Monthly Archives: December 2005

Final Business Brief for 2005

Serena
Serena shareholders are being encouraged to accept the offered new shares in a special mailed prospectus. The deal has been endorsed by the board as well as financial advisors of the company and is being promoted as a unique opportunity that takes advantage of a number of factors including one-off tax credits amounting to 504 million shillings from Tanzania & 96 m from Zanzibar, and the higher revenue and margins that Serena enjoys from operating hotels in Tanzania and Zanzibar. The company also plans to acquire hotel properties in Nakuru and Western Kenya in 2006. I have no doubt, the takeover will be successful and I look forward to owning new shares in Serena after March 2006

Standard
The Standard Group’s year ended in September and revenue increased from 1.76 billion to 1.99 billion. However, increased administrative and distribution costs meant that profit for the year reduced from 78m to 66m and the company will not pay a dividend in 2005.

Kengen
Another politically-correct deal was concluded last week and while this is not the first time that conflict of interest issues are being raised in the energy sector, it does raise questions about the outcome of the upcoming Kengen IPO.

New blood at NSE
2006 looks to be a bright year at the Nairobi Stock Exchange, with several companies expected to list some shares at the NSE for the first time since Mumias did in 2001. Kengen leads the pack with 30% available to the public while other companies who have expressed interest include the Scanad Group, Suntra Investment Bank, Sopa Lodges, Wananchi online, Adopt-a-light, belated Equity Bank ( who were expected to float some shares by October ’05), Sarova Hotels (target is June 2006), and Nakumatt (target 2007)

Cashing Out
Already investors are setting aside cash by liquidating other investments. NSSF which has already sold shares in KPLC also plans to sell other shares in Housing Finance, National Bank of Kenya and Sameer Investments. Top investors have also sold shares in Barclays, Uchumi and CMC.

ISP licences
The Communications Commission of Kenya has extended the deadline by one month for licenced ISP’s to apply for mandatory modified ISP licences. Companies will have to provide details of their current shareholding and tax compliance status – otherwise they will be de-registered in 2006.

Banking
– Co-operative Bank of Kenya has applied to the CCK for a value added service PRS license, which will become effective around January 15.
– Can giving micro-finance loans to men reduce the level of violence against women?
– Post Bank has officially ended its once popular premium bonds savings scheme and tomorrow (31/12) will be the deadline for bondholders to encash their bonds which will not be worthless thereafter.
– World Bank vs. Western Union: The amount of wire transfer remittances to Africa is greater than the amount of official direct aid.

Nairobi City Council
The NCC had quite an interesting week as;
– The Kenya Revenue Authority walked away from a deal it had struck with the NCC to collect land rates on behalf of the council.
– Members of the United Business Association and WeCanDoIt advised their members to renew their single business permits with the council to avoid harassment and arrest. The two groups which are challenging the council, claim that their members are being targeted for harassment.
– This week, NCC staff pulled down fences that surround private parking compounds in the city, insisting that owners put up modern fences that beautify the city.

Jobs
At the Kenya Revenue Authority
– Commissioner of domestic taxes CDT/05: Applicants expected to have MBA with at least 5 years senior management experience at audit or accounts in large organizations as well as good knowledge of revenue acts in Kenya.
Commissioner of customs services CCS/05: Applicants should have a business degree – preferably MBA, 5 years experience in senior management of large organizations and good knowledge or revenue acts in Kenya with emphasis on the East African Community Customs Management Act
Apply through KPMG’s executive selection at esd@kpmg.co.ke by 16 January.

Media jobs
Nation Media Group
– Television: Swahili reporter/anchor, sports editor, cameraman
– Radio: news presenter
– True Love magazine: senior fashion editor, fashion editor, and staff writer.
Apply to the group human resource director, Nation Media Group P O Box 49010-00200 Nairobi by January 4.
Standard
Senior reporter broadcast division. Apply to the group human resource director at hrd@eastandard.net
Kenya Times
– circulation sales executives: Nairobi (2) Eldoret Mombasa Kisumu Machakos Nakuru and Mt. Kenya
– advertising sales executives: Eldoret Mombasa
– advertising manager
– chief accountant
– managing director
apply to kenyatimes@timesnews.co.ke by January 6.

New Year’s resolution
Doubling church attendance can raise income by almost 10% recent research indicates. But is money a good reason to go to church? linked from www.aldaily.com.

The road to Mombasa

That’s what friends are for
I called in a huge favour last week and was able to snap up some tickets on a Coast bus to Mombasa, two days before Christmas. Most bus companies are fully booked this time of year, and the seats I got were on one of the extra buses added to meet the holiday demand. On this trip, I took a bus ride down and drove back in a small car. Another option I considered was to make both legs of the journey by overnight train.

Shopping jam
Because of the last-minute shoppers, and increased number of buses & matatus waiting to travel, there was huge traffic jam in the city on Friday. As a result, it took over an hour to clear the city limits and we were passing JKIA (Nairobi airport) more than 1 ½ hours later, despite having left on time at exactly 10:30.
Good road

The 500 kilometre (300 mile) road to Mombasa is one of the smoothest and most pleasant roads to drive on – for at least 200 miles or (2/3) of the journey. There are long stretches of road that never seem to end, meandering through flat, mostly dry, low hills and plains. It’s been dry in most of Kenya for several months now, but one goes though parts of Ukambani where it has not rained for years and the drive is made beautiful in that you don’t have to stop here, and are only passing through at high-speed. The road is mostly new from Sultan Hamud onwards, and even though there are some diversions where the road is still being constructed, they are well paved and you don’t lose any time.

All those people who nurse their Subaru’s, BMW’s, and other high performance cars thought Nairobi’s daily traffic jams should consider giving their cars a treat and drive down to Voi, or even on to Mombasa. The roads are so good that one can easily get carried away, until they look at the speedometer and realise how fast they are driving on the many long stretches of road that never seem to end. But, if you have an older, troublesome or weak car, the drive can be frustrating because it appears you’ll never reach your destination, and keep getting demoralized as you’ve overtaken by faster cars, buses and even trucks.

Speaking of trucks they really hit top speed on the highway with trailer trucks cruising at 80 – 90 km/h. When one drive you (going in the opposite direction) the turbulence it produces can blow other light vehicles (with inexperienced drivers) off the road.

There are supposed to be some speed traps on the highway, but I did not encounter any. Police on this road are more concerned with ending a series of attacks by highway robbers who have been operating on the road for the last two years.

Bad road

Near Mombasa is short stretch of road that is reason enough not to drive to Mombasa. The road one of the worst you will find in Kenya, and is so unbelievably bad, it’s a national shame. It takes about 1 – 2 hours to cover the 20-kilometre section between Mariakani and Miritini on the outskirts of Mombasa. It doesn’t matter if you’re driving a land cruiser or humvee – high speed will cause a puncture or you to leave some vehicle parts behind. Power steering is a must, as you must literally dance your car around a huge endless sea of potholes, which are either huge craters or sharp-edged ditches.

Several prominent companies located in the area such as Mabati have complained and threatened to move their businesses elsewhere if the road is not improved – but to no avail. Mombasa residents say the road is actually better than in years past, and have faith that repairs will be done in 2006. You won’t believe how bad it is until you try it, but you should only attempt to drive through in the daytime. A nighttime drive though will expose you to severe vehicle damage and a possible robbery attempt.

For security purposes I was told that if you get a puncture in this area, or other parts of the highway (and especially at Night), it is advisable to block the whole road with your vehicle. This forces other vehicles to stop and support you while you carry out you repair your puncture. People who pull to the roadside are often attacked.

Nearer Nairobi (between the Athi River and Machakos turnoffs) the road is also slowly deteriorating as no maintenance is being done.

Banking
Pesa Point have installed an ATM at Mtito Andei (halfway point of journey) in what is arguably the town’s busiest location – the Caltex petrol station where Coast bus make their rest stops. KCB also has some branches along the way, but most Banks only have branches in Mombasa

Wildlife
I saw a giraffe near Sultan Hamud, baboons, and three herds of Zebra who appear to have permanently settled on the roadside just after Mtito Andei. Also saw two elephants approaching the road near Manyani, and I almost ran over a four-foot monitor lizard that wanted to cross the road near Mariakani. Oh, and some cows grazing at Nyayo Stadium in Nairobi under the close watch of Masai herdsmen.

Summary
Overall it’s a good drive, whether going to or from Mombasa but only if you leave early enough to tackle the bad roads (at either end) with plenty of time and daylight left – it’s also advisable to go in a convoy of vehicles. Next time I go to Coast, I will try to take the train, as it is the only mode I have not recently used. The Kenya Airways flights take one hour and are unremarkable except for a clear view of the disappearing snow atop Mt. Kilimanjaro.

Good and simple banking technology

good use
Pesa Point’s new ATM’s continue to multiply as they are quickly installed in unexpected places. An ATM is such a useful banking facility that it is shocking how many people still patronize banks that don’t have them. One problem with ATM’s thought is their high initial cost, which can range from 2 to 4 million shillings and their need for secure wall/building locations. But Pesa Point seem to have worked out that problem by coming up with light weight, stand-alone, low cost machines which can be easily be set up. Here are a few more places that Pesa Point should set up machines to cope with our economy in which hard cash is still the currency of choice:

(1) inside bars & clubs e.g. Choices or K2 so you don’t have to drive off (drunk) at 2.a.m to withdraw more cash
(2) all court houses (to facilitate speedy bail payments)
(3) all police stations (to facilitate midnight bail payments)
(4) Ngong race course, casino’s and other gambling spots
(5) at ‘safe’ sports event venues e.g. Safari Sevens grounds (but not soccer stadiums)

simple technology
Standard Chartered Bank is renowned for its investment in technology to improve customer service – e.g. they were early pioneers of ATM’s and are still the only bank at whose ATM’s you can pay your electricity bill. But there’s one simple machine they need to re-adopt – cash counting machines.

I spent half hour while an adequately staffed group of hard-working tellers took an inordinately long time to count out wads of cash, unwrapping and counting out with their fingers, dozens of thousand-shilling notes at a time – one lady even counted about a million shillings, by my estimate.

It’s the of the month for most companies (who close for a two week x-mas break) and many customers were withdrawing huge amounts of cash (that probably exceed ATM daily limits). A Cash counter is old fashioned and costs about 100,000 shillings but the savings they generate are so much more to the other customers who are waiting for their turn. When used by bank tellers, they are able to serve customers at a much faster pace. Maybe there are high incidents of fraud that some banks have ordered their tellers to thumb and count each note by hand, but the use of cash counters would have saved so much time wasted at the Bank this morning.

Monster Week

Monster truck finale: Three ministries are fighting for the monster trucks and other assets of the about–to-be-disbanded CKRC.

Flora Kenya: A look at some of the major flower farms in Kenya. From Timbuktu Chronicles

Banking Secret #1: Cheques over 10 million shillings are cleared on the next day, unlike smaller cheques which normally take about a week to clear.

Nigerian Shares:During the Arsenal-Chelsea game shown on Super Sport, there were numerous advertisements about an on-going rights issue of Union Bank of Nigeria. I am not sure what the cost of advertising is on DSTV, but it’s unlikely that Kenyan banks or institutions will place adverts on DSTV especially for a rights issues. Note that the 2004 KCB rights issue had a total budget of 104 million shillings of which only 13 million was set aside for advertising.

Mobile phone questions: 

  • Safaricom House is a new office building next to Njuguna’s on Waiyaki Way. What will happen to the old Safaricom House in Westlands?
  • Now that I have bought a Celtel line for 49/= and received a second free Safaricom line for buying 100/= worth of credit on Luthuli Ave (both of which are dormant) what is my average value (ARPU) as a subscriber to both companies?

Tourism: Workers in the tourism sector are being encouraged to learn Mandarin to cope with the 10,000 (and growing) tourists from China who visit Kenya each year.

Housing: Construction of Eagle Plains Housing Estate, a 350 housing development off Mombasa Rd, is expected to resume after a Nairobi Court dismissed an objection to the construction of the estate filed by Nakumatt supermarkets against the developer and the National Environmental Management Authority (NEMA). Nakumatt had complained that the location of the proposed estate, which is next to its headquarters, went against the spirit/business theme of the area, which already has 13 major industries.

Retrenchment Pipeline: The Minister of Finance has approved a tax waiver of benefits to be paid to retrenched employees of the National Bank of Kenya (NBK), Kenya National Trading Company KNTC and the Civil Service. As part of the package, civil servants will not be allowed to re-join the service for a period of three years.

Jobs:  At the Kenya Times newspaper; managing director, chief accountant, adverting manager. Apply to the secretary to the board, kenyatimes@timesnews.co.ke by January 6.

Educational opportunity:  The Cornell Assistantship for Horticulture in Africa (CAHA) provides a doctoral assistantship in horticulture to a student from Sub-Saharan Africa. More details here and the deadline for applications is March 1, 2006 Thanks, Kevin.

Correction: The Nation corrects a story they had published earlier to the effect that Uchumi had fired PWC as their auditors.