Monthly Archives: August 2008

Online Nairobi Stockbrokers

Continuing the popular Where to buy shares series, my long-time stockbroker CFC (actually CFCFS) have finally unveiled an online trading and account/portfolio platform. It’s quite good so far, quick registration, easy navigation, and hopefully a secure one. I hope they add share reports, and other useful tips which they can e-mail to users.

My portfolio is correctly displayed and I will make my next trades online (previously I used to e-mail my orders, and get confirmations and statements back by e-mail)

Other brokers with online features (can’t vouch for their quality) include Afrika Discount Drummond Dyer & Blair, Faida and Sterling

Questions
1. What are you online experiences like with your Kenyan stockbrokers?
2. Have any Kenyans in the Diaspora got their Safaricom IPO refunds, or been able to apply them to buy other shares? Have you seen your refund cheques, or know where they are?

Electric Shock

Last month’s electricity bill from KPLC was an all-time high, and who would have thought it could still go up? This month it’s Kshs. 2,590 ($39) – up from Kshs. 1,860 last month. Consumption was ‘161 units’ costing Kshs. 1,000, but that was exceeded by their fuel costs [billed at 769c per kWh – whatever that is ] that added another Kshs. 1,240 to the bill, followed by all the various other government tax and regulatory percentages tacked on to everyones’ bill.

Again ‘fuel costs’ are to blame – Who does KPLC buy fuel from? Retail outlets? If I bought my own fuel, and sold it to KPLC I’d probably make a profit. KPLC spent 14 billion on fuel last year – about the same as Kenya Airways [Kshs. 15.6 billion, but who were able to reduce their fuel bill this year by 5% through hedging contracts] and that’s three time as much as electricity generator Kengen who spend about Kshs. 5 billion on fuel [they have a competitive bidding process – to reduce fuel costs, and Total has the contract now] – but I hope KPLC who only distribute electricity address their fuel procurement process in future before passing all costs on to costs to their over-burdened consumers and taxpayers.

So how much are you electric bills this month?

Who Funds ICT Start-Up’s?

one entrepreneurs’ experience; I have a business plan and have been looking for funding for over 8 months now. I have been unsuccessful because many financiers are more focused on expansion capital – only if you have been in business for 6 months and over is when you would qualify for capital

I’ll begin by saying that, apart from Enablis, I haven’t found a true venture capital firm anywhere in Nairobi. Although many firms describe themselves as ‘investment banks’, ‘development banks’, xyz Funds, or venture capitalists, for better or for worse, they absolutely do not fund arart-up companies. They like real-life balance sheets rather than projected balance sheets. is already an Enablis member and does qualify for capital, but it’s an 8-16 month long process of reviewing my business plan and then getting funding

Investeq Capital – It’s very impressive; they have offices alongside Milimani Road I think. They seemed to be genuinely interested in my proposal but they said it was too small. If I remember correctly, they fund between Kshs. 5m to 40m. They have a super-skilled management, btw.

Fusion Capital – They fund expansions; you have to have been in business for about 6 months, but I liked their customer service. I didn’t ask about their rates though.

IFC SME centre – Fund expansions. They advertise in the Tuesday newspapers, you’ve probably seen it. Met with them at their offices. Naturally they were not interested so I didn’t get past one meeting, so I don’t know their rates.

Grofin – didn’t meet with them. How they operate is buy you first sending them your proposal, they review it to see if it meets their criteria, and then they respond to you. They told me (over email) that my plan wasn’t up to their standards. It’s generally difficult to argue with such an organization because they effectively cut out your argument. They don’t even bother to meet with you, so you don’t know what it is they found that you could have responded. Another fund I personally know of like this is the APDF but that was a few years ago.

East Africa Capital Partners – They definitely give you time to defend your idea, but it has to be an ICT business. They have big interests in TEAMS and the like and invest heavily in ICT infrastructure. So up to this point they have not looked at small businesses. They are in the process of setting up what they call a ‘special purpose vehicle’ – basically an SME fund. Right idea, wrong time I guess. I’d approach them in 6-8 months if I was an entrepreneur… wait a minute, I am an entrepreneur!?

Banks – Banks were the first entities I approached with my first proposal, but that was some time back before they began lending like crazy. Basically they want you to have been banking with them for at least 6 months, which for me is out of the question. Again, they look at expansions. If he had approached me, I’d have told him we don’t do start-ups, mainly expansions, who have a few years of audited financial accounts

Youth Fund – The fund is broken into two separate funds, one for Kshs. 50,000 and under and the other for Kshs. 500,000 and over. The rules for the bigger fund are obscure. The fund is run by ‘financial intermediaries’ which mostly are banks and SACCO’s. In theory they are supposed to lend more than half a million but they don’t. I think the youth fund gets funnelled to other products of these intermediaries because they don’t mention them. You end up looking for them instead of them looking for you. Family Finance bank is the only one I’ve found that is a defined youth loan.

Related: Four other SME finance avenues suitable for ICT start-up entrepreneurs in Kenya.

Plane Moments

great interesting photos from airliners.net

KQ Outlook: Interesting debate at stockskenya on the outlook of Kenya Airways at a time of high oil prices, whose impact on last years prices were softened by hedging contracts which may have since lapsed. Nice breakdown, but for KQ even financial discussions can be overwhelmed by the PR, service, and communications weaknesses at the airline.

Virgin Nigeria: Just finished reading Richard Branson’s autobiography which was finished before he began his Nigerian airline venture, which now seems to be unraveling amid allegations of blackmail, mafioso tactics, and partly blamed on the former president. Whether the Virgin Nigeria venture survives the fracas which was triggered by a dispute over airport space, it is nevertheless a successful venture.

Cyber squatters: Don’t confuse:
– official Kenya Airways with this one
– official CFC Stanbic with
this one
– official Safaricom site with this site, which was last used by Dyer & Blair during the IPO earlier this year
(any other examples?)

Tiomin Kwale saga

Thanks MM – the Canadian $ is almost on par as the US $

Looking at the accounts of Tiomin and 2008 AGM notes paints an interesting picture of the company for foreign investment deals at a time when Rift Valley Railways is deal is unraveling and Econet continues its four year incubation as the mobile phone market passes them by at a growth rate of almost 20% a year

Tiomin, which claims to have invested $86 million directly and indirectly since 1995, secured financing in 2006 but the project was unable to take off and funding was canceled in 2007 on a venture in which the company was to invest $150 million and pay the Kenya government 2.5% gross annual revenue.

The Company had a target to conclude (divest part or all of) Kwale and slashed costs from $450,000 to $70,000 per month (most staff were given notice in March 2008) until divestment which happened in July when the Jinchuan takeover was announced – with the Chinese firm purchasing 70% of the venture for just $25 million.

What can Jinchuan do going forward to improve on where Tiomin got stuck?

  • Get some local shareholders (they are now shepherding RVR back on track)
  • Have a clear communications strategy with locals; go beyond issuing vague press releases.
  • Spread the wealth; do more value addition processes here, work with local banks/financiers to raise funds locally, engage in some CSR, and join the Kenya association of manufacturers (KAM)
  • Work better with stakeholders; in this case, it is local landowners (farmers), the taxman, and employees.
  • And don’t blame the ‘government’ on tax matters. The Tiomin AGM notes state that ‘Jinchuan were key’, and were able to ‘facilitate government relations’ which mean the project could resume soon.