Author Archives: bankelele

Coop Bank 2017 AGM

Cooperative Bank (Coop Bank) shareholders had their 2017 AGM in Nairobi where the directors proposed a Kshs 0.8 per share dividend as well as a bonus share for every five held.

At the AGM, their CEO, G. Muriuki, spoke of continuing the turnaround at the bank which had a Kshs 2.3 billion loss in 2001 when they had 100,000 customers – and on through 2016 when they had Kshs 353 billion of assets, Kshs 18 billion profits, 149 branches, and  6.2 million customers. The cooperative sector remains the heart and identity of the bank, and they will continue to provide services to the sector.  The cooperative movement also forms the anchor shareholding of Coop Bank with a 65% stake.

Most amazing, he said, was the digital transformation at the bank. Some years back, McKinsey had identified 60 services done at their branch that could be decentralized – and now, only 15% of transactions are done at the branch – with customers doing the bulk of transactions on mobile phones, at ATM’s, agents, and on the internet – and this had seen the Bank’s cost/income ratio reduce from 60% to 50%

At the AGM, there was also discussion on some challenges such as court cases & loan provisions, funds at held Chase Bank and hyperinflation in South Sudan which has resulted in losses. Some shareholders also asked if they could have the annual report mailed to them via post offices and also had other queries on issues like diaspora banking services, staff fraud, PesaLink, interim dividends, the bank’s share price, transport fare to attend the AGM, cyber crimes, and interest rate caps. In answering one question, the CEO said Cooperative Bank was not one of the bidders for Chase Bank as they had a presence similar to Chase and would focus on growing organically.

The  CEO also said this year marked the third bonus share issue since the bank had listed in 2008, and this was good for shareholders as the bank had grown its capital without asking shareholders to put in more money.  Coop Bank had a livestream of the AGM for any shareholders who were unable to attend the AGM, and more companies should do this for investors awareness

Kenya Airways 2017 Results

Kenya Airways (KQ) announced their full-year results in which they reported an operating profit of Kshs 900 million, an improvement from an operating loss of Kshs 4.1 billion the year before.

KQ flew 4.5 million passengers, an increase of 5%, to 53 destination, but had an 8% dip in revenue to Kshs 106 billion, due to the reduced fleet capacity including a change from anchor Boeing 777’s to 787’s

But more significant was that idle capacity, such as from the large Boeing 777’s, and been jettisoned, reducing fleet ownership costs by 47%, and this combined with Operation Pride initiatives, had seen the airline achieve the gross profit after all the direct costs, fleet ownership costs and overheads. However after finance costs were factored in, the airline still had an after-tax loss of Kshs 10 billion, a great improvement from the Kshs 26 billion in 2016.

These were the final results presented by CEO Mbuvi Ngunze who had announced his resignation and who is being replaced by Sebastian Mikosz from  June 1. The airline is next expected to extend the restructuring program to the other side of  their the balance sheet and address the negative capital position and high debt on the balance sheet.

During the year they added new flights between Entebbe and Bangui and two new routes  to Cape Town, via Victoria and via Livingstone. From October 2017, KQ will add 30 new flights to existing African destinations. On the cargo side, they are now flying flowers to new markets in Australia and China.

This month, their Jambojet subsidiary acquired a second Dash 8 Q400 as the airline also got Kenya government permission for international routes, which could include Kilimanjaro, Mwanza, Hargeisa, Mogadishu, Goma, and Kisangani.

Milk Pricing in Kenya

Most supermarkets in Nairobi now have ATM’s/’bars’ which are machines where customers can bring their own containers and buy their own quantities of unbranded milk. Today at one ATM, milk was Kshs 80 compared to about Kshs 110-120 per litre (sold in half litre packs for 55/= or 60/=) for branded milk packs.

Branded milk sachets

But how does milk pricing work? M-Farm tracked a milk trader called Wangondu,  who sells 1 litre of milk at 70/- at his milk bar.

  • Farmers usually use donkeys to transport milk. The wholesaler is introduced into the supply chain at the point which motorbikes transport milk to a center. When there was Mid March scarcity – majority of the milk was sourced from Kinangop at 35 to 37/= per litre.
  • Boda boda people who bring 100 litres to the main road are paid 250/- meaning, the milk bar trader has to add 2.50 per litre bringing the total cost to 40/- per litre. The road is bad; lot’s of push and pull which adds another cost to the milk.
  • Milk is very sensitive and has to be moved quickly. If one is collecting 1,000 litres, it means there will be 20 motorbikes from different sourcing points and have a vehicle using a particular route to collect aggregated milk. At end of day of the day, milk per litre costs a trader about 40/- to 50/- given the circumstances.
  • Pasteurization costs 6/- per litre bringing the total cost thus far to 56/- per litre.
  • Each vehicle collecting aggregated milk has to have 3 people; a driver and 2 loaders. At this point, transport cost of the milk is charged at 6/- per litre. A wholesaler trader calculates his/her profit margin at 3/-.
  • If milk is being sold to a retailer at 65/- they add 5/- margin to retail the milk to 70/- litre. When there’s surplus milk, a trader reduces 5/- per litre by demanding that the farmer delivers the milk to the aggregation center and bears the cost.   Were it not for the rains, the wholesalers had an agreement that on the Saturday before the start of April rains, milk pricing would have retailed from 80/- per litre.
  • When the rains come, they hire an escort to help with the pushing of vehicles who are paid 2/-. “We as traders, take advantage, don’t see the reason why we should sell the milk at 80/- and we see the way farmer and consumers suffer and we have to be neutral. When we have mercy on both the farmer and consumer, the consumer ends up claiming that my milk is cheap because it has been tampered with and therefore, of poor quality.”
  • Bars have lower milk pricing at some supermarkets

    But all the same, the little margins I make are able to pay licenses and pay my handymen in my milk bars. Even after all deductions, I am able to make 1/- or 2/- per litre as profit.

  • When there’s scarcity of milk, we source from Kikuyu and Limuru dairies. Harvesting, transportation to the milk buyer in town, management of milk at the milk bar – this is my business solely. I have to buy from the joint business source,  make sure there are no additives, and we have to be there to make sure the quality you get from the shamba is what we give the customer.

Milk is also being sourced from other countries in East Africa as and there is a butter shortage (affecting bakers like Sugarpie). 500 grams of butter is retailing at Kshs 1,000/- and this is just ridiculous.

$1 = Kshs 103.

Gambia Asset Freeze

On Monday, the Justice Minister of Gambia Abubacarr Tambadou announced that he was freezing the assets of former President, Yahya Jammeh.

Reasons for this were that “preliminary investigations have revealed that between 2006 and 2017, former President Yahya Jammeh personally or under his instructions directed the unlawful withdrawal of at least 189,000,000 from funds belonging to Social Security and Housing Finance Corporation. Between 2013 and 2017, former President Yahya Jammeh personally or under his instructions directed the unlawful withdrawal of at least $50,000,000 from Special Projects Fund and International Gateway Accounts at the Central Bank of The Gambia.”

The freezing order affects:

  • 131 landed properties held in the personal name of former President Yahya Jammeh or companies directly associated with him.
  • 88 different bank accounts held in the personal name of former President Yahya Jammeh or held in the names of organizations directly associated with him;
  • 14 companies purportedly belonging to or directly associated with former President Yahya Jammeh;
  • A number of animals and livestock purportedly belonging to former President Yahya Jammeh.

“The freezing order is therefore meant to prevent former President Yahya Jammeh from liquidating or dissipating assets held in his personal name or his assets held in the names of his close associates or agents so as not to cause prejudice to the State should there be adverse findings made against him by a court of competent jurisdiction which may require the recovery of assets and monies from him by the State.”

Tambadou also announced that, after negotiations, the  Government had reached a settlement with a company called Conaprio and would pay $4.6 million. This, he said, was down from a claim by Conaptop for $32 million which was part of potential liabilities of over two billion dalasis (about $43 million) arising from international cases instituted against the Government of The Gambia in different fora around the world as a result of the purported acts of former President Yahya Jammeh and some of his close associates.

See also this Guide to Banjul, the capital of Gambia.

Guide to Togo and Benin

A guest post from a media gathering trip to these two French-speaking countries that lie between Ghana and Nigeria.

Getting There: Took Ethiopian Airlines – Nairobi – Addis – Lome, then by car to Cotonou and then back to Addis and Nairobi. Ethiopian flies to both countries. Initially, I had set my trip to go into and out of Lome, but changed it mid trip. The expense for the change was significant, but I assume it would have been minimal if I had done it that way up front. The round trip cost was $750 plus $350 for the change.

On arrival: Arriving in Lome was easy, but the visa on arrival (American passport) was a bit of a pain of a process and wait. There was a list of the cost for every country in the world, except America and of course mine was much more than any listed. It was 10-20,000 CFA for most countries, while the US one was 27,000. I paid in USD cash, but they had to exchange it into CFA. It’s better to pay in CFA I’m sure.

Getting around: I had private transport the whole time. In both Togo and Benin, the massive majority of people move via private motorcycle. There are many boda for hire as well. A few matatu type transportation as well and the rare taxi car for hire. The large buses were for transport to other towns and the small minivan was not seen on the highways between towns. There did not seem to be much foot traffic like you have in Nairobi. Cars and bikes were not fighting for space and everything seemed to flow smoothly.

Benin: Walking around my hotel was safe. It is next to the airport and it seemed that many of the government offices and embassy’s were around, so the security was higher. Many of my local friends have been pick pocketed on the streets, but violence doesn’t seem to be as common as in Nairobi.

Togo seemed very safe overall. The crowds were smaller. A slower pace of life.

Staying in touch: It was very easy to get a local SIM card, much like in Kenya. Costs were very comparable. I forget the network in Togo, but I’m using MTN in Benin. I don’t recall if I could use Safaricom, I didn’t even try. I have not tried calling international on either network. Wi-Fi seems to be common, but the speeds vary a lot and the network is down often. I suspect it’s a problem with the ISP more than the local network. In Togo, my colleague’s wife happens to work at the office of the mobile company. I provided my passport and she gave me a SIM card. In Benin, a friend purchased the card for me, but I suspect it only required a copy of ID to obtain.
Where to Stay: I think the median cost is $60. I started at a place that cost $25 without breakfast that was a rat hole. I moved to a western level of accommodation for $80 with breakfast. All the hotels I stayed in, no matter how nice, always had AC & Wi-Fi.

Electricity was surprisingly good. I honestly don’t recall a single power cut, but I’m sure they happened. Most of the hostels had a generator.

Eating Out: Foo Foo is a staple somewhat similar to ugali. It’s wet and slimy and has more flavour to it, but fermented, like Ethiopian injera. Some forms have a lot more flavour than others with cassava being a common ingredient. No clue on the beer, but easy to get everywhere, as is French wine, even upcountry.

No clue with bar conversation is – it’s also all in French. French is a must. I had a variety of hosts with me the whole time. The only English I found was the little spoken by the staff in the hotel. I very much doubt there is a local English paper.

Shopping: in Benin, there is a very small market in front of a very nice supermarket next to the airport. It seems the majority of gifts are cloth based. I did see some very unique, artistic metal work. Of course, there is also the standard wooden animals. I was told there is another market, but I was not able to attend.

In Togo: I was taken to a small market with maybe a dozen stalls with a wide variety of items. For the most part, pretty similar to what you find in Kenya. There was one guy selling silver jewelry, like what you find in Ethiopia.

Sightseeing: In Togo,  there is the main museum next to their national monument, but I didn’t have time to visit. The beach is incredible, but only locals use it. There doesn’t seem to be any structured area for tourism.

In Benin, the interior mountains are incredible sites to see, massive slabs of granite, there is a very famous sighting of Mary in Dassa. A very large church has been built there and every year massive numbers of West African Catholics come for a special service and ceremony. The church is only used for this event. I’m told that the town comes to a standstill. The church could probably hold over 10,000 people and I was told the grounds outside are completely covered in standing room only. I imagine over 25,000 people attend.

Card usage is extremely rare, even for nice restaurants. Food costs vary from $1 (roadside) to $20 (nicest restaurant) for a meal. CFA is used in both Togo & Benin everywhere.  I used an ATM everywhere. They were found all over town. I used CFA for everything.

Odd Points: Partial buildings: West Africa’s way of saving money is to build their homes and churches over many years as money comes. Sadly, I have seen in rural Burkina Faso many, many ruined homes never finished. What a waste. But, from what I saw in Togo and Benin, most everything is eventually finished.

My hosts were rarely forthcoming with information and did not seem like problem solvers. I was constantly having to suggest solutions and pointing out gaps. I am not sure if I was missing culture cues or perhaps a lot was happening in the language that I was not picking up on. I appreciated that the roads seemed significantly safer.
Biggest surprise:  The road structure. There are beautiful, nice main roads, and then dirt. Nothing in between. This seemed mostly true in both countries. Many roads in both countries were not paved but made from interlacing bricks. Black market fuel seems to be very big in both countries. It’s not as obvious in Togo, but it’s done very openly all over Cotonou, and it’s half the price compared to the pump.