Monthly Archives: July 2013

Chama Management 101

Chama to Conglomerate (Reinventing your Investment Group) is a book by Tony Wainaina, an investment banker, who was also the C.E.O of the Transcentury Group.

In it, he highlights key pointers and pitfalls that Chamas (informal investment groups) may encounter  in meeting their (initially) ambitious growth plans, such as dealing with members with different expectations & commitment to the group, the importance of hiring professionals, avoiding mediocre management, getting all members to bring the best investment ideas to the Chama, the problem of meeting in social places, the importance of strategic planning, time-keeping, & record-keeping – and some common sense lessons – such as if everyone is talking about a particular investment, it’s already too late Safaricom IPO)

He also gives examples of other Chamas of people who turned informal meeting sessions into investment groups that invested, some with success and others with difficulties such as with members who have different expectations and level of commitment, land purchases, dealing with KRA (taxation).

There is also a brief mention of what is arguably Kenya’s most famous Chama which began at a goat eating party in Athi River in 1997.which was not the most optimistic time for Kenya. It became the Transcentury Group which roped in 29 members who put up Kshs. 24 million that was invested into local NSE shares, Castle Brewery, East African Cables, Aureos, Rift Valley Railways, Helios, and which all led to their own eventual listing at the Nairobi Stock Exchange in 2011.

The book is a short, nice, easy read that you’ll want to have with you, and refer to as your Chama grows or gets stuck like some of the examples highlighted. It also includes sample documents and guides like ‘Letters of Intent,’ ‘Investment Term Sheets,’ ‘Non-Disclosure Agreements,’ and steps to concluding a Kenyan land deal.

The book is sold at Text Book Centre, Bookpoint- Moi Avenue and is also available on Amazon for the e-reader investor types.

Going App to get better Banking Service

It’s been over a a month since Barclays Kenya gave a peek to its’ new banking app that can be downloaded from the android and apple stores.  The app offers customers full service in terms of viewing account transaction histories (of up to 3 months), making payments and transfers, and finding Barclays ATM’s & branches.  

While other banks have like KCB, Equity and Co-Op have chosen the  agency banking route, Barclays has gone for an app – and with a device like a Samsung Galaxy Tab, other Android phone or Apple device, you can now make payments on the go such for credit card bills, water bills, with a few clicks that take less than a minute to make in lieu of previous visits to banking halls to queue and fill out forms. 

The app works on the premise that you build functions on the Barclays web  platform where you go and setup/add accounts, add payees such as utilities, credit cards, landlords etc. (if they bank with Barclays), and other details.

It is free to use (for now), and one attraction of this app is that it comes at a time when banks are clawing back on services like free monthly statements which are sent to fewer and fewer customers – and yet, oddly, remain a mandatory requirement to bring in to the bank for a loan or credit card application. You can get mini-statements at the ATM, but they fade after a few days in your pocket or wallet. 

The Barclays app is still a test app, on which the Bank hope to build more functions around it with time. It also appears there are working apps for customers in other countries like Ghana, Zambia, UAE, Botswana and Mauritius. 

Some issues to consider so far include; 
– Each time you log in, it asks you to answer a secret question (even if you’ve entered the password correctly). For this, it’s advisable to set your secret answer to be as simple as possible e.g. if you pick out a favourite movie (and year) as a secret answer, just fill in ‘Matrix’, not  ‘The Matrix’, ‘Matrix1999’, ‘Matrix 99’  or ‘Matrix(space)1999’ – as if you get it wrong, the system does not provide for an alternate question.
– Statements are not formatted to export or print. You can print or export 3 month old statements in Excel or PDF formats

Urban Inflation Index: July 2013

There is much debate about an upcoming VAT bill and the current government budget deficit, separation of powers, and transfer of funding responsibilities to devolved governments (even as some entities like road contractors, and teaching & health unions prefer to deal with the central government. This weekend, County Governors floated a proposal for the country to hold a new referendum, which will be the 6th Kenyan public vote in 12 years, to decide on an increase in the allocation of funds to counties from the current 15% to 40%.
The  VAT Tax Bill (PDF) seems to tax everything at 16% with only a few exemptions. Exclusions from the tax will include;  
  • Supplies to the red cross, emergency relief, personal goods brought in by travelers, supplies to international and regional organizations, supplies to multilateral and bilateral donors, supplies of to diplomats and governments, oil prospecting, international air travel, and bottled water makers. 
  • Services in sectors like banking, insurance, education, medical, agriculture, local transport, residential, stock brokerage, sports, arts & plays, mobile airtime, and gambling. Even though they are exempted here, banks are passing on a new tax to their customers amounting to 10% per transaction while Kenya Airways management has said that the airline will shut down if the bill is passed as it will affect operations by increasing the cost of jet fuel, aircraft purchase/leasing and landing/ parking fees.
  •  Petrol, Kerosene and Natural gas are exempt but only for the next 3 years.  

On to the index that compares prices to a year ago and three years ago. 
Gotten Cheaper
None really 
About the Same 
Mobile Communications:
Communication costs are largely unchanged with slight variations in promotions for voice and data usage. The big moves are in mobile and card payments with companies seeking to increase their awareness and become the preferred payment platforms for ordinary Kenyans such as by using Safaricom’s Lipa Na M-pesa and Equity Bank’s Beba Pay and PayPal channeles. 
More Expensive
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. 104 compared to 118, a year ago. But this is 46% more than the Kshs. 71 price of three years ago.
Beer/Entertainment: A bottle of Tusker beer is Kshs 200 (~$2.3) at a local pub, up from 180 last year and 160 three years ago. There have been two recent price hikes, but this may have more to do with EABL’s management and procurement outlook, and the price may go up more with future taxes. 
  
Fuel: At Kshs 109.52 per litre (~$5.73/gallon), petrol prices in Nairobi are slightly cheaper than the Kshs 117.6 per litre a year ago but about 20% more than the Kshs 90.9/litre  of three years ago. Petrol, Kerosene and diesel prices are set by the government and even with the prospect of oil discovery, the major retailers are going through some turbulent times with both listed Total and Kenol reporting losses. 
Foreign Exchange: 1 US$ equals Kshs 87.15 compared to 84.25 last June and  80.6 three years ago  in March.
Other food item: A 2 kg. Mumias Sugar pack is Kshs 250, which is up from Kshs. 237 a year ago, and Kshs 200 three years ago.
Others
Factors likely to affect the the cost of living include:
– Consumers are likely to see an electricity cost increase due to debts for generation of hydro power.
– The National Social Security Fund is proposing  a 4400% increase  in monthly contributions (for the highest earners) from Kshs 400 per month to 18,000 (~$210)

 – A new 1.5% levy on all imports was effected on July 1, to fund a future standard gauge railway between Mombasa and Kisumu. 

Idea Exchange: Barcamps, Heineken, Nuclear, Authors, Pilots, Blog Awards

New, ongoing, and concluded opportunities.

Acumen Fund is accepting applications for the next class of the Regional Fellows Program in East Africa, in Pakistan, and now India. Deadline is 2 September 2013.

The Africa Awards for Entrepreneurship recognize and award exceptional entrepreneurial leaders who serve as role models to Africa’s aspiring entrepreneurs and demonstrate business excellence, innovation, and profitability. This year there will be prizes for (a) lifetime achievement award,  transformational business, outstanding mature business, outstanding small and growing business, and one for an outstanding social entrepreneur – that will range from $50,000 to $100,000 each.  The Awards are supported by the Omidyar Network, and the deadline is July 18.

The African Business Awards competition is now open and there will be winners ins categories of African Business of the Year, Business Leader of the Year, Award for Good Corporate Governance, Award for Innovation and Outstanding Woman in Business. The deadline is August 5 and more details are here.

Barcamp Nairobi  is set for 24 August, 2013 and more details are here.

East African Breweries Foundation has university scholarships.

Enactus Kenya (formerly SIFE Kenya) stages the 2013 National Business and Entrepreneurship competition on  July 20, 2013, in Nairobi, and will choose a champion who will represent Kenya at the Enactus World Cup in Cancun Mexico.

Advertising, media and risk jobs at Equity Bank.

Heineken is seeking premium distributors in Kenya and entrepreneurs needs to have vehicles, sales person and Kshs 5 million ($60,000) in working capital to be eligible.

Highway Africa 2013 takes place at Rhodes University, South Africa in September and will have new media awards for innovative newsrooms, best African ICT Blog and (most) innovative use of technology for community engagement. Deadline is July 31.

Magadi Soda is seeking graduate engineer trainees and the deadline is 20 July 2013

The Mo Ibrahim Foundation and Global Integrity, who are embarking on a partnership to prepare the African Integrity Indicators (AII) 2013-2014, are seeking teams of journalists, and researchers experts across Africa to conduct original research and gather data that will feed into the Ibrahim Index of African Governance.

The Mo Ibrahim Foundation Leadership Fellowship Program which closed on July 16, will place winners to work at African Development Bank offices for 12 months.

Morland Writing Scholarships are grants of £18,000, paid monthly over the course of one year to winners selected who submit published works of between 2,000 and 7,000 words for evaluation. The Scholarship is intended for writers who want to write a full-length book of 80,000 words or more and the deadline for the first series is October 31.

Poland is selling an Embassy property in Nairobi for $3.5 million. The deadline for bids is August 21, 2013.

Rhodes Scholarship Kenya applications are open until August 31.

RwandAir, hiring young and qualified Rwandans to be sent for Pilot training in Ethiopia. Deadline (was) July 15.

Top50at50: The Business Daily Africa newspaper is seeking to recognize the top fifty-year-old leaders in business to coincide with Kenya’s 50th year of independence.

The University of Nairobi has received 15 scholarships from the Kenyan government that will be availed to Kenyans who want to pursue masters degrees in Nuclear Science – and the deadline for applications is July 31.

The University has also partnered with the National Oil Corporation to build capacity in petroleum research and development through a management trainee program.

 The USAID DIV seeks applicants with innovative ideas that address development challenges more efficiently and cost-effectively than the competition, and that have the potential to scale to reach millions of beneficiaries. Deadline is August 15.

The World Bank’s InfoDev mAgri challenge aims to identify entrepreneurs developing innovative mobile agri apps in Africa, and provide them with additional resources to further commercialize their products. Deadline is August 15.

Zara: Fashion Stylists drawn from local media houses will battle on July 28.

Opportunities from Austria, Kofi Annan, Orange, Wellcome, and Georgetown University that were posted earlier are still open and here’s a nice link to other useful opportunities for advancement.

Private Equity Moment

Access Kenya directors have approved the sale of the company to Dimension Data and will now recommend that all other shareholders vote in favour of the deal at a shareholders EGM on August 20, 2013. The company will forward this circular to all the company’s 28,000 shareholders and need to get a 75% vote approving the deal which will pay Kshs. 14 (~$0.16) per share and also de-list the company from the Nairobi Securities Exchange just six years after an IPO and listing.

Elsewhere, the government has agreed to waive the requirement that local Kenyans have to own 20% of the company after the Dimension Data takeover.
Other Deals

Big Milk: According to the Standard, dairy giant Brookside has acquired a majority stake in rival Molo Milk – continuing a pattern of the company buying out its rival’s and consolidation in the milk processing sector.
Unfriendly Oil: Kenol Kobil is fighting off the takeover of a prime petrol station at Yaya area, Nairobi by a rival company – Hashi Energy. KenolKobil (management) claim an armed gang of 20 people raided the petrol station, kicked out its staff, and rebranded the outlet with the Hashi Energy logo.
Recent M&A deals approved by the Kenya Competition Authority include:
Automobiles
– The acquisition of DT Dobie Kenya (distributors of Jeep, Mercedes-Benz, Nissan, Renault, Chrysler) by Toyota Tsusho Corporation – with a provision that implies that there will be some separation of brands above and below 1,800 cc.
– The acquisition of Cica Motors Kenya (distributors  of Hyundai Trucks and Greatwall brands) by Toyota Tsusho Corporation
Banking, Insurance & Finance
The acquisition of Iroko Securities by Ecobank Development Corporation.
 
Health & Beauty
The acquisition of Laborex Kenya and Epdis Kenya by Toyota Tsusho Corporation.
Technology
– The acquisition of Comztek Holdings by Datatec in a South African deal valued at 88 million rand (Kshs 767 million)
– The purchase of all assets of Interest Africa by BSS Africa (Belgium Satellite Services)

KQ-KLM: The Competition Authority also exempted the joint venture agreement between Kenya Airways and KLM Royal Dutch Airline from the provisions of section 21 of the Competition Act which prohibits the abuse of a dominant position in the Kenyan market.