World Development Report 2016

The annual World Development Report  (WDR) is considered to be one of the most authoritative reports published by the World Bank and is widely read by policy makers in developing countries  and anyone looking at development issues that affect the poor.

WDR2016  looks at the how the internet for development. At a presentation in Nairobi today, the researchers spoke of the unprecedented diffusion of digital technology – with the comparison that while Kenya got electricity, 60 years after its discovery, Kenyans were able to use mobile banking 5 years before the USA.

The internet affects development by helping people and economies around the world overcome information barriers/inclusion .(e.g women, and freelancers are able to get more online opportunities and funding (kickstarter))  than were available offline, attain lower transaction costs /efficiency (manual filing systems in government replaced by models like Estonia where you can start a company in 20 minutes) and achieve economies of scale/ innovation.

However, access has been unevenly spread and there are risks and challenges brought by the internet. These include exclusion (elite take the lion’s share), efficiency may lead to inequality, cyber security attacks & wasted projects , while more innovation may lead to  job destruction.

Firms in lower-income countries are less likely to use the internet and  low-income countries are becoming more disadvantaged as the internet rewards those at the top of the chain, while middle skilled occupations may disappear (bank tellers, drivers – from a hollowing out of the labour market)

Some conclusions

  • Internet brings growth opportunities but they are largely unrealized (You need 15% broadband penetration to see impact. Also it has to be fast, affordable and always on – mobile broadband does not have the impact of fixed broadband)
  • Internet can improve welfare and reduce poverty but can also worsen inequality
  • Affordable internet requires open access and public private partnerships (which are still lacking)
  • A digital economy needs a strong analog foundation – competitive  environments where incumbents are forced to innovate, and internet savvy newcomers can enter market easily


Mwalimu SACCO acquires 51% of Equatorial Bank

EDIT: Jan 27:  The Government has ordered an inquiry into Mwalimu National Sacco’s bid to acquire Equatorial Commercial Bank. The Commissioner of Co-operatives has appointed an inquiry team report to him following a protest by the Co-operative Alliance of Kenya (CAK) 

Last week, Mwalimu SACCO became  the majority shareholder of Equatorial Commercial Bank (ECB), acquiring  51% of the bank for Kshs 1.6 billion (~$18 million). The acquisition was cleared after no objections were received from the Central Bank of Kenya (CBK), Competition Authority of Kenya (CAK) and Sacco Societies Regulatory Authority (SASRA). There was another objection, but not from any of the regulators, who were aware of the issues raised.

Mwalimu with Kshs 24.5 billion of assets (2013), acquired the stake in ECB,  the country’s 27th  largest bank (Kshs 15 billion) which has been boosted by an earlier merger with Southern Credit Bank.Mwalimu will have three (3) seats on the board of ECB, but the Society is not converting into a bank nor merging with ECB. Due diligence of the financial and legal processes was done by Ernst and Young and Mose & Mose Advocates.

This comes two years after the LAPTrust, a pension scheme and the Kenya Tea Development Agency acquired a combined 22% stake in Family Bank – and LAPTrust estimated their stake was worth 1.6 billion in 2013, just two years after paying a 1/4 of that amount.

QNB in Kenya

The local newspapers have an ad by QNB Group (QNB - Qatar National Bank ). QNB is not in Kenya officially, but they are the largest investor at Ecobank (with 23.5%) who have a mid-size presence in Kenya (about No 20) – one of the 36 countries across the continent that Ecobank is present in. QNB

A newspaper opinion piece last year linked QNB with a bid to buy government shares in one of Kenya’s state-owned local banks – one with a regional presence in East Africa. QNB Capital was also joint lead manager for Kenya’s 2013 eurobond with pals to arrange a Sukuk (sovereign bond) for Kenya after the Eurobond.  

A Bloomberg piece notes that the Qatar bank is pushing into Africa as competition in its home market of 2 million people curbs profitability..with the possibility that QNB will go for the entire (Ecobank).

Guide to Seychelles

A guest post by @Honoluluskye about a visit to Seychelles. In it’s November issue, Vanity Fair featured a travel guide to the Seychelles which has 115 islands, located 1,000 miles east of Kenya, which is the closest point on mainland Africa.

Getting There: I used United Airlines miles to purchase the flight so it was a much better deal than the going market price (which I believe is about $1,500 USD per person). I used 70,000 miles and paid about $250 USD in taxes for two people round-trip with a 1 week layover in Ethiopia on the way back.

On Arrival: It was very easy to go through. The great thing about Seychelles (and Ethiopia) for Kenyans is that there is no visa needed. We got a pick-up at the airport included in our lodging so I’m not sure the exact cost but taxis are not cheap. It could cost between $20 – $50 USD to get from the airport to your lodging.

Getting Around: Most locals use the bus system which is quite reliable. It comes every 30 minutes or so and costs 5 Seychelles rupees ($0.37 USD) per person per trip. However, as a tourist you will probably want to rent a car (about $50 USD a day) as it is much more convenient to move around the island.

It is very safe and secure (esp. as compared to Nairobi). We were just told to watch our belongings and that pickpocketing has become more common but no violent crime.

Where to Stay: We used Airbnb and paid approximately $90/night. Most hotels are between $150 – 300 USD/night. Electrcity is quite reliable, and they have the British plug system.

Staying In Touch: You can purchase a SIM card quite easily (about $3.75 for the SIM card and some airtime credit). Data is expensive to use on the SIM and phone calls cost more than they do in Kenya. Also, it’s hard to find Wi-Fi hotspots or cybers.

Shopping & Sight-Seeing: While most Seychellois use Creole (a pidgin French), most in the tourist sector are able to speak English well.

The capital city, Victoria is a small town walkable in about an hour or less. You might be able to find some gifts there but there’s not much to purchase. We stopped by a grocery store to buy some vanilla tea and also brought home some coconut oil. There is a local rum, Takamaka Rum, that one can purchase either at local shops or even at the airport to take back to your home country.

The main sights are the beaches!!! We especially recommend Petit Anse on Mahe Island and La Source D’Argent on La Digue Island. Hiking is also great. We recommend Copolia trail on Mahe Island and Anse Major.A beach in Seychelles

Eating Out: Most Seychellois (locals) eat at home so there are very few tasty and reasonably priced restaurants targeted to locals. Most restaurants are expensive and targeted at tourists.

The main local food is seafood (esp. fish). There is a delicious sauce called creole sauce that can be put on everything. Local beer is called SeyBrew and goes for about $1.50 USD – and easy to get anywhere.

Lunch could go for as much as $50 and dinner between $50 – $100 so if you plan on going to tourist joints, I would budget about $150 a day. We ate at smaller kiosks/take-away so we were able to get by on about $50 a day.


Capital Gains Tax in Kenya

It’s a new year, and with it comes the reintroduction of the capital gains tax (CGT) in Kenya. This is not the first time it’s appeared (it was suspended in 1985), but previous attempts to reintroduce it in 2007 and 2011 were set aside by parliament. This time it has stuck and is now the law, with the a 5% tax imposed on the transfer of land, buildings and investment shares.

While guidelines have been published by the Kenya Revenue Authority (KRA) it’s still unclear how the tax is to be determined such as on the buying and selling of shares.

For the last few weeks there’s been a mini-rush to complete the sale of some land and share deals. e.g. Equity Bank’s divestiture from Housing Finance with a sale of 24.9% to British American Investments (Britam) for Kshs 2.7 billion ($30.3 million) was concluded on December 31, 2014 (presumably beating the tax deadline).

With land deals, there may be some double taxation, in that  that while a buyer pays stamp duty of 4% of the sale value, the government will also deduct 5% from the amount paid to the seller for the same piece of land.

CGT will apply when  a property is gifted, abandoned or when the rights to a land title. Exemptions allowed under CGT include transfers that involve retirement benefits, divorce, land that is less than 100 acres, when a company issues shares, motor vehicles, estates of dead people, in corporate restructurings, and if someone sells a house they have lived in for more than 3 years.

Curiously the guidelines have something special for Kenya’s budding extractive industry, but which some investors are not happy about as for sector, which includes, oil, gas, and minerals comes up for some special attention: The net gain on disposal of interest in a person owning immovable property in the mining and petroleum industry is 30% for residents and 37.5% for non residents. 

Urban Inflation Index: December 2014

It’s been over a year and a half since the last urban inflation index. So let’s see what the differences are in tracking changes compared to 5 years ago and to the last index which was in July 2013..

There is a current debate about the impact of many external and internal events on the Kenyan economy and the cost of living. Some of these include insecurity around the country which has directly impacted the tourism sector, investments in infrastructure (the standard gauge railway,) education, electricity generation (coal, geothermal) new laws by counties, unregulated or illegal imports of some commodities like maize and , and digital changes (in public service vehicle fares and television broadcasting) etc.

Gotten Cheaper

None really

About the Same

Mobile Communications: Costs are largely unchanged, but there’s a push to do more now. Safaricom launched 4G a few days ago,and like Airtel, they have taken to pushing many messages to reward and retain customers at the same time. Current promotions include buy a Samsung and you may win a BMW, pay by m-pesa and you may win a house etc. Meanwhile Airtel and Safaricom have respectively absorbed the customers and assets of (Essar) Yu that has exited Kenya, while Orange is also looking to sell out.

Staple Food: A 2kg pack of (Unga) maize flour, which is used to make Ugali that is eaten by a majority of Kenyans daily, costs Kshs. 101 compared to 104 in July 2013. But it was Kshs 83 in December 2009.

Missing Mumias Sugar

Missing Mumias Sugar

Beer/Entertainment: A bottle of Tusker beer is Kshs  200 (~$2.3) at a local pub same as it was in July 2013. However, 5 years ago it was Kshs 140.

Other food item: A 2 kg. Mumias Sugar pack is Kshs 250, same as last July. However it was 200 in December 2009 and today Mumias Sugar is a shadow of it’s former self limping under debts and losses, with their sugar products now difficult to find in many Nairobi supermarkets.

Electricity: Consumers have been told to expect to see an electricity price drop in their bills, but many are not sure.  KPLC shifted many customers to a new prepaid system a few years back and it is tough for most customers to understand how far their money goes in terms of actual electricity delivered (see this FAQ)..and while the cost of fuel, forex charges on bills appear lower, it still does not translate into more units of power per shilling.

More Expensive

Fuel: At Kshs 106.8 per litre ($5.40/gallon) fuel is slightly cheaper than the 109.52 of  July  2013 – and just today, the government has lowered that to Kshs 102.01, with diesel at 90.85 and Kerosene at 71.37. However petrol was Kshs 83 in December 2009 – and with the recently there has been a sharp drop in the international price of oil, there has been expectations that the petrol price drop would be greater. International oil is about $57 per barrel now, compared to $95 in July 2013 and $75 in December 2009.

Cost of Financial Inclusion: Bank charges are creeping up for many. The government now taxes a 10% tax on every fee-levied by a bank on a customer – whether it’s for an M-Pesa withdrawal, ledger fee, new debit/credit card, even a tax payment..a tax on almost every charge except for loan interest.

Foreign Exchange: 1 US$ equals Kshs 90.56 compared to 87.15 in July 2013. The dollar was exchanging at 75.62 in December 2009.

Business Impact of the Security Law Amendments

Business Impact of the Kenya Security Law Amendment (PDF) for various people & companies (XX refers to pages, not clauses).

  • For people who own/occupy property near airports; A cabinet secretary can designate zones and  impose restrictions on land use
  • People (farmers, bush air tour operators, helicopter charters?) who fly planes from unmanned airports, may have to inform a cabinet secretary (70)

Business Premises

  • NIS officers get powers to arrest (46) and enter any place and obtain access to anything (47)
  • A Cabinet Secretary to designate where demonstrations can take place – this may ward of looting of businesses that follows large demonstrations across towns (2)

Citizen Data

  • Landlords are to keep records of tenants e.g. name ID, email, telephone (36)
  • Police stations to obtain information from hotels in their area on guests names, ID numbers, sex, telephone, email  details (70)
  • Motor  vehicle dealers to maintain records of buyers of vehicles (40)


  • Electronically recorded evidence is admissible – electronic messages, digital metrical (26, 29) also teleconferencing or videoconferencing of court proceedings are recognized
  • The government may intercept information if it believes it will prevent terror. Such evidence is admissible regardless of the technicalities under which it was obtained (57)


  • (For white-collar crimes), there shall be no local extradition proceedings required if a court is satisfied that a proper foreign warrant was executed (21)
  • A police officer can apply to hold someone longer in jail by writing to a judge e.g the Britam-Acorn case


  • A cabinet secretary shall designate which industries are eligible for work permits  - and also vet foreign investors (42)
  • An (all important) ID card can be cancelled if there is evidence of fraud  in its procurement (22)
  • Foreign nationals residing in Kenya for more than 3 months will have to inform the government of change of address (66)
  • Employment bureaus to be registered before sending Kenyans to work overseas (42)

Media/Social Media

  • If you travel to a country designated as a terrorist training country without passing through immigration you are presumed to have traveled to receive terrorist training (54) ..people who live around border areas are exempted
  • Anyone who publishes or broadcasts  photos of victims  of terror  omits a crime can be jailed for 3 years or fined Kshs 5 million (55)

Self Protection

  • Want to own a gun? A  firearm licensing board will be created to assess suitability of applicants, issued cancel, change licenses, and register civilian firearms (34).


  • No person shall own an armored car unless certified by this body (35)
  • Government to have a database of all diplomatic plated vehicle (40)

CBA Bond

The Commercial Bank of Africa (CBA) has an ongoing medium term note (MTN) bond issue to raise Kshs 8 billion ($90 million) with green shoe option for another Kshs 2 billion. Investors in the MTN bond will receive 12.75% paid semi-annually for the next six (6)  years.

  • The minimum investment is Kshs 1 million ($11, 235) for the MTN that is priced in multiples of Kshs 100,000 thereafter and runs from  26 November to 10 December. Other recent financial bonds in Kenya include CFC raising Kshs 5 billion, an 11% infrastructure bond from the Central Bank of Kenya (minimum investment was Kshs 100,000), NIC Bank’s 12.5% bond which was oversubscribed by 30% in raising Kshs 6.5 billion (90% of which came from institutional investors), and Britam also got Kshs 6 billion (minimum investment was Kshs 100,000 for the 13% bond).
  • In case of an over-subscription those who apply for more than Kshs 100 million ($1.1M) of the MTN will get priority in allocation.
  • The CBA bond will be listed on the fixed income securities market segment of the Nairobi Securities Exchange
  • CBA which has 23 branches in Kenya, 12 in Tanzania, and 1 in Uganda, plans to use the funds to strengthen Tier 2 capital and fund regional expansion. CBA is looking at partnerships with other institutions to make it a stronger regional financial services platform.
  • The MTN bond is budgeted at Kshs 67 million (0.67% of the target for the fund-raising) and this is split as: arrangement fee – Kshs 40M(CBA capital), legal fee – 4M (Coulson), Accountants – 3.5M (PWC) , marketing – 10.5M (Ogilvy), and the NSE gets Kshs 0.8M while the Capital Markets Authority (CMA) gets Kshs 8 Million.
  • CBA’s EPS was Kshs 15.22 in 2013, with a 4.38 DPS, payment of over Kshs 1 billion. Shareholders include a CBA Employees Share Scheme (ESOP) who own 2.5%.

Idea Exchange: Acumen, Elumelu, Mastercard, MP’s Qatar

Acumen Global Fellows:  Applications for the Acumen Global Fellows 2015 are now open. Gain world-class leadership training, serve in the field with a social enterprise, join a cohort of emerging leaders who will change the world. Deadline is December 14.

Challenge Cup 2015:  Startup Incubators 1776 and iHub have partnered to bring Challenge Cup 2015 to Nairobi.  Challenge Cup 2015, is a global competition that spans 16 cities in 11 countries to identify the most promising startups with the best ideas to solve the world’s biggest challenges. Challenge Cup participants compete for $650,000 in prizes in four categories—education, energy, health, and cities—as well as the chance to connect with mentors, corporate partners, policymakers, and potential investors. The Nairobi event, will be held on 22nd January 2015,  and the application deadline for that is 19 December.

Tony Elumelu Foundation Entrepreneurship: The Tony Elumelu Foundation launched a $100m program to empower next generation of African entrepreneurs through a multi-year program of training, funding, and mentoring. A committee of African business leaders will select the most promising 1,000 start-ups annually from across the continent. The online application portal for the 2015 round of entries will open on 1 January 2015 and close on 1 March 2015, and is open to applicants from all 54 African countries and will be accepted in English, French and Portuguese.

(edit) Football Dreams Africa: Qatar Airways  and Aspire_Academy give 20 African fans a chance to train with the “FC Barcelona under 15’s Youth Team” in Barcelona, Spain. It’s open to all countries in Africa, and the sign up deadline is January 31, 2015.

GSK Africa: GSK asks that you submit your ideas that help improve the understanding of non communicable diseases (NCD’s) in Africa to be considered for funding from GlaxoSmithKline. GSK have availed 4 million pounds to fund research proposals with an opportunity for successful applicants to collaborate with GSK scientists. Deadline is 13 January.

ITU Telecom Initiative: The Young Innovators Competition is an annual ITU Telecom initiative, aimed at talented young social entrepreneurs using technology creatively to meet a range of real-life developmental challenges. Selected winners with the most exciting ideas or start-ups are invited to ITU Telecom World in Doha for a four-day accelerator programme of pitching sessions, workshops and mentoring – as well as the opportunity to win up to USD 10,000 in seed funding.

LIFT Innovation Fund: TradeMark East Africa launched a $16 million challenge fund for innovations that reduce the cost of transport & logistics in East Africa. The #LIFT challenge fund supported by DFID (UK) will provide grants of US$200,000 – $750,000 to winning proposals.

MasterCard Foundation Scholars: The Mastercard Foundation has committed $86.6 million to educate up to 2,300 university students from Uganda, South Africa and Ghana by 2015. The support will be channeled through 4 universities that are now part of the Foundation’s 21 global partners;  Makerere University ($21M), The University of Pretoria ($21.3M), The Kwame Nkrumah University of Science & Technology ($20.8M), and the University of Cape Town (23.5M). The MasterCard Foundation Scholars Program is a 10-year, $500 million Program that hopes to inspire 15,000 young people from economically disadvantaged communities to lead change through education. Scholars receive holistic financial, social, academic and leadership development support to create pathways for them to transition to jobs, entrepreneurial activities or further education – and by the end of the Program, about 75 percent of the Scholars will be girls and young women.

People Shujazz Awards: Which Parliamentarians raised motions, issued statements, made contributions or moved bills of great public interest in 2013-2014? Mzalendo keeps an eye on Parliament and has selected nominees in 10 categories. Help Mzalendo celebrate the parliamentarians by voting for your choice. Voting ends on 7 December, at 11.59pm, and finalists will be announced on 11th December.

(edit) Rising Star: The  CfC Stanbic  Rising Star Awards Programme has been developed to publicly recognise inspirational and passionate and talented young people (between the ages of 28 and 40) who contribute in an encouraging manner to the future of our nation. There are ten industry categories in this year’s awards –  include banking & finance, construction, energy & chemicals, entrepreneur, ICT, logistics & supply chain, media & marketing, professional services, manufacturing, retail & FMCG, Service: public & private, and tourism & hospitality. Deadline for nominations is 30 January, 2015.

Safaricom Spark Fund: The Safaricom Spark Venture is a $1 million fund available to start-ups using mobile technology as an enabler in mobile commerce/payments, youth, media content & infotainment, SME & cloud solutions, data & messaging etc. The Fund will be managed by TBL Invest over a 2 year period and Spark will invest $75,000-$250,000 of debt/equity in ICT startups selected by TBL.

What other cool opportunities are there that people can apply for?

When to hire a smart accountant

 A question I often get, is when should I hire hire an accountant to manage the books of my small or growing company? This should provide some answers. Reposted with permission from the author..article first appeared in the Nation.

Accountants help out in the growth of your business. They handle more than just tax and payroll. This question has become all too familiar. “When should I consider hiring an accountant?” It depends on your immediate needs. Out of your needs, you will either get a full-time accountant, part-time one or contract one.

A good reason for hiring an accountant however is to create a business plan, form a company, apply for loan, during tax audit or simply in order to delegate some duties. However, since we have a number of rogue ones out there, recruit your accountant carefully.

Here are some moments when an accountant would be a smart hire.

  • Say you need to write down some financial projections, a business plan or the usual business finance management and reporting. An accountant can help you use an accounting software to generate reports.
  • The earlier you hire one, the better. This way, you benefit from sound financial knowledge. It saves you a lot of money and helps you mitigate risks associated with poor financial management.
  • An accountant can also advise you on the best legal structure for your business. For example, it is a fact that you will have business liabilities. When you operate as a sole trader, you could be held personally liable for business deals whereas in a limited liability company, the burden of the enterprise is limited to its assets.
  • SME accounting can easily become complex when you do it yourself, and can get overwhelming since you are stretched across many control points. An accountant can help you fix your cashflow by computing key business metrics that help you ensure that the outfit is on track. Say ratio of salaries and other employee payments to total revenue, cashflow analysis, your gross margins and net margins. These are reports that help you understand your business’ financial standing at a glance. It is even better if you are using an accounting software that is online as this can allow even an external accountant to review your financial records for regular reporting. These kind of reports help you monitor the pulse of your business. With the reports, an accountant is able to offer input on how to improve your business model, pricing or even inventory.
  • Generally, you need an accountant to prepare and file tax returns. Although we have software that simplifies this, it is always safe to get a seasoned hand to deal with the taxman. A good accountant should help you complete and file all legal and compliance company returns, prepare regular annual statements of accounts, handle your payroll, ensure all individual taxes and payments are recorded and bank reconciliation is done monthly. A good accountant will help you meet tax obligations. If external auditors are coming, your accountant should ensure that all necessary reports are ready.
  • You might need an accountant when applying for a loan, overdraft or securing a fresh investment. An accountant will help you develop the financial statements your bank will need. Your accountant can help you know if the loan interest, terms and conditions are favourable.

Overall, at some point, you will need to hire an accountant, so recruit wisely!

@DorcasMuthoni is the founder of OpenWorld