Author Archives: bankelele

Kenya Tax Amnesty 2018

During a funding session for entrepreneurs last year it was revealed that Kenya has an amnesty for people to declare offshore wealth and repatriate this and that the country expected $3 billion in extra collections from this initiative in 2018. The Kenya government currently collects tax revenue of about $14 billion a year and there was a question on if the additional funding generated could become a source of competition for local private equity funds.

Tax amnesty

The actual notice was first published in July 2017 by the Commissioner of Domestic Taxes at the Kenya Revenue Authority (KRA) and read “The amnesty under Section 27B of the tax procedures act is meant to provide a one-off opportunity for Kenyan residents to declare assets and income and voluntarily repatriate the foreign-held assets to Kenya and invest in development of the country”

Applications, filings, and returns are to be made on the online KRA “itax” system before June 30, 2018. If funds are not brought in by that date, there is a five-year window (up to June 2023) to bring the funds back, but with an additional 10% of the amount repatriated as a penalty.

Married couples may file for the amnesty jointly, while assets and income that are in the name of minors can be declared by their parents or guardians. But anyone who had been assessed by KRA or was under investigation or audit over their income and assets prior to the amnesty is not eligible.

PayPal in Kenya: Part II M-Pesa Links Up

PayPal’s reach in Kenya has now been extended to M-Pesa wallets, allowing users of the service to get payments directly to their mobile phones, thanks to a partnership between Safaricom, PayPal and TransferTo.

Under the new service, qualified M-Pesa customers can link their PayPal accounts to M-Pesa wallets, using an “M-PESA PayPal portal”  that will enable them to buy goods and services using M-Pesa to top up their PayPal accounts and this is expected to benefit international ecommerce and remittances. They can also withdraw cash at 148,000 M-Pesa agents around Kenya. M-Pesa has 27.8 million active customers while Nasdaq-listed PayPal has 227 million and is available in 200 markets, allowing merchants to receive funds in more than 100 currencies and withdraw funds in 56 currencies. TransferTo is a Singapore-based cross-border mobile payments enabler. 

PayPal has officially been in Kenya for almost five years exclusively with Equity Bank, dating back to 2013 when Equity and FNB were the only authorized Paypal partners in Africa. Equity is still the only bank in Kenya that PayPal users can withdraw with and during 2017, Equity reduced the PayPal withdrawal time from 8 days to 3 days. Last week Equity reviewed the cost of getting paid using PayPal to as little as 1% for withdrawal amounts that are over $5,000 (~Kshs 500,000), versus 1.5% for payments below $500 (~Kshs 50,000).

At the Equity Bank 2017 results announcement last month, CEO James Mwangi confirmed that usage of PayPal by Equity Bank customers had overtaken traditional remittance channels of Western Union and MoneyGram. PayPal was used for payments worth Kshs 6.2 billion in 2017 by Equity customers, up from Kshs 3.6 billion the year before, and accounted for 21% of the Kshs 30.2 billion worth of payments with another new service provider, Wave accounting for 52% of the value of transfers.

Makini Schools Sold

It’s now official: The Okelo family, the owners, and founders of the Makini group of schools, have agreed to sell the company to an international education partnership consisting of two pan-African educational institutions – ADvTECH Ltd (which is listed on the JSE in South Africa) and Scholé Ltd.

The Makini group was founded, fourty years ago, in 1978 by Dr. Mary Okelo, and her late husband Dr. Pius Okelo, who passed away in a road accident in 2004.

Makini has 8 schools on 4 campuses in Nairobi and Kisumu and 3,200 students in nursery, primary and secondary schools (from Kindergarten to Grade 12). The consortium that is acquiring all the shares in Makini has committed to enhancing the quality of education at Makini, and that the schools will continue teaching the Kenyan educational curriculum.

ADvTECH runs 117 educational sites in Southern Africa and Scholé operates schools in Zambia and Uganda – and Kisubi High School, a boarding school in Kampala with 900 students, will become part of the partnership. 

See other recent M&A deals 

EDIT April 17:  One of South Africa’s leading private schools  will soon open its doors in burgeoning Tatu City. Crawford Kenya International College is the brainchild of JSE-listed ADvTECH, Africa’s largest private education provider which recently acquired the Makini group of schools. Set to open in September 2018, and with a capacity for 1700 students, Crawford Kenya will teach the UK/Cambridge Curriculum in modern, trendy facilities – which include a multifunctional indoor sports centre, a swimming pool, outdoor sports fields and tennis and basketball courts. Additionally, it will also provide high school boarding facilities.

Bank Rankings 2018 Part 1: Kenya’s Top 10 Banks

2017 was a more challenging year for Kenyan banks, and borrowers due to interest rating capping, elections affecting Kenya’s economy, the crunch in South Sudan, while 2018 will be more interesting with IFRS9. Here is a ranking of Kenya’s top banks, and the rankings are by bank assets as at December 2017 – and compared with the previous years’ rankings (in brackets):

1 (1) KCB: Assets of Kshs 555 billion and a pre-tax profit of Kshs 27. 5 billion. Have 13 million mobile customers, and 57% transactions were done on mobile devices, 15% by bank agents and 10% at bank ATM’s. However, KCB did not roll out a new digital strategy direction in 2017 as earlier announced. Combined group assets were Kshs 646 billion (US$6.4 billion).

2 (2) Equity Bank:  Focused on fee income, transaction processing and treasury business over interest income, and their CEO said micro-lending will only resume after interest rate caps are lifted.

3 (3) Cooperative Bank.

4 (5) Standard Chartered Kenya.

5 (4) Barclays launched Timiza app in 2018 which should enable a big retail banking leap. It will also begin a process of rebranding to Absa.

6 (6) Diamond Trust: Bought Habib bank.

7 (8) Stanbic Bank (formerly CFC Stanbic)

8 (7) Commercial Bank of Africa: Now in five countries after using M-shwari to expand to Ivory Coast and Rwanda – where they recently acquired Crane Bank Rwanda.

9 (10) NIC Bank.

10 (9) Investment & Mortgages (I&M):  Assets of Kshs 184 billion, and pre-tax profits of Kshs 7.5 billion. They have fully absorbed Giro Bank and are now in Kenya Tanzania, Rwanda, and Mauritius. Group assets of Kshs 202 billion (US$ 2 billion)

11 (11) National Bank.

More rankings to follow. 

Kenya’s Money in the Past: Bethwell Ogot Footprints on the Sands of Time

My Footprints on the Sands of Time is an autobiography by Professor Bethwell Ogot (wikipedia),  an eminent academic scholar. It is a tale of a young man overcoming incredible hardships, and going through early schooling at Maseno, and later through winning scholarships and prizes, on to excelling at Makerere, St. Andrews (Scotland) and teaching with Carey Francis at Alliance High School. It also touches on his work and roles in the establishment of the University of Nairobi, and Maseno University, and at his travels to present papers and speak at prestigious conferences and other institutions across the world.

Ogot narrates tales on growing up in Luo culture, seeing emerging economic changes e.g. he took a honeymoon trip to Uganda in 1959 traveling on first class from Kisumu to Kampala via Nakuru, a twenty-seven-hour train journey. Later, when his father died on August 30, 1978, this was the day before Kenya’s first president Mzee Jomo Kenyatta was to be buried, and it was a period when the sole broadcaster – the Voice of Kenya refused to publish any other death announcements, newspapers would not publish any other obituaries as a sign of respect to Kenyatta, and coffin-makers were not willing to make any other coffins.

He was close to former schoolmates, who were now in government and its leaders. Ogot was waiting to meet Tom Mboya for lunch at the New Stanley Hotel when Mboya was shot (his death was not unexpected to his friends), and Ogot had an encounter with Mboya’s killer who was fleeing the scene.  He writes of his work to establish and get government and financial support for the Ramogi Institute of Advanced Technology – RIAT and a delicate dance with community leaders including Oginga Odinga who was firmly out of government.

The book has a wealth of information on corporate governance and management from Ogot’s time at regional bodies, parastatals, international organizations, donor-funded ones, universities that were in slow decline and government. He writes of working in research and publishing, and struggling to document and publish African history. Also of his times at the East African Publishing House that published books on political science, history, geography and a modern African library with much opposition from British Publishers who controlled publishing and later from government officials who set out to shut down independent academic stories. They published Okot p’Bitek’s Song of Lawino that some critics considered a terrible poem ahead of its publication but which went on to be celebrated and sell over 25,000 copies.

There are also stories of navigating the East African Legislative Assembly, travels around East Africa, interacting with leaders and observing actions that were either supporting or undermining the East African Community. Uganda’s President Amin spoke of supporting the community even as he launched Uganda Airlines that he said would only do domestic flights in Uganda. There was also the importation of goods for Zambia through Mombasa that undermined the Dar es Salaam port and the Tazara railway, so Tanzania banned Kenyans trucks with excess tonnage from using their highways, and Kenya retaliated by closing its border with Tanzania. Officials in different countries also tried to keep community assets from leaving their borders, and Kenya grounded planes and withheld fuel of East Africa Airways which owed money to Kenya banks in a move designed to hurt vast Tanzania the most.

The most shocking tales are from his time working at the Museums of Kenya and its spinoff that saw Ogot as the first director of The International Louis Leakey Memorial Institute for African Prehistory – TILLMIAP (see an excerpt). It is a serious indictment of Richard Leakey who regarded TILLMIAP as his personal family fund-raising institution and who, with the support of Charles Njonjo in government and diplomats and donor agencies to warded of transparency and Africanization efforts – and were eventually to hound Ogot out of the institution.

Another tale is of when, as the candidate representing Africa on the executive board of UNESCO, he ran for the Presidency of the General Conference. But what should have been a formality of confirming his position became a long process after a surprise Senegalese candidate emerged to run against him – and France lobbied Francophone countries to only vote for a French-speaking African candidate, rules were changed, documents forged, and additional multiple election steps added before Ogot finally won.

The 500+ page book by Prof. Ogot does not have an index, but it’s worth reading all over again.