Category Archives: ADB

Bond Moment: M-Akiba, EABL and other NSE Bonds

Update on NSE Bonds or bonds listed at the Nairobi Securities Exchanges and other bonds, since the last bond moment in May 2015 http://bankelele.co.ke/2015/05/bond-moment-may-2015.html.

Globally, the bond market is bigger than equities one, and according to the latest CMA Kenya quarterly statistics (PDF),  bond market turnover in Kenya has been larger than the equities one since 2009 mainly due to government bonds. In 2016, equity market turnover was Kshs 147 billion (down from 209 billion) in 2015. Bond market turnover was Kshs 433 billion (~$4.2 billion) in 2016 (up from 305 billion in 2015). Turnover has been 99% due to government treasury bonds, while that of corporates is less than 1% of bond turnover in a year – except in the years 2010 and 2011.

If one doesn’t want to buy NSE bonds directly, there are CMA-approved bond funds for investors including the Apollo Bond Fund, Co-op Bond Fund, Diaspora Bond Fund, Dyer & Blair Bond Fund, ICEA Bond Fund, Madison Asset Bond Fund, and the Old Mutual Bond Fund. These fixed income /bond funds total Kshs 1.4 billion (or 2.5% of the 57 billion) of funds management by fund managers in Kenya.

Government Bonds

  • M-Akiba: Following the successful launch of M-Akiba, Kenya’s Kshs 150 million , 10%, tax-free, 3 year bonds that were entirely sold via mobile phone (the minimum investment was Kshs 3,000 (~$30))  another Kshs 4.85 billion (~$47 million) is to be floated in June 2017.
  • Following the launch of a green bonds program, banks, under the ambit of the Kenya Bankers Association (KBA), have partnered with Nairobi Securities Exchange (NSE) towards raising the country’s first bank-supported climate change-aligned corporate debt instruments in the next six to eight months. The capital flows from the green bonds in Kenya will go towards funding bank clients that require finance for clean and sustainable development projects in the priority areas of energy, agriculture, transport, infrastructure, building and urban planning, and water and waste management…so far, banks operating in South Africa and Morocco are already tapping the green finance opportunities in partnership with local municipalities and development finance institutions. projects. Also in South Africa, the World Bank’s International Finance Corp (IFC) successfully raised a 9-year, 1 billion Rand Green Bond via the Johannesburg Stock Exchange. More on the Kenya Bankers Association Sustainable Finance Initiative.
  • The Kenya Government finance bill 2017 will give Islamic finance bonds the same treatment as conventional bonds and also allow Islamic finance products in the cooperatives sub-sector.
  • The Rwanda government is about to issue a 10 billion Rwanda franc (~$12 million), 7-year Treasury bond. It will be issued on May 24 and the funds will be used for infrastructure project and capital markets development. The bonds will be listed at the Rwanda stock exchange and trade in multiple of 100,000 francs (~$120).
  • Nigeria has asked Goldman Sachs & Stanbic IBTC Bank to advise it on the sale of a debut “diaspora bond” targeted at Nigerians living abroad. – via @kenyanwalstreet

Corporate NSE Bonds:

  • Centum announced a Kshs 2 billion one year 14.5% note for the Two Rivers Development.
  • Cytonn is seeking advisors  for their medium term notes to raise Kshs 5 billion from the public towards the financing of Cytonn real estate’s (CRE) projects including Taraji Heights in Ruaka and The Ridge in Ridgeways.
  • On Monday EABL listed the Kshs 6 billion (~$58 million) of bonds at the Nairobi Securities Exchange (NSE) as the second and final tranche of its Kshs 11 billion shilling medium term note program that was launched in 2015. The tranche attracted bids worth Kshs 8.4 billion, representing a 41% over-subscription. The bonds maturing in March 2022 will pay an annual fixed interest of at least 14.17% and the raised funds will go towards optimising operations and restructuring the brewer’s balance sheet. “This is the first corporate bond to be listed on the bourse this year, and we are confident that its success, a subscription rate of 140.9% will open the doors for more listings in the course of this year.” said Nairobi Securities Exchange CEO Mr. Geoffrey Odundo. Citi upgraded EABL as a buy, due to its low price – seeing value even as the beer market was flat. The first half of FY17 (ended December 2016) showed decent volume growth for EABL (+5% YOY) but weak sales growth (-6%) as beer demand continued to shift from mainstream to value. EABL is doing well in spirits but struggling in beer, and Tanzania continues to present a challenge. – Citi report.
  • A South African credit-only micro-finance institution Real People Investment Holdings which issued a multi-billion bond in Kenya late 2015, has received a negative rating. Global Credit Ratings (GCR) said it had downgraded the primary and special servicer quality ratings assigned, with the outlook accorded as negative.
  • Transcentury bond holders lost 50% in a restructuring buyout deal.

Other Bonds

  • The African Development Bank had led the establishment of an African Domestic Bond Index and a $200 million African Domestic Bond Fund to deepen liquidity in local bond markets. It has also issued local currency bonds in 11 countries, including Kenya, South Africa, Egypt, Ghana, Nigeria, Botswana, and Uganda. leading the African Union in mobilizing domestic resources required to execute the Bank’s five developmental priorities dubbed the ‘High 5s’. – Light up and power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the quality of life for the people of Africa.
  • The Africa Finance Corporation issued a US$500 million 7 year Eurobond. The senior, unsecured Eurobond which carries a coupon of 3.875% was priced to yield 4.000% and matures in April 2024. It attracted orders of US$2.4 billion, representing about 5 times over-subscription from 231 investors. The bond will be listed on the Irish Stock Exchange. The Eurobond was distributed to investors in Europe (29%), United States (25%), United Kingdom (24%), Asia (18%) and the Middle East (4%). Citi, J.P. Morgan, MUFG and Standard Chartered Bank acted as Joint Lead Managers and Bookrunners for the U.S. dollar-denominated issue.
  • FSD Africa (Financial Sector Deepening Africa) and KfW Development Bank will invest £15.3 million (~$19.8 million or Kshs 2 billion) in the African Local Currency Bond Fund enabling it to step up its engagement with developmentally important industry sectors such as green energy and housing and take on investments in fragile and conflict-affected states. ALCBF is managed by Lion’s Head Global Partners (LHGP) Asset Management LLP.
  • Bonds, Loans & Sukuk Africa “the continent’s only Pan-African debt event” takes place on 13th & 14th March 2018, at the Cape Town International Convention Centre.

Coal Energy in Kenya

 

 

 

This week, there was a debate on the future of coal in Kenya and its place in the energy mix for the country. It took place at the Strathmore (University) Extractives Industry Centre (SEIC) Nairobi, and was co-hosted by WWF Kenya). The government plans to put up a coal plant on maInland Lamu and a private developer Amu Power was selected to build it, and is seeking approval from the energy regulatory commission to commence construction.

Excerpts:

Coal around the world

  • There are 3 new coal plants in Africa, and Japan & Korea will build 60 new ones to replace their old coal & nuclear ones.
  • There are now more global jobs in solar than coal, and solar has gone from 1 GW production in 2003 to 70 GW this year.
  • Trump got votes from Appalachian coal states where jobs were lost. But coal shares are down as gas has replaced coal.
  • With or without Kenya, the world is going green – Ethiopia aims to get to 100% renewable., Germany gets 20% renewable (all in the last 8 years), US has gone from 2 to 7% renewable (in 10 years), South Africa gets 2 GW from solar, and Rwanda’s 8.5MW solar is the largest in the region.

Lamu

  • No projects happen at Lamu because NGOs on the beach want it to stay marginalized and oppose port, coal, roads etc.
  • Lamu has high unemployment leaving youth exposed to Al-shabab & drugs. This project will have 1,800 jobs for locals.
  • It is not the job of private company to create jobs or improve security in Lamu – that is the government’s role
  • “Save Lamu”  groups oppose the plant because all its side-effects have not been quantified,  and it will destroy far more (fishing) jobs than it creates.

Other Sources and Energy Mix

  • Amu Power’s 1050 MW will add 50% to Kenya’s 2,200 MW electricity from the coal plant that is 20 kilometers from Lamu town.
  • A country’s rate of development depends on availability of cheaper and reliable energy supply. Developed countries get 60% from coal/nuclear and just 3% from renewables on average.
  • Solar is okay for isolated homes, but it will not recover the cost of national power generation and distribution.
  • Geothermal costs $4-5 million per well per well & each one generates 5MW – so how many can Kenya get? It’s very expensive for government & IPP’s who often sink many dry wells
  • Geothermal depends on nature to generate the steam and you can’t tweak the inputs, unlike with coal & nuclear where you can vary the inputs to match demand.
  • Industries need coal. Moyale which gets electricity from Ethiopia hydro only has supply three days a week
  • Even today people on the grid will not turn on electric cookers – the main energy sources in Kenya are charcoal and wood, and the are larger pollutants than coal.
  • Kenya imports all glass because we don’t have the energy to make glass.
  • Coal is Kshs 7.5 per unit compared to kshs 20 from diesel-fired plants.

Environment

  • The US has lake signs that “if you fish here, don’t eat the fish” – Kenya will likewise have to monitor coal pollution risks
  • Kenya emissions (excluding extractives) will be 150 MT of carbon by 2030 and the government has committed to reduce this by 30%. How?
  • How will the plant dispose of the ash, carbon dioxide and acid rain? Lamu does not have infrastructure
  • An EIA (environmental impact assessment) audit process in Kenya is a compromised one. They are done by auditors hired by investors and will never oppose projects.
  • Amu Power will use three new clean coal technologies at the plant.
  • The government must check that industry and investors comply with environmental standards – there was a toxic battery factory in Mombasa. County and national governments need to do their own monitoring.
  • Energy projects are financed by lenders have strict conditions.e .g IFC/World Bank finance  many thermal plants, and they can’t allow plants that compromise commitment. The Amu power one is guaranteed by the African Development Bank.

TEF Forum 2016 Part II

Tony Elumelu, a Nigerian businessman is considered one of the most influential business people in Africa. He’s been an advocate for seed financing and angel investing for entrepreneurship across the continent, something that he’s dubbed “Africapitalism” and advances this through the Tony Elumelu Foundation entrepreneurship program that has seven pillars including mentorship, online resources, the annual forum, seed capital funding, and an alumni network.

Dr. Awele Elumelu and Tony ElumeluAt a Q&A session during the 2016 forum in Lagos, Elumelu spoke of his desire to expand the awareness of the program which currently has applicants skewed in Anglophone African countries (Nigeria had almost 1/3 of the applicants, followed by Kenya, Uganda, and Ghana). He said he’d been asked in France if this meant anglophone countries were more entrepreneurial but he said they were more aware of the program, and that he wanted to see more Francophone and North African participation in the program

He also spoke of his desire to grow the program even larger through partnerships with other organizations, one of which is the African Development Bank to match, and therefore double,  the number of fellows that the program is supporting.

Parminder Vir, the CEO of the Foundation also said that the 6-year-old organization would be  rebranding several aspects of the two-year fellowship program and that all initiatives will be realigned under the Tony Elumelu Foundation (TEF). So there will be the TEF  entrepreneurship capital management , TEF entrepreneurship hub, and TEF research & advocacy etc.

 TEF Forum at the Nigeria Law SchoolVir said they had also built a platform to link partners and the diaspora with the entrepreneurs and which can be vital to the program (e.g. Nigeria get $62 billion from the USA in remittance). She asked entrepreneurs to engage on the unique social network (not facebook or snapchat) as the platform is unique for investors thought leaders, partners, funders –  VCs, PEs, Angels who want to come to Africa and now would now have access to 65,000 entrepreneurs in the  54 countries who were  pipeline of bankable investments, and 2,000 have who had already received advanced entrepreneurship training.

Already the entrepreneurs who are diverse sectors, use the platform to share their stories, engage each other, network, market to each other, pose and get solutions to problems they face. This platform also forms valuable data for research and trends and they will be producing more research reports to market to the diaspora and potential partners.

The largest sector of those supported in the 2006 cohort are in agriculture (27%) followed by fashion/clothing and ICT, and about 1/3 are women. Vir said they were committed to supporting 20-40% of agri-entrepreneurs every year and this was echoed by other participants including former Nigerian president Olusegun Obasanjo.

The next class admission class to the Tony Elumelu entrepreneurship program will start in  January 2017.

Idea Exchange: Agri, Bellagio, GSMA, Stanford

New, and ongoing, opportunities to apply for, including..

EDIT Chivas Regal announced  the first Kenyan edition of Chivas, The Venture, a  $1 million global search to find and support the next generation of social enterprise start-ups. 32 countries across 6 continents are taking part and only the most promising from each country will be selected as a global finalist. It is open to any for-profit-start-up that creates both financial value and a positive impact on the lives of others. Deadline for Kenyan social entrepreneurs to make submission is 30th November 2016. Kenya’s very own WEFARM, a farming information platform came 2nd at last year’s finals, securing $200,000 for their social enterprise.

EDIT Bloomberg Media Initiative Africa Executive Training Program: Intake 4 is now open. This prestigious program has been developed for mid-career journalists, financial professionals with an interest in financial journalism; government professionals responsible for public policy, communications and finance portfolios; and development practitioners and civil society professionals with an interest in African development and financial and economic data. The program value is $22, 000 USD, but Bloomberg Philanthropies with support from the Ford Foundation are generously funding each successful candidate on a scholarship basis. Scholarships include tuition, class materials, lunch and refreshments. The deadline for initial applications is 25 November 2016. Applications will be reviewed and places awarded on a first come first served basis. The BMIA Executive Training Program will begin in January 2017 and will be offered in Johannesburg, Lagos and Nairobi.

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EDIT Stanford SEED, which enables East Africa business owners to lead their regions to greater prosperity. The Seed Transformation is a comprehensive year-long program that includes six months of immersive general-management training in Nairobi, Kenya, led by Stanford GSB faculty and supported by trained local facilitators. It is targeted at founders and senior leaders of for-profit companies who want to grow and scale their companies. Deadline 31 October.

Vote in the OLX Social Media Awards  up to September 22.

TED Fellow: Apply to the TED Fellows program, that aims to find a new class of extraordinary thinkers and doers who are aged 21 to 40. The next cycle is from October 4 to November 13.

 EDIT Also  TEDGlobal is returning to Africa at Arusha in August 2017.

YALI Regional Leadership Center East Africa (RLC EA) is merit-based and open to young East African leaders.

EDIT  The Africa Region of the World Bank Group (WBG) is relaunching its fellowship program for Ph.D. students who are Sub-Saharan nationals. The program will increase the diverse workforce that is a priority for the Bank and its clients.

EDIT AIA, one of the world’s largest insurers, has created the AIA Blockchain Challenge, a virtual challenge that concludes with the chance to secure a pilot contract and a sizeable development grant of up to US$50,000.. (in) claims process, customer information and regulation, risk management & treasury efficiency, digital health..Applicable top entries will receive paid pilot opportunities. Submission deadline is November 20 (source)

EDIT  Apply for a 2017 Mandela Washington Fellowship, as the Young African Leaders Initiative (YALI) is looking for 1,000 African leaders! Applications closes on 26 October. (source)

EDIT Recruiting AkiraChix class of 2017:  Every year for the last 5 years, AkiraChix has the pleasure of welcoming a group of young, hopeful, young girls from all over Kenya for our one-year training program. This program has continued to be offered at no cost to the students with classes in Web Design, Mobile application design, Graphic Design, Hardware design, Life Skills just to mention a few. If you or someone you know is interested in joining next years class please apply

EDIT Apply to join the next MasterCard Start Path Global – #StartPath program.  MasterCard partners with startups from around the world to help scale their businesses. The program enables companies to gain access to MasterCard’s global ecosystem and to break new markets through relationships with MasterCard and our customers. Some key features include: 6 month virtual program (take part from your home location),  2 immersion weeks at different cities and  no upfront equity in exchange for participation. Deadline is October 11.

EDIT  The Chezo Game Jam Competition is here. Chezo Gaming is an initiative to support the creation of games to address local challenges. The competition will take place from the 30th of September 2015 to the 2nd of October 2016. Winning teams (3) will receive a cash award of € 2,000 (US$2,200) and additional mentorship for up-to 3 months. Find out more here.

EDIT  The 5th edition of the  Pillars of Africa celebrates the extra-ordinary achievements of the young people of Africa, and is open for nominations in entrepreneur,  humanitarian, arts & clulture, business icon and sports categories, up to  October 28  (via @pillarsofafrica on twitter; or Facebook page Pillars of Africa).

EDIT The African Leaders of Tomorrow (ALT) Scholarship Program commemorates the late Nelson Mandela’s commitment to social justice and equity. It supports young African professionals to become leaders in public policy and administration. The ALT Scholarship Program grants full scholarships based on merit to women and men from sub-Saharan Africa to pursue a Master’s degree in public administration, public policy or public finances in Canada. Application deadline is October 14 2016

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Adansonia, a unique pan-African opportunity, gives one the tools to be part of a wide network of similarly minded ambitious entrepreneurs from Ghana to Uganda, from Nigeria to South Africa or Kenya through an intense one-week course by  Bocconi Business School, and  international pitching event.

Africa Business Fellowship places talented American professionals within leading African companies for a minimum of 3 and up to 6 months. Through this joint partnership, Econet (founded and led by Strive Masiyiwa, and also the Fellowship’s benefactor), Africa Leadership Network and MLT will offer this unparalleled opportunity for American professionals to gain invaluable insight and hands-on experience in African businesses. Apply by November 1.

Appsafrica Innovation Awards recognise innovation and excellence in African mobile and tech. Supported by Mobile Monday, the Mobile Ecosystem Forum (MEF), Uber and the Mobile Marketing Association (MMA) winners will be announced at the awards party on November 14th, 2016 in Cape Town. Entries will be charged $60 per category that is entered. Start-ups who are less than 12 months old will not be charged subject to approval and can contact us for a discount code. Deadline is September 20.

creative

Africa Tech Challenge has 15 teams from Technical Vocational Education and Training institutions (TVETs) in Kenya, Zambia, Ghana and Uganda competing for Ksh 200,000 ($2,000)  as well as full scholarships to study for their Masters’ in top engineering universities in China. AVIC says the Africa Tech Challenge has armed over 290 students with technical skills.

At the AGRF 2016 in Nairobi in September 2016, commitments were made to fund African agriculture with $30 billion, including $24 billion from the African Development Bank, $5 billion from the Gates Foundation and $3 billion from the International Fund for Agricultural Development.

Advance Africa has several opportunities including British Chevening scholarships for international students to study in UK.

Government of Kenya scholarships to study in the UK, China, India, Mexico, Brazil, Russia, Oman, Hungary, Cuba, Slovakia, Egypt, Korea, Morocco, Ireland etc.

GSMA Ecosystem Accelerator Innovation Fund is now open for applications from start-ups in Africa and selected Asian countries, offering funding: grants of between  £100,000 and  £ 250,000. Applicants must provide a matching of at least 50% of the amount of funding requested Deadline is 18 September.

Heva Fund: HEVA is ready to receiving applications for its investment cycle,  investing between KES 100,000 and 1,000,000 to help creatives grow their businesses.

Advance Africa has several opportunities including Mo Ibrahim Foundation fellowships for young Africans.

Apply to Pitch AgriHack to win investment for your e-agriculture start-up! The Technical Centre for Agricultural and Rural Cooperation ACP-EU (CTA), in collaboration with the African Development Bank (AfDB) and the support of partners including the Centre for Agricultural Bioscience International (CABI) and m:lab East Africa, is launching the pilot edition of Pitch AgriHack, a new component of its AgriHack Talent Programme. The entrepreneurs should be owners of an already developed e-agriculture/ICT4Ag application or platform. Two categories are available: Early stage platform and Advanced platform. Winning teams will receive a cash prize of up to €15,000, as well as promotional support, additional capacity building and networking opportunities. For More.

Rockefeller – Africa Centre,  Artists In Residence (Bellagio) program is seeking applications from high calibre African artists, in different stages of their career development (from emerging to late career), who are provocative, innovative, and are stretching the boundaries of their artistic practice. The residencies are available to composers, fiction and non-fiction writers, playwrights, poets, video/filmmakers, curators, visual and performance artists. Application deadline is September 30.

$1 = KES 101, £1=133, €=113

What other opportunities are out there? Share in the comments section

AGRF 2016 $30 billion for African Agriculture

The ongoing  6th African Green Revolution Forum (AGRF) summit at Gigiri in Nairobi has seen a raft of commitments made by global and African organizations and leaders to increase production, income and employment for African farmers. The Gates Foundation and the Rockefeller Foundation announced an extension of their support to AGRA (organizers of the  event), who also celebrated their 10th anniversary this week.

Kanayo Nwanze, Agnes Kalibata, Akinwumi Adesina - three winners / laureates of the Africa Food Prize

Kanayo Nwanze, Agnes Kalibata, Akinwumi Adesina – three winners / laureates of the Africa Food Prize

Some of the announcements include:

  • African Development Bank $24 billion  to accelerate commercial financing and commercial lending to small farmers and agri-business, some of which will go towards partial risk and  partial credit scheme to improve the quality of agri-business investments to Africa
  • Gates Foundation $5 billion. 
  • $3 billion from the International Fund for Agricultural Development over 6 years (IFAD has a policy to spend at least half its $1.1 billion annual budget in Africa) .
  • Kenya Commercial Bank pledged $350 million (including $200M towards market infrastructure and $150M to livestock farmers) 
  • Kenya Government $200 million towards young farmers and entrepreneurs market access,  finance and insurance.  
  • Others were by $180M from the Rockefeller Foundation (including $130M to the Yieldwise initiative under AGRA to improve field storage), Yara fertilizer (to link small farmers to value chains), OCP Africa ($150M for local fertilizer distribution), World Food Program (will buy $120M from small farmers through a  Patient Procurement Platform), MasterCard Foundation ($30M to give small farmers market & credit info on phones in conjunction with KCB) and finally, USAID reported it had invested $6.6 billion through its ongoing Feed the Future initiative. 
$1 = 100