Kenya’s First REIT IPO

About a year after laying out their plans,  the Capital Markets Authority has approved the first REIT to be issued in Kenya – and it’s from Stanlib Kenya.

Stanlib Fahari I-Reit will issue an initial public offer for investors to subscribe to units in the new REIT which is expected to raise a minimum of Kshs2.6 billion and a maximum of Kshs12.5 billion. The unrestricted IPO will be listed on the main investment market segment of the Nairobi Securities Exchange (NSE).

US$1 = Kshs 105 this week

Using Pensions to fund Private Equity & Venture Capital

The recently passed Kenya finance budget 2015/16 had some changes that affect licensed retirement benefit  schemes.

The main one was to allow pension managers to invest up to 10% of retirement funds they manage into private equity and venture capital investments that are licensed by the Capital Markets Authority (CMA).

Pensions can also invest up to a maximum of 15% their funds in any asset class, bond, equity or security issued by a single issuer, but this exception does not apply to government securities.

The new rules also bring in term limits, as trustees are now limited to serve two terms of a maximum of 3 years each and are contained in legal notices 109-112 of 2015.


Finance Act to Enhance NSE Investments

The Capital Markets Authority highlighted some points about the recently passed Finance Act that enhance the investment climate in Kenya. These include;
  • Removal of capital gains tax (CGT) on the transfer of securities traded on any licensed securities exchange.
  • Allowing a company introducing shares through listing to pay 25% corporate tax for 5 years.
  • No stamp duty on the transfer of property to a Real Estate Investment Trust (REIT) till after year 2022.
  • Asset-Backed Securities (ABS) are exempted from paying stamp duty on securitization transactions.

BRCK Education Launches in Nairobi

It’s been just over a year, since the BRCK team launched their groundbreaking device – a rugged 3G router with Wi-Fi, and 8 hour battery life that’s built to be extended to work with other devices and uses.

From pieces of electronic junk assembled at the iHub a few years earlier, this became a consumer electronics device that has now been sold in 54 countries and the team is now back with the next variants of their device.

BRCK engineers

BRCK engineers

The initial device had been extended since with assistance from partners and feedback from users, some of who found that the in-built storage in the BRCK and its micro web server (which allowed users to share content over Wi-Fi) were unexpectedly and surprisingly crucial features.

The groups who showed the greatest interest in extending the capabilities of the BRCK were mainly in the education sector – comprising education providers who had content, but had challenges delivering it at schools around the world which had the challenges of electricity, internet, device failure etc. With the support of Mozilla Foundation, they were able to develop the BRCK pi – in which a Linux server was added to the BRCK, enabling content to be shared, even with zero connectivity.


Nivi, who was a co-founder of eLimu learning tablets, and who’s now the president of BRCK Education spoke of the inspiration and challenges that eLimu went through in delivering digital education through sharing text-book content in a digital format – with the main problems being uploading new content and the fragility of the imported tablets. But with BRCK content cached locally, they were able to update several eLimu tablets overnight.

BRCK was launching two devices today in Nairobi that can be ordered at the BRCK Education site:

  • The BRCK Kio is a new sturdy tablet for school education. It can survive a 70-centimeter drop, is water & dust proof and is designed for kid-size hands. It has 8 hours of battery life, to last a full school day and has the latest processor from Intel. The $99 Kio is available for sale from October 1 to schools, and thereafter to the public in January 2016.
  • The BRCK Kio Kit a suitcase that has a BRCK pi (server), and 40 Kio tablets. The Kio Kit has a single charging point (and can be solar-powered in hotter areas) and wireless charging sleeves in which kids drop their tablets after school to recharge, and get uploaded with new content. The Kio Kit has a single power port and a single start button that gets the entire Kio Kit running in a minute. Erik a.k.a @whiteafricam, who’s a BRCK co-founder said that wireless charging, which is still a luxury item in many parts of the world, was an essential feature here to eliminate the need for multiple charging cables (and many sockets at schools). The Kio Kit is also secured that if someone removes (steals) a Kio tablet from the school, it won’t work and can’t be flushed. An entire Kio Kit costs $5,000.
BRCK Kio kit charging and loading Kio tablets

BRCK Kio kit charging and loading Kio tablets

#BRCKEducation has partners at JP, Intel, Pearson, Eneza education, KnowZone, eKitabu, eLimu and Kenyatta University. It also has Chase Bank as a finance partner to enable schools to acquire Kio Kits at Kshs. 46,000 ($460) per month.

More on the launch and products here and here . 

Passenger Train to Mombasa in 2015

What if the sales person, at a company you want to buy from, tells you not to buy their  products and you still  go ahead to, because of nostalgia and history?

Train front

The legendary iron snake

What if, despite being routinely behind schedule, the staff go out of their way to ensure that you’re comfortable? What if despite being inconvenienced by half a day, you still consider it worthwhile? And after all this, and understanding all the circumstances they are in, would you still recommend the service to your friends?
That’s the situation with the passenger train between Nairobi and Mombasa. Many people used to take the Kenya Railways train to Mombasa and for school trips elsewhere. But not many do these days, and many more are not aware that the passenger train still runs to and from Mombasa.

It’s been eight years since this last review and there are some major differences

  • There used to be two trains per days, now there is one train, that makes numerous stops
  • The train runs to Mombasa three times a week (M, W, F), and the same to Nairobi on alternate days (T, R, S)
  • The meals are done by Pride Inn hotel group
  • The train is usually late
Train late lunch

Late lunch at Kenya Railways

The train was meant to leave at 7 p.m., and get to Mombasa at 10 a.m. the following day. But we got called at 10 a.m. the day of the trip to be told that the night train was late, and to come in at 10 p.m.

This we did, and there was still no train at the station, just the night managers who said this does happen a lot. There were other passengers waiting, and it was clear that they would take the train no matter what time it came, as it was their only transport from Nairobi to whatever town they were heading on the route. The station master said that when the train came, it would take more than an hour to clean and ‘fill the water’ before the return journey.

We left a phone number with the station master and went back home and kept calling every half hour back to check if the train had come. It did come in at about 3 a.m. and we went back to the station. At about 4 a.m. the train pulled up from the yards, and after showing our receipts, we were issued with boarding cards for the first class cabins. A first class ticket is   Kshs 4,505 ($45) for adults and 2,795 ($28)  for children for full board travel which is dinner, breakfast and beddings for the cabin for each person.

Train cabin beds

1st class cabin with upper and lower beds made

Dinner was served at 5 a.m., and shortly afterwards, the train departed Nairobi for what turned out to be an interesting, and very long day trip. When we got back to the rooms, the beds had been made up by the train staff and we went to slept for a few hours, till the bell rang again to announce breakfast was served. This was at about 10 a.m. and it was back to the dining car that seats about 40, in tables of 4.

The train made many stops in places such as Konza, Sultan Hamud, Makindu, and Ulu, and it got to Mtito Andei which is the mid-point of the journey at about 2 P.M. At these small town stations, passengers in the third class cabins would get on or off the train with their luggage.

That should have been it for meals, but at about 5 p.m. the crew again to summoned first class passengers for an unexpected late lunch meal. After that, it was back to either watching the afternoon views or taking another sleep break in the cabins

The delayed train afforded some unusual daytime views not seen on past trips. Two particular new sights were views of the SGR, the new China-built standard gauge railway which for many kilometers, runs parallel to the old railway. Also after Mtito Andei, and once the train was passing the Tsavo Park, there were also sighting of wildlife including several giraffe and elephant herds in the evening.

Train speed

Speeding through Tsavo

The train is able to attain a decent  speed of almost 60 kilometers per hour when the railway is straight and there are no slopes to navigate or stops to make.

But cargo is clearly the priority for the Rift Valley Railways consortium who run the railway (it is said that 99% of their revenue is from cargo, with just 1% from the passenger trains) – and on at least three occasions, our passenger train had to stop for 10-30 minutes at a station, to wait for a heavy cargo train to pass on the way to Nairobi. The trains had wagons go goods or fuel for Uganda, or wagons for the Magadi soda ash factory.

The train eventually got to Mombasa at  1 a.m., having left Nairobi at 5 a.m. the day before. Mombasa station seems to have lost or leased some space in its front yard to a private developer and there’s now a lorry sales lot  where cars used to park.

Some other advice;

  • Carry extra snack foods, and soft or hard drinks of choice.
  • Carry wipes, toilet paper, bug spray.
  • Have reading material and fully charged devices

Shares Portfolio August 2015

Comparing performance to last quarter and a year ago the portfolio is down 10% in the last three months, while the while the NSE 20 share index  is down 12% since May 2015.

The Stable




Atlas  ↓
Bralirwa (Rwanda) ↓
Centum (ICDCI) ↓
CIC Insurance  ↓
Diamond Trust ↓
Equity ↓
Kenya Airways ↓
Kenya Oil ↓
Mumias ↓
NIC  ↓
Safaricom ↓
Scangroup ↓
Stanbic (Uganda) ↓
Unga ↓


  • Everything is down this quarter!
  • In: Atlas, CIC Insurance, NIC, Equity Bank, TPSEA (Serena)
  • Out: None
  • Increase: Equity Bank
  • Decrease: None
  • Best performer: Kenol  (No change in three months)
  • Worst performer: Atlas (down 44%) ,KCB (down 24%), Centum (down 20%) Mumias

Unexpected Events:

  • Kenya Airways record loss.
  • Mumias and Uchumi have new CEO’s
  • Profit warnings at a half dozen Kenyan companies –  Car & General, Mumias Sugar, East African Cables, Express Kenya, Standard Group, and Uchumi.

Looking Forward To:

  • Safaricom’s dividend
  • KQ and Centum AGM’s

Urban Inflation Index September 2015

Tracking changes compared to five years ago

Gotten Cheaper

Utilities: An electricity in June 2015 showed that consumers incurred costs of 251(US) cents per kilowatt hour, and forex adjustment ones of 40 cents per kwh. Five years ago it was 340 cents per kwh while forex was 57 cents per kwh.

Communications: Call rates are between Kshs 2 – 4 per minute, compared to Kshs 8 five years ago, and SMS are now Kshs 1. There has also been a massive drop in the cost of mobile data. That said there’s a bit of turmoil in the industry. Safari com is diversifying into new segments like health and television, as Airtel is threatening to pull out. Meanwhile Orange is apparently for sale, and Essar folded their Yu brand just a few months ago.

About the Same

Beer/Entertainment:  A bottle of Tusker beer is Kshs 200 at the local pub compared to Kshs 170 five years ago. The competition from the introduction of several new beer and alcohol brands  (like Carlsberg) does not seem to have made prices lower.

Carlsberg Nairobi

Other food item

A 2 kg pack of (rare) Mumias sugar is now Kshs 240. Its rare because both Ucumi and Mumias are going through some transitions with financing, suppliers, and even new CEO’s  Meanwhile, there’s also the debate about whether and at what cost Kenya produces sugar compared to other countries like Zambia, Sudan and even Uganda. The same Mumias pack was Kshs 200 five years ago. Mumias troubles has resulted in other brands like Butali Chemelil Nzoia and other store and generic brands now getting space at supermarkets like Ucumi.

More Expensive

Foreign Exchange:  1 US$ equals Kshs 103 compared to 80 fiver years ago (actually today it’s 106) a steep rise that does not seem to have reached its bottom. This may be due to the strength of the dollar but other currencies have also strengthen due to the trade deficit

Staple Food:  Maize flour is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs 113 compared to Kshs 65 five years ago.

Fuel:  A litre of petrol is Kshs 102.6 petrol compared to 94.5 five years ago (but with the weaker shilling, in dollar terms it’s about $4.5 per gallon (down from $5.25 five years ago)

I&M acquires Giro Bank

Fast growing I&M Bank is acquiring Giro Bank.

Kenya’s 9th largest bank institution with 2014 assets of Kshs 137 billion ($1.5 billion) is buying Giro, which is the country’s No. 31 bank and has 7 branches (5 in Nairobi). Parent, I&M Holdings is going to merge the banking business of Giro with I&M bank after all regulatory approvals are received

Kenya’s Parliament may have stalled the government’s move to raise the minimum bank capital from Kshs 1 billion to 5 billion (~$55 million), but it’s more likely that the loan to deposit ratio was a pressure point at Giro which had the highest difference last year (the next highest was Dubai bank).

Dstv Pricing in Kenya

This week saw satellite TV provide Multichoice Kenya increase the price of their DSTV satellite TV subscription service, with the top (premium) package now going to cost Ksh 9,400 (~$92) per month from October – an increase of almost 15%. This has since been debated on several fronts, one of which was a cost comparison with South Africa pricing where the company is based.

WGKantai dstv

 Another was done  in terms of what paying for TV means compared to other real life costs like paying for housemaids.

In an interview on the price change, Multichoice Africa CEO Tim Jacobs cited several factors behind the increase including Kenya’s shilling which has depreciated 15% this year against the US dollar in which they buy most of their programming such as the (extremely popular) English Premier League (EPL) who’s rights were hiked 70% in the new deal signed earlier this year.

The price increase also sparked a local consumer lobby to pursue a boycott and petition and in past years, a similar dstv cost increase was debated in Kenya’s parliament. Back in April 2010, one MP asked if Kenya’s national broadcaster - KBC, who own 40% of Multichoice Kenya would consider waiving their profit so that more Kenyans could afford to watch the 2010 World Cup .

dstv maid

This may be the most significant sports television moment in Kenya since  GTV went bust after a short period of outspending dstv in the race to televise top sports events.

The new dstv cost that has a figure close to five digits per month seems to be a tipping point with many subscribers now saying that the cost is simply too much and that they plan to downgrade their subscription to a cheaper one or switch to another company.

Rival, Zuku (of the Wananchi Group) has since responded to the dstv increase with an enhancement of their channel package and offering their viewers more programming, at no extra cost, by adding as many as 19 new channels such as Nat Geo Gold, Fox Sports 2, BET, Discovery Science, IConcerts, TLC, Fox News, FX , Bloomberg, E!, Sky News and Euronews.dstv multichoice

It’s not clear how many of the 100,000-160,000 dstv subscribers in Kenya are on the premium package, but it’s clear that many of those that do, subscribe to it for the sports packages (which are exclusive to the premium tier), and also that many of the same premium dstv subscribers do enjoy watching their favorite sports teams and players with their friends and fellow fans in sports pubs, and not at home where they are paying for the sports (and face many distractions!).