Why aren't the world's navies simply blowing up the pirates' ships/boats...?

Just send a few planes to bomb the somali ports... and blow up any boat that looks remotely like a pirate ship...

The KFS is installing LED screens at KShs 50,000,000.

A good idea for revenue generation but... the ferries are old, prone to stalling and will sink one of these days... Shouldn't they be looking at buying new/better ferries???

Not my usual topic... but is mswati of Swaziland a paedophile?

Whereas there may be some cultural reason or justification... I just can't wrap my mind around it. It is abhorrent to me. Or am I being Euro-centric?

He is 40 years & is looking at marrying girls who are barely 16 years. He could have daughters that old!

In Kenya, we have the founder of Java Coffee House in court on charges of paedophelia. Should mswati be allowed to enter Kenya? Has he ever been to Kenya?

(My advice... if mswati is in town... lock up your daughters!)

What say you?

P.S. My personal opinion is mswati should be deposed, castrated then jailed for life.

Experiences vary but Kenyan banks need to improve! Asap. Various experiences of friends & family (reatil clients) below... Most prefer a low balance Savings Account with a Cheque Book.

Keep at least 2 accounts if you can afford it just in case a bank's ATM is down or you need access to a branch for services not available at an ATM.

Equity Bank - Long lines at both the branches & ATMs... BUT what I like about Equity is that they introduce new solutions e.g adding branches, adding ATMs, internet access & access through mobile phones... They to maximise Finacle's functionalities e.g you can get upto 30,000/- cashback from any Nakumatt (some are open 24 hours) & avoid visiting an ATM or branch! The hours are so-so... BUT... among the best banks in Kenya.
Equity is going regional in Uganda & S.Sudan.

Conclusion: Definitely a good innovative bank for most but not all Kenyans... Equity credited all their customers' accounts with Safaricom refunds on the same day! Their customers seem happy & Equity gets a thumbs up.

NIC Bank - Lousy for retail customers. The customer service staff is friendly but generally clueless. The right CSR can make a huge difference. Their 'Orchard Account" which offers a cheque book needs a 50,000/- (formerly 20,000/-) minimum balance or a fee is charged. Even though they have online banking, folks want to ditch them. The previously free chequebook now costs a whopping 500/- (previously you only paid for the CBK/revenue stamp). Customers I spoke to plan to close their accounts or 'downshift' to other accounts to avoid the fees. BTW, their menu of retail accounts suck! Hours are pathetic... The Westlands Mall branch opens from 9-11.30am on Saturdays!

Conclusion: Nyet! No way Jose!

I&M Bank - Great service. This makes a huge difference. Slightly expensive but the service makes it worth the fees. It has been described as an affordable 'upmarket' bank.
Nice - 'fancy' by Kenyan standards - branches though sometimes the service is a little slow since the customer base has grown substantially over the past 2 years. Varied & affordable range of accounts. I&M has been aggressively marketing credit cards. Finacle (banking platform) installed in July will allow them to expand through the internet & mobile phones. Only 12 branches in Kenya (10 in Nairobi) but growing. Latest branch in Ongata Rongai while all others in CBD or upmarket areas. Electronic statements & balances via free sms i.e. they do not charge the customer when they an sms. No extra charge to sign up for the e-banking. Savings account with a chq book needs only 10,000/- minimum. Weekday hours suck vs other banks but longer hours are coming soon at selected locations. The employees are often available for meetings & discussions beyond 5pm... Now... that is GREAT...

Branches: One each in Mombasa & Kisumu. That is limiting for folks who travel all over Kenya. No regional expansion though they have a subsidiary in Mauritius.

Conclusion: Yes... A bank for those who want value. You pay for the service BUT actually get the service. Nice website though a work in progress! They need to expand their reach asap.

CFC-Stanbic Bank - Avoid like the plague. No more Savings with a chq book. Instead you get a Current Account with fees. Expensive. Hours are so-so... Unless you do lots of business in Africa, it is not a bank for the local retail investor. And they have the lousiest forex rates. Except for NIC Bank. Only star is CFCFS. I think Stanbic will scare the customers away! Imagine there is no internet banking for retail customers!

No... Nyet... Hapana...

Diamond Trust - The "Open" account if it makes sense for me. Seems decent but fee heavy. Relationship managers all around... Nice branches. Clientele is mid to upper market. Fees are negotiable. Forex sales & purchases ($5,000+) are negotiable.

Conclusion: Neutral for Kenya but great if you do business in E.Africa.

Standard Chartered - The X account is intriguing. 1,250/- per month gives you multiple benefits. No idea but the 9am-9pm at Nakumatt Ukay is an excellent idea.

Conclusion: Neutral coz untested.

Virgin might dis-invest from Virgin Nigeria since the strong-arm tactics used by the Nigerian government were not to Virgin's liking. The gov't sent in goons to smash up Virgin's counters at the airport!

Many Nigerians were happy that VN brought in better schedules, better planes & safer aviation to Nigeria but regression to the old ways in Africa is not new...

I used to wonder why KQ did not expand its services to Nigeria but no wonder they are cautious about flying to Nigeria... And Nigeria might not be a very profitable market esp with the inefficiencies and corruption there. Did you know Nigeria - a huge oil exporter - imports refined oil products?

When will Africans learn that negotiations are a better way to go...

BTW, if you complain about Kenyan airlines, once you fly Nigerian 'airline matatus'.... you will never complain about Kenyan airlines!

KPLC is in a bind...

The firm has done rather well during the past 3 years - since the Manitoba guys came in - but there are dark clouds on the horizon.

KPLC has the following:

• Oodles of cash on the balance sheet
  
• Cash generating/collection capability
• Large procurement needs

So... add all this up and it is attractive to anyone who wants to rip it off... Samuel Gichuru was one of the few kikuyus who survived under dan 'thieving' moi coz gichuru knew how to spread the largesse - at the ordinary Kenyan's expense!

Things got so bad that the GoK was forced to appoint the Canadians - if KPLC wanted financing - to run the firm. After bringing KPLC back into the light... they are being dumped...

Furthermore, the GoK & KRA have made KPLC one of their 'collectors'... KPLC has to use fuel to produce electricity... the fuel is heavily taxed... and this is passed onto consumers making KPLC look like the bad guy! KPLC is also forced to charge VAT thus increasing the burden on the consumers & KPLC...

So KPLC has become a tax collector of sorts for KRA & GoK...

It's rare when a ruler directly gets involved in a 'business' deal in another country but gaddafi has laid down the law for kibaki - who accepted money from gaddafi to fund his re-election - as regards the Grand Regency Hotel.

If Kenya kowtows to libya, then we have a huge problem coz we are selling the refinery and pipeline to the libyans. Bad idea... They will have us by our b***s.

Who pays Adeninji to while his time away at the Serena? Hmmm... I need one of them cushy jobs!

The "makeovers" that Nation & Standard have implemented on their websites might make them look 'fancy' but with the excruciatigly slow speeds... loading these pages is a pain...

The old format was easier to navigate coz I knew which pages had what. I do not care much about pictures. Having videos is a nice touch but speed/data restrictions does not help....

I am sure I will get used to the new formats but I would rather they spent time & money IMPROVING THE QUALITY of articles and reporting...

What's wrong with the kids?

I remember the riots in university - that were less over 'rights' than allowances & food.

There is no point in destroying dormitory blocks and torching buildings...

For every kid caught with petrol intending to destroy property should be thoroughly whipped then expelled...

Me thinks they are in line to become MPs... considering the utterances of ntimama and his ilk...

One of the pitfalls of investing in 3 World countries esp Africa is not knowing what you bought or didn't buy...

Delta Resources - backed by Mukesh Ambani of Reliance Industries - purchased land in Nairobi that is 30% less than what they thought they were buying!

The NSSF bought this land during the KANU years when KANU was rewarding its loyalists by raping Kenyans (not that PNU or NARC did any better) left, right & center.

So now the NSSF might have to give back KES 400 million (29% of the sale price) to Delta Resources.

What I find curious is that Delta did not dispute the 'error' earlier since you do not buy land at $11mn/ha and trust the seller before you survey it! Or was Delta Resources toying with NSSF all along while waiting to spring on them? Of course, NSSF is also at fault by selling what they do not own aka fraud.

Africa as a continent fails in almost all positive metrics against any other continent... even Central & South America (I deliberately N. America as part of "America") which has seen its share of troubles over the past few decades including military juntas, hyper-inflation, etc...

S. America threw off the colonial yoke, suffered economic downturns, military regimes, etc but even they have surpassed Africa... by a distance... as of 2008... Whereas some part of Africa always has a famine every 2-3 years led by the superstar Ethiopia... I have never heard of a famine in America. Well, one in the recent past anyway.

Mexico with all its myriad problems and smaller oil & gas reserves than Nigeria beats Nigeria hands down!
Asia - even with laggards like Burma/Myanmar and Mongolia - has done much better than Africa. South Africa may be a 'performer' in Africa but barely makes the cut in Asia. Since 1990, many S.E. Asian countries have done much better than S.Africa including Taiwan, S.Korea, China, India, etc...

Japan's (or China's) economy is larger than the whole of Africa (including S. Africa and Arab Africa). Then there are the oil-rich gulf states, India, Taiwan among others... Even Russia is primarily Asian by land mass.

Would it be considered genocide if we (as Africans) lined up 90% of African politicians and shot them... dead... using an extra bullet just to make sure... Then bury them six feet under...

So the story is about 'small' firms being able to list on the Dar Stock Exchange...

However companies that wish to enlist through the enterprise growth market will have to have been in operation for three years, and will require a capital of $200,000 million as a precondition before being listed as opposed to the $500,000 million that is required for the main market segment on the DSE. But in case a company is operating as a subsidiary in Tanzania but is listed in country of origin, then it will be required to have at least immovable assets worth $500,000 million in Tanzania.

Well... unless they are talking Zimbabwean Dollars... and that would not make sense either...

So according to the East African... a 'small' business has to have capital of $200,000 million ($200 billion)... this would mean the firm would be an immediate entry into the top 500!

Sunny Bindra writes about AGMs becoming entertainment rather than serious affairs.

I have been to a few AGMs and most are pathetic where little business is done & hardly any serious questions are asked.

The questions revolve around food (or lack thereof), freebies, share registrars and food. Yes, Kenyans take their 'free' food seriously.

I think firms should follow the Jubilee system which gave out vouchers for discounted Life Insurance. This keeps the riff raff out. The firms that want to curry favour with the shareholders - so no tough questions are asked - include BAT & Nation.

The Nation AGM started late courtesy of a song & dance gig - Sunny doesn't mention it but that is what he is referring to. I did like the 'newspaper' giveaway which is a nominal cost to them but did they have to do the bag?

It is disgusting to watch certain shareholders - names withheld - who are worth 10s, if not 100s, of millions scrambling for food. We know who they are.

Then the question time... the same shareholders ask the same questions year in, year out. They are long-winded and take ages to get to the point. If they ever do!

Then there are the shareholders who get flustered when there are 2 AGMs at the same time. They literally run from one to the other not for the questions but the food & freebies!

I have written on the waste of time these AGMs can be.

So why do I go? While the scramble for the food is going on, I can corner the MD or FD...

WTF?

When we have lots of poverty, pathetic roads & lousy services... ka-loser gets a $3 million house. I wonder how much more we will spend annually to keep him in style?

And I believe this excludes the cost of land since it was built on government owned land...

Another ka-loser aka scammer jesse jackson goes after Barack Obama... Ati "I want to cut his nuts off."

Apparently one of Uchumi's buildings for sold for a song as well.

If a transparent process had been followed then there would be no question of impropriety but it was not.

So kirubi & kimunya are in the same boat. They may be innocent. They might not have benefited from the sale but it seems neither followed a transparent process.

kirubi is also known to have political goodwill/connections with the current government. I think he was at the head of kenatco - which collapsed during or soon after his time there - which is a pale shadow of it's former self.

Kenya should desist from subsidies even if they are politically expedient. Especially if all they are politically expedient! Whereas agricultural subsidies seems a good idea they will create 'leaks' as politicians & civil servants resort to corruption.

Kenya needs to fight - at the WTO - other countries that provide subsidies to its industries & agricultural entities.

Solutions:

• Better infrastructure so products can move easily to & from all parts of the country. This will reduce costs of transporting foods as well as reduce wastage.
• Better access to credit facilities but through private institutions e.g. KCB, Equity Bank, etc.
• Change from 'imported' crops (e.g. maize, wheat) to local/native crops like Sorghum, Millet, Cassavas, etc.
• Secure our forests & water catchment areas.
  
• Reduce population growth. Kenya's population grows much faster than it's real rate of growth. This is unsustainable. China has improved its per capita income by introducing severe measures to curb population growth. I do not advocate what they did but we need to work at reducing the rate.
• Improve agriculture outreach services while reducing direct subsidies. These better techniques can help farmers improve yields.
  

OCHL has gone through an interesting year as follows:

• Rights Issue (over-subscribed) which raised 420mn
• "Loss" of OCC (Botswana) as a subsidiary but later regained after OCHL's Rights Issue
• Inclusion of Paul Wanderi Ndungu (of CMC & KQ fame) as a director
• Increase in Issued Shares from 10mn to 40mn
• Change of year end from 31 Dec to 28 Feb (see the prospectus)
  

The results of 2007-8 were not anything to write home about. They can be downloaded from www.investinginafrica.net but the commentary was interesting (pasted below). Clicking on the subject header above will link to a Business Daily story on OCHL.

OCHL's financing costs in 2007-8 were horrendously high but the process of a Rights Issue in Kenya takes too long so funds were 'borrowed' in the meantime. The Rights Issue in Botswana was concluded much sooner than in Kenya coz faster approvals. The repurchase of shares in OCC(B) did hurt OCHL since they were purchased at 50% more than what they were issued at 6 months earlier.

Plush is OCC's largest subsidiary & has been performing below par in 2007. I hope it's performance improves. Kalahari Floor Tiles is the 'star' of OCC's subsidiaries but OCHL gets only 51% of the benefits/profits from KFT.

The other acquisitions (Natwood & Mather+Platt) benefits, if any, will show up in 2009. I have said that 2009 is when OCHL is expected to shine as its cash (420mn) will have been fully invested. 2008 remains an acquisition year for OCHL. Of course, that is mere conjecture on my end hoping that Kenya & S.Africa remain peaceful & grow!

There was an increase of 20% ownership of Avon Properties but the property firm cannot be consolidated since it is less than 50%.

There will be substantial costs associated with the new PVC tile plant including paying for it, installing it & working capital. I hope the marketing team is up-to-speed since the production is expected to triple vs the old plant. The prospectus had some rosy numbers for Dunlop plant.

A housing/construction slowdown in Kenya will severely hurt Dunlop since the plant will be commissioned as the construction industry sees a slowdown. I hope Dunlop can export to COMESA as well as compete & lock out the PVC tiles from China & Egypt. The core product/ingredient is petroleum based & that is a concern in the future. A plus for Dunlop is that higher transport costs from Egypt/China to Kenya may make Dunlop's products more competitive though the Kenyan market will shrink with higher prices.

All in all, I see a better 2008 (got to get that PE down to reasonable levels) and an even better 2009. Of course, I hope Kenya and S.Africa does not see a recession or violence!

Commentary
The 14-month period ended 29th February 2008 was a very eventful time for the group. • Our subsidiary, which is listed on the Botswana Stock Exchange, Olympia Capital Corporation (OCC) migrated to the main board from the venture capital board and had a successful 1:1 rights issue in March 2007. This was to pay off debt used in the acquisition of 74% of Plush products (pty) Limited and resulted in our slipping from a majority position. In August 2007, we purchased shares putting us back in a controlling position in OCC.
• In September 2007, we had an oversubscribed 3:1 rights issue on the Nairobi Stock Exchange (NSE) and raised Ksh 420 million. These funds have enabled us to look for expansion in existing and new areas. It is difficult to compare the year ended Dec 2006 with the period under review, mainly because of the acquisition of Plush in Dec 2006, which has now been consolidated for the full period and that the cash raised on the NSE, was raised in the later part of the period under review. Board Appointments: Following our rights issue in September 2007, we invited Mr. John Simba and Mr. Paul Wanderi Ndungu to our board. Thus increasing the number of directors to seven and we also had an increase of executive directors from one to two, with the appointment of Mwangi Wamae as Chief Operations Officer. Financials: As expected, turnover increased significantly from Ksh 397 million to Ksh 1.4 Billion. Profit from operations increased from Ksh 30m to Ksh 74m. Unfortunately, due to heavy borrowing, prior to the rights issue, interest costs rose from Ksh 4m to Ksh 36m. Without factoring new acquisitions and due to the rights issue being held at the end tail of the period, we expect this to come down significantly in the next year. Dividend: Our AGM will be held on 4th August 2008, and we intend to pay a dividend of Ksh 0.20 per share on 11thAugust 2008 to shareholders registered in our books at the close of business on 23rd July 2008. Our books closure dates will be 24th and 25th July. Post Balance Sheet Events: Following the end of our financial year on 29th Feb 2008, we have made three key investments. OCC entered into agreements to purchase 50% + 1 share in a Cape Town based business called Natwood (www.natwood.co.za). Olympia Capital Holdings Limited (OCH) entered into agreements to purchase 49% of a Kenyan business in the provision of Fire Systems, Water Services and Mechanical Installations called Mather + Platt Kenya Limited (www.mplattkenya.com) OCH has also increased it’s shareholding in Avon, the property company from 27.5% to 47.5%. Our focus is now on the growth and profitability of the businesses in our stable. I am also please to note that the new tile plant for our Kenyan subsidiary Dunlop Industries Limited is now on the high seas to Kenya. We expect this plant to be on line by October 2008.

The NSE & CMA Investor Compensation Fund might not have enough funds to cover losses in the event of another broker collapsing.

The issue here is FRAUD. If a client has shares then they are 'safe' with the CDSC but a client would lose cash & shares sold without their knowledge.

Solutions?

• CRIMINAL charges against fraud.
• Move to bank-backed brokers e.g. CFCFS & now NIC Capital.
• Move to strong brokers i.e. publicly published & audited financial statements like insurance firms have to do.
• Sell new licenses with 100% of the funds going into the IC fund.
  

It seems there is another broker on the ropes & several brokers are courting offers for sale or raising funds...

There are buyers for 'new' or 'clean' licenses but there is little interest in existing licenses.

Rumors (& that is all they are) have it that NIC Capital will raise more funds - from NIC Bank - to defray 'bad debts' & 'investor claims' accumulated under Solid Securities. Some NSE insiders claim NIC buying 60% of Solid saved Solid Securities since NIC Bank can't let NIC Capital falter...

Is kimunya being sacrificed by kibz using raila & wako?
When will he be resurrected?

It seems that the CBK - owner of the Grand Regency Hotel - is being let off scot-free.
Did ndungu support or oppose the sale in the opaque manner?

Who else was involved in the sale?
Did kibz know - rhetorical question!
Will raila use his position to make hay while the sun shines?
Will ODM get a say in the appointment of a new Finance Minister?

Will the MPs get away with paying taxes as the Executive panders/bribes to them to make GRH go away?

Notice how Martha Karua isn't her usual abrasive self defending kimunya, kibz, PNU or govt?

The committee has wako (PNU or however the wind blows but essentially KANU), orengo & omondi (ODM), kilonzo (ODM-K but a KANU guy) & ringera (more of a GEMA guy).

Kenya should go the India way & appoint a clean TECHNOCRAT as Finance Minister - not a repeat of saitoti!

According to the Nation Susan Mudhune the immediate former chairperson of KCB has retired. Or is it poor reporting by Nation? Or slow updates by KCB?

She still appears - as of 2 July - on the KCB Bank website as a director.

The only other woman to chair an AGM, for a listed company, was Susan Mudhune chairing Kenya Commercial Bank, but without the benefit of a woman chief executive. Ms Mudhune retired from the bank’s board last month.

The GoK could have sold GRH to the public and make it a public entity... but there would be nothing there for the politicians... would there?

GRH with a market value of KES 3bn would have been larger than the market caps Unilever Tea, Kakuzi, Rea Vipingo, C&G, Marshalls, Sameer Africa, etc... It would have been as large as ALL the AIMS firms combined!

Of course, interested bidders for the management contract could have been Serena, Fairmont among others... but again what would kibz or kimunya have gotten?

In Zambia, Lusaka's premier hotel, the Taj Pamodzi, majority shares were sold to the Taj Group of India but it remains a public listed entity... It seems Zambia have better government governance than we do...

Who knows, KQ - publicly listed - could have taken a stake in GRH & marketed it as their exclusive hotel for its passengers & crew but would k&k benefit?

I am going to boycott the GRH unless it is (re)sold for a fair price in a transparent manner. I will urge ALL listed firms NOT to hold their AGMs there in protest at the farce.

I do not have additional details except as provided by Business Daily but this should be interesting... Nevertheless, is a broker really worth KES 600mn?

We need more details coz some of the funds might be used to add capital to the business as well. I wonder what Suntra is valued at...?

BTW, there is no value to Crossfield's business from what I have been told... so the price is merely for the license?

Errors Galore... Business Daily at it again! My comments/questions in RED... City Trust banks on I&M regional expansion

Written by James Makau

I&M Bank has assets worth Sh30 billion in Kenya.June 27, 2008: The star that once shone over City Trust Ltd at the Nairobi Stock Exchange (NSE) in 2007 seems to have dimmed, put out by low volumes of tradable shares that have led to stagnation of its share price at the local bourse. Actually... prices on shares with low liquidity tend to be more volatile... if there are trades... At the Alternative Investment Market Segment (AIMS) of the NSE, low liquidity and the lack of shares available for trading is the bane of firms , but this is one plight that City Trust had managed to side- step, making huge gains on its share price last year. Little is still known of the firm which at one point in 2007 had floored the MSCI World Index— a free float-adjusted market cap index used to measure global equity performance— by a massive 157 per cent. The press is allowed at AGMs... Did this reporter make the effort to attend an AGM? 'Little is known'... I think the reporters concentrate of the 'larger' sexier firms e.g. KQ, Equity, etc while ignoring the smaller firms then claim 'little is known'... But in a remarkable about turn , City Trust —a listed investment holdings company—has lived to the AIMS billing; trading a mere six times this year, with the price changing only thrice. The owners of City Trust, which is tucked away in the relatively quiet corners of the stock market, keep an equally low profile. Picture this. The company, with a book valuation of Sh220 million and market value of Sh781 million, has no office or employees. It has an office. Ask the directors. A shareholder asked them at the AGM & he was told where it is though by law all a firm needs is a registered office - which is at Kirungii for City Trust. The business of the day is run by two of the four directors of the company board with the full board overseeing the company operations. The board occasionally meets at the Livingstone Associates offices, Westlands to plan and transact the business of the company. Prime Securities Investment Trust Ltd is listed as the largest shareholder in the firm with a 49.98 per cent stake while local individual shareholders account for 29.48 per cent. Institutional investors control a 17.89 percent stake in the firm. And with a dormant subsidiary —Kenstock Ltd—and modest earnings compared to other firms listed at the bourse, City Trust rising share price is likely to remain a subdued affair, outshone by the likes of titanic debutant at the bourse, Safaricom. Erm, it's the Earnings Per Share rather than the Profit After Tax that is directly related to the share price. But there’s still hope for City Trust, one that of course makes investment sense for its shareholders. Analysts say that should a persistent investor willing to buy bits of City Trust over a long period of time to create a weighty portfolio, the consistent dividend payout from the firm is a worthy attraction. What the heck is a 'weighty portfolio'? The dividend per share of three shillings which is pocketed entirely by the firms shareholders is mainly attributed to City Trust’s stake in a rising star in Kenyan banking. So... if the firm's shareholders don't pocket the "entire" dividend, then pray I ask... who does... Of course, the shareholders get the "entire" dividend (except withholding tax)!!! Investment consultant with over 50 years experience of trading at the NSE Chandulal Shah in a previous interview with the Business Daily expressed the view that City Trust’s shareholding at Investment & Mortgages (I&M) Bank holds a crucial piece to the firm’s portfolio puzzle. With a stake of 11 percent representing 1.1 million ordinary shares in I&M Bank, City Trust is the recipient of a tidy sum in dividends from the bank .“This is an investment company (City Trust) where any dividend derived is paid directly to shareholders.” said Mr Shah. Actually, City Trust owns only 8.93% of I&M Bank represented by 1.94mn shares. This is public information if one reads their Annual Report. City Trust which is expected to release its half year results this month is set to pay out a hefty dividend that will top up the Sh3.10 payout issued to shareholders last year. I thought the 1H 2007-8 ended 31 Jan 2008 thus the 1H 2007-8 results should have been released by 31 May 2008 or they are in breach of some NSE regulation. Income statements for the company at the beginning of the year put the firm’s investments at I&M Bank at Sh171 million. Last year, the firm increased its investment portfolio to Sh185 million. In 2007, I&M Bank reported a pre-tax profit of Sh1.3 billion compared to Sh936 million the previous year. Following the steady growth and strong earnings derived from I&M Bank, the firm invested more funds in the bank, bringing City Trust’s investment to Sh185 million as at January this year. In March this year I&M Bank acquired 50 per cent shares in First City Bank (FCB) of Mauritius at a cost of Sh1.1 billion. The acquisition of FCB represents the bank’s first investment abroad and is viewed as a launching pad for its regional expansion. FCB is one of the 19 commercial banks in Mauritius licensed to do both on-shore and off-shore banking business. I&M Bank has assets worth Sh30 billion in Kenya and has 10 branches in Nairobi, Kisumu and Mombasa. The bank also announced a private offer for Sh600 million subordinated unsecured floating rate notes to shore up its capital base. Low Liquidity Even then, City Trust’s free float and tightly held share structure still have a major bearing on the firm’s trading price. With only 4 million shares listed at the Nairobi Stock Exchange, City Trust Ltd is one of the smallest firms at the bourse. But even with about 3.5 million shares available for trading; only a tiny fraction of these are actually traded. Hmmm... according to the 2006-7 Annual Report, City Trust gave a bonus & this increased the shares to 5.2mn. I got this info from the NSE pricelist... No rocket science here... With only a few thousand shares changing hands on a weekly basis, the low supply of City Trust shares at the bourse has allowed holders of the securities to quote high prices which are occasionally matched at the bourse leading to price distortion. Wait... the same article (this one) claims there were only 6 trades this year... but the above paragraph claims that a few thousand shares trade weekly. Since it is June 2008, I would say we have had over 32 weeks this year... ICDCI was in a similar case a while back before turning round are becoming one of the most profitable investment holdings firm in the country. What has low trading volume & 'steady' price have to do with a firm's profitability? Sameer Africa , Eveready , Unilever Tea trade much more than City Trust but are they as profitable? But one reason that market players believe is a key link behind City Trust’s meteoric rise is the possible share holder value derived from the sterling performance of its portfolio’s gem.

So... I came across an interesting little tidbit in the Business Daily (18 June 2008)...

But problems started emerging early this year when the NSE 20 Index fell sharply and the weakly capitalised brokers could not keep up with the teeming and lading game.

What exactly is "teeming and lading" - in relation to stockbroking?

And it continues...

That is how Nyaga Stockbrokers, Francis Drummond and a few others got into much trouble.

1. Its is Drummond Investment Bank not Francis Drummond...
2. Hmm... I though it was Franchis Thuo & Co that was in hot water...
3. Isn't DIB/FD owed a copious apology?
4. Will this error remain frozen in cyberspace when I google Drummond?

Well... surprise, surprise... BD has been nominated for the Diageo Africa Business Reporting Awards (DABRA). Well, I don't think Drummond IB was among those who voted for BD...

NEGATIVE: The unaccountability of how tax revenue is spent continues unabated. Plastic manufacturers who pay 120% excise duty want to see the funds used to clean the environment. Makes sense but I think its being used to but new cars for the bloated cabinet!

POSITIVE: Another broker is licensed though not admitted to the NSE. We need more competition. Chartered Capital used to be Town & Country. CCL belongs to Chase Bank. James Gachui (of Trancentury) is a shareholder of Chase Bank.

NEGATIVE: Allegations of insider trading of Equity Bank shares.

POSITIVE: Kenya gets $10mn from EU to boost tourism. Of course, most of it will be spent in the EU promoting Kenya.

NEGATIVE: Nairobi's 'planning/zoning' is thrown out of the window as residential areas turn into commercial areas. Smells fishy to me. What say the Nairobi City Council?

POSITIVE: KCC is now profitable and likely to go public in 3-4 years.

China is growing in importance as a food exporter even with the recent 'food scares' in Japan and USA.

China has 1.2bn people but why is it that Kenya (a poor country with low 'cost' of living or low standards of living) can't compete with China?

Our flower, tea and horticulture exporters are crying over the strength of the KShs (vs the US$) while lamenting high costs of production,of which labour is a huge part, which makes them increasingly uncompetitive in world markets.

Why is Kenyan labour so expensive vis-a-vis China or India yet we have a (unofficial) 50% unemployment rate?

6 brokers on the Watchlist according the Business Daily.

Bob Mathews - In trouble once. In trouble again?
Discount Securities - The owners tried to sell it at an inflated price but no-one bit at the time.
Reliable Securities - In the news before. Jos Konzolo was the former NSSF head honcho.
Crossfield - Securities - No idea.

Solid Securities - Now NIC Capital. An operational matter or a problem with the prior owners. NIC Bank has enough money to keep them in business. NIC owns 60% of SS but I expect an 'internal' Rights Issue will increase their stake.

Ngenye Kariuki & Co - A surprise on this list. It has been a 'steady' firm with a large retail base. The owner is a hands-on manager (unlike Nyaga Stockbrokers).

Does any one have more to add on these firms?

And a new broker- Chartered Capital. Info from Bankelele.

I think the value of the 'licenses' will drop from the astronomical figures bid by Old Mutual (KShs 452mn) and Renaissance Capital (KShs 256mn). Rumours have it that there are another 4 new licenses waiting to be issued.

On 10 April 2008, the Z$ was at Z$50mn:US$1
On 25 April 2008, the Z$ is at Z$220mn:US$1

Coldtusker is probably a Trillionaire.

I tip in the 100s of millions. I carry at least 1bn in loose notes & change.

(OK, put in perspective for those boggled by all the zeros... Z$1 trillion = Z$1,000,000,000,000 so it equates to approx US$4,500)

Link to the OMIR rate

I have spent too much time on politics. My blog was supposed to be business-oriented with little politics. I too the turn when Kenya's politics became self-centered on the politicians greed rather than good governance.

Since the "Grand "Thieving" Coalition" is in place with crooks & thugs like fred gumo as ministers, I need to look to the Kenyan business community for hope.

To the future. May it be peaceful & prosperous.

Apparently the Libyans want in on Kenya but in a back-handed manner. They want to buy the Grand Regency Hotel for a song.

Mukesh Ambani (of Reliance India) & partners are offering an estimated KShs 8-12 bn while the Libyans want in at KShs 1.6bn. That is a glaring difference. I wonder who gets the difference between the 2 bids?

Solution: An open bidding process with a 20% deposit & allow the winning bidder to seek financing within 12 months. Failure to pay for the GRH in 12 months means forfeiting the deposit. In the meantime, the bidder can run the hotel JOINTLY with the CBK appointed receiver.

Kenyans will stand to benefit as they will get the best price for the asset they have paid for through their taxes.

Similarly, there is the issue of the Refinery. It is old & inefficient and needs a major upgrade but the GoK is stalling by not selling its shares to Essar - who won the tender by paying the highest price - nor agreeing to pony up 50% of the capital needed for the upgrades. The Libyans want in but they did not pay the highest price back then so why would they do so now? Kenyans lose no matter how you slice or dice it!

Solution: The GoK should let KPRL sell shares in KPRL to the Kenyan public to retain Kenyan ownership. So the GoK will be co-owners with Essar & the Kenyan public. It would be unsafe to cede the refinery to the Libyans who will favour OilLibya vs the other Oil Marketers e.g. Kenol, Total, etc.

I am just fascinated by the rapid devaluation of the Zim$ vs the US$ (which is going through its own devaluation). If I could map out against the Euro, GBP or KShs, the Z$ devaluation would look even worse.

What do you expect with 100,000% inflation? And puhleeze don't blame the 'colonial' powers since they are long gone.

The Zim$ has crossed the 100,000,000 mark. Yes... you can get Z$100,000,000 for US$1. On 11 April 2008, I blogged about the Z$ at 50mn. It has only gotten worse, a lot worse but, hey, I am on my way to becoming a TRILLIONAIRE!

North America is Kenya's 3rd largest tourist market. If Kenya can get an Open Skies agreement with the USA (& Canada) it will reduce KQ's costs & increase passenger numbers by bypassing European hubs.

Furthermore, Delta which plans flight from USA to Kenya via West Africa is a member of SkyTeam, and can add code-share passengers to KQ's regional flights while allowing KQ to sell additional seats/destinations on Delta flights. Then, KQ can compete with SAA for passengers from southern Africa traveling to N.America.

Whereas high fuel prices hurt KQ, its larger/stronger financial base can make KQ - if well managed - a long-term winner as many marginal African airlines are expected to collapse during 2008.

Of course, all is not rosy but KQ should not let up on investing in new efficient planes, better facilities & staff training.

LOL... My 'wealth' in Z$ just shot up 34% in a week...

US$ 1 = Z$ 88,270,000 (OMIR rate)....

I was joking about being a 'trillionaire'... well... it might be sooner than I thought!

How does Bill Gates calculate his wealth in Z$.... can Excel display the figures?

Cartoon courtesy of The Standard


Well... The Standard headlines were "Bloggers fury over the new cabinet".

M of "Thinker's Room" has done it again!

Why bloggers are pissed off:

1) State overdraws at CBK. This means higher interest rates or inflation!
2) Overlapping & nonsensical ministries created for solely political reasons.
3) Politicians are frittering our money away. moses wetangula - I gave him a C - said this "Government would only spend an additional 10 per cent of its revenue".
4) Unnecessary spending on new cars, offices & palatial residences while Kenyans starve & IDPs are ignored.
5)Continued insecurity. The mungiki are causing havoc & saitoti - an F from me - can do nothing.
6) More scandals to come when the crooks behind goldenberg merged with those behind anglo-fleecing. Of course, there are thugs like fred gumo as well.


BTW, at least Balala seems a good choice - well the hoteliers think so. I gave him an A.

There is good stuff happening in Kenya but the bad overshadows the good... I know we can turn the corner but we need accountability from politicians & public officials. Wananchi lack the means to challenge silly rules, laws or regulations. We are taken for granted.

Water cost to rise coz of a tax on water! We have no say. I don't mind the tax if I knew a) what the money was used for b) if the money was used effectively.

Increased cost of electricity. KenGen will eventually raise its rates to KPLC which will in turn bill consumers. KPLC has to deal with vandalism that increases the cost for the rest of us. KPLC is not allowed to adequately protect itself & our police are not motivated since KPLC does not bribe them!

Where is NEMA when a lead smelter is being built in the middle of Nakuru? Where are the safeguards? Why does NEMA not provide information to the public? I don't mind the investment but will the benefits outweigh the risks? Are the chinese investors in Kenya for the long haul? While we are it, it is suspected that lead poisoning