Author Archives: bankelele

CFA: West Africa’s Brexit Moment

CFA Facebook post republished with permission of  TOS.

Today Senegal celebrates its independence; strangely enough, I am not in a celebratory mood. 50+ years of so-called independence, the more things are the same.

I am somehow very encouraged by President Alpha Conde’s and Kabore’s recent remarks, which makes me think that something is brewing…I had posted an article in a private forum and feel the need to share it with a bigger audience in hope to widen the tent that will lead our leaders to the waters…Here you go..
“If you want your independence then take it”, uttered De Gaulle in 1958 frustrated by young men heckling him.  Independence was given a few years later, but independence was not gained, as the terms were never negotiated in good faith but dictated by France and the CFA became a by-product of that.

At recent events, the Minister of Economy of Senegal suggested that Senegal is not considering dropping the CFA, which given the current climate, to me is a political response to an economic problem.

In contrast the President of Chad, Idriss Debby landed on the opposite side of the argument, and clearly established himself as the only head of state siding with a growing number of Africans, who have come to accept that Africa cannot be truly independent if its financial system is controlled in France.

In many parts of Francophone Africa, there is an emerging sense that economic growth cannot happen without economic independence especially with 50% of CFA member countries reserves being deposited into the French coffers. Such an awareness implies that people are ready for an alternative and a clean departure from the CFA and transition into an independent currency.
A move like this has to be strategic and deliberate simply because doing away with 70 years of political and economic control, will not be without peril. The French economy came out of its economic crisis after World War II in big part because of the CFA and relies on this system of exploitation to remain a strong economy in Europe.

Therefore, dropping the CFA, without a clear well laid out plan and implementation strategy might not be a winning strategy, but a knee-jerk reaction. It is also important that we take timeless lessons from previous movements that called for change such as the Arab Spring, Occupy Wall Street etc. These movements were well-meaning and all called for positive changes, but they were all reactive and started without a clear end game and solid alternative in place.

So my question is how do we form a coherent strategy consistent with the efforts already being put forth on the ground, and overcome the challenges ahead? Here is a summary of what I think might be a good starting point:

  • Understand the forces at play: Understanding the lay of the land, including the historical backdrop, the parties involved will help us not duplicate efforts and coordinate our efforts to support the different fronts that are on the ground presently. The first step should be to research and take stock of all the current issues, what the movements are doing, including the Front contre le Franc CFA, led by people like Kemi Seba, who have been fighting the good fight for years now.
  • Build on strengths of the movements already on the ground: A number of organizations have been laying the ground for years, but efforts have not been coordinated enough to reach a critical mass. I think the time is ripe and we can build on the January 7, 2017, events that were synchronized in Paris, Abidjan Dakar etc.…  Some research will be beneficial in order to know what people are doing and what is working, and what is not. Based on this information a framework can be built for how we can contribute positively to the cause. However, so far it seems the conversation has not gone beyond denouncing and asking for the end of the monetary servitude, for I am yet to see any concrete steps that lay a blueprint of how to achieve this objective and the ultimate goal of self-determination.
  • Develop a framework to complement these efforts: The framework should consider an end game, formalize the necessary steps, and then develop an initial response to potential challenges for each step. The benefit to this approach is that it allows us to look ahead, identify, anticipate and help us adapt to changing situations.
  • Educate ourselves and inform others, to build a critical mass: The only way to be effective is to have a full understanding of the high and low points of what an independent currency would bring in terms of positive changes. There are several resources from African born experts who have written and spoken extensively on the subject, such as Nicolas Agbohou who wrote “Le franc CFA et L’euro contre l’afrique,” Demba Moussa Dembele, author of “Sortir l’afrique de la servitude monetaire” and many others. There are also many short and easily digestible videos available on the subject.
  • Enlist Monetary Policy and Economic development experts: We need to know what our competencies are, and seek out outside experts such as Dr. Abdourahmane Sarr President at the Center for Local Economic Development Financing (CEFDEL), on areas where we do not have either an expertise or sound plan in place. A winning proposition will have to add something positive to the debate, therefore it is important to know what are the winning strategies being currently executed and try to complement the gaps we can identify.
  • Craft a value proposition to engage those on the sidelines: Assuming that despite framing the value a departure from the CFA will bring, we do not succeed in getting people to get involved, we should be able to pivot and appeal to people’s selfish nature, and what they personally stand to gain, for example: If a person lives in the US, and sends money home monthly, could they be swayed if they see that they monthly remittances can drop considerably? If the person lives in Senegal and wants to start a business or grow their business, could we explain how this will possibly affect access to capital and help them export?
  • Attack the CFA weaknesses and offer alternatives: Every solution has weak points and every problem presents new opportunities. Let’s list these out, and take the message within our networks and above. Winning people’s support and buy-in will build momentum and bolster enough support to put pressure on our leaders to hold referendums and in term force on the hand of France to accept new terms in its relationship with its former colonies.
  • Negotiate a win-win economic partnership with France: Coming up with a creative offer for France will be a better solution than a confrontation, which will simply be suicidal, and will lead to more destruction of our economies. Let’s capture our imagination, if you have ideas or know others who might have ideas on how we can give incentives to France to accept a different partnership agreement that can allow both parties to benefit, please share these ideas.

If you subscribe to this vision, I challenge you to engage people in your networks, one conversation at the time. The lives of close to 150 million people depends on this, so if you are from Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, Togo Cameroun, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, Gabon, or know someone from those countries, get educated, get involved and be the change you want to see.

Read up on the CFA Franc.

Image source: Silicon Africa

Urban Inflation Index: March 2017

Comparing prices and inflation in Nairobi to four and five years ago.

It’s exactly four years since the last election and we are back into campaign mode for an election on August 8. How has life changed since the Jubilee government came to power? There are many reports about economic growth and food inflation, and the budget speech that was read last week had a planned expenditure of Kshs 2.6 trillion (~$25.2 billion) compared to the government’s first budget  that was Kshs 1.6 trillion for 2013/14.

On to the index comparing prices of basic urban commodities.

Gotten Cheaper

Finance: Bank loans are 14.0% due to the interest capping law of 2016. The Central Bank of Kenya’s bank supervision annual report for 2014 notes that the average lending rate was  16.99%  in December 2013 and 15.98% in December 2014.

Fuel: A liter of petrol is Kshs 101 (~$4.41/gallon) today in Nairobi. It was  Kshs. 111.6 per litre in March 2012 and Kshs 117.6 in March 2013.

Cooking Gas: A cylinder of LPG (cooking gas) is Kshs  2,030 today. It was about Kshs. 3,000 ($37) in 2012 for the 13kg cylinder.

Communications: Safaricom dominates. Prices are coming down and both Safaricom and Airtel have combined packages called Flex and Unliminet respectively . With Unliminet, Airtel customers get free WhatsApp, Facebook & Twitter of up to 100MB per day and at Safaricom, every reload of M-PESA  gets someone 3 free FLEX units. On the money transfer side,  Equitel and Pesalink are driving down the cost of mobile money usage.

About the Same

Beer/Entertainment: A bottle of Tusker beer is Kshs 200 at the local pub. This is the same price it was in March 2013.

Utilities: Pre-paid electricity is about Kshs 2,500 per month which is unchanged from the last review. The calculation of pre-paid tokens remains a complicated exercise.

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. 147 up from Kshs 97 in March 2012 and Kshs 105 in March 2013. But in his budget speech last week, the Minister proposed to zero-rate bread and maize flour to remove VAT. “ Manufacturers, Wholesalers, and Retailers who sell such goods will be expected to reduce the prices of these basic commodities, failure to which, I will reverse the policy. In addition to further lower the cost to Wananchi, the importation of maize during the next four months will be duty free. I expect, therefore to see a reduction of prices for these basic commodities which enjoyed by majority of our people.”

Other food item: Sugar: A 2 kg. Mumias Sugar pack is now Kshs 292; it was Kshs 245 in March 2012 and Kshs 250 in March 2013. It has hard to find Mumias sugar which is going through some issues, so this is the price of Chemelil sugar at the supermarket.

Foreign Exchange: 1 US$ equals Kshs. about Ksh 103 today compared to Kshs 83 in March 2012 and Kshs 85 in March 2013.

Utility: Water in Nairobi is more expensive.

Guide to Lome, Togo

A guest post about a visit to Lome, the capital of Togo in West Africa. 

Getting There: Took Virgin/Ethiopian, San Francisco to Newark, then a direct flight from Newark to Lome (it then goes on to Addis). The cost was between $950-$1,000.

On arrival: This was an easy experience, that took about 10-15 minutes. I paid for a 7-day Togo tourist visa on arrival. They take your passport and do the visas one by one – you can go collect your luggage then come back for your passport or just wait around if you carried on. It was about $8 to take one of the airport taxis to my destination, but I was staying very close to the airport, not in downtown.

Getting Around: I didn’t do much moving around town, but motorbikes are definitely the most popular form of transport. They were everywhere. Buses are not very plentiful, though they do have a fleet of donated buses that are used as city buses. No mini-buses that I saw. People also walk a lot and there are taxis around, but most people use motorbike taxis.

I didn’t walk around, but Lome is pretty safe. Not sure that it is recommended to walk around at night though. I wasn’t able to use a credit card anywhere I went, but I bet fancier hotels would accept them. Togo uses the CFA Franc, same as other French-speaking countries in West Africa.

Staying in Touch: Local phone calls were reasonably priced, though I only made a few. International calls are very expensive, though. Also, 3G data is available in Lome but quite slow at times because bandwidth is very limited. I bought a local SIM, some airtime and 1 GB of data for $9. Wi-Fi is not very prevalent, but it’s available in some places.

Where to Stay: I was hosted by the organization I was visiting in Togo, so I didn’t spend time in a hotel or b&b. Electricity was pretty reliable. We had a generator where I was saying and it definitely kicked in at least once in the few days I was there.

Eating Out: There is a variety of different foods. Starches like fufu, one made of very fine maize flour, and rice. Also peanut sauce, a cow cheese similar to paneer, lots of spicy/fishy flavors. Common proteins were fish, chicken and guinea hen. A beer was easy to get, but I didn’t go to any bars. French and local languages are spoken, though French is most commonly used and I don’t speak French so I missed a lot of what happened around us.

More business travel tales at  This is Africa.

Chase Bank EOI 

Yesterday the Central Bank of Kenya (CBK) invited new investors to express interest in buying into Chase Bank as they also extended the management period of the bank by another six months. When the CBK governor met depositors last November, he indicated that he hoped that the deal would be concluded by the first anniversary of the closing of Chase Bank (April 7), but that has now been pushed back. Last week, the Governor also said that nine banks were interested in opening shop in Kenya.
  • Following the receipt and evaluation of EOIs, a shortlist of qualifying investors (“Shortlisted Investors”) will be granted access to a haseomprehensive confidential data room to develop a formal proposal to acquire Chase Bank (Kenya) Limited. The Shortlisted Investors will be determined in a fair process using appropriate and objective criteria based on, inter alia, regulatory imperatives and prudential guidelines which will ensure a speedy and optimal recovery for depositors, creditors and other stakeholders of Chase Bank (Kenya) Limited, whilst also mindful of seeking to preserve and develop a sound and innovative banking system in Kenya.
  •  The deadline for applications is April 21, and CBK has appointed KPMG as its advisors in this process. EOIs should include the following key areas: Interest in banking in Kenya, ownership details, management skills, adequate capital, financial resources, liquidity availability and the proposed transaction structure. 
  •  No information beyond what is already available in the public domain will be made available to interested parties and there will be no question and answer process at this stage.
  • Following the receipt of EOIs, shortlisted Investors will also be granted access to a “Data Room ” to develop their investor proposals (from May 3)

Oman Air launches Nairobi flights

Product launches seem to follow an established template: bright flashy lights, cakes, and ribbons, and occasionally a tame wild animal, concluded by a rehashed speech from a government functionary. But no wildlife was present as Oman Air officially launched their four times a week flight to Nairobi at the Kempinski Villa Rosa Hotel on 29th March 2017. The inaugural flight to Nairobi had arrived the previous day and it was received by local Kenya airport and Government authorities.

Importantly, however, was the interest generated of Oman as a destination and indeed a hub for travelers to the Middle East and beyond. The airline’s Deputy CEO and VP –Commercial, Abdulrahman Al Busaidy proved not only an eloquent spokesman for his company but a worthy ambassador of The Sultanate of Oman. The interest of those present at the launch was piqued as few had ever thought of Oman as a holiday destination let alone a hub. Most travelers from Kenya have traditionally chosen the Arab carriers that utilize Dubai (Emirates), Doha (Qatar), Abu Dhabi (Etihad) as well as Sharjah (Air Arabia) which all market themselves’ as glitzy shopping and commercial destinations.

Oman Air doesn’t pretend to be a Gulf Major carrier. Currently Emirates, Etihad and Qatar Airways are the undisputed ME3 giants who are now subject to what has been perceived by many to be protectionist measures from the USA and the UK in the guise of the ‘laptop ban’. Al Busaidy attributes such measures to the incapability of carriers from those countries to compete on services available at their fantastic airports and modern fleet and services. While no US carrier serves the Middle East, the gulf carriers operate multiple flights to any of the major hubs in the Middle East.

Oman Air is leveraging the long historical ties between Kenya and Oman which date back to the days when the Portuguese ruled much of the East Coast of Africa. Indeed the Sultan of Oman’s army flushed out the Portuguese from Fort Jesus in the 17th Century and the cultural exchanges and inter-marriage with the local coastal people gave rise to Africa’s most widely spoken language, Kiswahili.

Currently, the airline flies to Dar es Salaam and Zanzibar with Nairobi being the 55th destination of the airline’s growing route development. With a popular in-flight entertainment and free Wi-Fi service on most of its aircraft, Oman Air now has a fleet of 47 aircraft with a mix of Embraer Regional Jets (ERJ) for local and regional flights, Boeing 737s for short haul routes and Airbus A330’s and now the Boeing 787 Dreamliners for the long haul flights.

Indeed two of the Dreamliners were leased from Kenya’s national carrier Kenya Airways (KQ’s) as part of fleet rationalization of KQ’s ongoing Operation Pride restructuring. Both airlines are expected to conclude a code-share agreement by mid-April 2017. Oman Air has also chosen not to align itself with any of the major airline alliances such as Sky Team, Star Alliance or One World but instead code shares flights with Emirates, Ethiopian, Garuda Indonesia, KLM, Royal Jordanian, Saudia, Sri Lankan Airlines, Thai Airways and Turkish Airlines.

Muscat as a base for Oman Air provides the entry point to this traditional conservative Sultanate which has a rich history in preserving its culture (Islamic architecture, all-white buildings, Dhow making, Painting shows, the Muscat Festival and the Khareef Festival held in Salalah in July and August annually) and environment punctuated with over a 100km coastline.

Nairobi will serve as the entry point to popular tourist destinations at the Kenyan Coast and the wildlife marvels of the national parks in the Mara, Tsavo, and Amboseli. Tourism between Kenya and Oman is expected to grow as the airline also envisages Mombasa as a future destination. Coupled with a fairly liberal visa regime (Note that Dubai visa holders get automatic entry into Oman), Oman Air is hoping to prise away traffic from the other carriers especially to the big hubs of the Middle East, India, and China. With introductory fares of $350 to Muscat and $485 to Guangzhou return, this could prove to make for interesting times for travelers to and from Nairobi.

Oman Air indeed epitomizes Oman as a country, its aspirations, culture, history and modernity and its approach to tying itself to both its past and the future as it opens up new destinations. The Nairobi route will be operated by a Boeing 737-800 and the airline’s growth and development strategy plans for 70 aircraft (currently they ar e47) and 75 destinations by the year 2020. The four times a week flight (WY722) )leaves Nairobi at 00:45 (on Tuesday, Wednesday, Friday, and Sunday) and operates non-stop and is designed for an early morning arrival in Muscat that enables connections to other 50 destinations.

Oman’s currency is the Rial and OMR 1 = ~$ 2.6, and OMR 1 is ~Kshs 267.