CBK launches Stawi SME pilot credit facility

The Central Bank of Kenya has launched a pilot credit facility targeting informal unbanked traders in partnership with local institutions.  This will be through an app, marketed under the name “Stawi”, that will initially be managed by five banks – Commercial Bank of Africa, Cooperative Bank, Diamond Trust, KCB Bank and NIC Group.

The pilot phase lasts two weeks and will involve 3,500 traders without bank accounts, who have turnover of Kshs 30,000 to Kshs 250,000 (~$2,500) per month and who are at least six months old. To register, besides providing their ID details, traders will need a valid business permit and an email address to create an account – this is an unusual as mobile apps just require a national ID number to match with the phone number of the loan applicant.

The businesses will be able to borrow between loans of Kshs 30,000 to 250,000 (~$2,500). Loan charges are at an interest of 9% per annum, plus a facility fee of 4%, insurance fee of 0.7% and excise tax on the facility fee – all adding up to about 14.5%.

Other features of Stawi:

  • Loans are repayable between 1 – 12 month and borrowers can top up loans once 80% has been repaid. Loans are only disbursed through the app as will all repayments be done
  • The loan rates are not cheap, but they are mild, and this program is targeted at the unregulated lenders who charge as much as 300% p.a. There was a draft financial markets conduct bill formulated to protect consumers from such practices.
  • There are also transfer fees and Stawi customers can also link up with Pesalink which allows much greater daily transfer amounts (up to Kshs 1 million) than the mobile money wallets.  
  • For now, there is no Stawi in the Google store as the program is still in a test phase. (There is an app called Stawika that has no affiliation)
  • A second round of the pilot will target 10,000 other traders.

While trying to forestall the arrival of interest rate caps back in 2016, banks, through their umbrella Kenya Bankers Association committed to set aside Kshs 30 billion for lending to SME’s including Kshs 10 billion to micro-enterprises owned by women and youth and lend to them at no more than 14%. They also committed to rank borrowers by high, medium and low risk and to work to reward low-risk borrowers with low-interest rates. To date, the credit reference bureaus piling up data on loan defaulters which good borrowing records are ignored or not rewarded with lower interest rates.

KWAL at 50

This week, Kenya Wine Agencies Ltd (KWAL) celebrated fifty years of business. At a Nairobi dinner event to mark the occasion, KWAL Managing Director, Lina Githuka, said that the company, which had been privatized four years earlier, had renovated its portfolio and improved its operation. These had resulted in volumes going up threefold and, with profits up ten times, had set the stage for a second round of privatization.

During the event, there were clips and narrations showing the history of the companywhich was established in 1969 by the Government of Kenya to bottle wines and spirits. initially, and up through the 1990s when Kenya’s economy was liberalized, KWAL had a monopoly to import leading international brands like Martell, Hennessy, Bacardi and Campari which they worked with local business owners to distribute to hotels and shops. Later in the 1980s, they opened a commercial winery and embarked in the manufacturing, process and bottling of local wines. While grapes are not easily obtainable here, they used other fruits, starting with pawpaw from Kakamega and later Pekera, and “Papaya” became the first domestically produced wine in Kenya. They later added variants based on passion fruit (Passi Flora), strawberries (Kingfisher), and apples (Woodpecker).

KWAL, under KWA Holdings E.A, is now a subsidiary of Distell, which owns 55% of the company after acquiring a 26% stake in April 2017 for Kshs 1.1 billion.  The company produces 20 brands locally including Kingfisher for the last 36 years, and through its partnership with Distell, also distribute many top international brands. The KWAL portfolio includes Yatta juices, ciders (Savanna, Hunters, Kingfisher) wines (Nederburg, Drostdy-Hof, 4th Street), Amarula, and Viceroy.

Distell reported that Kenya had a stellar year (in 2018) with volume up 32% and revenue up 27%, which was partly attributed to the impressive performance of local brands like Kibao and Hunter’s Choice. KWAL plans to open a production facility at Tatu City, near Nairobi, their first new manufacturing plant in two decades, at a cost of Kshs 3 billion to meet the demand of fast-growing brands.

Kenya’s Cabinet Secretary for Industrialization, Peter Munya, who was the chief guest at the event,  said the Government was prioritizing value addition and local content in investments and that the Cabinet had recently approved an investment policy to legally safeguard all the incentives offered to investors. He applauded the privatization process which had rejuvenated KWAL, and he hoped this would extend to the sugar sector where private companies were doing very well, unlike the Government-owned ones.

MTN Nigeria Listing

MTN Nigeria has received approval and will proceed to list its shares on the Nigerian Stock Exchange on May 16, 2019. The company entered a settlement in December 2018 paying $53 million to the Government of Nigeria out of $8.1 billion tax demand and the listing is believed to be an extension of this process.

MTN entered Nigeria in 2001 and it has grown to be a key market for the Group. It accounts for 55 million of their total 210 million subscribers in Africa and the Middle East. 25% of their subscribers are in Nigeria compared to 13% in SA. They get 30% of revenue from Nigeria, compared to 29% from SA, with Nigeria growing in the double digits. MTN which has 79 million data customers and 27 million mobile money customers in 2018, plans to introduce mobile money in South Africa, Nigeria, Afghanistan and Sudan this year.

The Group owns 75.81% of MTN Nigeria through a Mauritius company while Nigerian shareholders own 18.7% through special purpose vehicles. 1.76% is owned by the Public Investment Corporation of South Africa.

With its shares introduced at 90 Naira each, based on recent private share sales, MTN Nigeria is valued at about $5 billion. All shares of the company are being listed and all shareholders will be able to trade their shares. MTN plans to get more Nigerians to increase their stake in the company to about 35% through the listing and a public offer that may follow. Besides Nigeria, the Group also plans to increase local ownership of its operations in Uganda and Zambia during 2019.

African Banker Awards 2019 Nominees

The winners of the 2019 African Banker Awards will be announced on June 11 at the Annual Meetings of the African Development Bank (AfDB) in Malabo, Equatorial Guinea. 

Multiple nominees this year include Absa, the Trade & Development Bank, Equity Bank, and Standard Bank while first-time nominees include Family Bank of Kenya who partnered with Simba Pay to enable payments via WeChat to China, Kenya’s largest trading partner. There are also nominees for arranging sovereign Eurobonds and IPO’s, while UbuntuCoin, an asset-backed digital currency that was a finalist at last year’s awards, is nominated again.

The complete list of shortlisted nominees for 2019 are:

African Banker of the Year:  Admassu Tadesse (Trade and Development Bank), Brehima Amadou Haidara (La Banque de Développement du Mali), Brian Kennedy (Nedbank, South Africa), James Mwangi (Equity Bank, Kenya) and Johan Koorts (ABSA, South Africa).

Award for Financial Inclusion: 4G Capital (Kenya), Amhara (Ethiopia), Bank of Industry (Nigeria), Cofina (Senegal), Jumo (South Africa).

Best Retail Bank in Africa: Coris (Burkina Faso), Ecobank (ETI), Guarantee Trust Bank (Nigeria), KCB (Kenya), QNB AlAhli (Egypt).

Deal of the Year – Debt: Absa ($350M Old Mutual Renewable Energy IPP), Afrexim – ($500M ChinaExim Syndicated Loan), CIB ($389M Egyptian Refining Company), Rothschild ($2.2 billion Republic of Senegal Dual-Currency Eurobond), TDB ($1 billion Sovereign Loan to the Government of Kenya).

Deal of the Year – Equity:  Al Ahly (Canal Sugar Equity), EFG Hermes (ASA IPO), RenCap (CiplaQCIL IPO), Standard Bank / RMB (Vivo Energy IPO), Standard Bank IBTC (Flour Mills of Nigeria Rights Issue).

Infrastructure Deal of the Year: Absa (Enel Green Power), Afrexim (Syndicated Loan for EBOMAF/Government of Cote D’Ivoire), National Bank of Egypt (ElSewedy Electric Hydropower Project), RNB (Roggeveld Wind Power Project), TDB (Mozambique FLNG Project).

Innovation in Banking:  ABSA (South Africa), Family Bank (Kenya), KCB (Kenya), MCB Capital Markets (Mauritius), and Ubuntu Coin (Côte d’Ivoire).

Investment Bank of the Year: ABSA (South Africa), Coronation Merchant Capital (Nigeria), NedBank (South Africa), Rothschild, Standard Bank (South Africa).

Socially Responsible Bank of the Year: Access Bank (Nigeria), Bank Misr (Egypt), Equity Bank (Kenya), KCB (Kenya), Qalaa Holdings (Egypt).

Safaricom eye international expansion using M-Pesa

Safaricom announced another year of record earnings through innovation and payments, despite a tough economy in Kenya and with an extra bonus for their shareholders.

For 2018, Safaricom recorded revenue of Kshs 240.3 billion (~$2.4 billion), an increase of 7%, and a net profit of Kshs 63.9 billion. The growth was attributed to M-Pesa which, grew by 19% to Kshs 75 billion, and which accounted for 75% of the revenue growth in the year. They also reported that there were 22.6 million active M-Pesa customers and these customers made an average for 12.2 transactions a month, up from 7.4 transactions a month, three years ago.

Chairman Nicholas Ng’ang’a said it had been a challenging year with constrained credit (from bank interest rate caps) and inflation limiting discretionary income while the government had added taxes on mobile transactions  Unlike last year‘s event where the company had earnings before interest guidance of Kshs 89.6 billion, this year CEO Bob Collymore was present at the Friday morning investor briefing at the company’s headquarters complex in Nairobi where he announced that he was proud that the company had achieved an EBITDA of 50% which was unprecedented in the mobile world.

Ng’ang’a announced that the company would have to look for growth elsewhere beyond Kenya, while Collymore said this could be by taking charge of the M-Pesa brand from Vodafone and leading the expansion across Africa with new shareholder Vodacom and he cited new M-Pesa global partnerships that Safaricom had signed with  PayPal, Google (play store) Western Union and AliExpress.

This year the company rolled out Fuliza, the world’s first mobile phone overdraft that has seen over Kshs 45 billion borrowed so far. In terms of banks, Collymore said the era of competing with them was now over, and there would be more collaboration. Last week, Safaricom renewed a partnership with Equity Bank that will aim to improve financial inclusivity, cash management and security.

From the 2018 results, Safaricom will pay shareholders Kshs 1.25 per share, an amount totalling Kshs 50 billion. They will also, for a second time since listing, pay a special bonus dividend of Kshs 0.62 per share – totaling Kshs 24.84 billion.