bill from KPLC is almost the same as 1,800 three months ago, and two years ago, respectively, while it was 1700 in March 2010. This is however expected to go up later this year, with rain shortfalls projected and the country mainly dependent on hydro electric power generation.
  
  Other food item: 2 Kg Mumias Sugar is Kshs 195, unchanged over the last year, but which was at 165 two years ago. However bread and milk are up in urban areas.
  
  More Expensive
  
  Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 80 - and while this is 23% higher than Kshs 65 three months ago, many have forgotten that a year ago it was 84 and two years ago Unga cost 96 shillings!
  
  Fuel: A litre of petrol is currently Kshs 98.8 [~$5.40] (up 15%) compared to 84.9 last March and two years ago it was Kshs 75 shillings per liter. It's been three months now since price control regime was introduced and petrol has crept up from 94 to 95.8 and now 98, with a return to the above 100 mark expected in the next review, but by which time the formula may be discarded. Meanwhile, Kenol and the Energy Ministry have toned down their war of words, but National Oil Corporation of Kenya cannot escape the news with questions of its capacity to undertake increased petrol responsibilities that the Government keeps allocating to them.
  
  Foreign Exchange: The US dollar trading at Kshs 83.0, and news reports that this is a 17 year low for the Kenya shilling (CBK site goes back about seven years and show a range of 61 to 83). This compares to December when it was Kshs 80.5 and a year ago at 76.6, but two years ago it was at Kshs 80.07.
  
  
  Entertainment: Tusker beer is Kshs 170 ($2) at the local pub - up from last year's 150. The Mutuho Law is likely to blame for putting a damper on bar profitability, by setting drinking hours from 5 to 11 PM on weekdays and (starting at 2PM on weekends) and there are creative ways around this as observed by more sales of alcohol at supermarkets who can sell it from 10AM
  
  Rent: Is up 25% from this year, after the last increase which was two years ago of 40%, however the landlord has not made any investment in the property or changed the service to justify these, but has probably done that elsewhere.

• Real Estate Moment

  Posted: March 4, 2011, 3:27 pm by bankelele

  Homes Expo: There was also another real estate expo at Sarit Centre last week - and some of the price ranges observed included
  
  - Two bedroom apartments in kahawa are Kshs 5 - 6M
  - 3 bedroom in kileleshwa/kilimani Kshs 16 - 17M ($200,000)
  - 3 br Athi River are Kshs 5 – 7 million ($70,000 - $90,000)
  
  Other property prices of interest seen there, and also away from the expo include
  - Tatu City and other ongoing developments like Migaa and Thika Greens which are modern estate communities that encompass shopping malls, schools, community centres, club house, sporting facilities/golf course, medical centres etc.
  - From Regent - twelve (12) units of 2-br flats in Umoja for Kshs 16 million ($200,000)
  - New office space in the Nairobi area ranges from Kshs 10,000 to 15,000 per square foot - and at Morningside it's 12,000 per sq foot ($150/sq.ft)
  - In the newspapers was a 9-storey building for sale, which is located in the central business district of Nairobi with 99 year lease, is fully leased, and brings in annual income of Kshs 20 million ($250,000)
  - From Kenya Valuers are some of the priciest real estate prices seen including; an acre of land in Kilimani for sale at Kshs 180M ($2.25 million) and another at Kshs 225M ($2.8 million), a 4=br house in Muthaiga for Kshs 150M, a 6-Br in Windsor for Kshs 180M, and a 5-br in Runda that rents for $7k/month.
  
  Mortgage report: Was released by the World bank and Kenya's Central Bank - and it showed that KCB and Housing Finance are the leading banks in the sector with about 4,000 mortgages worth Kshs. 17 billion ($212 million) each . Barclays have 742, CBA 238, Prime 651 and First Community with 157 – which presumably offers only sharia complaint products. Mortgages rates average at 14% up from 12.5% in 2006 - and there were 6,000 new mortgages in 2009 up from 1200 in 2006.
  
  Developers Club: KCB Kenya’s largest bank and leading mortgage company has a developers club for local developers and held a session this week in Nairobi.
  
  Some Highlights
  - Mumo Musuva, an architect with Planning Systems talked about this being a very exciting time for Nairobi, currently ranked No. 102 in the large cities of the world with a population of 4 million and which is projected to become No. 73 with a population of 8 million - and with 60% of the country population below the age of 30.
  - He’s also lead developer with Tatu City and they are going to use digital management & GIS, detect when someone leaves a tap open, cut off the utilities of tenant who don’t pay, collect rates and deploy that to infrastructure etc.
  - He lamented the low quality of most real estate buildings & projects in Nairobi as developers have been chasing quick returns (ROI) – these will change to world standards including environmental designs as the requirements of working with large tenants are evolving.
  - The definition of real estate is changing from owing a house or building to it being seen as a commodity - and this is evidenced with the current investment for speculative purposes and eventual roll-out of REIT’s.
  - There are massive opportunities for developers in Rwanda, Uganda, south Sudan which KCB can finance.
  - They also launched a new KCB property guide will feature developers. The bank also expanded its mortgage offerings (available at their 168 branches), to loans for Kenyans in the Diaspora at 7% in foreign currency as well plot & purchase construction loan - unlike with previous arrangement where one had to pay off a plot loan before commencing construction
  - The developers forum which has 300 arranges fact finding trips abroad to China, and possibly South Africa, & Brazil - and Joe Mungai of Tamarind Properties advised any developers to take such trips before embarking on any large projects to learn concepts like construction for low end housing, waste treatment & gated communities.
  
  REIT’s: The Capital Market's Authority (CMA) is undertaking a review of the Real Estate Investment Trust (REIT regulations ) & rules that formulated they in 2009. They will get feedback from developers and real estate institutions on product demand, tax rules. D/L is March 25 2011

• Meal Deals with Rupu & EatOut Kenya

  Posted: February 28, 2011, 10:35 pm by bankelele

  Today a unique partnership was announced between Rupu and EatOut.
  
  EatOut is a very useful sites that offers restaurant & cuisine information, reviews, and even enables bookings, keeping their clients in tune with what's happening in the restaurant scene, and up to date on specials, and events. They have signed up 150 restaurants in Nairobi, Mombasa Malindi Diani, and soon Zanzibar.
  
  Rupu who launched in December 2010, offer discounts on their site of between 50% - 90% through the concept of group buying - and found that their customers were asking for restaurant deals. The benefits to consumers are the sharp price discounts (which Kenyans love - see bazaars, Gikomba and the buy-one-get-one-free at Pizza Inn & Steers); while to business owners, they benefit from free marketing & publicity, introduction of new customers who are committed to buying, minimum guarantee of sales if a deal goes live and instant cash which is split 50/50 between the business and Rupu.
  
  The first deal of the week under the partnership is with the new Sankara Hotel which wants to show its not as pricey as its current image.
  
  Booking can be done through the restaurant or EatOut - and Rupu have trained & equipped business owners in authentication and redemption of vouchers. Transactions are completed online or by mobile phone, and take a few seconds if you have enough money in your M-Pesa or Zap account, with a booking interface is via pesapal. Credit cards, whose use is not as prevalent, will be introduced later this year.

• Getting Local Funding for ICTs in Kenya

  Posted: February 26, 2011, 4:57 pm by bankelele

  Local funding for ICT's is the genesis of a Report on ICT (PDF) released by Kenya’s Capital Markets Authority. It was funded by the Rockefeller Foundation and drawn by Strategic Business Advisors (SBA).
  
  The CMA had set up rules for Venture Capital firms, but there has been little uptake despite the offer of 10-year tax holiday – and VC firms operate in the East Africa region, but many are based in Mauritius and other countries. In seeking other ways of enabling ICT's to obtain local funding in the region, a taskforce was setup (chaired by Richard Bell of Wananchi) – and which comprised 25 people drawn from the government, technology, venture capital, private investment - and featured input from Kenya, Uganda, Rwanda, South Africa and Tanzania.
  
  One of the solutions considered was impact investing which the Rockefeller Foundation has championed as a new asset class that will draw the private sector into making socio-economic investments that solve age old problems.
  
  Some Findings:
  - ICT's do not attract local funding in East Africa and while it is easier for large Telco’s to get money, it is early stage firms who require funding the most ($10,000 - $150,000) - this is where most mobile software development firms fall owing to the low barriers to entry.
  - Most ICT companies are Small & Medium Enterprises (SME's) - who face the same challenges as other SME’s – including low collateral, skills, capital etc.
  - Investors also face challenges such as difficulty doing due diligence, lack of sector information, red tape (it took 8 years to set up one particular VC firm)- and while there are angel investors, there is no angel investor network
  
  How & why to get local funding into ICT
  - Education and policy reforms with insurance, financial, and other investor groups in regards to the ICT sector
  - Regulatory changes; easing of regulations for ICT firms to raise funding locally, and encourage more IPO’s. Many firms invest in Asia because it gives clear exit strategy through IPO’s
  - Support technology incubation, mentorship and angel networks
  - There will be a multiplier effect; once foreign investors observe the investments and returns that locals get, they will probably replicate that ten times over
  
  Will this happen? Will local pension and insurance regulators relax their rules to allow the funds they oversee to be deployed in the risky world of local ICT? These same regulators have spent years tightening the screws to clean up wasteful spending in real estate, and loopholes through which retirement funds were lost.
  
  The report is a start, and it lay out the path to local funding of ICT's. These investments are very risky as is real estate which insurance, unit trusts, and SACCO's are edging back in to.

• Do Corporations Understand Social Media?

  Posted: February 24, 2011, 5:00 pm by bankelele

  Millward Brown, a qualitative research firm which set up shop in Kenya, had a talk last week about research & statistics on modern engagement. They did a study in 15 countries and their findings on Kenya showed the increasing use of Facebook, Youtube, and mobile internet, some of which has been covered before in other studies and recent Communication Commission of Kenya – CCK stats - but theirs was from the perspectives of corporates and how they can engage better.
  
  Through their Firefly initiative, Millward Brown can help local companies navigate the online space using tools like ideablogs to find the right mix.
  
  They noted that:
  - Locally, Safaricom and Kenya Airways are actively engaging, while Manchester United and Arsenal also do this well with Kenyans
  - Kenyans are not yet keen on online marketplace transactions
  - The niche may be easier for small retailers than large corporates to navigate
  - Marketers are only now coming to grasp the changes in advertising & communications away from traditional media and seeking new ways to engage brands 7 consumers
  - Social media allows two way communications (unlike TV & radio) and there are effective (and free) social media monitoring tools available
  - Social media allows even brands considered boring like detergents to connect with potential & new customer and engage more with current customers
  
  Some tips they shared include:
  - Don’t put the corporate Facebook/Twitter account in the hands of new employee or intern; it should be by an experienced hand who know what they are doing
  - Don’t recreate your homepage in social media
  - Give your brand a face & talk like a friend
  - Offer something of value e.g. discounts, coupons
  - Talk like a friend not a corporate entity
  - Don’t ask for personal information too soon

• Shares Portfolio February 2011

  Posted: February 17, 2011, 3:08 am by bankelele

  A tale of Two Brewers – comparing shares to November 2010 and a year ago
  
  The Stable
  
  Bralirwa (Rwanda) ↑
  Diamond Trust Bank ↑
  East African Breweries (EABL)
  Kenya Airways ↓
  Kenya Commercial Bank (KCB) ↑
  Kenya Oil Company (Kenol) ↓
  Safaricom ↓
  Scangroup ↓
  Stanbic (Uganda) ↑
  Uchumi ↔
  
  Review:
  - Best performer: Bralirwa up 31% since their 2010 IPO
  - Worst performer: Scangroup (down 14%), then EABL
  - In: Bralirwa
  - Out: None
  - Increase None
  - Decrease: None
  - Unexpected gains/losses: - Uchumi shares have not been re-listed despite the company’s exit from receivership a year ago
  
  Events & Outlook: - Performance: The Portfolio is down 3% in the last three months while the NSE Index is down 6%
  -Bralirwa Rwanda was a good buy as the Rwanda (virtual monopoly) beer company listed shares that were open to all East African nationals and many retail shareholders got full allocation (still waiting for a similar offer from Tanzania); However in Kenya EABL faces challenges from the so-called Mututho Law which appears to have curtailed sales of alcohol through reduced hours.
  - Safaricom seem to be weathering the storm from Airtel Kenya and their battle has extended to political and regulatory circles. Airtel added only 2 million more customers in all Africa compared to a year ago (Dec '09)
  - Kenol has gone quiet since the Kenya Government instituted price controls around the country and despite popular expectations, prices have steadily risen in the two months since the program started.
  
  Looking forward to: - February brought news that Transcentury and Britak - British American insurance plan to list at the stock exchange this year. Britak, Kenya’s 4th largest insurance company looks more likely – it had a 2009 pre-tax profit of Kshs 500 million and assets of 15 billion ($185 million). Transcentury shares trade at an OTC market run by Dyer & Blair - and (this week) are at Kshs 35 per share compared to Kshs 48 in 2010 according to the East African.
  
  CIC Insurance, CFC Life and Family Bank are silent, while government linked companies like New KCC, Consolidated Bank, and National bank, are also likely to go through more political hoops before they reach the market.
  
  - Also on offer this month is a 30 year savings bond from the Central Bank of Kenya to promote savings in the country. It pays 12% per year and targets to raise Kshs 18 billion ($221 million) with a minimum investment of Kshs 50,000 ($615), and closes on. Exactly two years ago, there was a similar push for an infrastructure bond offered by the Kenya Government to raise 18.5 billion ($231 million) by offering investors 12.5% returns over 12 years.

• Award Season

  Posted: February 12, 2011, 9:31 pm by bankelele

  Capital Market Awards: These took place late in January 2011 and were organized by Think Business who also organize awards for the banking and insurance industry. The awards gained notoriety when they started a few years ago when the regulator capital markets authority (CMA Kenya) complained about their implied association /endorsement as a result of the name.
  
  Some of the winners this year included;
  Custodian of the year: KCB
  Bond deal of the year: Housing Finance
  Stockbroker of the year: Genghis Capital
  Fund manager of the year: Genesis Kenya
  Legal transaction advisors: Hamilton Harrison & Matthews
  Unit trust: British American (which was launched 5 years ago)
  Research team: Kestrel capital
  Lead transaction advisor: Dyer & Blair
  Investment bank of the year: Dyer & Blair
  
  D & B director Jimnah Mbaru mentioned that they had used Hamilton Harris & Matthew in most of their deals, and had been represented in several deals including NIC (Uganda), Bralirwa (Rwanda), CRDB (Tanzania) and the largest was KPLC in Kenya which was a complex deal. He added that its not just technical know-how that wins them deals (everyone had talented transaction employees) but it's a more about relationship management and understanding people, politics, social economic (and that many runners up had recruited staff from D&B). But he also spent 5 minutes telling what looked like it was going to be a very funny accounting or golf joke, only that it turned out to be one everyone knows as it ends with a lawyer answering 'how much do you want 2 + 2 to add up to?'
  
  The CMA awards were mostly deserved, but there are a few glitches that were evident:
  
  - The organizers insisting on presenting awards (best performing NSE company won by British American Tobacco) that were not voted or verified by the auditors (who stated this before the award was given)
  - Some categories listed had no entries (IPO of year, Chairman of year, PR transaction advisor), or two winners in same category (CEO of the year shared by Nasim Devji and Martin Oduor Otieno) and some prizes winners not showing up.
  
  Other Awards up for grabs
  - Poptech: Nominate a Poptech Social Innovation Fellow
  - Property Awards: Organized by Property Expo Kenya, these take place on February 24 at Sarit centre and will award property developer of the year, real estate agency of the year, mortgage company of the year and real estate journalist of the year
  
  Other Media Awards include
  - Diageo Africa Business Reporting Awards
  - East African media awards by East Africa Business Council

• Motoring Moment: Ugly Cars, Overlappers, Thika Road

  Posted: January 28, 2011, 1:52 pm by bankelele

  Overlappers are one of the most irritating nuisances of driving on Nairobi. Over-lappers are drivers who are too impatient to wait their turn in traffic, so they swerve into the lane for oncoming traffic or onto pavements & footpaths, and speed away, only to nudge/cut-in/force/beg for their way back into their assigned lane when they run out of road or meet another car. The habit is believed to have started with Matatu (minibus) drivers who used to be acknowledged as the worst drivers in Nairobi, but has spread to other including ordinary drivers, taxis, buses, governments & diplomatic vehicles.
  
  So we’ve started a new site - Overlap.co.ke ( #overlapKE ) - to rank serial over-lappers and point out over-lapping hot-spots for over-lapping . The police may not be anywhere or have an interest in the reckless road behaviour of some motorists, but there are ordinary motorist who are fed up with the impunity that is symbolized by over-lapping and can send in reports to identity the worst offenders.
  
  Car Use Verification: Odometer tampering is suspected to be a not rare occurrence employed to increase the value or enable the importation of the 5 to 8 cars brought in to Kenya from Japan, Singapore, and Dubai.
  
  However for vehicles shipped from Japan, @Karuoro of Huduma Bora points to the JEVIC(Japanese Vehicle Inspection) site which wary drivers can use to confirm the details of the vehicle they are about to buy, including identification/serial numbers and odometer readings at the time they left Japan.
  
  Road Rage incidents are thankfully still only isolated incidents despite, the build up of traffic gridlock. The use of Police Officers to control traffic is both praised and loathed in different measure. - and a few weeks ago, a truck driver got involved in a major fist fight (longer than several boxing matches) with a traffic policemen.
  
  It was captured on camera (above), and when played on TV caused some debate with different viewers siding with the policeman and others with the driver who was later charged in court.
  
  Thika Road: It's transformation to a super-highway courtesy of engineers from China continues, and they are changing the landscape from Nairobi to Thika - going by the changes at Museum Hill, University of Nairobi, and Globe roundabout. You can follow the changes with this useful Thika Road Blog.
  
  Ugly Cars: via @diasporadical comes two lists of ugly cars that may be less desirable than the controversial Toyota Vitz which is equally loved and loathed around Nairobi. My (least) favorite, it’s the Toyota Will V1, of which there a few around Nairobi, but this odd shaped car does not appear to have an (too embarassed?) manufacturer’s badge.

• How developers can make money with Safaricom - Part II

  Posted: January 24, 2011, 4:21 pm by bankelele

  One of the unintended effects of Airtel’s price wars with Safaricom in Kenya is that it has made Safaricom more responsive to Kenyan developers in terms of collaboration on products, services, platforms etc.
  
  This has long been a peeve of local developers that’s Safaricom has not been, leading to the company coming up with a mooted innovation board as a forum to improve the interaction process with local developers.
  
  And if you do get the chance remember it’s a two year money-making cycle of boom and bust with Safaricom.

• DABRA 2011

  Posted: January 24, 2011, 1:47 pm by bankelele

  The 2011 Diageo Africa Business Reporting Awards - DABRA were launched today in Nairobi, Kenya and entries are invited from all African countries for the winners to be announced in London later this year.
  
  The 2011 DABRA's will feature entries for blogs, podcasts, online content, print, radio and TV entries, published or broadcast between 18 April 2010 and 20 March 2011. Entries can be submitted in eleven categories - ICT feature, finance feature, infrastructure feature, agribusiness / environment feature, tourism feature, use of new media in a story, business news story, business feature story, newcomer, media of the year and journalist of the year and the deadline is March 21 2011.
  
  The 2010 awards attracted 750 entries that were narrowed down to the finalists including this post.

• Unplanned Nairobi Infrastructure & Buildings

  Posted: January 20, 2011, 9:26 pm by bankelele

  The spat this week between the Kenya Government and various businesses about demolition of buildings along Mombasa road is not a surprise for anyone who was at the 2010 TEDxNairobi where Architectural Engineer Eric Kigada of Planning Systems Services spoke of the lack of a valid master plan for the City of Nairobi and the resultant chaos for building owners and his fellow professionals.
  
  He said Nairobi had master plans drawn in 1948 and 1973, but this last one expired in 2000 and it was a city that would expand toward Thika side of town. Currently, the government, planners, and landowners operate in a vacuum with different departments and ministries having different maps and plans for road expansion and it’s not clear what routes they will follow or how large actual roads will be constructed. Government officers who won't commit approval in writing and there are unclear plans such as one extending the growth of Nairobi up to Namanga.
  
  He advocates for digital maps (which exist) to be availed and used, transparency in the planning process, and most important a master plan that will be shared within the industry. He also spoke about his company’s other work such as revitalizing green spaces along the three Nairobi rivers and a proposal to utilize existing abandoned quarries to supply enough water for the Eastern half of Nairobi, but which the government authorities are yet to commit to.
  
  Will the buildings, include the new Sameer Business Park and new Standard Newspapers Headquarters be brought down to expand the road? The Kenya Property Developers Association (KPDA) in a statement today called for urgent development and implementation of comprehensive master plan and a defined compensation plan for land and building owners if the Government goes ahead with demolitions to make way for necessary infrastructure improvements.

• Alcohol Law in Kenya

  Posted: January 19, 2011, 4:36 am by bankelele

  Kenya’s alcoholic drinks control act is the talk of the country
  
  The new law which restricts sale of alcohol, bar opening and closing times, prescribes penalties on offering brewers, sellers, patrons etc. is temporarily on hold after an association of bar owners from Muranga in Central Kenya filed a court case to delay its implementation. But in a rejoinder another group of leaders from Muranga County (see website) have come out and supported the bill via a full-page colour advert in the newspapers. They claim alcohol has ravaged the county leading to death, blindness, family break-ups, but most important the waste of able bodied youth and men who would otherwise be engaged in productive agri-business (coffee, tea, milk, horticulture).
  
  More on the positive side of the alcohol ban can be found in a separate newspaper article in the Saturday Nation which showed the dramatic effects the ban had on a small village in Gatanga (Central Kenya), and the scenes were probably mirrored in many other rural villages that havd (previously) seen similar effects on alcohol abuse on productive population.
  
  ….although it is noon, the young folks are sober, a state locals say is a miracle. “By noon, half of them would be drunk,” says Mr Michael Muthee, 45, a carpenter. He should know: Although offering to pay Sh300 a day for a helping hand in his workshop, he found it hard to find a sober young man before the new alcohol laws came into force. And when he did, the fellow could not be counted on to return the next day, least of all, sober.
  
  …Before the new laws came into effect, he says, much of the work on the coffee farms was left to women and children, The male folk would vanish in morning and stagger home in the evening.
  
  So what’s in the bill being championed by the National Campaign Against Drug Abuse Authority (NACADA), but which a Member of Parliament John Mututho took most of the credit and now some blame for hurriedly pushing through?
  
  - NACADA which operates under the Office of the President, and not from either Ministry of Health (why there are two Health Ministries and two education Ministries in Kenya is another story) sought to tackle the increased availability of outlets selling alcohol, and the marketing of it to (and use by) youth (under 18’s).
  
  Enforcement: NACADA are meant to educate Kenyans on the dangers of alcoholism. But so far there has been little education (clause 69), and the agency which is to give statistics on alcohol which they collect state (at their website) that 15% of 15-64 years-old's in Kenya take illicit brews.
  - Changaa Legal: Kenya’s most popular illicit brew is going to be legalized (repeals changaa prohibition act (69). The Government is going to develop standards for changaa which is to be brewed and packaged in a manner similar to Uganda’s Waragi and Tanzania’s konyagi, and sold in glass bottles larger than 250ML.
  Fund: There is now an alcoholic drinks control fund supported brewer, wholesale & retail licenses - and of money raised, not more that 15% will go to civil society groups and not more than 50% to the district alcohol committee (led by district commissioner)
  - Being drunk in public can attract a fine of Kshs 500 ($6) or 3 months in jail (a mismatch? - @archermisahle says cops are asking 1,000 for people who stagger out of pubs)
  - Restricts police harassment: Only senior police officers can conduct inspections not the loitering patrol cops (25)
  - Special Ones: There is some elitism at play, and places exempt from the Act (7) include national assembly (parliament), clubs (i.e. sports, social), military & institute canteens. A separate newspaper notice extended some exemption to hotels (tourists/guest) and restaurants (patrons who eat) but these are not spelt in the act.
  
  Promotion Landscape Changes: Kenya’s popular music reality shows contest – Tusker Project Fame would be no more, unless it can be rebranded as something else (Alvaro Project Fame perhaps?)
  - Bottle top lotteries (check under your bottle cap & win) are banned (47) as no promotion can be run that encourage alcohol consumption
  
  - Also while EABL's Tusker brand has bailed on the world famous Safari Sevens rugby tournament (now known as the Safaricom Sevens), alcohol cant be sold at the event which also features schools rugby competition (46) – will the organizers exclude schools and any spectators under 18 from the tournament?

• Bank Enforcement CYA

  Posted: January 13, 2011, 8:11 pm by bankelele

  The Finance Act 2010 is now available at kenyalaw.org.
  
  It covers a lot of grey area generated by the Central Banks of Kenya’s (CBK) handling of the Grand Regency sale and the Charterhouse Bank closure, and gives powers and direction that provide some legal safe cover (but not retroactively).
  
  It requires funds recovered by the Kenya Anti-Corruption Commission to go to the Government's Consolidated Fund (78) and gives CBK powers to (peek and) take action at a bank based on (a banks' own) auditor report (66) and specifies harsher actions that may be taken against banks who violate share capital limits (67).
  
  Other provisions:
  - Banks can lend up to 40% of balance sheet to real estate (up from 25%)
  - Beer prices up 20%
  - Copyright inspectors can summon police officers to arrest piracy offenders (77)
  - Abandoned vehicle number plates should be submitted to Government for cancelation (40)

• Internet Security in Kenya - Part II

  Posted: January 7, 2011, 9:45 pm by bankelele

  This week, the Kenya Police website was hacked and it sparked some debate on security investments and their effectiveness.
  
  Mid last year, a forum was held in Nairobi to review the state of internet security and some of the findings were that hacking and computer fraud were relatively easy to perpetrate so in some organizations and the problem is only going to get worse owing faster internet speeds and failure to address risks around people, processes, and technology in regional organizations and financial institutions.

• Farewell Mars Group Kenya

  Posted: January 3, 2011, 8:54 pm by bankelele

  While the world awaits the release of more cable from Wikileaks, some unfortunate news comes from Kenya where the equivalent of Wikileaks – the anti-corruption watchdog Mars Group Kenya - inexplicably took down their website in mid December.
  
  The reasons for this are unclear, but (via @twitter) it appears it came about when someone tried to create an application to access their vast database - and this provoked the founders to take down the site and post a message that their database and contents therein are copywrited and invited anyone who wanted to use it to e-mail them for permission.
  
  Mars Group Kenya (created by Mwalimu Mati, former Director of Transparency International Kenya) has been a great resource of information for taxpayers, students and analysts looking at corruption. Their site had official and unofficial, unreleased and secret reports of the Kenya government, Kenya parliament and auditors) mainly on corruption in Kenya. Also their budget reports on government spending have come to be appreciated and even caused the Kenya Finance Minister to re-check his numbers going into the 2009 budget.

• Pepsi vs. Coke

  Posted: January 3, 2011, 8:34 pm by bankelele

  silent invasion
  

  Pepsi were expected to re-enter the Kenya market via a full blast push, like Airtel’s onslaught on Safaricom.
  
  But with Kenya being an long time entrenched Coke market - bottling plant partnerships around the country with the quasi-government (ICDC) and politicos, a different mode has been adopted, with production/bottling in Mauritius as opposed to having a plant in Kenya.
  
  For many years Pepsi used to be hard to find in neglected corner shelves of the main supermarkets, but over the last few weeks that barrier has been closed with plenty of Pepsi (and Mountain Dew) now priced the same as coke (both 45/= $0.55 for 1 500ML plastic bottle) and prominently placed, sometimes occupying the same shelf space. Previously Pepsi was priced at almost double the price of coke (60/= when Coke was 40/=).

• Local Content, Conservation & Branding in Africa

  Posted: December 28, 2010, 2:07 am by bankelele

  Late in 2010, TNS released a Kenya digital study as part of a three month study of the habits of online Africans; In Kenya it involved 800 interviews - 400 online, 400 face-to-face and tried to answer various questions like - Who is online? What are people doing online? How can brands connect? What messaging/digital communication channels are best?
  
  Some findings included:
  - Internet penetration: Kenya & Uganda is 10%, Tanzania is 1.6%, Nigeria is 29%, Egypt 22%, South Africa 11%. In local capitals - 49% of Nairobi residents have tried the internet, 53% in Kampala, 31% in Dar es Salaam (and 42% & 49% in Mombasa & Arusha respectively) for an average of 45% of EA urban nationals
  - Cyber café are the primary mode (67%) of access Internet in Sub-Saharan Africa, but in Kenya its the mobile phone (60%)
  - Many people started using Internet in last two years and are on a learning curve; Companies need to make sure they educate the users on how to use their sites more effectively. This is compared to countries like Japan which has high internet penetration but low interest (its a part of life, no longer exciting)
  - In terms of daily media access, digital is still lower than conventional media – so companies/brands have to continue with old media; Also radio is very important, compared to global where radio trails TV
  - Top e-mail sites: Gmail Yahoo, Facebook, MSN
  - Top social networks: Facebook Google Yahoo Youtube
  - Top knowledge sites: Google Wikipedia Yahoo DailyNation
  - Top news sites: Google BBC Standard DailyNation
  - Top multimedia sites: Youtube Google CapitalFM Facebook
  - Very few people (7%) say they are shopping online
  - Kenyans (and Africans) want to do more activities online - like internet banking, pay utility bills, watch TV, make travel bookings, submit taxes, advertise online. This will become an annual study by TNS to monitor trends in the online space.
  
  One of their partners, VML (Kansas, US) also did a complementary study on digital monitoring of some Kenyan and African brands over several months this year using SEER ecosystem to find a link between bloggers and brands. They looked at mobile companies (Orange,Safaricom,Yu), countries as brands (Kenya,Nigeria,South Africa) and banks (Stanbic,Ecobank)
  
  Some findings:
  
  Mobile: Orange is way ahead of everybody else (846,000 mentions with 92% positive) but may have little to do with Kenya (more the international Orange brand)
  - Safaricom had 11,000 conversations online, with people talking about the business, Michael Joseph (outgoing CEO), but not about products & prices. 66% was positive, and this varied from month to month, with some negative on their customer service and competition/regulation.
  - Most intriguing - the bulk of conversation abut Safaricom does not happen in Africa - it's highest in US, UK, Germany. In Africa, there is some conversation in Kenya, Uganda, and South Africa - and in Kenya its associated with 4 blogs (Kenyanjobs, siku-moja, bankelele, kenyaprincessproject)
  
  Banking: Ecobank has 5000 mentions, and Stanbic 900 mentions – but Ecobank spiked as a result of an unrelated Ecobank twitter account in Japan (not Africa) while for Stanbic it was due to coverage of a cricket tournament in Zimbabwe
  - The highest conversation about Stanbic is in UK, while for Ecobank its in the US,
  - These are very few conversations about banks or their business, and these are happening mainly outside Kenya and Africa (Ecobank is associated with this blog on the strength of a couple of blog posts about the bank’s 2010 AGM in Nairobi)
  - There is an opportunity for banks, to engage, and not just about Internet banking products.
  
  Tourism: Kenya tourism conversation is 81% positive, 16% negative – (jambo ad annoyed people on the net) - and again a lot of conversation in UK and US.
  - While Kenya gets good conversation given the budget they spend, Kenyan tourism only get as much positive conversation as Nigeria – showing a need for more positive content creation and engagement online.
  - Concern that despite the natural beauty of Kenya (wildlife, beaches, scenery), 0% is taking place on photo or image sites - a missed opportunity to create visual content.
  
  Summary
  - Very little conversation about African brands is originating in Africa, and there are opportunities for links to be created either with influential blogs, or social media etc.
  - Complaints cause large spikes in conversation
  - Companies need to monitor online conversation, beyond press clippings
  - Companies need to incorporate digital plans in their branding exercise

• Reading the Tea Leaves at KPLC

  Posted: December 22, 2010, 2:17 pm by bankelele

  The on going rights issue closes on today (22/12/10) after a month and a half of the balance sheet restructuring program.
  
  Background: CEO Joseph Njoroge said its necessity began with the 1999-2002 power-rationing period when the company incurred heavy trading losses of Kshs 15.9 billion. The debt was converted into equity for the government (GoK) and preference shares for the government and what became Kengen – and which Kengen transferred back to GoK prior to their IPO.
  
  Preference share burden: There was a five-year moratorium on dividend, but the preference shares have continued to be perceived by lenders and investors as debt - with fixed annual payout. This distorted the value of ordinary shares, creditworthiness of KPLC, and would be a burden on cash flow to meet as seen when the moratorium ended with a payment of Kshs 1.25 billion ($15.6 million) to holders of 7.85% preference shares in 2010
  
  New balance sheet will have a level playing field and enable the company to access more funds after the redemption of preference shares in three steps by (i) issue of 76 million new ordinary shares (ii) ordinary share split 1 to 8 (iii) a (December 2010) rights issue to shareholders entitled to buy 20 new shares, for every 51 they own, at a ~20 per share with GoK renouncing its rights – to raise a net amount of ~Kshs 9.1 billion ($114 million)
  
  Underwriter: KPLC sought an underwriter and got Centum and Equity Bank to underwrite the issue by 50%.
  
  Retain GoK control: from a current 40% ordinary shareholding, GoK stake will 69% for short period, but as they are renouncing their rights, on conclusion it will be 50.1% and still remain a parastatal. GoK can also ‘count on’ no.3 shareholders – the National Social Security Fund who own 8%

• Entrepreneurship Moment: Apprentices, Intellectual Property, Mentors, Partners

  Posted: December 19, 2010, 8:48 pm by bankelele

  Over the last few week, I have been exposed to various events and lessons that touched on entrepreneurship. We had the Legatum business awards winners feted in Nairobi, talks by some young US technology start up executives, and got to watch the movie 'social network', and final episodes of the Apprentice beamed live from the US.
  
  Talk 1: Russell Simmons co-founder of Yelp.com and Jawed Karim co-founder of Youtube were here for i/o Ventures which aims to incubate start up entrepreneurs and formalize angel investing – this is because giving back is a big deal in Silicon Valley.
  
  They talked at the Nairobi iHub and some of the business advice they imparted to local entrepreneurs included
  - What you are working on, will be different in 3 to 4 years, but keep going & don’t give up
  - If you have bad chemistry with an employee/co-worker, fire them as soon as possible – as dealing with them takes up so much productive energy
  - It’s hard to find good team members. But it may be better to recruit from universities, as enthusiasm trumps experience
  - Get your product out immediately, don’t over tweak - perfect it as you go along. Also, instead of juggling many projects, focus and do one project really well - hit home run and people will line up for more
  - On Intellectual Property: In Kenya, theft of ideas is a big worry with young companies seeking partners & financiers, but their advice was that in Silicon Valley, theft of ideas not an empirical problem
  - If you have idea, someone else has same idea – and having idea does not give you advantage, it’s about being better to execute better than anyone else,
  - Don’t be afraid to share your ideas, because once you launch, everyone will see it anyway
  
  Talk 2: Paul English co-founder of Kayak.com who’s working on Join Africa a last mile (wifi) connectivity project with University of Nairobi, University of Kigali and MIT also gave a talk on entrepreneurship.
  
  - Most important elements for him were the team, customers and profit incentive
  - Don’t make customers happy – blow them away – kayak.com is the best for getting cheap flights (actually make more money from hotels than airlines)
  - Take risks, but pick partners carefully.
  - He has no customer service, everyone in the company does that
  - Be the best; He said even if an employee took their code to a rival, he believes he’d’ still build a better travel site
  
  At the talk, Communications PS Bitange Ndemo also talked about push to have a sub-patent law and creative commons in Kenya, as opposed to unwieldy patents - these are suitable for local development of incremental innovations as many creations will not qualify pass IP test. He also believes it’s best country for have flexible laws until we develop further
  
  Apprentice: Got to watch the final few episode of Donald Trump's Apprentice - which this year featured Kenyan born Liza Mucheru-Wisner. She was one the 16 contents, picked from several thousand applicants and made it to the final three. She would have gone further but for the sudden decision by Trump to fire her even when her team had won a challenge.
  
  Earlier, in defending her decision on that project, she got into a debate with Trump about race as a factor in marketing of products, and Trump said he fired her be she did not get along with her fellow contestants – and she was shocked because they were all in a competition to win, not be popular.
  
  The apprentice is a TV show with plot, structure, bad guys, and a defined ending. But it’s a microcosm for business & entrepreneurs who face different challenges, have to play multiple tasks, who's plans don’t always go right, may not have the resources they need or you don’t get to work with the right people - and there’s always a bit of improvisation to get a win.
  
  Liza Mucheru-Wisner, Apprentice Contestant
  It’s all cut and edited into a dramatic hour package for TV, which means that you don’t see a lot of the hard work that contestants put in. Liza said she actually got a long with all the contestants and the harsh comments were never repeated in front of contestant during tasks, but only came out in boardroom, when everyone was fighting for to stay in the show.
  
  Despite not being the Apprentice, she does not feel like she lost. She represented herself well, put a spotlight on herself and her passion (education, kids, technology) and as a result she’s got lots of offers to consider, one of which may may involve becoming a goodwill ambassador.
  
  Social Network: This is a well received movie about the origins of Facebook - and which leads Roger Ebert’s list of top movies of 2010> I got a 50/= ($0.6) bootleg copy in Nairobi and it’s a must see for any entrepreneurs - with lessons on maintaining focus amid changing business concepts & expectations, management, and picking/rejecting partners

• Urban Inflation Index December 2010

  Posted: December 18, 2010, 2:43 am by bankelele

  tracking changes to three months ago and two years back
  
  Quarterly Review: The talks are again about price controls. While earlier in the year the president rejected a parliamentary bill that controlled food prices and courts have stalled the controversial health care bill. But now there is now . There is an alcohol bill, which some the Star eluded was crafted by the national drug abuse agency with strict hours of drinking and this week the minister for energy gazetted rules for petrol prices
  
  On to the index
  
  Gotten cheaper
  
  Beer/Entertainment: A bottle of Tusker beer is Kshs 140 ($1.75) compared to 170 three month ago. It was 140 a year ago, and 120 two years ago. It is widely believed that bar owners are struggling with the reduced hours of alcohol sale of 5 – 11 PM on weeknights and 2 – 11 PM, and there is room for shady arrangements to extend the hours.
  
  about the same
  
  Fuel: A litre of petrol fuel (at local petrol station) is now Kshs 94.3 ($5.28 gallon) about this same as 94.5 three months ago, It was 83.5 last December and 92.7 two years ago. The price was 97 until Tuesday when the new rules came into effect, and as the business daily noted, the drop in petrol prices was offset by increase in diesel and kerosene prices. Price controls have been resented across the board but the populist wave won and it will be interesting to watch how the government will respond to oil prices, and the join import tender system, to appease the refinery, pipeline and oil marketers in addition to the public
  
  Staple Food: Maize flour, which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs 69 ($0.85) compared to 65 three months ago, 83 a year ago and 97 two years ago. There have been good rains this year and good harvests, but which lead to farmers wanting the government to buy at higher prices. And there was a strange story of the government importing maize form Japan
  
  Other food item: Sugar : A 2 kg. Mumias pack is Kshs 195. It had been two hundred for over a year, but two years ago it was 160. The tug of war about the licensing of as sugar company in western Kenya has highlighted some challenges of the sugar sector regulation.
  
  Communications All Kenya’s mobile phone companies have call rates of about Kshs 3 shillings per minute to call across networks. What has changed is the offering of more value at the same price and significantly blurring of the lien between pre-paid and post-paid services - through offers for subscribers to sign up for ‘unlimited’ or enhanced call, SMS, or internet services by sending in text messages and these in turn entail daily deduction of money. By offering these packages, mobile companies are assured of steady revenue from a subscriber even if he does not use the service on a given day and continues until a customer deactivates the promotion
  
  Utilities: Latest electricity bill is Kshs 1,800 ($22.5 for a month), slightly up from Kshs 1,700 three months ago, but less than 2,100 of a year ago, but about the same as 1,700 two years ago. Though the droughts of 2009 has now been forgotten , fuel surcharges are still a feature on electricity bills
  
  Foreign Exchange: 1 US$ equals Kshs 80.5 compared to 80.8 three. A year ago it was 75.6 a year ago and 79.0 two years ago. Presently Kenyans are riveted by the Wikileaks Kenya cables that are slowly being disseminated
  
  more expensive
  N/A

• How is the GOP’s opposition to Obama’s decision affecting USA?

  Posted: December 17, 2010, 12:26 pm by bankelele

  A Guest Post by Jason Holmes
  
  The Grand Old Party or the GOP very commonly known had asked President Obama to fire his entire economic advisors because they had failed to take out recession and job loss problems out of the country. The decisions taken by Barrack Obama are criticized every now and then by the GOP. Take a look at how the compromises are forced in to the decisions of Obama and how it in turn is devastating the country.
  
  Republicans against the financial reform by Obama
  
  Barrack Obama’s decision to sign a bill for financial security in the country is jeopardized by the strong opposition from the GOP. The decision lies in the regulation of derivates which are financial instruments and their value depends on the underlying assets such as mortgages or stocks. But there is also the risk that these assets can sink giving rise to losses and other financial crisis. 41 Republicans are against any bill by the Democrats including this bill. It’s predicted that the regulation of derivates market is quite risky and will badly affect the small businesses as well as community banks. But even if there were some of the well-known financial crises in USA due to the regulation of risky derivates, it can also reduce the loss and produce huge profits if the underlying assets don’t sink.
  
  Obama fears for the failure of bipartisan prospects
  
  In the new reports it has been recorded that Obama is not against a lot of decisions of the Republicans but fears that he won’t be able to take other decisions freely if the GOP runs the House. He wants to make some changes in education and energy-related decisions that have been overlooked. He fears that if GOP comes into power, he won’t be able to make any decisions regarding foreign policies even. His bipartisan cooperation prospects are looking bleak due to the GOP opposition at every step. But if given a chance, Obama’s decision may work for the betterment of the country but due to the problems in the House due to the Republicans, public is showing less interest in any decisions. Since the term of Barrack Obama started in 2008, Republicans have shown very little interest in working with Obama or the Democrats in the whole.
  
  GOP create problems for Obama for building foreign relations
  
  Obama has taken decisions to bring US troops from Afghanistan back to the country by July, 2011. But Republicans oppose this decision and say that it’s arbitrary and that war commanders shouldn’t withdraw forces just like that. Obama’s plan to improve relations with other countries such as Cuba and Iran is also not accepted by the Republicans. They fear that if there is no border control, US may have to face another war since the World War II. But against the Republican concepts, Obama’s decision may mean peace with other countries and no war.
  
  USA and EU relations affected if GOP comes to power
  
  As per the latest reports, it’s foreseen that the relations between America and European countries may come to a halt when the GOP comes into power. Obama’s decision to have good relations with European countries especially Turkey will be highly affected and opposed by the Republicans. If the New Strategic Arms Control Treaty with Russia is signed by Obama and the Russian President Dmitri Medvedev, it may lower limits of both the nations’ nuclear arsenals. But the Republicans are not sure whether or not Russia would be fair in its decisions to be fair.
  
  Whether Barrack Obama or the Republicans take decisions, they should always use a fool proof plan so that it positively affects the country. In their fight to stay in power, both the Democrats and the Republicans are overlooking the public interest. The downfall of the big economic countries led to the financial crisis. They must look for reforms to improve the countries financial status and create more jobs.
  
  About the author: Jason Holmes is a regular writer with debtcc community and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, Take Creditors and Collection Agencies to Small Claims Court’ and, My Story- From Depression To a Smile’.

• Investor Choice: December 2010

  Posted: December 15, 2010, 7:36 pm by bankelele

  December is traditionally a slow investment month in Kenya, but not so this year with so many investment offers from a variety of sectors
  
  Recap
  
  - Bralirwa IPO is ongoing for Rwanda’s largest beer company. Nairobi stockbrokers who are facilitating the cross-border deal include Dyer & Blair, Faida, African Alliance and CFC Stanbic
  
  - Deacons set out to raise Kshs 800 million ($10 million) in November. They extended the deadline to early December, and came up slightly short at Kshs 700 million which is still commendable for a low marketed company in a competitive industry with no immediate listing plans
  
  - I&M Bank had a private placement to raise about 2.4 billion ($30 million) and is said to be past the mark
  
  - The Kenya Power & Lighting Company - KPLC Rights issue set out to raise almost Kshs 10 billion ($125 million) in a combination share split, tights issue, government shareholding restructuring. It runs till December 22, but for new shareholders deadline is December 15 and is 50% underwritten with Centum and Equity bank.
  
  - A second tranche of the Kshs 12 billion Safaricom bond program which aimed to raise Kshs 4.5 billion ($56 million) closed yesterday, and announcement is to be done today - (PDF)
  
  - Airline Investors – away from retail investors we have the rarefied world of institutional investors and buccaneers in the aviation space in Africa
  
  - (Via Flight Africa Blog) Jetlink expanding flights to (Asmara) Eritrea while Fly540 is to soon launch operations in Angola and Ghana
  - Kenya Airways resumes flights to (Rome) Italy on December 16 which is its fourth European destination
  - Recently, Rwanda Air launched flights from Rwanda to Dubai via Mombasa.
  - Yemenia resuming flights to Kenya.
  - East African, (who may or may not be in business) are promoting flights from Nairobi to (Hargeisa) Somaliland for $620
  - And helicopter leasing is getting popular in Kenya, even at rates of $2,000 per hour.

• 2010 Kenya Bank Rankings Part II

  Posted: December 6, 2010, 3:53 pm by bankelele

  Comparing to last year’s Top 10 list.
  
  I&M Bank: Sits, at number eleven, for the year, just outside the top 10, but made more profit than two of the top banks . I&M had an exciting year, with a November rights issue targeting to raise Kshs 2.4 billion ($30 million); they also launched an e-commerce platform, bought stakes in banks in Mauritius and Tanzania and got investment funding from Proparco & DEG.
  
  10. Diamond Trust (2009 rank 10): Assets of Kshs 58.2 billion ($727 million) and nine month profits of Kshs 2.3 billion ($29 million) – had growth across the board of 30% compared to a year ago and with a good income outlook and very low NPA. Expanding to Burundi while other banks have headed to Rwanda, and Chairman stepped down to take up similar post at the revived Air Uganda.
  
  9. Citibank Kenya (2009: 7): Assets of 63.9 billion ($798 million) and nine month profits of 2.15 billion ($27 million). A quiet year for the bank but ramped up in Q3 this year and that will impact year-end numbers, which were flat before that. MD Ade Ayeyemi moved on to other bank operations, and the bank has been unable to shake off local stockbroker allegations that they are holding Safaricom IPO refunds from investors since 2008
  
  8. Commercial Bank of Africa (2009: 9): Assets of 65 billion ($813 million) and nine-month profits of 1.9 billion ($23.7 million) . A quiet year for the bank which has grown by about 40% since a year ago, but which will soon have to raise compliance capital from its shareholders.
  
  7. National Bank of Kenya (2009: 8): Assets of 67.4 billion ($842 million) and nine month profits of 1.9 billion ($24.8 million). And has ramped up lending including mortgages and seen improved profits. The replacement of long serving CEO is up in the air are Government plans to privatize the bank with plans shifting toward private investor as opposed to offering more shares to the public
  
  6. CFC-Stanbic (2009: 6): Assets of Kshs 104 billion ($1.3 billion) and nine month profits of 1.5 billion ($18.8 million). The sleeping giant created by the merger of two mid size banks is still treading, and though with improved profit, they are still the lowest of the top 10 banks.
  
  5. Equity Bank(2009: 5): Assets of 129 billion ($1.61 billion) and profits of 6.8 billion ($84 million) . For the second year slightly reduced growth to 40 - 50% not the 100% of years past. The bank had a shift in direction towards an agency branch model using mobile phones to reach its 5 million plus customers, and after the rapid growth of m-kesho ( a partnership with Safaricom,), they have in the last two months also signed on with Orange and Essar, tying up 3 of the 4 Telco’s with mobile money.
  
  Diversification has been a mixed bag, with good results from Sudan and M-kesho, but not so (yet) with Uganda, investment banking, and Housing Finance, which while initially unwelcome it appears that HF shareholders would now welcome a merger. Still, this could be the year they clinch the highest profit crown in the Kenya banking sector.
  
  4. Standard Chartered (2009: 3): Assets of 134.6 billion ($1.68 billion) and profits of Kshs 6.1 billion ($77 million) in nine months. Had an over-subscribed rights issue and took over the custody business that Barclays sold in Africa. They make good money from corporate loans and from government securities – they have almost as much paper ($650 million) as they do in customer loans.
  
  3. Cooperative Bank ( 2009: 4): Assets of 141.1 billion ($1.76 billion) and nine-month profits of 4.3 billion ($53.7 million) . overall growth of ~40% with group assets about the same, and diversification has included buying stake in CIC insurance, stock broking and have talked about going into South Sudan and other East Africa countries
  
  2. Barclays(2009: 1): Assets of 177 billion (2.2 billion), with nine month profit of 7 billion ($87 million). This big bank has nowhere to go, with growth of 5% from a year ago, can they buy up some smaller banks? They shed their Africa custody business to standard chartered and got into an m-pesa banking partnership belatedly after pushing their own mobile money platform for two years.
  Site of planned KCB new HQ building, opp Equity Bank Centre, Upper Hill Nairobi
  1 KCB (2009: 2): Assets of Kshs 218.2 billion ($2.72 billion) and nine month profit of 6.39 billion ($80 million). Had a rights issue earlier in the year, that raised $156 million and they plan to put up a new headquarters in upper hill. But with total group assets of 244 billion, the bank was third in profit behind Barclays and Equity after Q3.

• Investing in Africa Moment

  Posted: December 2, 2010, 8:58 pm by bankelele

  Legatum Africa Awards: Three Kenyan companies - Biodeal Laboratories (generic drug manufacturer), Craft Silicon (financial software developer) and Mellech Engineering (construction & engineering), have been selected as finalists in 2010 Africa Awards for entrepreneurship.
  
  They are competing for $350,000 in fund prizes, with a grand prize of US$ 100,000 and five other prizes of US$ 50,000 each. The other finalists in the top 10 are Malcom-Ezindaleni Hydraulics (SA) NTR Technology (Botswana), Planbuild (Uganda) Sigma Electric ( Ethiopia) Steel & Tube Industries (Uganda), Tutuka Software ( SA) and Wilkins Engineering (Ghana) – who were also shortlisted from more than 2,700 entries.
  
  Legatum, a privately owned investment group and Omidyar Network, a philanthropic investment firm, organized the awards, who's winners will be announced on December 6 in Nairobi.
  
  Agriculture Equity: The African Agriculture Fund, a private equity fund closed on US$ 135 million of funding in November 2010. The funds will be invested in the agriculture value chain from primary production to processing at $20 million per portfolio company.
  
  The Fund also has a dedicated SME sub-fund and a technical assistance facility of 10 million euros, to support out grower schemes in large companies and business development services in SMEs.
  
  Transparency Equity: Late in October, Omidyar and Hivos created the Africa Transparency and Technology Initiative (ATTI) - a fund that will support technology-driven initiatives that give citizens the tools to hold their governments to account. Omidyar Network will invest up to $2 million and Hivos will administer the fund.
  
  Diaspora Fund: The Enkare Innovators Fund was launched and is seeking US$850 Million from Diaspora for investments in Eastern, Southern & Northern Africa with early focus on Kenya, Tunisia, Egypt and South Africa. This is via a private placement that will run from January to July 2011 and is promoted by Cauave Deaa Et Al Capital Partners
  
  Silicon Valley Visits: The Kenya ICT Board will host a team from I/O ventures, comprising entrepreneurs & founders will from Silicon Valley who will visit Nairobi on December 14 & 15 and who are seeking young ICT entrepreneurs to mentor.
  Mombasa housing development
  Impact Investing: Impact Investments are a new asset class as per a report being launched this week in Nairobi, London and New York - by the Rockefeller Foundation, Global impact investing network, and J P Morgan.
  
  These refer to investments that have an intended purpose of positive social or environmental good besides a financial return – and probably what Acumen Fund have been referring to as patient capital.
  - Impact Investments are primarily debt or equity, and are investments not philanthropy investments
  - They studied 1,100 investments and found that about 500 were less than $500,000, and only 35 were more than $10 million
  - Impact investments are founds in sectors like agriculture, water, housing, education, health, energy and financial services (micro-finance is the most mature sub-sector)
  - There are now metrics, tools, ratings, conferences – all devoted to impact investing and how to measure non-financial impact; One benchmark called IRIS (based on IFRS) and others are Pulse and GIIRS . Currently impact investments are measured primarily by investors own proprietary systems, or by a mix some investor goals such as job creation, asset accumulation, or energy efficiency
  - The report has a robust outlook for the sector and concludes that there are potential impact investing requirements over the next 10 years of between $400 billion and $1 trillion, with potential profit of $183 billion to $667 billion, and with the bulk of these to be found in the urban housing sector.
  
  Further Reading
  
  Invent for Mobile: CGAP article which asks how viable companies in mobile health and mobile money can attract VC funding and interest.
  
  Large Private Equity: FT article - about private equity in Africa by Andrea Bohnstedt (@andreabohnstedt), the publisher of Ratio Magazine

• 2010 Kenya Bank Rankings Part I

  Posted: December 1, 2010, 10:48 pm by bankelele

  Ranked by total assets at September 2010 and compared to 2009 rank (in brackets)
  
  --missing is Southern credit (32 last year) which was bought by Equatorial in 2010
  43 (43) Jamii Bora *formerly City Finance
  42 (42) Dubai
  41 (--) UBA Kenya *new
  40 (39) Middle East
  39 (41) Oriental
  38 (40) Paramount Universal
  37 (37) Credit
  36 (38) Transnational
  35 (34) Habib Bank
  34 (36) First Community
  33 (31) Victoria
  32 (33) Fidelity
  31 (25) K-Rep
  30 (28) Guardian
  29 (26) Habib AG Zurich
  28 (27) Gulf African
  27 (30) Consolidated
  26 (23) ABC
  25 (29) Giro
  24 (24) Development Bank of Kenya
  23 (35) Equatorial *merged with Southern Credit
  22 (22) Fina
  21 (19) India
  20 (20) Family Bank
  19 (18) Ecobank
  18 (16) Imperial
  17 (21) Chase
  16 (17) Bank of Africa
  15 (15) Housing Finance
  14 (14) Baroda
  13 (13) Prime
  12 (11) NIC
  11 (12) Investment & Mortgages

• Reading the Braliwa Tea Leaves

  Posted: November 26, 2010, 4:57 am by bankelele

  Brasseries et Limonaderies du Rwanda Limited – (Bralirwa) is Rwanda leading beer brewer and which is now offering shares to the public in an IPO. In the spirit of the East African Community, the shares are offered to residents of all member countries (Read that Tanzania).
  
  In the past, cross border opportunities have been in the case of Safaricom (Kenya) and Stanbic (Uganda) IPO’s as well as with cross listing of a half-dozen Kenyan companies across the exchanges of Kenya, Uganda, Tanzania and soon Rwanda.
  
  from reading the information memorandum (IM)
  
  On Offer: - 25% of company is for sale; being 128.57 million shares at 136 RwF per share (~Kshs 18) and minimum shares are 100, with units of 100 thereafter
  - IPO allocation will be 35% retail (Rwanda and EAC nationals), , 5% employees & distributors, 30% international investors, and 15% to Qualified Institutions (insurance, pensions firms) in Rwanda and in EAC – if oversubscribed Rwanda nationals will get 60% in retail pool
  - Runs from 23 November to 17 December, and trading begins in February 2011
  
  About Bralirwa: - Current shareholders are the Heineken group with 75% and state of Rwanda with 25%; the shares were split by 5000:1 ratio in November 2010 to facilitate this IPO
  - The IPO represents a complete divestment by Rwanda government
  -Heineken, the no. 2 brewer in Africa controls the group.
  - The company is largest tax payer in Rwanda – accounting for 12% of domestic tax revenue
  - Sales in 2009 were $60 million and with a net profit of $11 million
  - Subsidiaries include Coglegas (62% of company exploiting methane in lake kivu) and Bramin (50% of a maize processing company)
  - Bank borrowing is a fixed interest rate of 12.25% and Bralirwa has unsecured borrowing facilities from Bank of Kigali, Commercial Bank of Rwanda, Fina Bank, Kenya Commercial Bank and Access Bank which have a combined facility limit of Rwf 3.5 billion ($5.8 million)
  - Staff benefits for 528 (45) staff listed in IPO include performance based bonus scheme insurance scheme, subsidized mortgages vehicle leases, medical treatment (free of charge), uniforms for school going kids of employees, school fees for orphans of staff killed in 194 and drinks for employees at special occasions
  - The company's supply chain is via the the port of Mombasa for clearing and transportation of inputs, and a 1000 KM along the northern corridor through Uganda which takes 3-4 weeks and they use SDV Transami
  - Regional competitors - EABL Kenya (Central Glass) and KIOO Tanzania - provide the company with bottles
  - Competitive strengths include fact that importing beer from Kenya or Uganda is uncompetitive owing to freight, fuel and insurance costs however high energy costs of US cents 22/kkwh are a challenge.
  
  Incentives: - While effective income tax in the country is 32% in 2011, it can drop to 8% (over 5 years) for companies that sell over 20% of their shares to the public
  - 2009 divided was 5.1 billion RwF ($8.5 million) or approximately RwF 50 per share (Kshs 6.5)
  - No capital gains tax
  - Withholding tax is 5% for Rwanda and EAC residents (but elsewhere IM says all dividend subject to 15% withholding)
  
  Market: - Bralirwa market share in Rwanda in 2010 is 94%
  - Rwanda has a Population of 10.5 million people, but per capita beer consumption of 9 litres trails Kenya (11 litres) and Burundi (18 litres!!)
  
  Kenya Links: Bralirwa will be Rwanda’s first listed company, joining Kenya’s KCB, which is the only equity, trading on the Rwanda Stock Exchange. Kenyan influence is strong in the form of KCB (collecting agents), Dyer & Blair (transaction advisors), Faida Securities, Renaissance Capital, Muriu Mungai advocates (legal advisors), and the Central Depository & Settlement Corporation - CDSC (registrars). However Kenyan investors may be currently pre-occupied with their own KPLC rights issue and Deacons private placement
  
  Governance & Registry: - Votes at annual general meeting shall by poll and articles explicitly state not by show of hands
  - Company may buy its own shares
  - All directors signed the IM document
  - IM declares none of the directors are involved in bankruptcy proceedings, or been convicted under criminal proceedings or been judged by a court to have been fraudulent or dishonest (Ethics Kenyan corporates can learn )
  - Articles also state – if a shareholder dies, their survivor, executor and administrators only persons recognized to have an interest in the shares

• Online Share Trading in Kenya

  Posted: November 25, 2010, 2:15 am by bankelele

  Tonight CFC Stanbic Financial Services launched online share trading which they say is the first online share trading platform in the country. The actual ceremony was conducted by Information Permanent Secretary Bitange Ndemo (a Mumias shareholder through CSFS) who noted that while Diaspora Kenyans remitted $2 billion per year, they hand no true seamless mechanism to buy shares – until now.
  
  It’s a light-weight system accessible to CSFS customers to make trade orders – buy, sell, cancel, monitor volumes, settlements, & trade live at the Nairobi Stock Exchange in real time as well as get statements & portfolio valuations.
  
  Disclaimer: I’ve been a long-term investor through CSFS primarily through e-mailing trades, and this has been quite satisfactory. Enabling online share trading is a service which several brokers have promoted, but delivery has been spotty. The CSFS system is available even on Smartphones,and while SMS and mobile money are not highlighted, these will be features to push for and the service is one to try out and see.

• Uganda Moment: Expat, CHOGM, Laico, Nirvana

  Posted: November 19, 2010, 5:52 pm by bankelele

  I made a trip to Kampala Uganda last week, which was very short but very relaxing two days. Unfortunately it was an all-conference (business) trip over two days that left very little time for sight seeing compared to the last time I was in Uganda, in 2007, but quick in-n-out airport – hotel – conference – hotel – airport with chats with taxi drivers and few locals is how a lot of non-residents form decisions about a country
  
  - The town looks better; much spruced up, cleaner, greener,
  
  - Election fever: from kids humming his song at the beach 'Yes, Ssebo!', to his posters all over town, President Museveni is in election mode, and while it appears early now for campaigns for an election next February (all the candidates, are on the nightly news at rallies), one local remarked that perhaps the president with 'unlimited' budget hoped to exhaust his opponents financially by election time.
  - Mobile Issues: Just what is Safaricom roaming? At JKIA I enquired about roaming tariffs in Uganda and was told to leave my line as is. But there, the charges were astronomical, about Kshs 30 to send an SMS, and Kshs. 50 to receive a call! Fortunately I was able to top up with M-pesa. Also, in different parts of town, the roaming partner would change from MTN, Orange, to Warid etc, and sometimes my remaining balance would change.
  - Also as you walk around Nairobi and take it for granted that Internet is everywhere on your phone, the same is not true in Uganda where there was no internet (at least for roamers) and buying a SIM card just for internet was not worth the effort; so I’d be offline all day till I got back to the hotel in the evening which had a guest wi-fi. a must for any modern hotel
  
  - CHOGM: There's a Uganda parliament report on the 2007 Commonwealth heads of government summit (CHOGM) on how money was diverted to build roads to private hotels and apartments, BMW's and missing blackberry with actions recommend be taken against the vice president and various ministers. Serena and Utalii College are the only Kenyan connection I saw.
  - I went to a bank hall and shock on me was that, there is no bullet-proof glass separating cash tellers from customers, and you exchange money over the counter as you would with documents at a customer service desk in Kenya (ok - security guards are armed and everyone goes through a metal detector at the bank door)
  
  - Finally the most telling moment om the trip, was a half hour at a public beach in Entebbe on the shore of Lake Victoria. This was about a kilometer from the Laico Hotel (yes there’s also hotel in Uganda controversially transferred and renamed the Laico, not just in Nairobi) and I sat on a beach with our taxi driver and had a Pepsi drink. It was a very peaceful moment, and one you’d be hard pressed to enjoy in Kenya where every few minutes a hawker will approach you selling fish, music, mobile phones, clothes etc - or in Mombasa at Serena beach, for every walk 20 meters you walk/jog on the beach a young man steps forward to offer you a boat ride. That's not how it should be.

• Shares Portfolio November 2010

  Posted: November 15, 2010, 1:57 pm by bankelele

  Solid portfolio gains, some speculative buys since last quarterly review in August 2010
  
  The Stable
  Diamond Trust ↑
  EABL ↑
  Kenya Airways ↓
  KCB ↑
  Kenol ↑
  Safaricom ↓
  Scangroup ↑
  Stanbic (Uganda) ↑
  Uchumi ↔
  
  Review:
  - Best performer: Scangroup up 74% this quarter
  - Worst performer: (tie) Kenya Airways, Safaricom both down 16%
  - In: Safaricom, Vipingo (error)
  - Out: None
  - Increase Kenol, EABL
  - Decrease: None
  - Unexpected gains/losses: None
  
  Events & Outlook: - Performance: The Portfolio is up 29% in the last three months while the NSE Index is down 1.5%.
  - Got dividends from: Stanbic, EABL & KQ, awaiting Safaricom (which will be paid by M-Pesa for the second year) after getting some Safaricom shares, and attending their (no SWAG) AGM
  - Kenol and the Government reached some settlement which has stabilized their share price, but the battle exposed other sector players like NOCK, Gulf Energy, and Addax.
  - Safaricom appear to have withstood the initial price war by Zain/Airtel as there is now concern about how long Airtel can keep the low prices in Africa.
  new airtel logo? via india4indians.com
  - New blood: The Kenya Government is doing a KPLC doing a rights issue, and share conversion of preference, while private companies on the horizon may include CIC Insurance, CFC Life, Deacons, and Family Bank

• Making Agriculture Cool

  Posted: November 4, 2010, 9:10 am by bankelele

  Kenya is traditionally been perceived as an agricultural country, with and a lot of government initiatives are focused on rural areas and food production. Yet trends show that Kenyan populations is getting more urban, and younger, as shown in the 2009 cencus. John Githongo wrote in this article - we have to rethink what Kenya is. Three-quarters of Kenyans are under 30 and want to live in towns, but we are ruled by farmers and trapped by land disputes.
  
  Land is an emotive complex issue that underlies agriculture and food production. As seen with the recent Tatu City, a $3 billion new city project, to which Maina T asks about the wisdom of using the most arable land in Kenya for buildings, on red soil which is more productive food wise.
  
  The urban population does not grow food, has little interest in agriculture. They want to make live in cities (like Nairobi which generates over ½ the country’s GDP) and build applications for mobile phones that do A, B, C, D etc. One way to increase interest is to agriculture relevant to a young population, farmers employing new techniques new crops, not just traditional maize and beans.
  
  In the technology space, there has been a shift, deliberate or not towards rewarding innovations and projects in the field of agriculture including:
  
  - Apps for Africa was won by i-cow a voice-based mobile phone application that helps dairy farmers manage breeding and feeding of cows leading to better yields.
  - The Chase Bank /Enablis Business Plan competition in which agri-business proposals overtook ICT both in the number of entries received and list of top 100 picked. Of these 35% of the entries submitted came from Nairobi and 30# were from people aged 18 – 25 years.
  - Finally M-farm, an information resource for farmers scooped the top prize in last week’s IPO48 entrepreneur contest.
  
  The best way to make agriculture cool is for it to make money, but by also making agriculture relevant for the youth - using best practices, new technology, and high profits (tea sector), Kenya won't go the way of Nigeria - a country capable of agricultural production but which almost all urban foods are imported, not from the rural side, but from other countries

• Succession Talk

  Posted: October 27, 2010, 6:59 am by bankelele

  There has been a lot about succession in the news today:
  
  • Legendary investor Warren Buffet outlined his succession plan for his company and shareholders.
  • Also, legendary World Cup match match predictor, Paul the octopus (and beloved by gamblers anonymous), died in his sleep in Germany, without leaving a successor.
  • NIC Bank held a succession planning clinic for its customers and entrepreneurs
  • This is also the week in which retiring Safaricom CEO Michael Joseph is being feted every other day somewhere in Nairobi while his successor Bob Collymore waits in the wings.
  • And at Equity Bank, CEO James Mwangi, finally addressed and put to rest the matter of his succession. Announcing the banks Q3 results (with group asset of Kshs 136 billion ($1.6 billion) and profits of Kshs 6.4 billion ($80 million), he was asked about a long standing issue with some with investors and shareholders – 'what would happen to the bank if something happened to him?'
  
  His answer? Profit would go up because he’s currently highly paid, and his style over 18 years has changed to one who takes less risks! On a serious note he pointed out to several of the bank’s current managers who had more experience and knowledge than he did (but he is better than selling himself), and would form a pool from which the Board could pick out a successor. Some of the people he pointed out, and who may succeed him, include Gerald Warui (his principal deputy), Mbaabu Muchiri (ex coca cola and central bank who reduced housing bad loans), Michael Wachira (ex-Fortis), Allan Waititu (brought finacle to the bank & automation and is now in charge of new projects), Samuel Makome (ex-Citibank), Bildad Fwama (ex Citibank, British American), and Mary Wamae (who negotiated the first ever conversion of the Kenyan build society to a bank, the Helios deal, and regional investments in Uganda, Sudan, and currently in Rwanda and Tanzania which are aimed to open in Q1 of 2011)
  
  He also noted that with his busy activities outside the bank at (Vision 2030, Advisor to UN & World Economic Program), he has delegated a lot to the point that he is not a signatory at the bank and does not sit on any of the seven board committees.

• A to Z Chat with Michael Joseph

  Posted: October 23, 2010, 10:16 pm by bankelele

  Ten days before he retires as CEO of Safaricom, Michael Joseph gave a talk at the Nairobi iHub on his ten years at the helm of the company, on the day to day job, and the up’s & down’s of the job in taking the company from a literal zero to hero.
  
  recap
  
  Beginning: Safaricom started with (inherited) 17,000 customers, 9 cell sites in Nairobi no billing system, switch in extelecom house, 5 Vodafone employees and 55 Safaricom staff deployed from Telkom (not chosen) – all working in a 3 bedroom flat at Norfolk towers . Has little cash (started with $20 million from Vodafone, and paid $10 million for a switch leaving the balance for salaries & rents) and launched on 23 October 200 (Saturday) and on Monday morning network collapsed (blamed on IT person)
  
  Crazy Kenyans; this was a theme in his talk of marketing in Kenya
  - Family & friends the average Kenyan calls 2.3 people, a fact he pointed out to his France Telecom (Orange) counterpart when they launched a family & friends promotion in which orange customers could call 5 people for 1 shilling per minute. The (forever) promo has since been discontinued
  - Free credit - a promotion to give away all the subscribers Kshs 200 free credit was a major mistake and after it was bungled by an IT person in Dubai, led to 5 days of congestion. Lesson learnt - don’t surprise customers
  - when okoa jahazi was launched, 1.7 million applied, even those who had credit and didn’t need it (crazy Kenyans love new things)
  
  Fibre: media don’t understand it, people expect after companies invested millions of dollars in undersea cables, internet prices would drop by 90% next day. They still have to have a redundant network, and network is pensive to maintain. They have 4 cables to Mombasa, and every day (Chinese) road contractors are cutting fibre without any punishment. Since 3 cables land at the same point in Mombasa, they will land points in Kilifi and Dar es Salaam for redundancy
  - He regrets not investing in metro fiber 4 year ago, which they are now leasing
  
  Growth
  Expectations: Safaricom expected to have 400,000 customers in 5 years, with about 50% of the market (against Kencell’s 50%). Had their first million customers in 2003, second in 2004, and by growing ½ million customers a month, are now a billion dollar company.
  
  The company growing at 20 – 25% a year; he used to report to 2 owners, now has over 700,000 (including his secretary ) who bought shares expecting the price to triple to 20 shillings. Safaricom has to balance their needs and revenue, and are still investing (they have the only 3G network in Kenya despite what their competitors say) while competing with Zain/Airtel’s subsidized/risky price cuts, and Essar who have petroleum and steel.
  
  Competition: the battle with Zain/Airtel is being won: their subscriber numbers have not dropped – and while revenue has dropped, minutes (usage) has gone up as has traffic into the network and they will watch their costs
  
  Finances: With the first $20m spent, they had to borrow money. They were to get a Belgium export credit loan if they bought equipment from Siemens, but since shareholders would not sign guarantees, Safaricom had to pledge their network (which at the time was not strong enough to manage their subscriber base, but when he signed equipment was shipped and this took away their congestion problems (at that time)
  
  Green initiatives: They are greener now than before, have 60 sites running on wind power (backed by generator). Main concern is not their date equipment, but for air conditioning to cool batteries, so are always looking at new ways to cool the batteries – e.g. bury batteries in the ground, and new (but pricey) batteries from Canada that don’t have to be cooled. Their HQ has smart systems, so lights go off when no one in room. They can do more, but local wind generator cost $80,000 , and the ones from India that cost $20,000 are easily toppled by Kenya’s gust winds. They are looking at solar sites, but again need air conditioning for batteries
  
  Investment decisions: They would start in Nairobi and Mombasa then looked at expanding the market. They measure ROI every six months, expect payback form a base station in 1 year – and 80% payback in 6 months. While they outsource physical maintenance - towers, lights, fencing, fuel, power remains a big cost – they have 5,000 generators to run when electricity (KPLC) cuts off
  
  Outsourcing strategy: he is not a fan of this as outsourcing partners don’t reinvest until they have to. He said Bharti Airtel EBITDA in India is down from 45% to 35% this year because they outsourced a lot of key costs, which are now coming back. Safaricom may outsource network management, but not outsource customer care, because quality will drop
  
  Innovation
  - They have team of 40 people spend time looking around the world for new ideas, and with the Vodafone group e.g. sambaza was already in Sudan & Egypt - and have had great successes like Sambaza, Okoa Jahazi, M-Pesa and M-Kesho
  
  - innovation without disruption says the company is very innovative in the mobile space and they innovate to make money, not for innovation space, as his goal is to deliver to shareholders. He takes pride that the company has won international awards, in Silicon Valley, not the UN
  
  - local developerswhen vendors want to sell new ideas, Kenyans write to them with their new great ideas, -but everyone, has to sign their legal waiver to protect the company from being sued.
  - On revenue share, his belief is that Safaricom should get the lion’s share – developers will be using their airtime, customers, marketing, distributors and collection method so it should be 80:20; if you want to keep 80%, go to Zain. But sometimes people can get good splits with Safaricom e.g. he did not believe ring back tones would make money, so mistakenly signed a deal that gave most of the money to developers
  - Safaricom has not stolen anybody ideas – they have been sued a few times and won every times, because they document everything. Also many ideas belong to nobody, and while someone claims they invented m-kesho is his (MJ) personal idea – and Safaricom have enjoined themselves alongside Equity Bank, who are being sued by an inventor
  
  Key decisions
  Pre-paid billing: could not afford a post -paid billing system, so they opted to go for pre-paid customers and bought a (cheaper) prepaid system that cost $200,000 – in hindsight was a key decisions
  Per second billing: he made the decision to bill per second even though per minute billing generated 20 – 25% more per call. He did not have scientific proof but had seen it in south America and felt his market was the mwananchi (ordinary person) who would use airtime in small increments-
  Customer service: was free & 24/7 - which was a good decision because people don’t read phone instructions booklets. it was not very expensive and they hired 200 university graduates. People then were even calling from kencell and today people still call to ask how to send SMS
  guiding principle - do it because it makes financial sense. Safaricom needs to be seen as a Kenyan company, with all their spend is in Kenya, unlike their competitors who are purely foreign owned. If Safaricom, has to outsource, he insists that the company have to have an office in Nairobi or he wont buy from them. He mentioned Karanja Macharia of mobile planet has done very well by being a local partner and who won over foreign SMS firms.
  
  Leadership
  - best advice was from a boss in Scotland – a leader has to make decisions, don’t be afraid to make them, (e.g. asking people to leave company) and if you’re right 7 out of 10 are right, you are doing well. He considers himself a benevolent dictator, who while he consults internally, makes the decision, he sees external consultants having no responsibility for their advice. He admits he has made wrong decisions (as an engineer in charge of marketing for the company)
  
  when a competitor changes your business plans: don’t panic, and reassure your people; they had studied airtel in Sri Lanka and saw how they came in with low prices and ‘destroyed’ the industry to a level that the government had to intervene. They have had a measured response – they could have dropped prices further, but their promotions are working.
  
  Lessons learnt: (i) you won’t learn anything from a book (ii) have absolute integrity (iii) lead from the front – being a leader is not about being seeing at tem building exercises or having your name on the door (iv) research - if you don’t know what you’re doing, act like you know
  
  M-Pesa
  - Vodafone won £1 million DFID (UK) award for deepen financial penetration for the unbanked, which they also had to match financially – and they were to develop a system for the disbursement and repayment of micro finance loans. They tested in Thika for 6 months and realized that it had more potential as a money transfer tool, and they launched M-pesa in March 2007.
  - M-pesa success has not come from technology, but from the distribution network –(20,000) points around the country
  
  Role of government
  - GoK should play an enabling not punitive role as a regulator. But what is enabling about getting a license? Vodafone paid $55m for license to operate in Kenya, and another $25m for 3G. Their competitors have failed to beat Safaricom and run to the government to complain about safaricom’s dominance. Safaricom opposed the CCK regulatory rules as unfair – and he wondered why EABL, Bidco and Kenya Airways (all with 80-90% e) were not subject to such rules – and why the government was sending the wrong signal to investors by seeming to crack down on Safaricom
  - Right regulator ICT is going to create jobs, and has a good PS now, but GoK has to pick the right people to run the industry, not people who happen to be married to a relative of the president or come from his town (he said he told this to Kibaki and got a good laugh)
  - Kenya as a BPO centre Kenya should be careful about investing heavily in this as a pillar of vision 2030 as this as it is l very fickle, and there is no loyalty you’re the flavour today, but what happens tomorrow? Can’t rely on time zone and English speaking skills, as companies will still take away their business to the next country to offer an incentive or when things go wrong. E.g. delta air moved their outsourced customer service from India back to US, when customers complained they could not understand the CS agents
  
  Safaricom vs. Banks
  - M-pesa is unregulated; when they got into it, there was no law coveting that, but they sought and got ‘blessing’ from the mobile and banking regulators.
  - Big (foreign) multinational banks who had shut down rural branches abandoning their customer opposed m-pesa and fought in government & parliament and would have succeeded till he persuaded acting finance minister John Michuki to green light m-pesa.
  - M-kesho allows people to save in small increments, and get interest immediately is a revolutionary product (he came up with), and in 3 months new 700,000 savings accounts, (which was more than all the saving accounts that existed in the country – and money that was not there has moved from the informal to the formal banking sector). On M-kesho had to partner with a bank (did not want to hold people deposit/too much regulation) and signed on with Equity Bank who have nationwide reach to make it work and took the risk. This exclusive deal which ends in May 2011
  - Warning to banks he has told the banking community that retail banking will disappear in 10 years time. Customers will not go there (to brick & mortar branches) except for loans, as ordinary banking will be on mobile phone whose convenience is unprecedented. E.g. The biggest transaction days for mpesa are when schools reopen (previously people would be queuing in banking halls for expensive money orders)
  
  Social Media: - He is not a fan of social media because people can take advantage of anonymity to write lies about him. He is not on facebook or twitter, but his successor is, and the company uses these tools a lot for marketing
  - SMS is a very dangerous phenomenon – and during Kenya election violence, they found many of the hate messages did not originate in Kenya, (came from south Africa). Safaricom responded by ending out peace SMS to subscribers, which was also controversial

• Real Estate Moment

  Posted: October 18, 2010, 11:40 am by bankelele

  Buy Buy Buy Many signs are pointing on the need to invest in property/real estate; from a mentor who says that land is the only commodity that is not increasing, to Dr. Laila Macharia, who in her TEDxNairobi talk said the boom is yet to come. NSE listed Centum Investments now has real estate projects on Uhuru highway and at Runda, and even a local reality show star (runner up in Tusker Project Fame) Nganga said in an interview, that if he had won, his Kshs 5 million ($62,500) would have been deployed into real estate.
  
  Also, last week Hass Consult and CFC Bank released a report showing that real estate outperformed stock market in returns; I'm yet to find the report, but a post in 2006 shows that the debate of shares verbs property returns is not a new one.
  
  Money flows in real estate? A lawyer who specialist in commercial law has found herself doing more real estate transactions – and is surprised by both how much money is being invested in land deals and how expensive Kenya is compared to south Africa – e.g. a 120 million Nairobi Muthaiga property, can be trumped by a better one or Kshs 50 million in Cape Town.
  
  Is land over-valued? A notice board had these ads of land for sale last week - 10 acres in Isinya for Kshs 5 million, 2.3 acres in Karen for Kshs 14 million, 30 acres in lanet for Kshs 40 million, 100 acres in naivasha kedong at 60 million (600,000 or $7,500 per acre), 1005 acres in ruiru for 301 million (310,000 or $3,825 per acre), 1,295 acres in thika for Kshs 1.1 billion (i.e. Kshs 850,000 or $10,400 per acre) and 250 acres at 20 million per acre in ngong road.
  
  The recent prices are subject to much debate Is it simple demand (for 500,000 homes a year) & supply (150,000 new houses built a year in Kenya)? Is it Somali money or foreign investors & donor agencies, or is Kenya an investment Mecca for the east Africa region?
  
  Banks are tempting: Last weekend the annual homes expo was held at KICC and present were several bank exhibitors: For comparison, a Kshs 10 million ($125,000) mortgageloan can be obtained from Barclays (at 12% up to 20 years at 110,039 per month), co-op (at 13% up to 20 years at 117,157 per month), Equity (at 15% up to 10 years at 161,335 per month) Housing Finance (up to 20 years at 137,257 per month), and National Bank (up to 20 years, subject to retirement age of the borrower). Most give up to 90% finance, and advise borrowers to factor in 5 - 9% for closing costs.
  
  Housing Finance wrapped up a mortgage bond offer that realized Kshs 7 billion ($88 million) against an initial target of 5 billion. The bank has been in turnaround mode, gone from cost/income ratio in 2005 of 73% to 58% in 2009 and non-performing from 35% to 4% over the same period, and has fended off interest from Equity Bank. The Bank’s MD also called for the Capital Markets Authority to green light real estates investments trusts (REIT’s) as the bank also became the latest corporate to join the world of twitter (@housing_finance).
  
  But few are biting: How many mortgages in Kenya? A central Bank of Kenya source says there are only 14,951 mortgages, in a country of 38 million people. (0.04%) with a total value of about Kshs 60 billion, for an average mortgage of Kshs 4 million ($50,000) Samuel kantai – so banks are not the source of real estate developments.
  
  Any other thoughts on real estate?

• Idea Exchange: App Opportunities

  Posted: October 13, 2010, 11:06 pm by bankelele

  Bankelele app: From this week, the blog is now available as a Nokia app that can be downloaded from the Nokia Ovi store. This is because, one problem with being on the blogger platform, is that it is quite difficult to read, and bulky to download, via mobile phone; this is now fixed, with this simple app, created using the Ovi Store appwizard, making it very simple (and small) for (Nokia) phone users to read the blog content. (Edit - thanks to Mwirigi of the E63 Club)
  
  Nokia remains the premier phone used to access the net in Kenya, as confirmed in the latest state of mobile web report which had Nokia phones occupying 8 of the top 10 positions in this region.
  
  Samsung app: The other two phones on the same list are from Samsung who are also emerging in the region with space for local developers, with a store for Samsung apps, and which will be explained further at the next Mobile Monday at the iHub on developer opportunities for monetization with Samsung.
  
  Other opportunities
  
  - Women Developer Opportunity: There is an mWomen App challenge for women developers from Vodafone to build apps for basic phones and for smart phones.
  - Echoing Green: Their fellowship program is now accepting applications with a top prize of $60,000 for individual start-ups that will win capital and technical assistance.
  - Tandaa Funding The Kenya ICT Board has a Tandaa funding challenge in which six companies will pitch ideas to venture capitalists in Nairobi.
  - EDIT: Apps for Development Challenge from the World Bank, with a first prize of $15,000
  - Finally, the US Embassy in Nairobi has launched the annual diversity visa lottery for anyone without an app; 3,000 Kenyans expected to win green cards.

• Kenya Political Party Finance

  Posted: October 10, 2010, 3:54 pm by bankelele

  Like with Kenyan stockbrokers, just over a year ago, political parties have been drawn out of their shells to publish some semblance of financial accounts. The carrot that has drawn them out has been state political funding for parties (by taxpayers), one of whose requirements is regular account disclosures to the public.
  
  Some findings:
  - Income is from a variety of sources that range from the state a (NAP-K Kshs 0.6 million ~100%), party founders (National Vision – Kshs 4.2 million ~85%), fees charged to applicants for party posts (Ford-K Kshs 3.2 million ~30%), and contributions by party MP’s (ODM Kshs 20 million and Narc Kenya Kshs 2.2 million = both ~25%)
  - Expenses vary across different parties but common to all are spending on workshops and regional /branch promotion expenses
  
  - Campaign Finance: The need to raise money for elections has been cited as a driver behind some of the country’s largest corruptions scandals, but this money is rarely reflected in the accounts of the parties. The June 2010 South Mugirango elections was contested by Safina, PDP, Ford people, Labour party, ODM, Nark Kenya, National Vision, and KANU, and many of these did not claim to spend funds in election campaigns – and of the dozen parties that have released June 2010 numbers, only Safina (at Kshs 3.5 million) and ODM (Kshs 26 M) claim some spend on campaign expenses. ODM also claim Kshs 9.9 M spent on civic education (two months before referendum). Narc-K won two recent by-elections, thanks to their generous but controversial candidates, and its doubtful if what they spent will be measured or accounted for by the party.
  - Some parties are shells: NAP-K spent its entire PPP funding of Kshs 0.6 million on among others, website 100k (www.Nap-k.org), 91k on developing party manifesto, 150k on branch opening, leaving Kshs 2,196 in the bank. You could call this a compliant briefcase party in waiting for a candidate looking to use the party to contest future elections.
  - Co-operative bank is listed as the main bank for several parties, perhaps because they have a branch a stone’s throw away from parliament, but most parties don’t have much left in the bank as at June 2010.
  Summary: It’s a good start, which parties should continue to be required to comply with. Over time the disclosures will improve and hopefully the governance and administration of parties and the election scene on Kenya. Safina is the only party to claim an auditor expense (of Kshs 55,000) for a clean audit.
  
  Also the Sunday Nation has written about party finances.

• Idea Exchange: Michael Joseph, Serena, Lotteries

  Posted: October 7, 2010, 12:18 pm by bankelele

  Michael Joseph: Outgoing Safaricom CEO Michael Joseph will have an informal fireside chat session at the Nairobi iHub this month ( details here on how to attend). It will be staged like one of the Warren Buffet town hall meetings, and he will take questions from the audience and talks about his legacy at Safaricom.
  
  Serena: last Monday had the bell ringing ceremony to launch newly issued shares of TPSEA (Serena Hotels Group) at the Nairobi Stock Exchange (NSE) after the company raised 1.1 billion shillings ($14.5 million) from shareholders. The funds will be used for: development of 3 hotel properties in Nanyuki, Nakuru and Elementaita (through Jaja Limited), buy 51% of Upekee Lodges who own two properties in South Tanzania, acquire Mbuzi Mawe Tented Camp and Mountain Village (Arusha) and increase the group's investment in TPS Rwanda from 8% to 17% (through refurbishments of Kigali Serena)
  
  Also at the launch:
  - Amish Gupta of standard investment bank called for day trading at the exchange (with settlement at the close of business), which he said, would raise turnover by 150% at the NSE
  - Eddy Njoroge, chair of the stock exchange called for more companies to consider using the Nairobi stock exchange for capital raising, noting that Serena were able to raise Kshs 1.1 billion in two months - faster than any bank loan of that magnitude. F. Okello, the Serena Chairman - who’s also a Barclays Bank director, diplomatically did not challenge that point.
  
  Centum Diversifies: Results and resolutions passed at the 2010 Centum (formerly ICDCI) AGM were published in the newspaper on Monday. The extra-ordinary business approved by shareholders at the meeting included:
  - Business of Reli holdings (a 100% subsidiary now called centum investments) which sold its shares in Rift Valley Railways for Kshs 265 million and paid dividend to centum shareholders
  - Uhuru heights limited (a 100% subsidiary), which is developing a plot on Uhuru highway worth 35.9 million
  - Runda Closeburn (a subsidiary) which is in the process of buying 100 acres of land adjacent to Runda for 1.16 billion
  --> Used to be a shareholder of Centum, but lost interest when they became too vested in other listed companies that all investors had access to. Yes it is healthy for an investment company to have a liquid portion of the portfolio, but Centum, Olympia and other investment companies should invest in unlisted companies (railways, real estate, coca cola bottling plants) that not available to the public - that is their attraction.
  
  Lotteries Galore Zain and Safaricom both have lottery claim to give away a million shillings each week. Zane actually had a press launch the day before Safaricom launched theirs, but did not go public till over a week after Safaricom Masonko 150 did. So did Safaricom pre-empt Zain? Or did Zain pre-empt Safaricom without getting all the necessary approvals or having all the operations in place? Anyway, Zain’s promo is to enhance their subscriber loyalty program, while Safaricom is to mark tenth anniversary of the company.
  
  This week urban IT consulting launched Supapesa which promises Kshs 50 million of prizes’ and last month saw the conclusion of massive 90 million in 90 days. Mbugua Njihia wrote about the lottery, also known as Shinda Smart and which a Nairumor has it grossed Kshs 1.2 billion from over 20 million SMS messages received.
  
  But the winners are genuine of the lotteries and appear in the newspaper clutching bundles of cash or weeping as they receive new car keys - I don't know any of them personally, but I know many faithful participants who remit spend a few shillings each day, sending in the daily lottery SMS and all hoping (& praying) they will be the next winner.
  
  But from what I know about gambling & lotteries is the house (organizer) is always the real winner, so it seems companies have landed on a new money making scheme based on unrealistic public expectations and naivety about the odds of winning prizes.

• EABL & Serengeti

  Posted: September 30, 2010, 3:33 pm by bankelele

  East African Breweries is seeking shareholder endorsement of their decision to purchase 51% of Serengeti Breweries of Tanzania. They have sent out a shareholder circular produced by Merrill in London that outlines the nature of their investment.
  
  Partnership: Serengeti will distribute EABL brands exclusively in Tanzania (except duty free shops). Also Serengeti will brew EABL beers but this has not yet started
  - EABL will distribute Serengeti products worldwide (the include Premium Serengeti Lager (PSL), The Kick and Uhuru Peak beers, as well as the non-alcoholic Vitamalt Plus)
  
  (image from Christian site writing about beer)
  
  - The deal is contingent on EABL selling its 20% stake in Tanzania Breweries (presumably to Tanzanians), not closing any Serengeti plants while continuing to produce certain Serengeti beer brands for the next five years. (SABMiller still have a 20% stake in Kenya Breweries)
  
  Payment: The EABL Board estimates that it will make cash payment of US$61 million (equivalent to Kshs 4.95 billion) to acquire its 51% stake using reserves or bank facilities (no recourse to shareholders). They will retain $10 million to deal with any shortcomings or deviations in concluding the deal.
  - Diageo (EABL’s largest shareholder) has the option to in four years time purchase the remaining stake 49% in Serengeti (not held by EABL) for not more than $600 million. The price is higher but the reasoning is that EABL is investing at an early stag while Diageo will be investing at a latter stage when capacity and synergy gains will have been achieved at Serengeti
  
  Partner: Serengeti is the second largest brewer in the country with a 15% share behind Tanzania breweries (EABL’s previous partner) who have a 72% share of the branded brew market. however unbranded beers command a significant majority of the alcohol consumed in Tanzania – and these include fermented drinks and local beers like Kimpumu (millet beer, is that Tz busaa?), cassava beer, Tekawima (maize beer, is that Tz changaa?) which are highly popular. Serengeti has plants in Dar es Salaam and Mwanza and is developing one in Moshi.
  - Serengeti ‘s balance shaeet has assets of about Kshs 4.4 billion (compared to EABL Kshs 38 billion). Their accounts summarized in the circular show drastic changes when produced under Tanzania GAAP generally accepted accounting principles) and international financial reporting standards (IFRS) mainly from change to treatment of bottles and crates (&their deprecation), and revaluation on land & buildings resulting in larger assets and smaller profits under IFRS compared to Tz GAAP
  - Current shareholders of Serengeti are Union Brewery holdings, Negus holdings (exiting), Napster group, and V. Mehta (exiting), CMG investment, Mark Bomani and Henry Mosha.

• Idea Exchange: Nokia C3

  Posted: September 29, 2010, 8:21 pm by bankelele

  I’ve been fortunate to be a tester for Nokia C3 in Kenya. It’s a phone I’ve been waiting to buy for almost three months, and while waiting, the local Nokia team lent me one to try out before the market launch. Prior to that I had an Nokai E72 loaner, which highlighted the shortcomings of the C3 in a roundabout way, and these include:
  
  - Not 3G enabled, so E72 functions like watching youtube video’s are out
  - Not a true smart phone, no multi-tasking like with the E72
  
  Also at the Tuesday media launch, one reporter pointed out that the camera was 2mega- pixels only, but the Nokia Manager pointed out that their research showed that people wanted to take camera phone pics that they could easily share, but that large high-res photos takes a long time to upload and have to reduce the size to share across platforms.
  
  The phone is a compromise of sorts, an affordable smartphone, with office tools. heavy on social media, connectivity, neworking, and data features.
  
  Features I like (so far)
  - WLAN so can browse on Wi-Fi at coffee shops or office hotspots
  - You can setup up to 10 mail accounts, with new e-mails push updates right on home screen, for response/action (can also sync with office e-mail nokia and Safaricom
  - It also has a community page for facebook, twitter updates appear on the home screen
  - Pictures taken on the camera, upload to facebook in a snap. Also unlike with E72 which had too many folders, picture are easier to find and organize, and because of their size, easier to e-mail
  - The home screen with all these updates (e-mail, twitter) shuts down at night so brings no midnight disturbances
  - Expandable memory (yet to try it out)
  - More C3 features
  
  C3 smash: The phone was officialy unveiled on Wednesday in Kenya by Nokia and Safariom, who are both market leaders in Kenya. As promised, it’s a sleek nifty smartphone, with its QWERTY keyboard which makes it look like a much more expensive phone (E72) or a blackberry, but costs Kshs 10,000 ($123)! It is being sold in Kenya exclusively at Safaricom stores, and comes with 40MB free data from Safaricom with every C3 purchase.
  
  This morning there were brochures being handed out on the street and promotions on the KISS FM Group for a happy hour during which the phone would be sold for one hour at a price of just Kshs 5,000. This brought out crowds of people seeking the Nokia C3, with some unfortunate effects, as captured by @wanjiku on twitter.
  
  - Huge crowd gathered @safaricomltd sarit for #NokiaC3 looks like a political rally via
  - Its wrong; 4 @safaricomltd @dorothyooko you should see the fight at Sarit 4 #NokiaC3 its bad; looks like people fighting for food; extend offer about 4 hours
  -How about extending this offer 4 #NokiaC3? Its wrong to advertize so much if u can’t meet demand @dorothyooko did u expect it to b this much?
  -@Ngendo87 u should see the way men & women are squeezing on the queue @sarit its chaos, guards throwing their weight... #ThatIsAll
  -Sarit management has complained that the crowd @safaricomltd is intimidating the precious clients who spend lots of money; PA system; offer over
  - Scenes from sarit with buyers and guards fighting over #nokiac3 http://twitpic.com/2t0tz0
  - Angry buyers storm Safcom entrance. The shop was forced 2 close doors, switch off lights http://twitpic.com/2t0u8k
  - Police called to calm crowd: sarit manager was there asking if crowd is gone. http://twitpic.com/2t0v5w
  - some sarit pictures
  EDIT: - Video from the C3 launch in Indonesia (June 2010) with round the block queues

• Too Big to Fail?

  Posted: September 27, 2010, 8:48 pm by bankelele

  Embattled market leaders Kenol and Safaricom got some reprieves last week.
  
  In the case of Safaricom, it was signaled in the form of a public complaint from rival Zain Kenya CEO (and which he followed up in a letter to the President) alleging that the communications industry regulator altered its new rules to shield Safaricom.
  
  At Kenol, the Permanent Secretary for Energy announced a settlement of the dispute between Kenol and the Ministry (Kenya Pipeline Company, Kenya Pipeline Refineries), which Kenol echoed that with a cautious statement.
  
  Kenol, Safaricom, and probably Kenya Airways and Equity Bank (with 5 million bank account holders) have reached a status of being too big to fail. They are huge tax-payers (Safaricom, Kenol), models of privatization (Kenya Airways), critical to the country and region (Uganda was affected by the Kenol shutoff) or source of international pride (Safaricom’s M-pesa)
  
  The government goes out of its way to listen to these companies and protectthem and make rules that will assist them in their growth. In the case of Safaricom, cracking down on them does not guarantee that Zain or Orange will fill the gap in the near term. The price war started by Zain has been called unsustainable by the Safaricom CEO and that language is also creeping into government circles

• Urban Inflation Index September 2010

  Posted: September 16, 2010, 9:04 pm by bankelele

  Tracking changes from three months ago - in June and one year ago
  
  Quarterly Review - Young population: The results of the Kenya's national census done in 2009 were released last month and the results are still being interpreted. Politicians obsess on tribal numbers, economists caution on birth rates, while businesses can look to demographics like the number of mobile phone owners, the number of youth in the country, along with other intriguing findings such as the population of Kibera (largest slum in Africa) being 1/3 of previous claims, and remote Mandera is the 4th most populated constituency in Kenya (after Embakasi, Kasarani and Juja which are all in Nairobi environs). It confirms other findings like the Safaricom 2010 A/R which notes that “…with the North Eastern
  region’s economy growing by over 200%, owing to improved security & enhanced economic activities, the area is no longer ‘served’ from Nairobi.”
  
  Price control: A price control bill was rejected by the President who referred it back to Parliament for amendments.
  
  Costly Health Insurance: The National Hospital Insurance Fund set in motion a plan to roll out a rather expensive health plan by increasing mandatory deductions from 320 per month to up to Kshs 2,000 ($25) for anyone earning over 100,000 ($1,200) per month. The matter has been challenged in court and the agency has been accused of not consulting widely with other health sector players and employers in a bid to revive earlier health bill
  
  On to the index
  
  Gotten Cheaper - Staple Food: Maize flour, which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs 65 compared to Kshs. 71 three months ago and 84 a year ago.
  
  Communications: All Kenya’s mobile phone companies have call rates of about Kshs 3 shillings per minute to call across networks. Exactly a year ago Safaricom has launched super ongea tariff, which promised rates of as low as 0.8 shillings, but from a base of Kshs. 8 within network. What has changed? The arrival of airtel in Kenya who will pursue a low cost high volume model though outsourcing of services among other measures. i.e. today it was announced in India that they will sell their African mobile base stations to a subsidiary company (Bharti Infratel) that will re-sell them to private equity funds.
  
  Even as Kenyans have celebrated the new chap call rates, Airtel have ruffled many feathers in the last month, forcing Safaricom and the other smaller mobile companies to match the very low tariffs, and this has been called unsustainable by some, a dis-incentive to investors by others, and even a situation which may result in a mobile operator closing shop. Two years ago, Safaricom had launched 'ongea tariff' which was a Kshs 10/= rate
  
  About the same - Utilities: Latest electricity bill is Kshs 1,700 ($21 for a month) up from Kshs 1,450 on June, but better than 1,900 a year ago when there was drought in the country.
  
  Other food item: Sugar : A 2 kg. Mumias pack is Kshs 200, unchanged over the last year. Two years ago, it cost 145, a price we may see next year when the COMESA regional sugar quotas are done away with. Already, leading sugar company Mumias has diversified into electricity co-generation, bottled water, and soon, ethanol production.
  
  Foreign Exchange: 1 US$ equals Kshs 80.8 compared to 80.6 in June. BUT, Two years ago it was Kshs 67.
  
  Beer/Entertainment: A bottle of Tusker beer is Kshs 170 ($2.1) (at a local pub) compared to Kshs. 160 three months ago. However it is tough to find a perennial location to keep track in Nairobi’s fast changing pub scene, where even Nairobi’s favorite sports pub Hooters closed last month. What needs to happen is a combination of Murua’s Tusker Index with this interactive beer map from the Czech Republic!
  
  More Expensive - Fuel: A litre of petrol fuel (at local petrol station) is now Kshs 94.5 ($5.25 gallon) up from Kshs 90.9 per litre in June. The back and forth petrol war continues between leading oil distributor Kenol and the Ministry of Energy officials who include the Kenya pipeline company, the Kenya oil refinery and the energy regulatory commission about the issue of preferential allocation of space and who owes who more. On their side Kenol can count on some political muscle, the fact that they blew the whistle on Triton Oil before it collapsed, they are the country largest corporate taxpayers. High prices at the pump are not unusual, as two years ago petrol was retailing at Kshs 101

• Idea Exchange: TEDx, Peace, Books and Samosas

  Posted: September 13, 2010, 12:32 pm by bankelele

  Last week was a very busy one in terms of tech, with AITEC East Africa, and Google’s GKenya over-lapping on two days.
  
  This coming weekend has the second edition of TEDx Nairobi at the Leakey Auditorium, National Museum of Kenya, on Saturday September 18. There have been other TEDx events held in the last few weeks including TEDxKibera, TEDxMathare, and a running series of TED videos at the Westgate Cinema.
  
  Also starting the same day as TEDx, is the SAMOSA Festival; this has no correlation with the popular snack, but it stands for the South Asian Mosaic of Society and the Arts, which is a weeklong celebration with various events staged at different locales in Nairobi from September 18 to 25. It also features a mentorship program for young entrepreneurs and professionals.
  
  The Africa Union Peace Day is being observed on September 21 2010, and will be marked by cessation of conflict hostilities, distribution of humanitarian supplies, one minute of silence at 10.00AM (GMT), development work by members of the armed forces, football games, and lesson plans in schools.
  
  Rounding off the month is the grand Storymoja Hay Festival over three days, from October 1 - 3 at the Railway Club grounds in Nairobi. It has over 60 events bringing together writers, business & cultural leaders to share stories, ideas and unique talks like “Demystifying the American Visa Process,” “Peculiar Kenyans,” “How to buy and sell real estate,” and “Publish your own (Children’s) book in two hours.”
  
  EDIT: The Nairobi Book Fair takes place at Sarit Centre from September 22-26.
  
  Others ideas from Twitter
  - @firesidecom: Safaricom is taking on Access Kenya & Zuku with unlimited residential broadband at Kshs. 3,999 (~$49) for 512Kbps via wimax for residential areas – its available of prepay and postpaid, with free quick installation, equipment,. Also available is 1mbps for Kshs 6,000 and 2mbps for Kshs 7,000.
  - @akcorporate Did you know that you can listen to Classic 105.2 FM through Access Kenya?
  - @MTrackKenyaLtd: MTrack - Personal tracking (Children & Elderly) services

• Idea Exchange: From Kimathi to Afrinnovators

  Posted: September 7, 2010, 10:55 pm by bankelele

  Tech September this week in Nairobi has two (unfortunately) simultaneous tech events on-going. One is Google’s G-Kenya at Strathmore University and the other is AITEC East Africa at KICC. Look for news and tweets about them besides the Android announcements. What’s interesting on the AITEC site is a banner reminding south African companies that exhibit at AITEC Nairobi that they may get a refund of between 80 -100% of their costs from the south African Department of Trade (DTI) a nice incentive for SME’s to advertise overseas
  
  Web Comic last week saw the release of a new web comic by @chiefnyamweya; Emergency Web Comic is about the life of Dedan Kimathi, with some straight history lessons thrown in.
  
  T-shirts give away by AfricaUnsigned.com and Afrinnovator Africa Unsigned is an initiative aimed at exposing the world to new music of Africa and is now using the internet as a stage for sharing these sounds and Afrinnovator is about telling the unique stories of African innovations and inventions especially in technology. They are jointly running a competition where 5 individuals can win a one of a kind, original t-shirt of their choice by Africa Unsigned. Check the AfricaUnsigned.com website for more details...
  
  Corporates on Twitter: Safaricom (@safaricomltd) and Zain (@zainkenyaltd) have stepped up in the online space with active messages on twitter as they respond (selectively) to customer queries & complaints and promote their price tariffs and press releases.
  Unfortunately, two other recent arrival on twitter seem to have given up on the medium; Kenya Airways (@KenyaAirways) and the Kenya Government’s Ministry of Lands which have not used twitter in almost two months. step back for e-government?
  
  Ugandan politician in Nairobi to give Kenyan counterparts some identity ideas

• Africa gets Android

  Posted: September 6, 2010, 10:07 pm by bankelele

  On the first day the GKenya summit at Strathmore University Nairobi, Nelson Mattos, Google VP for Product Management & Engineering [Europe, Middle East & Africa] announced the launch of the Android market for Kenya and South Africa that allows local developers to share (or sell) their creations worldwide through the Android store.
  
  Somewhat of a surprise (even to Google) leading up to the event was the announcement (via the day's newspapers and blog) that Huawei was launching a low priced Android phone that would retail for just $100 (Kshs, 8,000).
  
  It’s been an interesting month, as this is apparently the third android phone launched in Kenya in the space of one month. The latest one, costs almost ¼ of the original one (subsidized by who?)
  
  This is Google’s third year in Kenya and they continue to work with curriculum developers and corporations, they invested in a local company called Mobile Planet, and their maps and apps are used by developers and corporations such as Kenya Airways and Eat Out. GKenya continues with day 2 set aside for software developers and day 3 for entrepreneurs & marketers.

• Safaricom 2010 AGM

  Posted: September 3, 2010, 4:02 pm by bankelele

  Safaricom held their second AGM since their 2008 share listing at the Bomas of Kenya on September 2 2010.
  
  Angry Shareholders: really complained into management, mostly about the low dividend, and lack of freebies – and the ~1,000 shareholders largely went home unsatisfied (the bus stage was quite full)
  Low dividend: Different shareholders complained 20 cents ($0.0025) dividend per share was too low, was not recognized as currency in Kenya, was not comparable to the company’s 19 billion ($238 million) profit, was not worth picking if it fell to the ground etc. The Board Chairman replied that this was a result of the large number of shares and, it was 100% increase of the previous year, and they were looking into share consolidation as a way of making it more meaningful
  No SWAG: Shareholders complained about not being given transport to the venue, why there were shirts only for Safaricom staff (they [shareholders] are better ambassadors of the brand), why they only got bottles of water & juice on a cold morning, and why they could not treat shareholders better, when companies like Kengen, many shareholders (~¼ of Safaricom) could? One shareholder who looked like he had been to a ‘local’ before he spoke, said he regretted buying the shares, admonished the company for taking from the poor (subscribers) to give to the rich (board), hurled a few other insults in his speech and walked out to some applause.
  
  No SWAG also includes annual reports, which were handed out at the door, but which shareholders felt should have been mailed to them. The Chairman said that this was a logistical impossible, it would cost almost 250 million ($3 million) to mail 800,000 books and last year shareholders had themselves approved that reports be placed on their website or headquarters, with summarized versions printed in the newspapers. How unwieldy is the large shareholder base? The registrars’ computer list at the entrance was over a month old and they did not have records of anyone who bought shares in the last few weeks.
  
  Is CSR bad for shareholders?: Later on when not satisfied with the Chairman’s response on the dividend, they began tackling expense items in the books to see if they could dig out some cuts to yield more profit. Ccorporate social responsibility items came under fire; this argument was first seen at Stanchart a few years ago when shareholders felt ‘their dividend’ was being diverted to unauthorized expensive projects (said shareholder and former MP Jimmy Angwenyi), and which were costly (But Chairman replied that the total amount was Kshs 250 million, broken into small impactful sponsorships like boreholes and schools that had no overall impact on the 8 billion dividend [$100 million]) . Again they went further and began tackling huge payment items (anything larger than the dividend) and suggesting to the Board ways to cut down these costs.
  
  Competition from Zain Airtel: Shareholders also took a stab at management for the high costs of their services, in relation to Zain who had recently cut call and SMS costs to 3 shillings and 1 shilling respectively arguing that the company management is asleep and they will wake up when they find their customers have fled unless they too cut prices. Outgoing CEO Michael Joseph took on these and said they had studied Airtel in India and were ready for the price cuts, but were surprised by the underhand tactics/accusations that followed. Safaricom will find a balance to protect their customer numbers, market share revenue, but most important were their profit margins. He added these prices were unsustainable, but that Safaricom would still make more money at 3 shillings than anyone else
  
  Share price: Later in comments about the share price which has declined in the last month, CEO said the market over-reacted to Zain/Airtel promo they are due to foreign sellers who don’t understand Kenya. They take parts in road shows to teach such investors about the market, how they EBIT margin of 42% is exceptional compared to others like MTN and Orascom, and 4 of the 5 analysts who cover Safaricom put the share price as Kshs 5.5 to 5.8 (who’s the dissenter?).
  
  Farewell Michael Joseph: Late the Chairman called on shareholders to thank retiring CEO Michael Joseph who built the company up from nothing in 10 years to be leading revenue earner and top brand in Kenya.
  
  Waving the patriotic flag: After the meeting ended, CEO gave a talk on his pride in the company, which is a Kenyan company one can be proud of with its customers, M-Pesa (which people all over the world come to study), M-Kesho savings accounts (500,000 users signed up in 2 months). It is 60% owned by Kenyans, which none of their competitors (i.e. Zain, Orange, Essar can claim), all their spend is in Kenya, all their profits are re-invested in Kenya, with nothing outsourced outside. It has 2600 employees (all in Kenya) , and supports over 250,000 other Kenyans through dealership and mpesa agents and another 1,500 in customer care (which they can move that to India but that would not be in spirit of the company)

• The Grid Goes Global

  Posted: September 2, 2010, 8:59 pm by bankelele

  The Grid, a mobile only social network owned by Vodacom, has gone global.
  
  First heard about The Grid when 'Portfolio Manager', Vincent Maher, spoke at Mobile Web in Nairobi earlier this year.
  
  - The Grid is a mashup of instant messaging, content sharing, location based services
  
- They target ads by location gender age time of day. Also they use location based adverts. To use LBA one needs user location, ad server that support this (Google does) and application that adds location. This is good for very small businesses e.g. hairdresser, plumbers, and they can expect to see low volume of impression but a high click though rate

  - Users don’t need to have GPS to use the service
 as the Grid uses aerial photographs and their own maps (not Google maps)

  - 

What is coming next?
- Ambient (mood based) advertising
  
- Desire line anticipation (plot where you will be and advertiser prompts you to buy later when you get there)


  
  The Grid has about two million users in South Africa, Nigeria and Tanzania. It rivals MXit, which dominates South Africa, and was launched in Kenya with Vodafone-managed Safaricom in May 2010.

• Rockefeller helps Farmers cope with Climate Change

  Posted: September 2, 2010, 1:44 pm by bankelele

  The Rockefeller Foundation involvement in Africa goes as far back as 1914 and one of their goals is to strengthen food security in sub-Saharan Africa.
  
  Climate change is affecting food security and the current floods in Pakistan attest and African farmers are seeing wild swings in weather, coping with higher temperatures, less dependable rainfall, and experiencing longer droughts. In Kenya, the Rockefeller Foundation estimates that maize production could decline by 30% in the next 20 years.
  
  Africa countries need to recognize their vulnerability to climate change as ½ billion people depend on agriculture for their livelihoods, yet some governments are instead selling off buying tracts of productive land to other countries who are themselves investing to enhance their own food security through geographic diversification
  
  The Foundation has thus made agricultural investments improve their productivity of farmers by reducing the risks they face through key innovations including
  
  - Developing new affordable insurance products for small farmers & pastoralists that are indexed to weather; this encourages farmers to increase land & agricultural investment with the knowledge that they may be compensated if weather conditions adverse affect their harvest
  
  pastoralists & their cattle camp in Nairobi's kileleshwa suburb during 2009 drought
  - Funded the World Food Program to develop a software platform to predict most destructive elements; Known as RiskView, it can be customized or every district in every country in Africa and allows governments and aid agencies to when and where a drought will occur.
  - Funded Kencall to implement a national helpline for farmers, staffed by a team of experts to answer farmer question on climate change, seeds, fertilizer, agro-dealer location etc – this will help overcome a challenge many famers don’t try new techniques or seeds because they don’t have enough information to take a risk. The information collected will become a research resource even outside Kenya.
  - Partnered with Kenya-based Alliance for Green Revolution in Africa (AGRA), in a $50 million loan program through Equity Bank’s ‘kilimo biashara’ program in which the Foundation undertook some risk guarantee enabling the Bank lend to small farmers at below market risks who take up other products like fertilizer weather insurance, and use the help line.
  
  read more

• Ship Repair in East Africa

  Posted: September 2, 2010, 1:22 pm by bankelele

  There’s an old company located near the port of Mombasa called the African Marine and General Engineering Company Limited - (AMGECO) which is a dry dock ship repair facility, and one of its kind on the East Coast of Africa.
  
  The company has a long history in East Africa, and has gone through ownership and management changes over several decades, but the core investment is the Lloyd's certified giant facility & dry dock which carries out all manner of ship repairs including steel & metalwork, engine servicing, mechanical, electrical, cabin/woodwork, refrigeration/air conditioning and hull-cleaning among others. They also re-stock ships with provisions like food and water.
  
  pic from their website
  The facility can handle repairs of various ships including cruise liners, military , cargo, tankers and others in its 40 metre wide berth, and currently they are repairing one of the old Kenya Likoni ferries.
  
  The skilled work and scope of repairs is fascinating, and ranges from light repairs of lifeboats to heavy ship re-building in their dry dock - and it makes for an interesting place to visit in Mombasa if you get the chance

• Reading the Safaricom Tea Leaves

  Posted: August 31, 2010, 10:53 am by bankelele

  Post two of three: Safaricom has been one of the most progressive companies in terms of investor relation’s management, largely because of the cost of their large shareholder base. They spearheaded move to avail electronic instead of printed annual reports and payment of dividend by m-pesa, as opposed to cheques which were unviable for many shareholder who had the bare minimum of shares. Another benefit of electronic reports is that they are easier for potential investors to obtain (some companies print as few reports as legally possible and they don’t circulate widely)
  
  Inside Safaricom's 2010 A/R
  
  Shareholders: - Safaricom has 787,363 shareholders down from 828,912 in 2009
  - The Government of Kenya has acquired more shares in the company despite a stated move of divestment. This year they have 22 million more shares, going up from 35% to a 35.06% stake
  - Overall there are more foreign buyers of Safaricom shares, but NSSF Rwanda may have exited
  - Director Esther Koimett bought 517,600 shares, and chairman Nicholas Nganga has 850,100. Outgoing CEO Michael Joseph and Finance Manager Les Baille each own 2.5 million shares, while their replacements, Bob Collymore and Chris Tiffin have none
  - Last years’ AGM (the first since NSE listing and prominently advertised as having no handouts or frills) was attended by just 2,182 shareholders.
  - 180,000 shareholders got their 2009 dividend by m-pesa (mobile phone payment)
  
  Performance - Revenue breakdown of the 83 billion ($1 billion) in revenue voice accounted for 75% (2009: 83.4%), with SMS and other data at 9.7% (2009: 8.8%), Mpesa at 9.0% (2009: 4.2%) and equipment sales at 4.4% (2009: 3.3%). Revenue growth was 8% for voice, 32% for SMS/Data and 158% for Mpesa n all categories was positive with voice at 7.8%, SMS and other data at 32.4%, 58% for equipment sales and 158% for Mpesa
  - North Eastern Kenya region is growing by over 200% owing to improved security
  
  Other Numbers - Earned Kshs 7.6 billion ($95 million) from m-pesa (up from 2.9 billion in 2009)
  - Has Kshs 10 billion ($125 million) in cash and short-term deposits, up from 4 billion the year before. Safaricom earned interest income of Kshs 350 million in the year
  - Borrowings comprise 6.28 billion from a consortium of banks, 2.3 billion from one bank, and 7.5 billion in corporate bonds
  - Have 2,000 dealers and 200,000 retailers
  - Pay income tax at 27%, compared to 30% before they listed at the NSE
  
  Staff - Launch ESOP in 2009 with 101 million shares and which will be issued in 2013. 2165 staff (88% of total) have joined the scheme
  - Key management were paid 522 million (up from 438m)
  - Of their 2,470 staff the company has an almost equal ratio of male and female employees
  
  Fibre/Data Investments: - are investing 890 million into Seacom: they paid 316 million and balance of 573 million is to be paid over the next 5 years
  - Paid 2 million to TEAMS for a 22.5% stake (other shareholders are GoK and Telkom both with 20%)
  - Paid KPLC Kshs 116 million as part of 290 million for use their power network for fibre distribution over the next 20 years
  - Bought packet stream data networks, for wimax,for Kshs 373 million shillings, and has lent Kshs 600 million to One communication (in which they own 51%)
  
  Customers - their internal customer delight index had a measure of 7.38 last year against a target of 7.76
  - Its true that premium customers get better customer service - there is a platinum line at call centre to service platinum (high end) customers on a prioritized basis (i.e. even by calling regular customer service free help line, ‘100’ they get through and served faster
  - Safaricom business has over 2,000 customers including airlines, media houses, banks
  - Mobile data is responsible for 90% of data revenue
  - customer growth (their measure) Safaricom took up 65% of new phone lines in last year
  - website: Safaricom the most progressive companies in online investor relations in terms of results and investor briefing posted on the web site and now dividend payments by mobile phone. It now uses twitter & facebook accounts, to promote its services and also try and (slowly) responsd to numerous customer service and product queries posted online
  
  Rival disclosures: Safaricom’s main rival is Zain Kenya - and while it is not a listed company, the former Zain parent was listed on the Kuwait Exchange, and used to produce some extensive reports on their African operations - ranking individual countries by revenue, profit, subscribers - which was information that the local Zain office did not typically share. Similar information can also be gleaned from Orange of France about their Telkom Kenya operation.
  
  Zain Africa sold to Bharti Airtel of India and while a financial quarter is yet to pass since the takeover, it appears they may follow the trend, as they are also a listed company with segmented reporting requirements. For Kenya in July 2010, they note that:
  
  - Airtel Kenya has been given additional frequencies that enable it to offer 3G services
  - All operators will have the right to borrow funds from the universal service fund (a fund that will comprise 1% of mobile operators annual turnover) and to use to set up infrastructure in the identified rural areas.
  - Kenya companies are Bharti Airtel Kenya B.V. (name changed from Celtel Kenya BV), and Bharti Airtel Kenya Holdings B.V. (name changed from Celtel Kenya Holdings BV)

• Reading the Access Kenya Tea Teaves

  Posted: August 29, 2010, 1:28 pm by bankelele

  one of three
  Over the last few years’ shareholders have voted to allow their companies to reproduce abridged financial statement summaries in the newspaper. One of the benefits of these resolutions would be to reduce costs of administering to thousands of shareholder, who previously were entitled to receive a full copy of a company’s audited results by mail.
  
  Now companies have the full accounts on their websites for shareholders, to download, with a summary of the annual general meeting notice, dividend, chairman statement, and financial summary that appear in daily newspapers.
  
  Limited numbers of the accounts are still printed and kept at the company premises, and distributed to analysts, partners, or to any shareholder who requests one. However most shareholders do not have Internet access or computers to read these PDF’s and may miss out on some details of events at the company.
  
  Three companies are about to have their annual general meetings in the next few days, and have all converted to the digital format in lieu of printed copies. Kenya Airways and Safaricom both had their financial year-end in March 2010, while Access Kenya has had a good year (2009), but their meeting was delayed by boardroom wrangles which saw a new chairman brought in, and later by a drop in first half 2010 results (announced earlier this month).
  
  AGM - Auditors Deloitte continue in office (new Chairman Mr. Ndonye was a long time partner there)
  - Shareholders will be asked to endorse a concluded deal to buy out the remaining 30% in Openview, which they describe as a company that sells IT equipment to enterprises and corporate customers. Openview had sales in 2009 of 165 million, up from 147m the year before, but it seems the minority owners opted to sell the company to AK (their right under original sale agreement), and a settlement was reached where payment was made by share transfers, but they also agreed to pay Kshs 38 million to settle some claims by AK group biz daily
  
  Notes - Dividend of 0.3 shillings per share will be paid for 2009, amounting to about Kshs 62 million
  - AK still enjoys benefit of listing as a group by paying 20% in income tax compared to subsidiaries and other Kenyan corporates, which pay 30%
  - Borrowings are up to 724 million (57m in 2009), but overdraft has been reduced from 166 million to 30 million. The group still has an overdraft position of 128 million. The loans are from NIC Bank and CFC Stanbic for both US$ and KES, with the bulk of this borrowing is in US$ which is cheaper (3%) is cheaper than the shillings ones (7%), unless the shilling depreciated significantly. Interest expenses for the year were 44 million compared to 6 million in 2008
  - Communications solutions limited charged 370 million as management fee and owes 364 million
  - Fibre: AK paid 106 million as investment into TEAMS (62.5 shares)
  
  Shareholders: Has 32,674 shareholders and while there are some top shareholder changes, the AK ESOP has increased stake in the company
  
  Website AK has an active presence on twitter, but is hounded by claims of poor customer service. Also from Twitter: The board has indicated there is strong interest in acquiring the company from three Telco’s but Safaricom have denied being one of them
  -@bankelele reading vacationing @alykhansatchu in the star - safaricom share dips back below IPO price as CEO denies interest in buying access kenya
  - @jgmbugua MJ is lying. I have impeccable information that they have approached AccessKenya at least three times. TKL, Airtel interested too
  - @coldtusker @jgmbugua @bankelele Maybe in the past but does #AccessKenya add real value to @SafaricomLtd today? [I say no]

• Kenya's Top Banks

  Posted: August 20, 2010, 11:44 pm by bankelele

  as at June 2010
  
  Bank Assets Pre-Tax-Profit
  1. Barclays Kshs 173 billion ($2.16 billion), profit of Kshs 4.75 billion ($59.3 million)
  2. KCB assets of Kshs 207 billion ($2.59 billion), profits of Kshs 4.34 billion ($54 million)
  3. Equity 117,578 4,282
  4. Standard Chartered 131,348 4,037
  5. Cooperative 133,322 2,848
  6. Diamond Trust 54,109 1,508
  7. Citibank Kenya 63,812 1,499
  8. Commercial Bank of Africa 60,229 1,465
  9 Investment & Mortgages 56,630 1,239
  10. National Bank of Kenya assets of 59,390 million ($742 million) and profits of Kshs 1,200 ($15 million) - then CFCStanbic (falling out of the top 10), NIC, Baroda, Imperial, and Bank of India.
  
  Notes- KCB is the largest bank (and group) but is less profitable than Barclays which is the most profitable bank
  - Equity may be the most profitable bank by next year: Five years ago (2006) they had 1/6 (Kshs 500m) of Barclays profits (Kshs 3 billion), now mid-way into 2010, they are the country's 5th largest in assets, and 3rd in profits - and are about 7X large by both measures compared to five years ago, while KCB is 1.5X larger and Barclays is 0.5X larger than it was in 2006.
  - Equity is perceived better in market terms than KCB though its half its size and has the same profits this year.
  
  Changes since last year
  - Credit sharing between banks is now being enforced
  - Anti-money laundering law now in effect
  - The Government of Kenya has set out to raise Kshs 31 billion ($388 million for infrastructure projects; Kenyan banks currently have almost half as much money invested in government securities as they do with loans to customers
  - The new constitution passed this month means we will have currency without the face of a president (virtually all existing currency bear the portraits of Kenya's past presidents)
  
  - Equity and several other Kenyan banks have decided to embrace and work with M-Pesa and other mobile money channels instead of fighting them
  - Micro-finance institutions (MFI's) are stepping up into the commercial banking sphere
  
  Incoming banks (all of which have micro-finance origins)
  - Faulu Kenya
  - Jamii Bora (formerly City Finance)
  - KWFT
  
  Gone banks
  - Southern Credit (bought by Equatorial)
  - S&L (absorbed into KCB)

• Bharti Airtel in Kenya

  Posted: August 19, 2010, 1:57 pm by bankelele

  Zain/Bharti shake market: On August 18, Zain Kenya announced new unprecedented low rates for voice calls and SMS in a new tariff war. The new rates for calls of Kshs 3/=(~$0.04) per minute and for SMS of Kshs 1/=(~$0.01), which apply across all networks and are available to all Zain customers, easily trumps their main competitor, and market leader, Safaricom whose rates hover around Kshs 8 for a phone call and Kshs 3.50 for an SMS (and 12/= and 5/= to other networks for the same).
  
  True cheap rates: The new rates have been well received with very popular comments online and a rush by consumers to obtain Zain lines or re-activate old ones. CEO Rene Meza called this a new long dark journey to market dominance [i.e. from 10% now] and one they will tackle aggressively for the long term. But is it sustainable? The last time Zain engaged in a price war, they ended in a bloody loss, with Zain gaining customers but not market share and $90 million in the red.
  
  Airtel Strategy : However Zain Kenya is no more. The push comes from new owners Bharti Airtel of India who completed their takeover of the Zain Africa Group last month and will rebrand the company (in Kenya) by October 2010. They have also set out to re-position the local telecommunications sector in tandem with Essar and France Telecom by lobbying the government for other changes to level the playing field in a market they believe is unfairly dominated by Safaricom and which denies Kenyans true freedom of choice.
  
  At the official launch in July, Airtel executives the emphasized some of their strategies including:
  - They are rural focused and will build a rural brand through farming related promotions and CSR activities
  - Be a low cost operators; employ low skilled sales force
  - Lobby for number portability
  - Push for lower interconnection rates which will lead to affordable products
  - Lobby for infrastructure sharing i.e. no need to have 5 cell phone towers in a small town (all incurring electricity, security, cement, other charges) town when 1 will do with all Telco’s sharing transmission and fibre
  - Work with ecosystem partners, like HP and Eriksson, and have a BPO call centre
  
  Will the government deliver on low connection fees, number portability and infrastructure sharing? At the launch Meza mentioned that the Communications Commission of Kenya (CCK) had lowered the interconnection tariff from about 4 to 2 shillings effective September 2010.
  
  Short-term losses: Meza said they plan to grow revenue and subscribers, and margins and profits will come later from operating a lower cost structure. And in a back stab at the previous owners (and perhaps minority shareholders), he said for the first time in eight years they have shareholders with the right mind-set to allow them to take opportunities in the market, increase rural penetration and utilise the right technology - by investing Kshs 24 billion (~$296 million) in the next 18 months on rural cell phone sites, revamping their zap money transfer systems, increasing their outlets & distribution network, expanding their 2G network, and rolling out a 3G network by the end of the year (since the license fee was reduced this year, they will be able to cover more parts of Kenya than just Nairobi and Mombasa)
  
  Improve on Marketing: Marketing has always been a weak point at Zain, who keep throwing out too many confusing promotions one after another after another. The Wednesday Nation had a full-page ad for the new Zain (3/= and 1/=) rates and on the adjacent page was a small story touting a tariff for Zain ‘Club 20’ subscribers who could now get free calls and unlimited SMS from 11pm to 6 a.m. within the Zain network only! And all this comes a month after they had launched anotherrevolutionarypromotion. Hopefully this will hopefully change with the recent marketing executive appointments and re-focused brand and strategy.
  
  EDIT - Other Developments
  - Zain accuses Safaricom of sabotaging its new price offer
  - Safaricom reassures Zain over inter-connect capacity, and says their concerns are premature.
  - CEO's e-mail exchange between Rene Meza (Zain) and Michael Joseph (Safaricom)
  - Safaricom launches Masaa tariff with prices of Kshs 2-4 for Safaricom calls and Kshs 3-5 to other networks.
  - Orange (France Telecom/Telkom Kenya) make their low cost pitch with Kshs 2 and Kshs 4 for on and off net calls respectively, with free on net calls from 10 AM to 5 PM for Kshs 100 per month ($1.25)

• Scangroup & Ogilvy Redux

  Posted: August 17, 2010, 6:58 pm by bankelele

  Scangroup shareholders today did their part and unanimously approved the proposed deal to buy into Ogilvy Africa as they also endorsed the creation and allocation of new shares to be swapped under the deal.
  
  This will give Scangroup (thorough Ogilvy) an opportunity and footprint to enter about 8 African countries as a minority partner and links with 15 affiliates, and CEO Bharat Thakar mentioned that creation of a Pan-African agency was fulfillment of a long ambition and the only way to grow the company since the Kenyan (and east African) advertising market was saturated.
  
  The deal still hinges on approval of South Africa authorities for the share swaps (otherwise Scangroup/WPP will have to pay $5 million to complete the deal). By using shares to complete the deal, Scangroup's war chest of cash at WPP is still available and ready to be used to seek majority stakes from these new Ogilvy partners around Africa.

• Scangroup & Ogilvy Redux

  Posted: August 17, 2010, 6:58 pm by bankelele

  Scangroup shareholders today did their part and unanimously approved the proposed deal to buy into Ogilvy Africa as they also endorsed the creation and allocation of new shares to be swapped under the deal.
  
  This will give Scangroup (thorough Ogilvy) an opportunity and footprint to enter about 8 African countries as a minority partner and links with 15 affiliates, and CEO Bharat Thakar mentioned that creation of a Pan-African agency was fulfillment of a long ambition and the only way to grow the company since the Kenyan (and east African) advertising market was saturated.
  
  The deal still hinges on approval of South Africa authorities for the share swaps (otherwise Scangroup/WPP will have to pay $5 million to complete the deal). By using shares to complete the deal, Scangroup's war chest of cash at WPP is still available and ready to be used to seek majority stakes from these new Ogilvy partners around Africa.

• Briefcase VC

  Posted: August 17, 2010, 12:22 pm by bankelele

  What’s briefcase VC?
  
  In Kenya we are familiar with briefcase NGO’s and briefcase contractors. 'Briefcase' is a not so nice was of describe someone who has access to power but does not invest resources in business. A briefcase NGO has no programs or operations, and exists merely to solicit funds from donors, while a briefcase contractors wins government contracts/tender (through the influence of a power network) which he/she has no capacity to implement, then sub-contracts these to compete firms (without access).
  
  A Briefcase VC (venture capitalist) is probably a tourist on holiday, who calls around or approaches vibrant local tech companies with unsolicited offers to invest in them - but has no funds or capacity (beyond a website) to do so and no recent deals to speak of, and unfortunately are able to put hungry young companies through hoops as they restructure and comply in the hope of getting funding that it unlikely to materialize.

• Shares Portfolio August 2010

  Posted: August 10, 2010, 9:26 pm by bankelele

  Market picking up steadily since last quarterly review in May 2010
  
  The stable
  Diamond Trust ↑
  Kenya Airways ↓
  KCB ↓
  Kenol ↓
  Safaricom
  Scangroup ↑
  Stanbic (Uganda) ↓
  Uchumi ↔
  
  Review:
  - Best performer: Scangroup Safaricom up 25% this quarter
  - Worst performer Kenya Airways down 10%
  - In: Kenol
  - Out: None
  - Increase None
  - Decrease None
  - Unexpected gains/losses: None
  
  Events & Outlook:
  - Performance: The Portfolio is up 8% in the last three months while the NSE Index is up 10%.
  - Got dividends from all the banks, which are improved performance this year. Dividend included that from Stanbic Uganda but its still a problems to cash as Stanbic Kenya is incapable of partnering with Stanbic Uganda to ease the encashment process – even better would be for Stanbic Kenya though CSFS to facilitate more share buying perhaps reinvestment of dividends to buy more Stanbic UG shares
  - Sat out the KCB rights issues whose results came out today (August 10). The Bank had set out to raise Kshs 15 billion ($189 million) from shareholders but yielded 83% of that – 12.45 billion
  - Scangroup’s investment in Ogilvy Africa
  - Kenol rebounded from problems at battle with government to report some much improved first half profits.
  - Looking forward to buying Safaricom shares, and attending their (no SWAG) AGM
  - Uchumi is yet to re-list despite exiting their receivership phase
  KQ leased 737 from KLM
  - Privatization: The Kenya Government is short on cash but their privatization basket is still empty. Nothing has come yet from National bank and East African Portland cement, while the next infusion of cash is likely to be from Kenya Power & Lighting Company. Meanwhile the Kenya government bond market has been much more active than the equity one.

• Government Contracting to SME's

  Posted: August 9, 2010, 11:28 pm by bankelele

  The Government of Kenya is collectively the biggest spending entity in the whole country. Yet provision of goods and services to the government is often over-looked by small and medium enterprises (SME). Many do so for a variety of reasons, some of which are late payments for good/services delivered, demands for bribes from government procuring officers, costly and time-consuming red tape procedures.
  
  However the opportunities are there for small companies to take. It is wrong to look at this collectively because different ministries, parastatals, agencies are governed under different rules of administration and purchasing. Over the last few years the procurement process has been streamlined at many government bodies. More tenders are advertised to the public giving more opportunity for new bidders, Corruption is not as blatant and the avenues for redress in this regard have opened up. Also there are opportunities in technology that new upstart companies can grab if they are prepared for the process.
  
  A glance at some recent GoK procurement awards at the website of the public procurement oversight authority (PPOA) shows some technology related awards including:
  - Direct loading of Safaricom airtime for senior staff at the Kenya Revenue Authority - won by Safaricom (Kshs 7.8 million)
  - Provision of documentation software at the Kenya Ports Authority – won by Sap Africa (~Kshs 5.7 million)
  - Installation and commission of security software at Kenya Forest Services (Kshs 14.9 million)
  - Supply of a network operations for Kenya Education Network- won by Lantech Africa (~Kshs 176 million)
  - Provision of data capture at the High Court registry – won by DPH Software Services (Kshs 69.9 million)
  - Support of the digital village sat the Kenya ICT board – won by Intelecon Research & Consultancy (~Kshs 25.9 million)
  
  The steps to winning & executing a tender are:
  
  - See advert in the papers
  - Pay a stipulated fee to obtain bid documents Kshs 2,000 to 10,000 ($125)
  - Return bid documents by a specific date and witness the opening of tenders. Bidders are often asked to provide copies of company profile, financial accounts, list of other similar contracts executed (referees/proof of performance)
  - Winner gets limited purchase order (LPO)
  - Winner delivers goods
  - Winner receives payment
  
  There are variations to this process; sometimes bidders are asked to return only a technical proposal (to demonstrate their understanding and expertise) subject to which those short listed are now asked to provide financial proposals. The lowest bidder at this stage should win though sometimes weighting the technical and financial scores arrives at the winner.
  
  Sometimes a winning bidder may experience delays in procuring goods, or as a result of other factors beyond their control. The end result is that their payment may be delayed. This cash flow cycles often cripples many small business hindering their opportunity to take up new orders while waiting for old payments to be received.
  
  This is where banks products such as solid loop, a contract finance loan, from consolidated bank can assist an SME. However, one major improvement in the PPOA rules is that a government entity cannot put out a tender for a good or service that is not budgeted for and which it has no funds for – and this cuts down on a situation where a company may provide a service that will not be paid for several years.
  GoK gives you wings
  So government procurement should be looked at in a new light, and many more vibrant emerging companies should seek out as aggressively as they seek out private sector or multinational procurement orders. These can be areas such as payment processes, digitization /archiving of records and web & mobile developments

• Media Moment: Newspapers Circulating in Africa

  Posted: August 3, 2010, 11:41 pm by bankelele

  Half year Growth: Kenya’s Nation Media Group released their half-year results on August 2 in Nairobi. The results were impressive for a media house, and as their CEO (Linus Gitahi) noted, newspapers still show double-digit growth in Asia, Latin America and Africa.
  
  At NMG Circulation numbers were up in terms of Nation copies distributed (up 6%, though no numbers cited), circulation revenue of the East African is 5% and business daily is up 10% - and overall the newspaper division had operating profits up 36% thanks to reduced costs.
  
  NMG have also expanded in the region (Tanzania and Uganda), invested heavily in digital media, but pulled out of a magazine venture (EAMagazines) before it collapsed. (The venture has been revived with new owners, and one magazine True Love is now back in publication)
  
  They have also reached out to the online community and social media - as the CEO mentioned Facebook several times noting the 100,000+ fans of their EASY FM radio station. Also, like with the Pan African Media Conference that marked their 50th anniversary, NMG reached out to the online community via invitations to bloggers to attend the announcement, and the CEO noted the presence of DJ CK (Chris Kirubi) and Aly Khan Satchu of Rich Management.
  
  (The CEO’s half year presentation can be downloaded from the NMG investor page).
  
  TV In –n- Out: The Indian Ocean Newsletter hinted that a new TV station and a new newspaper would hit the streets of Nairobi on August 1. No newspapers are out yet, but a 'new' TV station is now up on air. At recent, events the presence of staff with the 'GBS' name (not to be confused with the collapsed UK sports broadcaster GTV) have been noted, but few knew what that meant. Now the station is air with a very powerful signal – as the Good News Broadcast Service a.k.a GBS with a mix of news and Christian programming
  
  However, still missing from free airwaves is CNBC Africa which is no longer broadcast on free TV in Nairobi and is only exclusive to satellite subscribers on DSTV
  
  Kenya Times Falls: Also missing from many streets and the advertising radar is Kenya Times newspaper which has floundered ever since KANU lost the Presidency in 2002. Dalliances with potential new owners, editors, investors have not borne fruit, and last week there was a notice in the paper about the entire office and press of thew newspaper going under the auctioneer’s hammer. Today’s paper has another ad canceling that auction but it’s probably just a postponement of the inevitable unless …

• Scangroup & Ogilvy Africa

  Posted: July 30, 2010, 5:00 pm by bankelele

  At the end of April Scangroup announced a deal to buy into the Ogilvy Africa group and has now invited its shareholders to approve the transactions.
  
  
  1. The acquisition of 51% in O&M Africa and 50% in Ogilvy East Africa will be structured as
  - O&M Africa: 51% is to be acquired by payment of $238,360 (Kshs 19 million) cash and transfer of 6.2 million shares of Scangroup worth Kshs 166 million.
  - Ogilvy East Africa: 50% will be acquired by payment of Kshs 13 million to Ogilvy south Africa (paid in US$) and transfer 4.4 million shares worth Kshs 118 million, and a payment to fellow shareholder Russell Holding of one euro and payments to Koome Mwambia comprising cash of Kshs 20.6 million and transfer of 3.12 million Scangroup shares worth Kshs 82.4 million
  2. Shareholders will have to approve creation of 14 million new shares and waive their pre pre-emptive rights to allow the new shares to be allotted to Ogilvy South Africa and Koome Mwambia.
  
  Winners
  - Scangroup gain entry via minority shareholding in Ogilvy into Namibia, Cote d'Ivoire, Senegal, Burkina Faso, Cameroon, Gabon, Zimbabwe, Nigeria and non-equity affiliates in 11 other African countries to create a Pan-African agency
  - Koome Mwambia sells out his shareholding gets cash and becomes a top 10 shareholder in Scangroup and he is to enter into a management agreement to remain MD Ogilvy East Africa
  - MD Bharat Thakar gains a pan African footprint and loses just 5%
  
  Losers
  - Local investment bankers: No transaction advisers were appointed and the IM only has an opinion from BDO East Africa that issue price of Kshs 26.4 is fair and reasonable and Deloitte's calculation of these price (now trades at Kshs 36)- Kenyan corporates whose choice of partners in media, PR, advertising got smaller – as Scangroup, Ogilvy, Hill & knowlton, Blueprint, Mindshare , Millard brown, Squad digital, Smollan are all under one roof.
  - Scangroup if the share swaps are denied by the South African authorities, will have to pay Kshs 427 million ($5.2 million) to proceed

• From Huawei to Makmende

  Posted: July 28, 2010, 11:20 pm by bankelele

  Last Tuesday was a roundabout day that began with the Equity Bank half year results announcement at and ended with Safaricom launch of a U8220 Android phone made by Huawei.
  
  In between I shook hands with James Mwangi, Churchill dodged my paparazzi snap attempt, a friend of mine missed out on a free giveaway of the Huawei phone, and I missed out on buying some shares in Equity Bank as my stockbroker (temporarily) misplaced my funds.
  
  At the Huawei launch, I had interesting chats with one pal on Kenol and another who found out an interesting tale about mobile spectrums – basically Kenyans should ignore mobile phone company promises and forget about 4G as its’ reserved for the Kenya military until further notice.
  
  Huawei and Safaricom were jointly launching an android phone to the Kenyan market and since the Safaricom COO was late in traffic as per his boss, Michael Joseph the CEO stepped up and launched the phone on his behalf. The CEO seemed underwhelmed by the occasion, maybe because his retirement was about to be officially announced or maybe because it was because the Smartphone being unveiled would cost about Kshs 30,000 and was nowhere near the $100 (~Kshs 8,000) price for a smart phone which he has commented as being a key target for future data growth.
  
  This ambivalence perhaps cascaded down because when Safaricom ran adverts for the new phone in the next day's paper , they were advertising a VF845 costing Kshs 16,500 ($206) and not the U8220, which had just been launched. The 'correct' ad for the U8220 then ran the following day pricing the phone at 27,200 (~$340)
  
  Two days later, Bank of Africa formally opened their Ngong Road branch at Bishop Magua Center. This is their second branch opening this month after Nakuru and they have set out to go after the not for profit customers. They have launched a Goodwill Current Account with goodies for NGO's including waiver of monthly ledger fees, cheque book costs, (Kshs) withdrawal/deposits, internal transfers, incoming wires, banker’s cheques, interim statements and a minimum operating balance.
  
  And finally on Friday, in the same building, the iHUb hosted a launch by Kuweni Serious (Get Serious) of a of a series of clips aimed at getting young Kenyans to participate in the constitutional referendum and in public life and starred Makmende.
  Here’s one clip
  
  

• Farewell Michael Joseph

  Posted: July 23, 2010, 10:31 pm by bankelele

  Safaricom announced in a statement that their long-serving CEO Michael Joseph will step down in November from the helm of the company. He has been CEO as long as this blog has been around and a search through archives finds these posts
  
  image from the business daily
  - Long before, the IPO there was a shareholder tug of war evict him in favour of a Kenyan CEO
  
  - In 2006 he gave a talk at the British Council on how the company which started with 5 employees and 17,000 customers, overhauled celtel and came to be one of the largest revenue earners and tax payers in Kenya. The talk was given before the IPO and before they launch M-Pesa and had numerous insightful tales, as he was the only spokesperson for the company and he also touched on low education standards, wrong government statistics, the problems at kencell/celtel/zain/ and political battles to succeed his seat.
  
  - The first post IPO report shows that he has 2.35 million shares in the company, same as the CFO so probably a contractual bonus
  
  - He has said post retirement that he will contemplate becoming a Kenyan citizen. He (and the company) have received manyaccolades both local and international. Form government, the private sector and he is noted for his CSR efforts especially in conservation of wildlife and forest
  
  - For many years, he has been Kenya’s Steve Jobs, a man so closely inter-wined with their brand and with a medical history, but whose company had not defined a succession plan until this week. New reports indicate the new CEO will work with MJ for two months from September, and that he will continue on in advisory role even after he leaves the CEO office.
  
  Other Blogs
  - Kainvestor asks if he was corporate legend?
  - Ratio Magazine on how the retirement may shake up the local mobile & telecom sector
  - Interviews with the CEO

• Karibu Member

  Posted: July 22, 2010, 12:46 pm by bankelele

  On July 20 Equity released their half year results at Equity Centre headquarters in Nairobi CEO James Mwangi mentioned that they are usually the first with results (this time pipped by KCB who are in the middle of a rights issue)
  
  Positive economic outlook: He noted that the picture is much improved from last year; with good agricultural harvests and prices, high exchange rate, government social programs rolled out (Vision 2030 social equity programs for the youth & marginalized), positive progress in the political arena in terms of new constitution, formation of the East African community with 126 million people, remittances are above 2006 figures, tourist arrival are ahead of the 2007 figures, and overall the economy of Kenya is expected to grow by 4.5 – 5% this year.
  
  Bank focus: How does bank focus strategically?
  - They have introduce new concept to influence direction of the bank, which for many years operated at micro finance until five years ago went into commercial banking. They have now created structure and are building capacity to move into investment banking (highest IRR per unit of capital), and merchant banking (private equity, venture capital) around east Africa.
  - About 400,000 customers graduated to upper and middle SME’s class. They have invested in a level 4 data centre, with a 65 million-card switch and banking platform that can handle 35 million. also boldly claimed that they have overtaken Safaricom to be Kenya’s premier brand
  - Innovation will continue through more collaboration with Telco (e.g they have opened 400,000 m-kesho accounts) without agents (yet) and are doing about 20,000 ones per day. Their their dream of opening 10 million accounts is still alive. They are acquiring merchants for visa and MasterCard (3,000 merchants in Kenya) and CBK has approved 4,000 retail outlets to become agents; they want agents to do transaction processing (withdrawals/deposits) at a commission, and equity do loan processing - so when you go buy milk and bread from kiosks, you may be able to withdraw cash
  
  Bank performance: compared to last June
  - Added 20 branches (now 165) but none in 2010, and 550 ATM’s (up from 494) and say they have achieved staff stability (5,169 from ,5,056) - no more huge growth in numbers
  - Have 4.96 million deposit accounts (up from 3,.9m) and loans 833,819 loan accounts (up from 710k)
  - Loans of 68.3 billion (up 27%) deposits 87.8 (up 53%) and assets 122.5 billion (up 40%) – CEO noted that with the economic recover they ate going back to the days when deposits used to grow at 70 % p.a.
  - Interest income was 7.3billion (up 45%), commission income 3.8 billion, total income was 10 .1 billion and with expenses at 6.27 billion, (up 36%), profit before tax for teh half year was 3.88 billion [~$48 million] (up 46% from last June)
  
  Summary: He’s optimistic because unlike last year, income is now growing faster than expenses, staff costs grew at 16% compared to previous 40% and asset quality back to 2007 (before Kenya election chaos and drought). The CEO was keen to emphasized that capital base of bank good, and shareholders will not be diluted this year or next year and that their investment in human resource, capital and systems are large enough and stable enough for the next three years, meaning that they can at least double in size without making new investments or seeking new capital.
  
  Q&A
  
  Regional diversification How have Sudan and Uganda performed?
  Sudan: Contributed to profit in first year of investment almost ~$2m– not bad for Greenfield. So far only operated in equatorial Sudan, which they can run from Uganda. They have also got lots of corporates to sign with them as their bankings, which used to take 4 days, now takes seconds with equity. The CEO expect S. Sudan to have a peaceful referendum vote next year, which will yield Africa’s 54th state
  
  Uganda: Here, they have been bleeding - in Q1 lost 12b shillings (Kshs 600m), Q2 made los of 3b shillings (Kshs 120m) – but expect to break even this month, and be out of loss in September. In Uganda they made a made mistake, as they did not freeze lending when they bought the other bank - left in the old managers who lent $16 million in 3 months. He believes its much improved; even though they bought a non deposit taking organization, they now have more deposits than loans, (have mobilized Kshs 4b deposits, compared to loans at Kshs 3b) and have 440,000 savers in Ug.
  
  Their increase in provisions in H1 of 2010 (up 211%) is as a result of making a one off hit to clean up Uganda books and the investment was a learning process for them. In hindsight they should have frozen lending and it’s a good lesson they will apply in more countries – the cost would have been much higher if they had made their first outside investment in south Africa or Nigeria and they still have their plan to be in 10 African countries in the next 5 years and now have a 50 member expansion team.
  
  The next foray in East Africa is likely to be Tanzania, earlier they had wanted Rwanda, but there was no easy entry point. But with the new east African community protocol, staff will be able to work without work permits, and it will be much easier to travel across borders
  
  Cyber crime: While he said there have been no hacking attempts on their secure systems, his managers mentioned that there have been attempts to phish or skim originating from eastern Europeans who see Africa as a soft target - however the attacks are not specific to Equity Bank (who are a leading issuer of visa cards) who are on their guard and have not lost through this fraud.
  
  Agency banking opportunities: - From September this year, customers whose salaries pass through Equity will be able to apply for loans from mobile phones or ATM's, not fill out any forms, and automatically get approved a loan (without human interaction)
  - They do about 2,500 M-Pesa transactions each day through their ATM’s from which they earn more than normal ATM charges, gettingabout Kshs 50 – 60 per m-pesa transaction as customers come and withdraw amounts that other agents can’t facilitate owing to float

• Barclays no longer flat

  Posted: July 22, 2010, 12:11 pm by bankelele

  A few years ago Kenyan banks rolled out a variety of flat fee accounts; this was at a time that there was an outrage in the country over bank charges pumping up bank super-profits.
  
  The flat accounts offered a range of services at one flat fee. NIC was the first with MOVE, then Diamond Trust, Standard Chartered with Diva (for Women) and later X Account (for Yuppies), while Barclays had Bouquet accounts that cost Kshs 490 ($6.5), 590 and 690 ($9.2) per month.
  
  They are few now left. Diamond Trust took their fee lower, and NIC went higher to ease out the flat tariff. Now Barclays have joined suit; for a while, they may have felt they were being taken for a ride by their customers (perhaps business owners who funneled large volumes of transactions through the flat fee account, and a few months ago) they tried to disguise an increase in the minimum fee flat fee from 490 to 590, by claiming that they had added ‘free’ mobile banking.
  
  One problem with flat fee accounts for some sustomer who underutilized the accounts (like myself) was that they were limiting in that you paid much more than you used and you could not get additional services without paying extra; flat fee accounts could not be altered, e.g. to get a cheque book or set up a standing order you had to move to a higher priced account
  
  Last weekend Barclays did a system upgrade and one end product seems to be a removal of the flat fee monthly accounts in exchange for a more conventional transactional charge for each over the counter or ATM transaction. The new accounts are called bank account (reduced ATM fees), bank account plus (free banking if over 50,000 [$625] in account), business flexi (cheque book) and business bouquet (first 20 transactions free). They also have tie-in discounts with Tamasha/buffet Park. Nike shop, Nairobi sports house and Sherlock’s den

• Medical Investments in East Africa

  Posted: July 15, 2010, 5:50 pm by bankelele

  Reading the Nairobi Hospital tea leaves
  
  Had a mini debate (with @matrixster) about the potential returns of investing with AAR or another medical sector firms in Kenya (if it is well run). Kenya and the region’s population has been steadily growing (good or bad thing?) and with more people accessing formal medical care would that not be a growth opportunity? While it’s tough to get true picture of the many private firms that operate in the sector, there has been quite a bit of banking and VC interest, with some local venture capital firms specificaly seeking out medical investees.
  
  Kenya’s premier hospital, Nairobi Hospital, which is owned by an association of members, also have their results out for 2009. It is considered a hospital for the middle and upper class in Kenya and the region. But, you can also get admitted to Nairobi Hospital if you observe the Underwear Rule (hilariously illustrated here byKuweni Serious)
  
  Anyway Nairobi Hospital, which is not a bad place to stay and recupearate ,had these illustrative numbers to ponder.
  
  - Turnover of Kshs 3.98 billion ($50 million) up from 3.3 billion in 2008
  - A surplus of 832 million ($10.5 million) up from 564 million the year before
  - Some income items: Medicine sales of 1.194 billion, inpatient bed income of 809m, radiology 400m, lab income of 628m, theatre/HDU/ICU income of 300 million, student fee income of 33m, and finance income of 47m.
  - Some expense items: staff costs of over 1 billion, bought medicine costing 894m, cleaning costs of 70m, oxygen 16m, and finance cost of 22m (with 11m paid to credit card companies)
  - Some operational numbers for the hospital: They had 106,242 visits to accident & emergency centre, carried out 427,725 lab tests, handed out 269,302 prescriptions, and did 93,755 radiology procedures. They also anoccupancy levels of 80%, up from 77% on their 272 beds, and had a slightly improved a customer satisfaction measure of 79.1%
  
  They promote their service locally and abroad; Since, in Nairobi, there are firms who advertise for medical procedures to be performed in India, the Nairobi hospital also competes for the same customers; last year they continued a medical tourism program that targeted 8 African counties and their teams made visits to DRC and Uganda, which may have contributed to their 50% increase in the number of foreign patients. Domestically, they participated in 16 expos and 36 corporate sessions, had open days (kidney, cardiology) and sponsored programs on Radio Waumini, and K24 TV.

• A to Z of Proposed Kenya Constitution

  Posted: July 13, 2010, 7:32 pm by bankelele

  Kenyans will vote in a referendum in August 2010 on a new constitution. Here’s an A to Z summary of some of what’s contained in it and the [chapters] which are cross posted at Mzalendo (where one can also download the current, proposed draft, and other analysis of the changes).
  
  Affirmative action: provides for 1/3 women on government boards, county assemblies (177) etc. (noble, but is it practical?)
  Culture: parliament will enact legislation that will see communities get royalties for use of their culture, and recognize the use of their seeds which will legalize mnazi, muratina, mayeek, busaa etc (11)
  - Youth: can benefit from affirmative action and access training and employment (55), but odd for a government that continually employs retirees and has extended the retirement age
  
  Citizenship: Dual citizenship is allowed - and a born Kenyan does not lose citizenship by becoming one of another country, and anyone who has lost it is entitled to re-acquire it (14) and (16). Also citizenship can be acquired by marriage to a citizen for 7 years, or lived in Kenya for 7 years (15) or is an orphan under 8 years can be citizens (14)
  
  Devolution: - The 47 counties are spelt out in the first schedule and include Mombasa, Kwale, Kilifi, Tana river, Lamu, Taita/Taveta, (for what looks like coast province), while Nairobi City is a single county
  - County government will have an executive committee (led by governor and a deputy governor who may not serve more than two terms) and not more than 1/3 of the assembly members.
  - National laws prevail over county laws where there is a conflict (191) (e.g. Mandera town that purported to ban DSTV)
  
  Elections: - Will be run by one body called the independent electoral and boundaries commission (82); currently there are two separate commissions, one for boundaries, one for elections. After it passes the boundaries commission will set constituencies and ward boundaries for the remainder of their term (but not county boundaries)
  - Election petitions can be served by a notice in a newspaper (87)
  - Independent candidates can avoid messy, expensive, party elections by running without signing on to a political party by obtaining 1,000 signatures for MP and 2,000 for senate from constituents (99). Also political parties have one year to comply with political parties act or be disbanded
  - Election date is constitutionally set (101) as second Tuesday in august, every fifth year for all including president. (This will be during August holidays for most schools which also double up as voting centres, but also importantly won’t affect busy Christmas season when elections have traditional being held and which churches have complained about)
  
  Financial Management: - No budget busting: government may not spend more than 10% in supplementary appropriations in any financial year (223)
  - Parliament shall enact creation of an ethics and anti-corruption commission (79) (good because current anti corruption commissions can’t review ethical actions such as conflicts of interest actions which don’t qualify as corruption)
  - Constitution defines separate roles of attorney general (156), director of public prosecutions (157) controller of budget (228), and auditor general (229)
  - The human rights & equality commission, judicial service, land commission and auditor general all have power to summon witnesses in the course of their investigations (252)
  - No double jeopardy: every accused person has the right not to be tried for an offence that was previously acquitted or convicted (50). Also you can’t be tried for an act that as not an offence in Kenya, or under international law (does that exclude old economic crimes which were only legislated in 2003? would Pattni, other Goldenberg offenders go free?)
  - A salaries & remuneration commissions will be created (230) that is separate from the public service commissions (233)
  - County Governments: are a are a new level of Government created to devolve power to the people by way of 47 county governments (176), will receive and share at least 15% of revenue raised by the state (203). Another 0.5% will go to an equalization fund (204) for the government to use to provide services to marginalized communities for the next 20 years. A commission on revenue allocation (215) formed by the president will recommend how much each county gets out of the national government while the senate will vote every 5 years on resolutions sharing resources among counties (217). Parliament till normal vote on such bills two months before the end of their scheduled terms (218). Using the 2009 numbers, of tax revenue of Kshs 480 billion, county governments will get 72 billion
  - Tax separation: county governments collect property, entertainment and other taxes approve by parliament, while only the national government may collect income tax, customs, excise and valued added – VAT taxes
  - County finance: county government may take loans if their assemblies approve, but only if the national government guarantees that (212). Parliament may legislate bailout of non-functioning county governments (190) and the government must operate sound financial systems prescribed by national government
  
  Judiciary: - Kenya will now have a supreme court (163) in addition to court of appeal (164) and high court (165) and subordinate courts (169) comprising kadhi courts, magistrate courts, and court martial
  - The Kadhi’s Court is limited to Moslems matters of status, marriage, divorce and inheritance (24)
  - The president will appoint judges, recommended by a judicial service commission for approval by parliament (166)
  - Traditional dispute mechanisms, are encouraged, but shall not violate bill of rights (159)
  - Judges and chief justice lose jobs under the constitution and have to re-apply (–)
  
  Land: - Clause (60) says land customs and practices should not have gender discrimination, but (67) which creates a national land commission also encourages application of traditional dispute mechanism in land conflicts (where daughters are routinely left out of land inheritance)
  - Community land definition (63) is vague – it mentions ethnicity, but is that Masai land (managed by specific communities), (volatile) Kalenjin land, county government land, or Ogiek land (traditionally occupied by hunter gatherer tribes)?
  - Land holding by non-citizens is restricted to 99-year leases (65) (takes effect as soon as the constitution is passed) and land without an heir reverts to the state (62)
  - Parliament must ratify concessions of land and mining agreements (71) (no more Tiomin’s)
  - In terms of land not much will change since parliament has the discretion to set rules (68) on land investment, minimum and maximum land holding, foreign ownership of land, matrimonial sharing and inheritance
  
  Parliament/Legislature: - Is based on 290 constituencies and 47 counties.
  - Parliament (97) will comprise 290 members of parliament, 47 women one from each county, 12 nominated by political parties and a speaker
  - Senate (98) will comprise 47 members, one representing each country, 16 women nominated by political parties, 2 youth nominees (M/W), 2 disabled nominees (M/W) and a speaker. They will legislate on bills concerning the county governments (110)
  - There will be two different speakers and two different clerks (128) in each house, and also speakers for each county
  - Money bills (114) are any that touch on taxes or use of public money or guaranteeing of loans, and will be referred to the cabinet secretary and parliamentary committee first before parliament votes on it (e.g. Anglo leasing?)
  - Any parliamentary vote that affects their interest e.g. salaries wont take effect until the next parliament comes in (116)
  - Quorum (121) is higher for senate (15 members ~22%) than for parliament (50 members, ~14%)
  - Parliament /national assembly (132) shall approve on nominees of the president for cabinet secretary (ministers), attorney general, secretary to cabinet, principal secretaries (permanent secretaries), ambassadors/diplomats
  - There are no term limits for parliament as there are for presidents, county government, judiciary and government officers e.g. inspector general of police will only serve one 4-year term (245)
  
  President: - Is (131) head of state, government, and armed forces
  - Restricted powers of acting president defined (134) as well as procedure when a president is incapacitated (144) or impeached (145)
  - Will be sworn in public (141) (swipe at you know who) two weeks after election results or one week after an election petition verdict by Supreme Court
  - Deputy president rules are defined (148) may not be replaced on whim (150) (has to resign or be impeached) and may not serve for more than two terms (148)
  - Cabinet size is defined (152) as between 14 and 22 cabinet secretaries (152) approved by parliament (no more 40 minister plus 60 deputy minister governments)
  
  State officers: (and anti-corruption)- Have leadership rules & guidelines set out for them mainly objective service to the public (73) & (75)
  - Can’t have bank accounts outside Kenya
  - Restrict number of directorships to not more than 2 simultaneous ones
  - Can’t be involved in politics (e.g. chair a Kengen and a political party)
  -Person who has been removed from a state office for a violation is not eligible for any others
  - State officers shall not have other gainful employment (77) (is this a repeal of the (controversial) Ndegwa Rule that allowed civil servants to engage in private business?
  
  Transition/Summary
  - Parliament’s calendar for the next three years to 2012 is going to be very heavy as they amend and enact new legislation to support the constitution if it is passed in August
  - President Kibaki, Vice President Kalonzo,Prime Minister Raila – his deputies Uhuru & Musalia, and the bloated cabinet of 100 ministers & deputies will remain in their posts until 2012 or the dissolution of the Grand Coalition Government. During this period Kibaki can continue to make appointments in consultation only with Raila. In effect the executive and parliament have postponed the difficult decisions of trimming the cabinet and subjecting appointees for parliamentary approval to the next government, as the constitution does not provide for prime minister or deputy ministers.
  - Key government officials will be forced out including chief justice Gicheru who will be out in 6 months, attorney general Wako and the auditor general who will be out in 12 months while all other state officers remain intact. In the first year parliament is to setup up system to vet existing judges. Any acting officials are left in limbo, so expect anyone serving in an acting capacity to push for confirmation before the constitution becomes effective
  - The provincial administration staff will be re-deployed into government over the next 5 years
  - Civic education has not been carried out adequately in the country and media and politicians have polarized on issues of the kadhi courts, abortion and land.
  - From a taxpayer perspective, taxes are likely to go up to support devolved government structures which ill take up over 15% of money raised by the current government, and services provisions are likely to go down, in the short term as the government is already on a cash crunch and devolved government set up to take on their new roles

• KCB Rights Revolution

  Posted: July 9, 2010, 3:44 pm by bankelele

  ($1 = ~Kshs 80
  Six years after the first, and two years after the second (reloaded), comes a third KCB shareholder rights issue (a revolution).
  
  KCB (aka Kenya Commercial Bank) is Kenya’s largest bank by assets [Kshs 221 billion (~$2.75 billion)] and has 210 branches in Kenya, Rwanda, South Sudan, Tanzania and Uganda. Separately, a Central Bank of Kenya audit report for 2009 shows it has the 3rd largest number of deposit customers at 751,852, behind equity 4 million and co-op 970,000 and followed by Barclays, 748k and Family 574k.
  
  In 2004 and 2008 they surpassed their fund-raising targets and raised 2.3 billion and 5.2 billion respectively. This time they are aiming for a much larger amount Kshs 15 billion (~$188 million), by offering 887 million new shares to their shareholders at Kshs 17 ($0.22) per share, in the ratio of 2 new ones for every 5 held – adding to the issued 2.217 billion shares and representing a 40% increase.
  
  The issue is not underwritten and is subject to a minimum subscription level of 50% i.e. must raise at least 7.5 billion. The shares will also be available to other east African investors in Uganda, Tanzania, and Rwanda. Rights also provided a way for shareholders to buy shares for close relatives by way of private placements.
  The prospectus (IM) (PDF) was not mass mailed this time, but is available only from their web site, stockbroker, and branches of the bank.
  
  comparisons to the last rights issue in 2008
  Then (June ’08) ; Now (July ’10)
  - Target 5.2 billion ; 15.8 billion (~$190 million)
  - Focus: then - East African expansion, Bank ESOP ; Now - grow mortgage business and other growth (if funds are raised, 13 billion will be used in Kenya, 1.5b in Uganda, 894m in Tanzania , 473m in Rwanda) Negative funds marked for Sudan and elsewhere the IM notes that KCB with 5 branches has 34% of the Sudan market by assets
  - New shares 222.1 million ; now 800 million
  - Price : then - 25/= ; now – Kshs 17/=
  - Allocation: then : 1 for 9 : now 2 for 5
  - Market cap: then – Kshs 66.4 billion, now – Kshs 47.6 billion?
  - Profit after tax then - 2007 2.9 billion ; Now - 2009 - 4.5 billion
  - Result: then oversubscribed; now, may fall short
  
  Budgeted cost of the offer: 2008 - 220 million : 2010 - Kshs 446 million ($5.5 million)
  What costs more? : CMA approval fees – up 360% (kshs 37.5m), Transaction advisor – up 288% (31.5 million), PR/advertising – up 300% (69.4 m), Legal advisor up 190% (2.2 million) NSE fees up 10% (500,000)
  What costs less? Reporting accountant (3.8m is unchanged from last time so virtually a decrease), and no figure given for printing costs which should be substantially lower than last time as they are not printing & mailing a copy the 116-page prospectus to each of the 169,076 shareholders
  
  Market players: The lead sponsoring stockbroker is Standard Investment Bank and they are also the lead transaction advisers along with KPMG. In Kenya, there are 18 NSE members selling the shares [including discount securities under statutory management, and reliable securities (in which Old Mutual acquired a 70% stake)] as well as 6 commercial banks with large branch networks - Stanchart, Equity, National, Co-op, Barclays and KCB itself)
  
  The rights issues is also open to foreign investors who are East African nationals who can buy shares through;
  - In Tanzania: 6 investment banks (including Core, Orbit, Rasilmali, Solomon, Vertex)
  - In Uganda: 20 investment advisers and stockbrokers (include crane, MBEA, African alliance, Crested, DFCU, Stanbic, Devere)
  - In Rwanda: 8 investment banks (including MBEA, Dallas, Continental, and a trio of Kenyan offshoots - (dyer & Blair Rwanda, kingdom, Faida)
  
  Shareholders: Anchor shareholders - then and now :
  Government of Kenya (26%:23%), NSSF (7.8%:5.23%), ICDCI (3.5%:3.36%), Sunil shah, (2.33%:2.33%) staff pension fund (2.32%, now out?). In terms of directors, no change except that the IM shows that Group CEO sold his entire individual shareholding between 12/09 and 7/10 while another has decreased hers by about 70% (none have
  
  At the record date, KCB had 169,076 shareholders who included other East Africans (12 institutions, 198 individuals) and foreigners (55 institutions, 438 individuals)
  
  Calendar: Record date 18/6, rights start trading 1/7, last day trade rights 12/7, last date to pay for rights 23/7, new share trade 19/8,
  
  Verdict: The rights started trading at over 1 shilling, but in the span of a week have dipped by 50% to about 0.5 shillings per share. Stockbrokers say that demand is good for the shares but that they anticipate the Government and one other top shareholder (one on CNBC said it would be the NSSF) are foregoing the offer and selling their rights before the offer lapses leading to the dip in the rights price.
  
  Investment analyst have variously complained about the massive amount of shares being listed, dilution of existing shareholders, and the large amount of money being raised by the bank, which they doubt has the capacity to utilize the infusion efficiently. One analyst from Renaissance Capital said they had downgraded KCB when the rights issue was announced.

Blah blah blah

Fish cakes

Alas a fish cake.

Yet more fish cakes

Guess what ... yeah ... fish cakes.

The end of the fish cakes