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."
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66 items tagged "Review"
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18:48
$3 million house for VP
» Rants, Raves & Reviews -
Uchumi real estate & Grand Regency Hotel
» Rants, Raves & Reviews 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. -
No to subsidies!
» Rants, Raves & Reviews 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.
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Olympia Capital Holdings - Final Results 2007-8
» Rants, Raves & Reviews 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)
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. -
NSE Compensation Fund runs out...
» Rants, Raves & Reviews 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.
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... -
kimunya - the sacrificial lamb?
» Rants, Raves & Reviews 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! -
Has Susan Mudhune resigned from KCB's Board?
» Rants, Raves & Reviews 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. -
Grand Regency Hotel - IPO? Dreaming...
» Rants, Raves & Reviews 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. -
Tsavo Securities plans to buy 51% of Crossfield Securities
» Rants, Raves & Reviews 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? -
City Trust & Business Daily goofs!
» Rants, Raves & Reviews 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. -
Drummond in trouble OR Business Daily screws up. Again.
» Rants, Raves & Reviews 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...
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Do not re-elect any MP who rejects taxation of their perks!
» Rants, Raves & Reviews 
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Pluses & Minuses - Kenya's growing pains
» Rants, Raves & Reviews 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 $10mn from EU to boost tourism. Of course, most of it will be spent in the EU promoting Kenya.
NEGATIVE: Nairobi's 'planning/zoning' is thrown out of the window as residential areas turn into commercial areas. Smells fishy to me. What say the Nairobi City Council?
POSITIVE: KCC is now profitable and likely to go public in 3-4 years. -
Why is Kenyan labour costly vs Chinese labour?
» Rants, Raves & Reviews China is growing in importance as a food exporter even with the recent 'food scares' in Japan and USA.
China has 1.2bn people but why is it that Kenya (a poor country with low 'cost' of living or low standards of living) can't compete with China?
Our flower, tea and horticulture exporters are crying over the strength of the KShs (vs the US$) 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? -
More stockbrokers to bite the dust?
» Rants, Raves & Reviews 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. -
Coldtusker becomes a TRILLIONAIRE...
» Rants, Raves & Reviews 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 -
Back to Basics - Economics, Finance and Wealth Creation
» Rants, Raves & Reviews 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. -
Ah, the Kenya we know...
» Rants, Raves & Reviews 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. -
Zim$ at 123,000,000 per US$
» Rants, Raves & Reviews 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. -
Zim$ drops faster than a rock!
» Rants, Raves & Reviews 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! -
KQ's fortunes looking up...
» Rants, Raves & Reviews 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. -
Zimbabwe Billionaire...
» Rants, Raves & Reviews 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? -
Bloggers pissed off at bloated cabinet...
» Rants, Raves & Reviews 
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.
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The "not so good" happenings in Kenya...
» Rants, Raves & Reviews 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 was the cause of death of 3,000 waterbucks at the L.Nakuru national Park. Sigh...
Where are kimunya, murungi & kibz who have been trumpeting the elusive benefits of 'chinese assistance'? The chinese got the oil exploration blocks they wanted then turned around & told Kenya to shove off... The loan of KShs 5.3bn has been reduced to KShs 2.2bn. Oh, I expect the chinese will insist that the materials, trucks & labour be imported from china!
kibz speech read in absentia in India highlights why he should have gone for the India-Africa Summit with some tough negotiators ( e.g. martha karua) to help ease Kenyan exports to India. Instead he (& karua's) are in Nairobi...
Venture Capital funds are renowned for their flexibility but the idiots at the CMA want to shackle them! How does a new VC firm provide 3 years of audited annual reports? Furthermore, I can understand protecting investors but the minimum capital requirements for VC funds is too high!
Mobitelea... need I say more... dan 'thieving' moi has been uncharacteristically quiet. Maybe he is counting his stolen safaricom/mobitelea earnings?
While politicians dither - but earn undeserved salaries - the ordinary Kenyan pays the price. Mortgage rates expected to rise since title deeds hold no value in many clash-prone areas. This will lead to a slowdown in economic activity where it is needed most!
Well... it turns out that SafCon (erm, I call it SafCon in my postings for a reason) might be lying to us... well, ooh lah lah... there is mobitelea... now it turns out that their definition of 'subscribers' includes inactive subscribers... Celtel has 2.1 'active' subscribers based on a 'chargeable' even in the past 3 months. So how many 'active' subscribers does SafCon really have?
The real subscriber base differential between Celtel & Safaricom might not be as high as we were led to believe. Celtel has a better quality network & attracts more business users with a much higher ARPU.
Revelation that the 9.2 million subscriber base includes active and inactive clients turns this figure into a reflection of the total number of people who have ever owned a Safaricom line since it was founded seven years ago. “Celtel has maintained its grip on the high revenue post-paid customers since its launch. That means it could have a high migratory flock of pre-paid users who join to enjoy cheaper tariffs,” said the analyst. He said the company makes its money from a stable number of post-paid, high grossing customers.
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India Grows Up...
» Rants, Raves & Reviews Unlike some commentators on KenyanEntrepreneur, I believe Kenya has a lot to gain from closer economic ties with India. The racist tone overpowers any sensible discussion.
Anyway, kibz missed a great opportunity to visit with African & Indian leaders in India during the ongoing India-Africa Forum Summit which is meant to mimic the Africa-China Summit. Sometimes it these meetings that enhance cooperation between countries.
India remains a 3rd world country but world-class in IT & engineering. It provided advanced manufacturing & engineering to Boeing. Even GM, Ford & Airbus use software & design firms in India.
Yet Indian technology is better suited for Africa than (most) European, American or Far-east Asian technology since India shares common attributes with most of sub-Saharan Africa. They have a large poor population, huge population crammed into cities/slums, large base of small-scale/subsistence farmers.
Since India is facing labour shortages in IT, what better way for all to benefit than outsource some BPO work to Kenya? This in turn will lead to work higher up on the ladder.
Indian firms are heavily involved in construction work in the Middle East. Hopefully, Africa - & Kenya - can provide expertise or labour to these firms. The conditions the workers face are not ideal but at least they are real jobs. Kenya needs the remittances. -
Kenya's economy suffers major hit
» Rants, Raves & Reviews Finance minister, amos kimunya, predicts 4% growth. This is in sharp contrast to 7% he predicted in the midst of the clashes in Jan 2008. vs 7% earlier.
kibaki did an excellent job earlier by reducing barriers to economic development during 2002-3. Politically, it is a different story. Economically (& politically) Kenya could become another Zimbabwe.
Due to the political crisis - partly of kibz own making - kibz will skip the important India-Africa trade conference. I believe India is the model African countries need to emulate. India is a large democratic country with diverse cultures, languages, political views & peoples. It was a British colony until 1947 & has or been through all sorts of problems that Africa faces, faced & will face. I think kibz should go to India. It is vital for us as a nation to learn how to improve ourselves.
India has a homegrown (efficient) rail system that Kenya can learn from. Kenya needs to improve its railways. Soon.
India has a robust telecommunications system - compared to other developing nations - by using homegrown technology. Sam Pitroda was one of the architects of the system. Of course, Kenya's thieves-in-charge gave up control of Safaricom to Vodaphone in exchange for a bribe.
Another story of new Indian investment in Kenya. Also an interesting side story on how they are encouraging the growth of Kenyan football.
Kenya needs to negotiate with the Indians & Chinese to secure its position in the supply chain for Tea. Kenya -the world's 2nd largest exporter- faces aggressive Indian, Sri Lankan & Chinese competition in the export market. Tata Tea bought out Tetleys & Kenya must ensure its are not locked out of the UK market.
Kenya needs to get serious. We have a decent port that whose throughput can be doubled - damn the politics - in 5 years. We can expand & improve the railway - a god start with its privatisation - to lower transport costs. We need an airport to handle 10mn passengers by 2010 to accommodate KQ (4mn passengers) among other airlines.
We need severe penalties for breaking laws - and enforcement - that protect businesses from theft, destruction & fraud. We need a powerful ombudsman who can protect Kenyans against powerful government functionaries & politicians.
Instead all we do is related to politics, politics & politics! -
Another pathetic article from Business Daily
» Rants, Raves & Reviews Kenyan newspapers need to improve on the quality of research, reporting, editing & presentation. The Business Daily is a premium financial paper which should be in the forefront of quality but fails on many occasions. This is just on of many examples of poor reporting.
My comments & questions in RED.
House of cards Written by James Makau 
Grapgic Illustration by: Conrad KarumeApril 3, 2008: Over the last three weeks, Kenyan banks have been trying to lure investors to borrow money from them to buy Safaricom shares.
Some banks have even gone to the extent of analyzing the account activities of their customers and suggesting the amounts they would be entitled to with earnest letters promising growing riches backed by debt.
This is not the first time that banks have done this with financially disastrous results that did not deliver quick riches.
This is a poorly phrased sentence. If the results were 'financially disastrous' it is expected they would not deliver quick riches so why even bother mentioning it?
Graphic with a 'c' is the correct spelling. And aren't illustrations graphic so why say its 'graphic illustration'.
While the Central Bank remains silent to the issue of banks encouraging their customers to speculate on the stock market with loans underwritten with deposits, the law bars banks from doing the same using their own capital.
In the US and UK, which represent one of the best developed markets, lending customers money to speculate on the stock exchange, which is also known as margin trading, is one of the most closely regulated aspects of the financial markets.
Neither Nairobi Stock Exchange and Capital Markets Authority nor the Central Bank has guidelines on consumer margin trading.
But as millions flock to the Nairobi Stock Exchange (NSE) to invest in Kenya’s biggest privatization deal, they have to decide whether their best option is to invest in shares using borrowed cash or using their hard-earned money.
There is no doubt that using other peoples money to buy securities can produce fabulous profits and big investors do it all the time, however such share-trading strategies come with huge risks that the average investors can barely understand or control.
In order for a small investor to make money on shares bought using bank loans, the economic conditions must be such that the price of this security appreciates significantly to cover the original cost invested, interest rates and other fees on the loans, brokerage commissions and most importantly, reduced purchasing power of the shilling caused by inflation.
What has inflation do with anything here? You are comparing shares purchased using cash & loans so in both cases the effects of inflation remain constant.
In the case of Safaricom, investors have blind faith that the company will continue reporting super profits.
“There is no guarantee that the share price will rally so much as to cover a sizable portion of the loan one may take, largely due to the likely minimal allocation,” said Resa Imbuye, an investment analyst at Old Mutual Asset Managers.
This is what happened with investors when KenGen and ScanGroup were brought to the market. In the case of KenGen, banks were offering customers loans that went to Sh1 million, however, when it emerged that the Government could not satisfy the demand for the shares the maximum allocation was fixed at 6,500, which worked out to Sh78 million.
Wow, last time I checked the maximum allocation was NOT for Shs78 million. A simple mat error but very misleading!
As the Government refunded Sh18 billion, thousands of investors found themselves with excess unplanned debt that had not been factored in their investment plans. For those who speculated in the stock market, it would turn out to be nightmarish as the NSE tumbled in the first quarter of 2007, losing a lot of money for most people.
The debt was taken BEFORE the allocation & refunds thus it was 'planned'. All someone had to do was use the refund to pay down the loan. Of course, there was interest owed but this was nowhere near the original loan amount. I do not understand how the author links the refunds with unplanned debt to losing money in 1Q 2007.
The only beneficiary of these transactions were brokers who got their commissions and commercials banks which continue to receive interest rates on this loans. As opportunities to lend investors evaporate, banks had found an easier way of entrapping investors with expensive loans.
There is no trap. Do banks force them to take loans? Just as brokers don't force clients to buy shares, banks can't force you to take loans!
To grasp the gravity of this entrapment, notice that while KenGen and Scangroup share price has doubled, their returns have not matched the interest rates going up to 20 per cent charged on the loans that were issued and inflation continues to gallop.
OK... if the price of the shares have doubled (100%) in less than 2 years then why can't they keep up with 20% interest rates? I assume the refunds were used to pay down the loans. After all this was not a personal loan but a 'business' loan.
Though Suntra Investment, one of the brokerage firms selling has rated Safaricom as a strong buy, it however warns that investors should be careful. “A word of caution is necessary. In view of the large number of retail investors that will come on board, as they try to cash in on the small gains, the impact of this could keep the price subdued for a while,” says an investor’s note issued by Suntra Investment Bank.
For Safaricom to make money for investors, a lot will depend on how both the economy and the company performs. The economic outlook will affect the ability of businesses to make profits and taxes paid to the Government. All these factors affect the movement of interest rates.
So far, the situation does not look good for the economy and Finance Minister Amos Kimunya expects it to slow down to a growth rate of four cent. Inflation is running high because of food shortages caused by political violence and this will affect demand for goods and services, meaning lower corporate profits and high unemployment.
As businesses default on loans, this could increase interest rates. Since the shares loans are pegged on the prevailing interest rates, this means that investors will struggle servicing them.
Loan defaults do not necessarily mean increase in interest rates. Increase in rates generally lead to higher defaults.
As for Safaricom, the company is expected to continue making a lot of money, but it will face increasing pressures from Celtel, France Telecom and Econet Wireless. This means that in a weak economic environment, it will be tougher to make the kind of money it has been making. The situation however could be the opposite and things get rosy and everyone gets rich. But the watchword here is that the fortunes could swing like a pendulum both ways and investors with heavy debt loads could suffer most.
“A point of caution needs to be given to investors many of whom are not sophisticated. The returns they receive from the IPO may not cancel out the interest payments and inflation which very few have factored in,” reckons Mr Sam Omukoko, the managing director at credit ratings agency, Metropol East Africa Ltd.
This makes sense beacuse its not the author who is making the statement.
During the Kengen IPO for instance, banks were lending at a rate of between 17.5 and 20 per cent. As Kengen’s share price shot up to levels three times its opening price, many speculators raked in tidy returns even after factoring inflation.
But for the Eveready IPO in December of 2006, investors looking to play the markets through margin purchases got severely burnt as the share shot up but consequently slumped to levels below the opening price.
With inflation hovering in double-digit figures and bank lending rates currently between 15 to 18 per cent, it would be a massive gamble to borrow with the objective of investing in the stock market.
Again, inflation is good if you have borrowed since the payments are 'devalued' with time. With inflation at 15% and interest at 20%, this means a real rate of -5%.
Experts say that any form of borrowing should be to meet a need. Investing is a want and really does not warrant any borrowing. Borrowing to invest amounts to a speculative move in that the borrower is at the mercy of positive market movements for them to at least recoup some of the repayments they’ll be making to the banks.
Analysts say that one should really be wary of loans targeted on stocks, and should at the most take a personal loan, and then ‘invest’.
“With this strategy, an investor will be able to sell at his own discretion without reference to the bank. Should a client default, banks are more than willing to take up most these shares through nominee accounts,” says an analyst on condition of anonymity.
Erm, ok... so why would a bank want shares that a client doesn't want? If the bank is 'happy' taking up the shares, it means the consideration is higher than the loan in which case the client should sell the shares and repay the bank!
Some banks have made the deal even more tempting by letting the customers pay interest for the time the loan is outstanding, however brief. There have been cases where some organisations even arrange with the financiers for a concessionary deal.
How is it tempting to allow for the payment of interest while there is an outstanding loan? I thought the 'temptation' would be a deferred interest loan!
“While some of these practices are in line with those in free markets of willing lender and willing borrower, both borrower and lender must ideally compute the effects of both the upside and the downside,” says Mr Cassim Jivraj, financial advisor at PFP Financial services.
“It must be noted that on the borrower/investors side the possible downside and its effects are not often thought through very much,” says Mr Jivraj.
Currently, banks are unwilling to receive lump-sum repayments from these financing deals. At the end of the day, some investors may be exposed to credits they were otherwise unprepared for.
What does the author mean? I can't make head or tail of the statement. Kenyan banks want the refunds applied to the loan if there is no additional collateral pledged. It would be unwise of the banks not to 'ringfence' the refund.
But with the euphoria surrounding the Safaricom IPO and coupled with the massive demand for shares, a number of banks see this as yet another excellent opportunity to cash in with their loans
Nine years ago, banks financing of stocks or margin trading, was extremely prudent. An investor was required to come up with an estimated 30 per cent of the financing while the bank topped up the rest. In 2006 however, banks switched gears, lending finances up to a maximum of 80 per cent of the funds with investors putting in as little as 20 per cent.
And with the unsecured loan products targeting mainly salaried individuals, banks were assured of a steady interest repayments pegged on salary inflows and the share as collateral, should a borrower default.
Most banks are still sitting pretty and have not suffered a bit, although that cannot be said of investors. To most banks, they will have to get the clients paying using other income streams and not necessarily cash obtained through sale of the shares.
Based on the relationship with the bank however, loan rescheduling can be agreed upon over the repayment period and the amount. But the truth is the chance of success for the IPO is not assured. In most advanced markets, margin purchases and short selling are done but again with very high risks.
Hedge funds have high returns but with high risks because they implement these strategies. Currently, focus has turned on them (hedge funds) because of the high risks that are sometimes not well compensated for by the returns the investors get.
OK, what a twist. We are talking simple borrowing here not complex derivatives, associated leverage, betas & deltas. Why does the author jump from one to the other when there is little correlation between the two?
“I feel there is limited, if any, benefit for borrowing to invest,” reckons Mr Imbuye. -
Official Safaricom Prospectus is out...
» Rants, Raves & Reviews Finally the (online) prospectus that should have available at the launch is now out... there are some restrictions regarding the download but here is the link...
Safaricom Prospectus
BTW, MJ - who I thought was S.African - is a US citizen...
Since most banks will provide shares financing, I expect a substantial over-subscription. Most banks will accept the (expected) refunds & alloted shares as security. Many banks want the interest pre-paid for 45-60 days when you take the loan.
Sampling of banks offering loans:- Equity - one of the receiving banks has a sweet deal. They lend money that gets back to them immediately with the application. They can re-lend the funds...
- CFC Bank - 75% LTV.
- I&M - 75% LTV (max loan is KShs 5mn). They are flexible & great to work with but they do not want 'smaller' loans since they don't have the capacity to handle too many clients.
There are many more out there... I haven't checked... The banks are limiting the total loans they give for Safaricom to manage risk & liquidity, so apply early... or you will not be able to borrow...
The 'claw-back' from the foreign pool is unlikely since it would require a 200% over-subscription from the domestic pool. This means an extra KShs 65bn has to be applied for before the clawback clause kicks in. Unlikely. Furthrmore, the clawback is proportional meaning its only to the extent the 200% level is maintained. - Equity - one of the receiving banks has a sweet deal. They lend money that gets back to them immediately with the application. They can re-lend the funds...
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Mugabe plans a 'Kenya' on Zimbabweans...
» Rants, Raves & Reviews Opposition claims early lead...
Delayed results...
Riot police in the streets...
Sounds just like Kenya... -
Lean vs Clean
» Rants, Raves & Reviews ODM wants a 'LEAN' cabinet.
PNU wants a 'CLEAN' cabinet.
I agree with both sides... coz I want a LEAN & CLEAN cabinet.
Will PNU & ODM listen to me? -
Is Reliable Stockbrokers reliable?
» Rants, Raves & Reviews RSL is being taken to court over 500,000/-. Peanuts but certainly a stain that RSL does not need after they received a conditional (not full) license from the CMA.
Oh, and ODM wants to postpone the SafCon IPO... Why did ODM agree to the IPO without clearing the mobitelea ownership issue?
Nyongo gaffed about the pricing... seriously... he should keep quiet about stuff he has no idea about. So what if SafCon is priced at 5/-? It is the PE Ratio, NAV and other market factors that count! Furthermore, KQ's OFS was at 11.25 not 6/-... If SafCon had only 10bn shares (not 40bn) then the selling price could have been 20/-...
Me thinks ODM was outmaneuvered by kibz... again... I am beginning to think kibz has not lost any of his smarts due to age... or is he taking lessons from dan moi?
Apparently PNU wanted 44 ministries... This is plain crazy. Oh, and give ODM mostly non-consequential ministries!
Anyway, parliament is 'closed' and will reopen around 15 April 2008. Sigh... to be an MP... Of course this means no questions from MPs... the ministers are all from the PNU alliance... raila needs to smell the coffee...
BTW, didn't raila learn the first time around - the MoU of 2002? -
Safaricom Prospectus Available here...
» Rants, Raves & Reviews It seems to be the latest (draft) version... of the Safaricom Offer For Sale Prospectus...
The download is available at www.InvestingInAfrica.net
Enjoy! -
Is the NSE a good buy?
» Rants, Raves & Reviews The SafariCon OFS is about to start. I am waiting for the prospectus before I make a decision.
Since the OFS has been hyped for so long, there is a huge local - and foreign - pent-up demand for the shares. The 'unchallenging' price of 5/- will push the OFS to all reaches of Kenya.
As discussed earlier, 10,000/- is affordable for many Kenyan households.
I have been asked what other shares look 'good' since prices have dropped as retail investors sell off other shares to apply for SafCon.
Olympia - Yesterday, it dropped 9.5% to 11.55 which makes no sense. OCHL's main business units are in the S.African region. The year end was 29 Feb 2008 and the results should be released by 31 May 2008. OCHL had a successful Rights Issue in 2H of last year.
Kenya Airways - It has been flirting with the low-50s. It is challenging to be an airline but KQ remains dominant in profitable E & C Africa. As incomes rise so do passengers. I hope the Kenya Airport Authority will expand the airport to cope with KQ's forecasts of 4mn passengers by 2010.
Equity - It just keeps on growing. I think it needs to drop further. Definitely worth buying at the rate of growth!
Barclays - They have expanded rapidly in 2007 and I expect further growth in 2008 with the new branches & aggressive expansion into alternative methods of sale/promotions.
Kenol - Aggressive growth in E & C Africa. Buying Kobil with mostly Kenya assets will be a drag. The gains from lower corporate costs as well single brand identity will benefit Kenol.
KCB - Get ready for the Rights. Regional growth is being ramped up in Uganda, S. Sudan & Tanzania. -
Safaricom sucking the blood of the NSE...???
» Rants, Raves & Reviews Well, the prices of most shares are dropping like a rock...
WHY???
Well... as Safaricom's OFS comes closer, other shares are being sold to fund the purchase of SafCon... BTW, Bankelele reckons its better to buy SafCon after the shares start trading...
Let's look at the numbers... 10bn shares @ 5/-. Please note that 3.5bn shares will be sold to 'foreigners' thus reducing the shares available to Kenyans to 6.5bn. I assume the 3.5bn will be picked up by the various foriegn funds & overseas Kenyans.
Ugandans & Tanzanians are considered locals thus we will have over 1mn CDS accounts. The minimum application is 10,000/- (2,000 shares @ 5/-).
6.5bn x 5 = KShs 32.5bn
So all we need are 3.25mn applications for 2,000 shares & the OFS is over-subscribed.- There are at least 800,000 CDS accounts = minimum applications for KShs 8bn.
- Another 200,000 accounts are expected to be opened by E.Africans = minimum applications for KShs 2bn.
- At least 100 unit trusts, pension funds & other QIIs in Kenya that can buy at least 10,000,000 shares each = minimum KShs 5bn
- SafCon dealers & employees will get preferential - higher - allocations. I expect a full subscription. an estimated 5% = 500mn shares = KShs 5bn
- There must be at least 10,000 Kenyans who can apply for KShs 1mn. Many of these in Nairobi. Add an additional KShs 10bn.
- There must be 100,000 Kenyans who can apply for Kshs 100,000. Pick your towns like Eldoret, Nakuru, etc. Add an additional KShs 10bn
- There must be at least 10,000 diasporans (USA, UK, Dubai, S.Africa) who can apply for 100,000/- thus an additional KShs 1bn.
I am already at KShs 51bn. So... of course, there will be an oversubscription....
It makes sense to temper the purchase/application for SafCon and buy other shares falling in price...
When the refunds come in... there will be a scramble for the other shares. Many investors will repay the loans BUT others will keep the loans. I expect banks e.g. Equity will see an upsurge in their loan books.
So be prepared... not necessarily for SafCon... - There are at least 800,000 CDS accounts = minimum applications for KShs 8bn.
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Africa is hot...
» Rants, Raves & Reviews Its not the weather.
There has been a huge increase in positive investor sentiment as evidenced by the various investor conferences all over the world focused on Africa.
When a luminary like Mark Mobius attends one of these... erm, something is cooking...
So I managed to take a snap with MM... I will have to upload it one of these days... then there is Warren Buffet... yep, I will get him to pose with me as well... and perhaps get a stock tip or two?
Africans have a nasty habit of playing down what 'foreigners' can bring to the table. Yes, Africans are the masters of their own destinies BUT take all the help you can get!!! Why do we want to re-invent the wheel?
The potential is huge. We know the problems exist but an open society with less deference to ignorant elders or leaders is a step to overcoming obstacles. Father does not always know best.
I will blog on a firm that has an excellent product that every investor in Africa should use... more later...
RenCap is really piling on the big boys... Terry Davidson, Maina Mwangi, Amish Gupta & now Mutahi Kagwe.
Mauritius is off the starting blocks... will Kenya catch up? Mauritius has got a flat tax rate. Yes, easy to implement. Laffer had it right!!!
Mauritius is small. Yes, small but it attracts more FDI than Kenya does. Why? Smart policies. Kenyan politicians - most of whom care only about themselves & their wives, kids & misstresses - are dithering while other African countries are adopting progressive policies.
Of course, there is the typical government (corrupt or inept or both) bureaucrats... look at the roadblocks in the deal that would have Essar take over the inefficient Kenya Oil Refinery.
Why do African presidents think they are important? I can't believe a terminal is to be reserved for the so-called VVIPs... VVIPs my a**e.
BTW, I plan to visit Rwanda... any tips?
Anyway... Africa is hot... get in before the ship leaves... -
Nyaga Stockbrokers bites the dust...
» Rants, Raves & Reviews As I reported earlier that things were looking dim for Nyaga Stockbrokers... well, they are down & out...
I am not sure what the NSE hoped to achieve by pumping a mere KShs 100mn of investors' money into Nyaga but...
I expect the license to be auctioned but the amount will not be enough to cover Nyaga's losses - estimated at 800mn - and this will be interesting...
Solid Securities has sold 55% (or more) to NIC Bank...
Discount is hunting for a partner... -
Nyaga (almost) bites the dust....
» Rants, Raves & Reviews Rumors about Nyaga Stockbrokers have been making the rounds on MyStocks & Stocks Kenya for a while...
Where there is smoke there is fire...
Since Nyaga is a major player in the retail market, this adds fuel to the fire. It seems many customers want out of Nyaga with the beneficiaries being firms like Ngenye Kariuki & Co.
The NSE is bailing NSB since a thuo-like debacle can only exacerbate the "bearish" situation on the NSE. I expect there will be a run on NSB but it will take longer to sort out compared to thuo coz NSB has a much larger/wider presence in Kenya.
I am sure there is a buyer for the license e.g. CBA but just the license NOT the business. Renaissance & NIC Bank are after high-net worth clients. I think CBA is in the same league. Of course, there is Old Mutual but they face opposition from other brokers. In any case, they would not want the retail business either.
Oh, well... what do you think? -
Kalooser (Kalonzo) getting edgy as Annan talks bear fruit...
» Rants, Raves & Reviews I have to give credit to Kenyan bloggers for the (nick)names they give politicians... but the new one is kalonzo = kalooser esp now that ODM & PNU could reach a deal that dissolves the current cabinet.
The VP's post is often considered "ceremonial". The only VP who made it to becoming prez was dan "the idiot" moi when jomo "the landgrabber" kenyatta kicked the bucket. Even then moi barely made it. If not for charlie njonjo's support, there was no chance moi would have been top dog.
Many VPs have been forced out of office. Among these are:- Raila's daddy... Oginga Odinga
- There was a decent, honest guy... Joseph Murumbi who quit coz he could not stand the shenanigans
- Josephat Karanja... poor guy was hounded out in fashion... though I am not sure what his crime was
- Musalia Mudavadi... VP for a few months then even lost his MP's seat in 2002. Now in ODM. Would have been VP (again) if Raila became prez
- Saitoti, corrupt, corrupt, corrupt. Goldenberg happened under his watch. Was told to shut up in public by dan moi.
So kalooser is concerned. Speculation is rife that he will be kicked aside to pave way for ODM (read Raila). I would say he deserves being cast aside just as he cast aside Julia Ojiambo. Just desserts! -
Kalonzo sweating bullets... ODM-K on its way out?
» Rants, Raves & Reviews The "agreement" between ODM & PNU over the formation/composition of a new government is causing kalonzo heartburn. After all what are ODM-K's 25 seats vs ODM's 96 seats? We know that PNU went to ODM-K in desperation & kibz wil dump kalonzo at the first opportunity. After all kibz has to reward uhuru kenyatta for his support.
Many PNU supporters would rather see a peaceful Kenya by ceding the VP's post to Raila rather than support kalaonzo & have Raila (& Ruto) cause problems. As is, kalonzo is a 1-trick pony with only the kamba vote under his belt.
ODM-K is facing problems as kalonzo tries to oust Julia Ojiambo from the party's top echelons.
ODM had 99 seats but the murder of the 2 ODM MPs (by PNU-related folks?) throws into confusion the slim majority held by ODM in the parliament. ODM has lost 3 seats coz Marende's seat - after his elevation to the post of Speaker - is also up for grabs.
I have to say PNU's attempts at using the bribed ODM MPs during the Speaker's election failed miserably. I wonder if ODM can keep its MPs in line as kibz is known to bribe with impunity.
My concern is that the above distractions will delay the resuscitation of the economy. The ray of hope is the cessation of hostilities - if the violence subsides - the business community can start rebuilding the country. I hope that the economy will be bigger than politics by 2012. That remains wishful thinking. -
The Unvarnished Truth...
» Rants, Raves & Reviews A cartoon by Patrick Gathara... so true... I think Kenyan political cartoonists are among the best in the world... -
Its official - the Kenyan Army involved in internal "security"
» Rants, Raves & Reviews The initial deployment of army officers was ostensibly for "humanitarian" purposes. No more... the Army was deployed in Nakuru.
Whereas we welcome the enforced peace the army brings - they are well armed & trained to suppress enemies - but it is a slippery slope. Will these actions embolden them to take a more active part in our politics? -
How to jump-start the economy...
» Rants, Raves & Reviews Simpler than it seems... at first.- PROTECTION of lives & property. Shoot to kill any thieves/muggers/looters. Of course, my assumption is that the police are part of the crooks' networks. Kenyan police are known to be behind many robberies.
- Allow peaceful demonstrations. This will allow for the venting of anger while directing police efforts to (1) above. Savings from police overtime, tear gas purchases, etc... Of course, kibz' hardliners would rather the police kill innocents than preserve Kenyans' properties.
- TAX breaks/reduction. Sure the government will "lose" income but the economic boost will be enormous. This is a time to suspend or eliminate many punitive taxes on agricultural products & inputs. Unfortunately, the corruption networks are getting stronger. Mumias has PUBLICLY complained about the non-action by police on smuggled sugar.
- PR campaigns. Yes, these are needed to boost tourism. The campaign has to include new markets like China & Russia. Tourism remains a key driver of our economy. The ancillary industries/sectors e.g. agriculture, transport, etc that need tourism will start growing. This is an expensive process & might take 6-12 months before the benefits kick in.
- Expand private/public partnerships. Fire political appointees like george muhoho at the KAA. We need PRIVATE SECTOR initiatives that have a positive ROE. KQ has been begging for a larger airport but the idiots at KAA proposed an expansion (2008-2011) to cater for 4mn passengers. KQ expects 4mn passengers on its own by 2011. We need a larger pipeline from Mombasa -Kampala. We can't control the Ugandans but let's extend it to Kisumu. There will be a steep learning curve but there is little choice. I expect the ROE requirements for private investors might raise prices BUT the efficiencies will negate these cost increases over the mid-term.
- Reduce barriers to business. The License Raj needs to be eliminated. Hong Kong & Singapore have a one-stop shop. The idiocy of standing in line to pay taxes is STUPID. The same with (insert city/town/county) license fees. Spending hours in line to pay for services. I am glad KPLC has finally expanded their pay points to include Posta. Now we need to pay these ONLINE.
- Reduce government expenditure. kibz has planned for 34 ministers. That means 34 Mercedes cars or Range Rovers or BMWs. Then there are asst ministers who do little. Add ex-officio members. And their staff. And chase cars. And perks. Sigh... I should have stood for office...
- Rebuild/build infrastructure. PPP are the way to go. A new highway to Uganda would immediately boost our exports. A decent road to Namanga would allow Kenyan manufacturers dominate the region. A new highway to S.Sudan would allow Kenyans a foothold NOW before others get in. I believe the future of Kenyan exports lies in Africa not Europe.
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The carnage continues... Tourism sector
» Rants, Raves & Reviews I want to highlight listed firms in specific sectors to see how they have been affected by the current instability in Kenya...
Tourism - TPSEA & KQ
KQ- Loss on inbound traffic into Kenya esp from Europe. KQ opened route to Paris in 2007 but it seems doom & gloom. The drop in passengers is frightening.
- Competition has pummeled KQ on the LHR-NBO sector. Add the clashes & it gets worse during KQ's "profitable" Jan-Apr period.
- Many N.Americans (2nd largest tourist market) have stopped flying to Kenya.
- KQ has suspended the LHR-MBA route since there are few tourists willing to come to Kenya on holiday. The Jo'burg-MBA sector has been suspended as well. Therefore, all flights have to pass through NBO.
- Weaker KShs means higher fuel & interest costs.
- KQ's saving grace are the W.Africa bound passengers.
- High oil prices makes it worse. All airlines will suffer (except the Mid East).
- If peace prevails, then KQ will see inbound passengers increase from August 2008.
- Replacement plane (767) delivery in Oct 2008 to ease current equipment "shortage". The SAABs will be retired.
- Weaker KShs will "boost" profits in KShs but the break-even factor has increased.
- Lucky for them, they expanded to include the Tanzanian portfolio of hotels & lodges. Some loss of Kenyan business has transferred to Tanzania.
- Serena Nairobi is normally 85%+ occupancy at this time. They are at 20%. Yes, only 20%. They are bleeding money.
- Serena's other lodges are almost empty. Most tour operators prefer the tourists fly but this can be prohibitive to middle-class tourists.
- Serena Mombasa may be shut down for "renovations" until tourism picks up!
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19:50
The Grass is Singing
» Kenya Imagine Last week, Doris Lessing won the Nobel Prize for literature.
"The Grass is Singing" is a psychological and social analysis on race relations in the old Zimbabwe, and an exploration of the dichotomy of culture and nature.
Read here as Annette Keino writes a review on her book, the Grass is Singing." -
Kitchen Toto
» Kenya Imagine Kenyan film has made large strides in quality and distribution. Encouragingly also, a growing, cultured middle class is adding to the viability of these efforts.
Still, there's scope for improvement and crucially too for the treatment of subjects such as our history and the social issues that have informed our painful progress through times. The dark days of the Kenyatta government, the hunger and horrors of the Moi years and the increasing unemployment and desperation that collar us to this day are all fertile ground for a wealth of ideas that properly done, would make for great movie experiences.
Read more here.
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Rights Issues - For Non-Shareholders
» Rants, Raves & Reviews OCHL RIGHTS ISSUE: PURCHASE OF RENOUNCED RIGHTS BY NON-SHAREHOLDERS
The potential investors who are currently not shareholders will have to buy the renounced Rights from the Secondary Market. Please note this ended on 14 Sep 2007.
The following sums up the general process flow:
1. Non-shareholders should approach their Agents and, if they are first time investors, they will be requested to open CDS Accounts as per normal procedures; Completed
2. The investors may then order and buy the Rights from the secondary market; Completed
3. The new investors will then raise payment for the Rights through their Agents; Payments due by 28 Sep 2007.
4. The Agents will deliver full details of the sellers and buyers as well as the payment for the Rights to KCB. The details so submitted should be in the form of schedules disclosing the following;
a. Full Names;
b. National ID or Passport Number;
c. Full Contact Details;
d. Number of Rights transacted;
e. Payment made/due; and (in respect to the seller);
f. The shareholder’s member number;
5. KCB will observe all the banking and batching procedures before delivery to CRS;
6. CRS will debit the seller’s (existing shareholder’s) account as well as create and credit the new investor’s account with the transacted Rights.
If you are still unsure, please contact Rina Karina of Faida Securities. -
Sabbatical
» Rants, Raves & Reviews COLDTUSKER needs a break. A long break. On 23 Sep 2007, coldtusker shall hibernate for a few weeks.
Please feel free to post questions/comments since there may be periods where coldtusker needs a cold one & shall break his (temporary) vow of silence.
Coldtusker has played with the idea of entering politics because he is tired of most Kenyan politicians who tend to be greedy, silly, thieving, conniving, sniveling, etc.
He thought he would be a breath of fresh air but like many of this ilk, he is pragmatic, & feels better suited to work behind the scenes. Since politics in Kenya is based on tribal lines & Kenyan voters have not matured enough to place "Nation" & "Merit" over tribe, Kenyans will continue getting the get the government we deserve.
I hope my vote counts toward the good guys.
Cheers! -
Rights Offers - How they work
» Rants, Raves & Reviews Dexter , a reader, said...Sorry CT for being a pain. One more question, there's somewhere on OCHL website which says that, the 28th of Sept. '07 at 3.00pm is the last day and time for acceptance and payment of new shares. What does this mean? Dexter - not at all. I am happy to help. Others are asking similar questions since many brokers are clueless esp regarding Rights that were purchased. #s 10 & 11 are relevant to you.
What the Rights process involves for investors
1 - Board decides/agrees the Firm wants to raise cash. They could take on debt but that might not be possible or desirable so they choose to issue Rights which allows existing shareholders to apply for additional shares at a (normally) discount to the market price. Most Rights are exercised for cash or cash equivalents.
Uchumi suppliers could apply their outstanding invoices to exercise the Rights instead of cash. This is a "cash equivalent".
2 - An announcement that the Firm plans to issue Rights is made but details are not always released. Some firms may indicate how many Rights they plan to offer at this stage.
3 - An application is made to the CMA. The application also includes a pro-forma Information Memorandum. Many firms announce the number of shares they plan to issue/offer. Some may announce/set the price at this stage as well.
4 - Firms announce the price for the Rights. This information is also submitted to the CMA. The price is often based on past trading of the shares. It may be 3-6 months' average price. The process is dynamic i.e. steps 2 & 3 may run concurrently. NIC has announced the price of 70/- but have not issued a timetable.
5- If the CMA approves the Rights Offer, a timetable is published that informs the investing public of the crtitical dates.
6 - An Information Memorandum is produced which has to be approved by the CMA. This is distributed to the shareholders who also receive their Provisional Letter of Allotment (PAL). The CMA does not "guarantee" the Rights Offer nor do they perform an in-depth due diligence.
The CMA was unfairly blamed for Uchumi being allowed to raise cash from the public but unless there was fraud - the bulk of which happened before the Rights - it is the Buyers who need to be aware of what they are/were buying.
7 - The shares officially trade Cum Rights. Buyers of these shares are entitled to the Rights issued through a PAL. DTBK & NIC are in this stage of the process.
8 - The Rights start trading on the NSE for a pre-determined period. The shares trade Ex-Rights. The OCHL Rights traded for 2 weeks from 3-14 Sep 2007.
9 - After the Rights cease trading there is a "break" to allow reconciliation of the Rights so the buyers are assigned the Rights from the sellers.
10 - The Rights need to be exercised i.e. payment for the shares needs to be made. The Rights lose all value if not exercised. OCHL's rights "expire" at 3 PM on 28 Sep 2007 .
11 - The payments are made through a broker or directly to the Receiving Bank using a Banker's cheque. The cheque should be for the exact amount (Rights' Exercise Price x Number of Rights) and the PALs usually have the amount payable filled in. Because of the time limit, do not delay & since most Offers close on Fridays, play safe and do it early.
I prefer submitting the form directly to the Registrar or Receiving Bank who will check for errors on the form. They will only accept a Banker's cheque.
An additional benefit accrues, there is no commission payable to the broker by the Firm. The Firm is YOUR Firm so any expenses paid by the Firm are paid by you, the investor.
Always insist on a receipt from the Registrar, Bank or Broker. OCHL's Registrar is CRS located in Bruce House. KCB's shares office is located in Kencom House.
If your broker does not know what they are doing, go see Faida, Standard or Tsavo who were involved in the Offer as advisers.
12 - The Rights + Payments are "converted" into shares. The shares are credited to those who exercise the Rights. An announcement is made regarding the level of subscription. If over-subscribed then the allocation methodology is announced. Unlike an IPO or OFS, buyers are guaranteed as many shares as the Rights they exercised.
13 - Refunds, if any, are dispatched. The CDS accounts are updated while others may receive certificates.
14 - There is a pre-determined date when the "new" shares can begin trading. The original shares can continue trading throughout this process.
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The Nairobi Stock ATM... Olympia, Diamond Trust & NIC
» Rants, Raves & Reviews The Olympia Capital Holdings Rights Offer comes to a "close" on Friday (14 Sep 2007). The Rights will stop trading on Friday but the exercise date is 28 Sep 2007 giving buyers 2 weeks to get their finances in order. They will raise KShs 420mn.
Barely after the close of the Olympia Rights Offer then Diamond Trust Rights Offer will start soon after the EGM on 1 Oct 2007. They will sell 23,291,015 shares at a yet undetermined price. As happened with the earlier Rights Offer in 2007, it is expected the Offer will be oversubscribed as well.
Then there is NIC Bank which plans to sell 16.5 million shares at KShs 70 = KShs 1,155mn. From the excitement shown for the shares on the market (selling at 175/-) it is likely the Offer will be heavily oversubscribed.
Barclays Bank announced a KShs 3bn bond offer today.
So all in all... the NSE cash ATM continues unabated whether it is an election year or not! -
Oympia Rights in major trade
» Rants, Raves & Reviews Olympia Capital Holdings has a Rights Offer pending. The final date for trading the Rights is 14 Sep 2007. The final payment date is 28 Sep 2007.
The current outstanding shares are 10,000,000 with 30,000,000 Rights on offer.
The regular shares trade volume is relatively low (see MyStocks for graphing) and if they trade 5,000 shares, it is considered a huge deal!
Therefore the total Rights traded today were 5,170,200 (yes, over 5mn)... Wow! That is 17% of all outstanding Rights on offer.
Generally when someone buys Rights, it means that they will be exercised. In comparison only 3,300 shares were traded at 16/- so there seems to be a bottom reached.
There are 3 more trading days for the Rights so let's see how this develops. -
VWAP (on the NSE pricelist) - Please help me!
» Rants, Raves & Reviews I had posted this earlier... I have not received a satisfactory answer, yet.
Please help!
VWAP (Click on the link)
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Olympia Capital Holdings Rights Offer - Queries Part 1
» Rants, Raves & Reviews Since I posted the earlier blog entry, I have been approached by various readers to explain more about OCHL & its Rights Offer. Due to time constraints, I will address 1-2 issues/topics/questions at a time. Leave the questions in the comments section rather than e-mailing them to me so others may answer/comment on your queries.
The information below is derived from the Information Memorandum. Please download the IM & read it for additional details/information. This is a document the CMA requires firms to produce & should be read by any investor who wants to participate in OCHL's Rights Offer. My comments are in RED.
PURPOSE OF THE RIGHTS ISSUE
The purpose of the Rights Issue is to raise long term funds totaling to an amount of Kshs. 420,000,000 for the following:-
1.To increase OCHL shareholding in OCCL, an associate company listed on the Botswana Stock Exchange.
OCHL used to own 53% of OCCL(Botswana) until April 2007 when OCHL did not participate in OCCL(B)'s Rights Offer. This reduced the ownership to 26%. The reason for the non-participation was the unavailability of funds to buy OCC(B) Rights. OCHL wants to buy 27% of OCCL(B) to equal a shareholding of 50%+ of OCC(B) in order to consolidate the financials.
ii. To fund potential business acquisitions in Kenya. OCHL is already in preliminary discussions with two Kenyan manufacturing companies. This is a strategic move that is going to bring a strong presence of the company in the local manufacturing market to compliment that of local subsidiary.
It should be complement (not compliment) but that aside, OCHL is looking at expanding its footprint in Kenya but acquiring firms in the building industry. Most Kenyan firms in this sector are importers not manufacturers.
OCHL will also undertake marketing of 'Window Accessories" (products of Plush-Yokota) in Kenya through Dunlop Industries Limited.
iii. To fund acquisitions and mergers in South Africa, where the current value chain in the retail housing sector is not complete and the company is forced to partner with others in order to market and sell its products. Therefore to reduce the cost of business and increase trading margins, the company is looking to acquire/merge with companies that can complement the current businesses in both Botswana and South Africa.
OCHL's management has consistently declared their preference for the S.African market which is much larger than Kenya's market. S.Africa & Botswana are part of SADDC that allows for preferential treatment of goods & services within SADDC.
OCC(B)'s involvement is through a PVC tile manufacturing plant (Kalahari Floor Tiles) & window accessories manufacturing & sales (Plush-Yokota). These firms also have "side" businesses including chemicals, uPVC windows & shower doors.
Expansion is likely to be in similar industries i.e home improvement & building materials.
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Olympia Capital Holdings - Rights Offer
» Rants, Raves & Reviews Olympia Capital Holdings Ltd launched their Rights Offer on 3 September 2007. The following link is courtesy of www.mystocks.co.ke
First a plug for MyStocks (no, they do not pay me...)
www.mystocks.co.ke
They have the BEST site out there if you are looking for information & tools on Kenyan stocks. I have used stockskenya, hisanet, etc but mystocks has information & tools I have not found elsewhere.
Mystocks has a relationship with mediacorp who supplied free access to the live stream. I think the "free" days are coming to an end soon. Apparently, the NSE charges the data vendors $2,500/month & it will rise to $5,000/month from 1 Jan 2008.
Anyway, try out the graphing tools which also account for splits & bonuses.
Olympia Capital Holdings Ltd website
Olympia Capital Holdings Limited Memorandum of Information for the Rights Offer in 2007
Basic Info on OCHL:- Rights Offer of 30mn shares at 14/- each = KShs 420mn
- Owns 26% of Olympia Capital (Botswana)
- OCC(B) owns 76% of Plush-Yokota (S.Africa)
- Year-end is 28 Feb 2008
Actually their website and memorandum has far more details than what I can reproduce here. -
Olympia Capital Holdings Rights Offer
» Rants, Raves & Reviews Hey! Olympia Capital has a website! This is a recent but welcome development. Better late then never. I hope they keep it up-to-date.
All listed companies should have at least a basic website where we can get information on them.
Olympia Capital Holdings (Kenya) Website
Plush-Yokota Website
(Plush-Yokota is the S.African firm Olympia Capital Corp (Botswana) acquired in November 2006).
Since the Olympia shares are trading Ex-Rights which means buying the shares does not entitle you to receiving Rights. Nevertheless, you do own part of the company. And one can sell these shares at any time during the Rights Offer as well as before the "new" shares are issued.
More details later! -
What is "Variable Weighted Average Price"
» Rants, Raves & Reviews The NSE provides a VWAP on their price list. Click here to go to their website to download a pricelist. The link is located on the left side.
I was informed (right or wrong) that the "V" stands for "Variable"...
I know what a Weighted Average Price is but if WAP is variable then what good is the WAP????
Does anyone know for sure HOW the NSE calculates the VWAP?
Will a Math major... or anyone else please help me out! I googled the term but came up with nothing that included the "variable"...
Or is this Kenyan style math where:
Politician( aka pig/GOK/GOK employee/FOK/moi) receives 100/- but the mwananchi/project receives 10/- but the politician (& his cohorts) crow how the project received the full allocation.
To recap how Kenyan math works 100=10.
Back to "V"WAP... erm, please explain to me what it means! -
More small cars coming our way from India...
» Rants, Raves & Reviews Wow... it is amazing how far India has progressed since 1980 vs most African countries... But as usual I shall concentrate on Kenya...
This is a slideshow about Indian car manufacturers & "small" cars...
India used to be thought of as an over-populated backward country but the changes there are amazing. The problems are still there but the economic progress is outstanding.
I pick India, not China, as a model Kenya should emulate (the GOOD not the bad) since Kenya, like India, has a (flawed) democracy. China is a totalitarian state Kenyans will & should not embrace.
Furthermore, India faces many issues/problems that mirror those of African countries including a burgeoning population, poverty, corruption & a monolithic bureaucracy.
So, what can we learn from India (the GOOD not the bad!)?- Privatisation - India is moving from a socialist mindset to a capitalist mindset. Some may argue that India has alway been a dyed-in-the-wool capitalist nation. Well so was most of pre-colonial Africa. The largest Indian firms are PRIVATE enterprises/groups including Reliance, Tata, Birla, Wipro, etc. Many state owned firms are being privatised as competition sets in. (Kenya is doing well on this aspect esp after Kibaki came to power. I hope the trend continues).
- Technocratic appointments - Manmohan Singh (PM) was a technocrat who was appointed as Finance Minister in the 1980s. And then give them a free hand. The "Dream Team" of the 1990s was a good idea but derailed when they did not kiss moi's ass. (Sigh... Kenya could do much better in this respect. Political appointments rule the day not merit. Then add underworked but overpaid assistant ministers to this mix!).
- De-tribalisation - India has more issues/problems than Kenya regarding "tribes", religions & castes. Nevertheless, there has been a slow but steady growth in those who don't care about these matters. And it starts from the top. Rajiv Gandhi married Sonia (an Italian). Indira Gandhi (a Hindu) married a Feroz (a Parsi). There are many other examples that are not widely known. The CEO of BioCon is Kiran Mazumdar-Shaw. Kiran is India's richest woman & married to a Scot. (Kenya is doing poor in this regard especially when the populace is intent on electing their "own" regardless of merit. The good news is that the urban youth are not swayed as much but the rural - ethnic - vote exceeds the urban vote. Raila's son, Castro, is married to a Kikuyu girl! But will this turn into votes for him?)
- Women empowerment - Even though women are often treated as second-class citizens, India's current president is a woman. India's kingmaker is also a woman (Sonia Gandhi). Indira Gandhi was the PM for many years. Many of the states have Chief Ministers who are women. (Kenya has women politicians (karua, ojiambo, ndungu, etc) but except for Wangari Mathaai, I do not see these politicians agitating for the common woman. Campaigning for another 40 "special" seats does not count. What about the 17,000,000 other girls & women? And why do women who constitute 50% of the population need special treatment? If the women ganged up, they could elect a woman president as well as the majority in parliament!)
- Domestic Market - Indian firms export BUT the domestic market is important. Indians support local firms. Even Coke had a tough time when many Indian favoured the local "Thums Up" over "Coca-Cola". (I am embarrassed when I see imported butter & eggs in Kenyan supermarkets!!! Yet we have KCC among other firms exporting dairy products to the Middle East. We import canned "Heinz" beans & "Ceres" juices whereas we have local firms producing the same /similar goods! Kenyans' obsession with imports is pathetic!
- Spread e-government - India has spread government's reach to embrace substantial portions of the population through technology. The kids are becoming the teachers in many villages. The trend is fueled by examples/idols ranging from billionaires like Azim Premji of Wipro among others. India's huge BPO industry is pushing technology into the villages. (Kenya has been talking the talk but not walking the walk regarding technology. We need to employ savvier professionals who can spearhead e-government. Credit to Kimunya among others who are driving the computerisation process. But we need to do more, sooner.)
- India has embarked on connecting the corners of the country with expressways. The idea is to boost trade as well as encourage exports & efficiencies. The rail network has great coverage all over India. (Kenya does not have a decent highway across the country. The Nairobi-Mombasa highway is a veritable mess. Nairobi-Kisumu is even worse. Imagine the possibilities if we had a decent North-South highway from Namanga to Lokichoggio AND a 4-lane decent highway from Mombasa-Kisumu. Our cross-border trade with S. Sudan & Uganda would show strong gains as would Kenyan domestic tourism).
- Privatisation - India is moving from a socialist mindset to a capitalist mindset. Some may argue that India has alway been a dyed-in-the-wool capitalist nation. Well so was most of pre-colonial Africa. The largest Indian firms are PRIVATE enterprises/groups including Reliance, Tata, Birla, Wipro, etc. Many state owned firms are being privatised as competition sets in. (Kenya is doing well on this aspect esp after Kibaki came to power. I hope the trend continues).
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Cheetahs vs Hippos
» Rants, Raves & Reviews [myafricatoday.blogspot.com]
The Government of Kenya (or some idiots within it) were "insulted" when an article in The Economist referred to "new" Africans as Cheetahs vs the "old, corrupt, status-quo' Africans as Hippos.
So the IDIOTS canceled an important meeting/conference the Economist was going to hold in Nairobi in view of the Economist's article. It turns out it was an AFRICAN (George Ayittey) made a great speech on why he believes in Africa & referred to Cheetahs & Hippos!
He also argues that Capitalism was integral to ancient African communities. The marketplaces e.g. Timbuktu was a marketplace. What the "Hippos" introduced as "Socialism" (including African Socialism as attempted in Kenya or Tanzania) was a form of "Swiss-bank Socialism" for the Hippos.
Anyway, here is his definition paraphrased.
The Cheetah Generation - made up of the youth, specifically the TED Fellows present here, the saviors of Africa who are not going to wait for government and aid organizations to do things for them.
The Hippo Generation - the current political and business leaders who are happy to wallow in their water holes, complaining about colonialism and poverty, but doing nothing about it.
Here are some sources of information on George Ayittey's speech.
White African
TED
Where are the Hippos? -
Olympia Capital Holdings announces Rights price...
» Rants, Raves & Reviews OCHL has announced the Rights price at 14/- per share. I was expecting 10/- but the 14/- is a 30% discount to the current market price of 20/-.
The shares should trade Cum Rights for a few days until they trade Ex-rights but that need to be decided by the CMA, NSE & OCHL.
OCHL would raise a (gross) KShs 420mn if all the shares are taken up. The current "excess liquidity" on the NSE may bode well for them since the KenRe IPO was over-subscribed & the refunds should start flowing in soon. -
Nakumatt eyes Ugandan chain?
» Rants, Raves & Reviews Considering Nakumatt's expansion plans across E&C Africa as well as its intention of going public in 2009... this seems an ideal opportunity to expand & gain instant market share in Uganda .
Uchumi has one branch in Kampala but can ill-afford to expand further... After what seems to be another failed attempt to raise additional funds from existing shareholders, it may have to shut down OR find a strategic investor to turn it around.
And just 10 years ago, Uchumi Supermarkets was one of Kenya's most profitable firms, under the then MD - Suresh Shah, paying hefty dividends... but it went downhill fast after chris kirubi & company took over...
That opened the door for the rapid expansion of Nakumatt since many suppliers quit supplying Uchumi. Even though Uchumi has a branch in Kampala, the continuing inancial problems at home will affect them in Uganda... whereas Nakumatt is raring to expand in East Africa.
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Malooned-- the movie
» Kenya Imagine Noel Opoti writes a review on the recently released Kenyan movie.
At first, the plot may seem really lame, the whole movie was set in one scene and it's hard to get past this if you have already watched the trailer. However, as the movie snakes along you begin to appreciate the creativity and effort put into making the movie.
Read more here.
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Business Process Outsourcing...
» Rants, Raves & Reviews So Kenya wants to be a prime candidate for the BPO industry... Well, a lot needs to be done and only a concerted effort by the private sector aided by the public sector will do...
Other Bangalore Wannabes (from Business Week)
Mauritius has a leg up on Kenya with better communications, bilingual population, tie with Indian firms (Infosys has already set up in the country) & enlightened leadership.
Other Anglophone countries that are in the market for additional business are Sri Lanka & Pakistan. In addition, the proximity to India (#1 BPO centre) makes the transition easier. The Philippines is another country with a substantial BPO sector. All the countries above also have a decent base to recruit IT graduates.
Senegal restructured its telecom network to tap into the Francophone BPO sector. -
So Kenya wants to be a prime candidate for the BPO...
» Rants, Raves & Reviews So Kenya wants to be a prime candidate for the BPO industry... Well, a lot needs to be done and only a concerted effort by the private sector aided by the public sector will do...
Other Bangalore Wannabes (from Business Week) -
One-Term President... a solution to Kenya's political crisis?
» Rants, Raves & Reviews We should limit Kenyan Presidential terms to ONE TERM... yes... perhaps the term might be a little longer...
Proposal: A 7-year term that enables the incumbent to concentrate on Kenya & Kenyans. Not on his/her re-election bid & political power games!
Why:- Fairly good presidents can get sucked into bad political schemes that tarnish even otherwise decent presidents e.g. Kibz, who seems to have done a fairly decent economic job, has re-appointed most of the ministers tainted by anglo-fleecing!!! Perhaps this is a result of the desire to bring in votes from various tribes... fronted by these politicians?
- Politicking by incumbents wastes time & money e.g. Most of 2007 has/will be spent politicking by kibz especially if he wants to stand for re-election.
- Limiting the term to 7 years will encourage presidents to leave (good) legacies. They could remain out of the pig-sty since, well, they are already at the top of the dog-pile!!!
- A one-term president has greater immunity (or a thicker skin) to political kingmakers & manipulators.
- There is the fear that some presidents will rig the elections to elect their proteges but this is no different from the current suituation e.g. Nigeria's Obasanjo favouring Yar'Adua.
- No fear of not being (re)elected provides a sense of hubris but the parliament retains the power to impeach.
- If the president dies or resigns without completing his term, they can be replaced by the Vice-President pending new elections &/or some mechanism of succession. We can use the USA model where the VP becomes the prez for the remainder of the term. An alternate is to have pre-set limits depending on when the transfer of power takes place.
- We might lose a competent president who we want to run again but there are many smart competent Kenyans. We need new blood, new ideas & accountability.
- Too many presidents on our payroll! But this is mitigated by fewer presidents serving a mere one term lasting 5 years! Hopefully, some of these presidents will take up international roles e.g. UN appointments, etc. Kenya should lobby for these positions on condition the presidents so appointed/elected to these bodies "give" up their GOK salaries/pensions for the term of employment with the UN, etc.
Politicians are like nappies, they need to be changed often or they start stinking. -
NBK 1H 2007 Results
» Rants, Raves & Reviews So what does all this mean?
Is NBK out of the woods?
The net interest income has significantly dropped in 2H 2007. As Marambii opined earlier during the AGM that the GOK was being charged interest at 15% which was a great rate by all means! But will now receive a lower rate. This will be a drag on earnings.
The largest gain is from the reduction of Loan Loss Provisions... Hmmm... what it means is that NBK with the "assent" of the CBK did not fully provide for these dud loans!
NBK claims it has enough securities to cover the "open" bad loans i.e. loans not provided for thus they do not see that as a problem. Of course, in Kenya, it means a lengthy court process to get much out of defaulters.
Nevertheless, NBK can start growing by pursuing new lending. The challenge will be how to deploy the Billions that the GOK will repay NBK. Who to lend to? At what rate? At what risk level?
The GOK & NSSF hold preference shares & I expect they will demand Preferred dividend payments if NBK pays Ordinary dividends.
The options to mitigate this are:- Negotiate a conversion from Preferred Shares to Ordinary Shares which would dilute the current shareholders' stake.
- Pay off the GOK by exchanging the T-Bonds for the Preference shares but this will result in reduced income.
Stanbic remains a suitor but 2 years down the line since CFC-Stanbic caters to the middle market but does not give Stanbic the heft it wants across all sectors of the economy. NBK's reach among the masses is probably #3 behind Equity & KCB.
There is a distinct possibility of a Nigerian bank taking a stake in NBK as they expand across Africa. - Negotiate a conversion from Preferred Shares to Ordinary Shares which would dilute the current shareholders' stake.
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AccessKenya IPO/OFS - Last Day
» Rants, Raves & Reviews Raging debates on www.stockskenya.com... Unlike prior discussions, there is more of substance being discussed...
I will not discuss the specifics since the fundamentals are based on POTENTIAL not the assets or current financial state of the firm.
(My) Bottomline:- Not cheap on a NAV or PE basis.
- Growth will continue for next 3 years.
- Cash out by Somens not a good indicator (OFS of 35mn shares).
- Growth will be at lower net margins.
- Expansion is a strong possibility into the region by acquisitions
- Corporate market prefers RELIABILITY over (cheapest) price. As long as Access Kenya delivers RELIABILITY there is great potential among the MNCs & SMEs.
- Cheaper bandwidth (TEAMS, Eassy) will boost usage.
- Increased use by government organisations will boost usage & sales.
- No debt plus IPO cash (KShs 426mn)to be used to boost service, sales & customer service.
- Somens want to increase the "value" of their shares so expect their dedication coz I think there will be a merger &/or sale of the AK (as we know it) to someone else!
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Kenya 2030 - Service Economy Superstar?
» Rants, Raves & Reviews Kenya has the potential (yes, that word again...) to become the African Superstar of the service industry.
After reading Kenyan Entrepreneur's blog entry on "niches" & "creativity" I think Kenya needs to find a niche... that niche is providing services to primarily Africa(ns) and beyond.
University Education & Research- We don't need to send KShs "Billions" to Australia, USA, Malaysia or the UK for tertiary education when we can/should set up WORLD-CLASS universities in collaboration with top-notch universities, departments or research centers around the world. Singapore & Dubai have done it. So can we.
- The cost of living in Nairobi is much lower than S.Africa, Dubai or the UK. In addition, it is cheaper for African students to fly to/fro from Nairobi than many of the other cities.
- We can attract students from Africa while providing Kenyans with jobs (lecturers, clerks, janitors, etc). These students become ambassadors for Kenyan universities. This has bee proven time & again by American universities' African alumni.
- We can attract African talent to these universities & think tanks to provide African solutions to Africa's problems. They understand Kenya's problems as we understand theirs. This allows for collaboration of peers.
- Networking opportunities arise from the interaction of African professionals that allow the expansion of inter-African commerce. It is a fact that "connections" spurs investments. The connotation is not about "corruption" but "connections" between classmates.
- Kenyans spend KShs "Billions" on treatments abroad. Our so-called "leaders" lead the way to more waste of funds... kibz went to UK, dan moi recently went to Germany. All the "heart" operations that are done abroad since we lack the facilities. The less well-heeled go to S.Africa & India.
- Medical facilities will encourage research that can boost Kenya's stature beyond the HIV & Malaria programs.
- Kenya has 2 medical schools & can expand its facilities to ensure we produce more doctors. We can then keep them in Kenya instead of "exporting" them to UK, USA or Australia!
- Kenya "exports" nurses to UK. We can keep them in Kenya by offering them better opportunities within Kenya!
- India has taken up the concept of "Medical Tourism" with gusto & it is a major growth industry for them. The benefits of Medical Tourism then flow to the rest of the population as the latest technology is used & personnel trained.
- Nairobi has become the premier airline hub for the East, Central & West Africa region - multiple carriers e.g. KQ - with the necessary connections to Nairobi. Kenya can effectively compete against S.Africa to become the preferred choice for medical treatment.
- The medical per capita "spend" is much higher than regular tourism! Of course, the patients' guests/visitors might tour other "touristy" locations e.g. Game Parks.
- The knock-on benefits for Kenya's construction sector, industrial (e.g. BOC Gases), education sector (nurses, doctors, technicians), agriculture (food, flowers) & tourism (relatives, friends visiting parks) are tremendous.
- We can capture some of the growing BPO market from India or complement India.
- There is need for BPO services for many African countries as these countries' economies expand.
- The fiber-optic broadband systems (planned) could substantially reduce the cost of telecommunications between African countries.
- Kenya needs to expand language classes in German, Italian & French since these countries may not be effectively served by India.
Problems & Challenges for the Service Economy
Insecurity
Kenya needs to work on the high levels of insecurity prevalent today.- Being "poor" is no excuse for being a thief. And being a violent thief is worse!
- I support brutal suppression of the "violent" elements. Yes, it will not be popular with the "human rights" folks but I would rather a thief is killed than my near & dear hurt. That's my opinion... What about my Rights to enjoy my hard-earned cash & life?
- My "little finger" is more important to me than the life of a violent thief! I would rather the police kill the thug/crook/thief before a single hair on my head is harmed.
- We need a 24-hour "economy" especially if we want to serve the BPO market in the USA.
- JKIA's utilization can increase substantially if insecurity is not an issue since the travelers may start their journeys much earlier & fly in much later.
- The transport industry - using lorries - can be boosted if these carriers move goods at night without fear. This means that the roads are "clear" for passenger & tourist traffic during the day!
- Despite advances in telecommunications, the cost of phone calls remain much higher than necessary. We need more competitors as well as increased "openness" for them then operate effectively.
- Data costs too much to access. Hopefully, the government will get its act together or allow private firms to lay fiber-optic cables all over the country (without onerous conditions/permits/fees) as well as international connections.
- Progress has been made with EaSSy & TEAMS but the there have been too many delays.
- Political & ethnic conflicts (esp violent clashes) e.g. Mt. Elgon clashes in 2007 need to be stopped asap. Even if it requires a military response. Nevertheless, the cause roots need to be examined.
- Property rights should be supreme. Kenya should not succumb to a "tribal" or "nationalistic" tendency that tramples on Human Rights that will dissuade further investments & aggravate poverty e.g. mugabe's antics in Zimbabwe.
- Politics seem to be a 24/7 obssession with Kenyans. No wonder we remain poor since "talking politics' takes precedence over "work productivity".
- Kenyans spend less time working, even at their jobs, than discussing politics!
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