Monthly Archives: November 2005

This Nairobi life

Cooling on pesa point: Several banks recently signed on to be a part of the Pesa Point ATM network, and now they are passing on the charges to the customer after a brief free trial period. If I use a pesa point ATM it will cost me 30 shillings per transaction, which negates the attractiveness of the flat fee banking concept which I signed on for. Henceforth, I will only use pesa point ATM’s for emergency withdrawals.

Development freeze: The Nairobi City Council has suspended proposals for property conversions / development activities (e.g. to apartments & offices) in Kilimani, Kileleshwa, Thompson, Lavington, Riverside and Westlands for a period of six months while it reviews the development policies which have transformed (and some say destroyed) these Neighbourhoods.

No escape: Plans for a Christmas holiday at the Coast may be put on hold because all major hotels have been fully booked, leaving no space for domestic tourists.

No water: The city could face a serious water shortage after talks stalled between a water company and its workers.

But there are opportunities:

Job: In the position of the finance officer at the national anti corruption campaign steering committee of the ministry of justice and constitutional affairs. Applicants must have b.com degree, CPA (K), 5 years experience, and good knowledge of the Government of Kenya and development partners’ finance and accounting systems. Apply to the director, P. O. Box 72546-00200, Nairobi by December 16.

Consulting:  Opportunities at the Tourism Trust Fund (link fixed) in the fields of business planning, marketing planning, legal, environmental impact, quantity surveying, project monitoring & evaluation, architectural services, civil & structural engineering, landscape design & architecture, financial planning and conservation. Contracts are for one year with the possibility of renewal and application dossiers can be obtained by emailing info@ttkenya.org with “panel dossier – standard” in the subject line, with your name and address in the message only. Closing date for applications is December 14.

Still Barclays Country

Barclays remains as Kenya’s leading bank by a large margin, with only one month left in the year. The industry remains largely profitable, with only two banks likely to make losses – Bank of Africa (9m) and Oriental (4m) so far. Figures are in million of shillings and are as at the quarter ended September 2005.

total assets
Barclays 106,667 (i.e. 107 billion shillings)
Standard Chartered 71,077
Kenya Commercial 70,913
Cooperative 49,434
National Bank of Kenya 35,942
Citibank Kenya 31,751
Commercial Bank of Africa 29,201
NIC 19,952
CFC 18,617
Investment & Mortgages 17,413

customer deposits
Barclays 84,006
Standard Chartered 58,444
Kenya Commercial 57,619
Cooperative 40,941
National Bank of Kenyan 28,168
Commercial Bank of Africa 25,631
Citibank Kenya 23,576
NIC 16,339
CFC 14,591
Investment & Mortgages 14,307

net loans to customers
Barclays 63,847
Kenya Commercial 32,701
Cooperative 30,028
Standard Chartered 29,859
National Bank of Kenya 23,507
NIC 13,484
CFC 11,755
Commercial Bank of Africa 11,141
Citibank Kenya 10,888
Investment & Mortgages 10,462

profit before tax
Barclays 3,375 (3.375 billion shillings)
Standard Chartered 2,595
Kenya Commercial 1,225
Citibank Kenya 908
National Bank of Kenya 629
Cooperative 607
Commercial Bank of Africa 603
Equity 352
Investment & Mortgages 349
NIC 305

Return on Assets
Dubai 4.76%
Development Bank of Kenya 4.38%
Standard Chartered 3.65%
Equity 3.52%
Barclays 3.16%
Charterhouse 3.10%
Citibank Kenya 2.86%
Credit 2.55%
Transnational 2.53%
Equatorial 2.46%

Return on Equity
Commercial Bank of Africa 31.26%
Barclays 30.80%
Standard Chartered 30.79%
National Bank of Kenya 25.98%
Equity 25.09%
Habib AG 22.55%
Imperial 20.08%
Baroda 19.40%
Citibank Kenya 19.04%
Investment & Mortgages 19.01%

Raking in those charges
(While foreign banks are frequently criticized for exploiting Kenyans through high bank charges, it is local banks who are more dependent on such income – since foreign banks have bigger loan books and thus higher interest income).

Percentage of income from fees, commission and other sources:
Oriental (formerly Delphis) 85.26%
Consolidated 52.98%
Equity 52.16%
Kenya Commercial 49.51%
Cooperative 46.39%
Citibank Kenya 46.28%
Commercial Bank of Africa 46.00%
EABS 45.92%
Barclays 40.90%
Standard Chartered 39.73%

Easy Money
Ratio of bank investment in safe government securities versus riskier loans to customers.

Habib AG 253.58%
Bank of India 185.54%
Baroda 137.16%
Development Bank of Kenya 128.29%
Standard Chartered 80.14%
Citibank Kenya 72.44%
Commercial Bank of Africa 57.91%
ABC 57.25%
Fina 55.88%
Kenya Commercial 46.19%

Where the money is
Cash rich banks.

Citibank Kenya 8,867 (8.867 billion shillings)
Commercial Bank of Africa 6,742
Kenya Commercial 3,702
Imperial 2,148
Cooperative 2,114
Equity 2,056
Barclays 1,897
Diamond Trust 1,699
NIC 1,632
Housing Finance 1,531

Total Non Performing Assets
National Bank of Kenya 17,100
Kenya Commercial 12,641
Barclays 11,627
Cooperative 9,217
Housing Finance 3,388
Standard Chartered 1,672
Commercial Bank of Africa 1,192
EABS 1,142
Oriental (formerly Delphis) 1,004
Consolidated 742

Insider Loans
National Bank of Kenya 16,734
Kenya Commercial 3,340
Barclays 2,942
Commercial Bank of Africa 1,262
Cooperative 1,225
Standard Chartered 866
NIC 534
CFC 461
Transnational 451
Diamond Trust 296

Over/under value?
Standard Chartered and Kenya Commercial Bank, banks 2 and 3, are almost identical in most major categories (assets, deposits, loans, and income) while varying in profit before tax (SC 2.6b to KCB’s 1.2b) and insider loans & non performing (which are historical problems of KCB). Yet KCB’s share price has risen steadily to 104 this year while Standard Chartered has hovered at 130 – 140 during the same period.

Supporting women entrepreneurs

A joint report by the International Labour Organization and the African Development Bank titled Support for Growth-oriented Women Entrepreneurs in Kenya was released today.

46% of SME’s in Kenya are owned by women who face numerous constraints in establishing and running their business. The goal of the program is to transform women enterprises from being informal and micro-sized, located on inappropriate premises, operating in feminized sectors & and locally restricted markets, and which are under-capitalized, making minimal use of technology – all of which limit their potential for growth. This will be done through tailored financial and other solutions.

In terms of banking and finance, women enterprises are restricted to group savings and micro finance (which yield slow growth). Despite women having high demand for loans and credit, and even though they tend to be better savers and have better loan repayment rates than men, women entrepreneurs are unable to access commercial bank loans. The reasons for this include;
– main problem facing women in Kenya is lack of collateral for borrowing (often is in husband’ name)
– Banks lack confidence in projects owned by women
– Men have bigger ideas and borrow bigger, while women are risk averse and take smaller loans, which are more costly for banks to administer
– Women lack the ability to approach financial intuitions (e.g. management skill, and in some cases education, technical skills or business records that banks require)

Among the recommendations of the report:
– In a pilot program to be implemented in Kenya, the ADB will guarantee up to 50%, loans advanced to women entrepreneurs by a small group of local banks
– Efforts will be made to link micro- finance loan clients to business development services
– A financial guide for women entrepreneurs will be published
– A women’s bank may be established in Kenya to be chaired by the First lady.

PDF’s of the report can be obtained from either the ADB or ILO sites.

Career guide

Un-scientific career pointer list for this era.

Some hot careers (5+)

  • Human resource/performance management consultant
  • tax adviser/lawyer
  • land developer
  • teacher
  • sales

Some cold careers (4-)

  • wheeler dealers /brief case contractor
  • NGO official
  • real estate agent
  • political party official

Help improve the business climate

You (the public) are invited to comment/recommend which of the 1,300+ licences required of businesses in Kenya should be deleted or simplified. E-mail your views to licenses@tradeandindustry.go.ke by December 2 and a complete list of licenses can be accessed on page 5 of this link.

PDF Roll

Start a Bank in Kenya
The Central Bank of Kenya has published an updated list of new prudential guidelines that cover the licensing of banks and which ensure that depositors funds are safeguarded.

Future banking trends
According to IBM, key trends that will drive global banking in the future will include;
– Customers taking control
– Specialized niche competitors
– A new workforce
– Regulated transparency
– Sharply focused technology

High flyer
Here’s a summary of a 2004 report which ranked Kenya Airways as the 7th most profitable airline in the world. An extensive report on KQ’s recent performance appeared (amid the referendum dust) in the Nation on Tuesday.

Cashing Out
Top shareholder are cashing in their gains at the Nairobi Stock Exchange including one Kapchorua’s top 3 – selling 480,000 shares at 170 shillings (81.6m) and one of Barclays top 10 shareholders – selling 600,000 at 265 shillings (159m).

New court
In an update to the residents lawsuit against the Nairobi City Council, a valuation court has now been set up to hear objections in about 8,500 cases raised by tax payers to the new rates. It was quietly gazetted by the Minister for Local Government in September, comprises 10 members (10 members – 3 lawyers, 4 valuers, 3 professionals) and will begin sitting from December 6th at City Hall, Nairobi.

jobs

Country manager at Africa Now (enterprising solutions) based in Kisumu. Apply by December 2 at info@africanow.org and check for further details at their site.

Paralegals – 13 positions at the Legal Resources Foundation Trust (LRF), to work at prisons in Nairobi, Thika, Kitale, Nakuru, Kisumu and Meru for 6 months beginning in January ‘06. Applicants should have certificate in paralegal/human rights training from a reputable institution, diploma in community development or social work and at least one year’s experience in community or social work, among others. Apply to info@lrfkenya.org by November 25.