Category Archives: Deloitte

Mara Triangle reports on running the Masai Mara

Earlier in December came some news reports of 26 elephant deaths that had happened in recent months in the Masai Mara area. This came a few months after a national uproar in Kenya over the deaths of 11 rhinos from a wildlife translocation program gone wrong,

The source of the stories on the elephant deaths was a report from the Mara Elephant Project (MEP), but the organization has since retracted the sensational claims.

That said, there’s a great ongoing series of reports on the management or the running of the Masai Mara game reserve by Mara Triangle. Written and archived monthly, the Mara Triangle reports give great insight into activities in the Mara, on topics like revenue collection, security updates (including poaching numbers), staff changes, rainfall, number of visitors, special arrivals, scientific research being done in the Mara, filming in the park and also on wildlife deaths.

Excerpts from different 2018 monthly reports

Revenue

  • March to May is the most difficult period as in those months, expenditure substantially exceeds revenue. March revenue was Kshs 30 million, and July was Kshs 98 million despite 44% of visitors not paying the Conservancy fee. In August they crossed the $1 million revenue mark for the first time ever, earning Kshs 109 million. Majority of visitors were from the Narok side which has better game viewing and management.
  • Discussions are ongoing between the Mara Conservancy and Narok County government, for the Mara Conservancy to manage all aspect of the park, through Seiya Ltd, except revenue collection, which is done by KAPS (Kenya Airports Parking Services). For that, they would retain 30% of the revenue.
  • Instances of non-residents, even Chinese tourists, posing as residents to enter the park, are common.
  • There is a high number of non-paying visitors and KAPS was asked to do a reconciliation. It found that, in April 56% of visitors to the Triangle did not pay the Conservancy.
  • They have applied to Safaricom for a Paybill number so people can use their M-Pesa to pay the conservancy fee. The Paybill number (863297) has since been activated and they hope to move to a cashless system of collections.
  • Governors Balloons started paying revenue for the first time in seventeen years.
Rains and Roads
  • In 2018, the Mara had its highest rainfall since 2006 causing flooding and heavy damage to roads. The rains in the areas were actually the highest recorded in sixty years.
  • Heavy rains damage roads and the management sometimes resorts to closing off some areas of the park. Vehicles crisscrossing off-road, in search of wildlife, only add to the problem. The County Government has directed that it does not want to see any saloon cars, in particular, the Toyota Probox, in the park.

Poaching and Wildlife Deaths

  • They document all wildlife deaths, the causes of these, and if there was a human involvement (versus death from natural causes), especially of elephants and rhinos and the recovery of the tusks and horns from the dead animals.
  • A District Warden from the Kenya Wildlife Service (KWS) collects all recovered ivory after each piece has been recorded and signed for. 
  •  KWS now has a trained prosecutor in Kilgoris and there are discussions on how to fund a training course for non-commissioned officers on wildlife law, preparation of statements and court procedures.
  • Sniffer dogs are an important aspect of park security, tracking poachers and thieves. New dogs are imported from overseas, trained, and extensively traded by vets.
Human-Wildlife Conflict:
  • A study found that the main actors in this are spotted hyaenas (53% of instances), leopards (32%), and then lions (15%).
  • Most households lose an average of 3.5% of their livestock to predators.
  • A compensation system has been developed: a kill is reported, rangers visit the scene to verify, photos are taken, and if approved, payment is done at the end of the month. The Conservancy is then reimbursed by the Angama Foundation.

The World-famous Migration

  • This year, 2018, saw one of the worst migrations in recent years. While newspapers report that Tanzanian authorities started fires to create a barrier for the wildebeest, something that they do every year, this did not in fact delay the migration  – but this was a story put out by the tourist industry to explain why safaris they sold on the basis of the migration did not, in fact, feature the migration.

  •  The heavy rain in the Serengeti in Tanzania meant the wildebeest had enough water and grass and did not need to migrate until later. Wildebeest only move from Serengeti to the Mara if they have exhausted water and foliage.  The Mara used to have its own Loita migration, but that doesn’t exist any more as the Loita wildebeest population has crashed.
Bad Manner and Tourism:
  • There are daily complaints about indiscipline and more up-market operators are avoiding the Mara during the high season. A Dutch diplomat refused to pay fine for driving off-road and then blocked a bridge.
  • There is chaos at many crossings, with as many as 300 vehicles present some with people running between them (and some of these images were shared on social media).

  •  It is very difficult to gauge how much the wildebeest are affected by too many vehicles.  The vehicles disrupt the crossing and drive the animals to quieter spots. 
  • Drivers do not obey rules, especially when they think they are not being monitored. On the 23rd (of September) we had nearly 20 vehicles around a leopard sighting .. It is most unfortunate that we can not rely on our resident drivers, (who are well-trained and from top camps) to police themselves. 
  • Campsites are sometimes left in a mess, including two cases by professional safari guides.
Other Masai Mara findings:
  • Visitors in the year included Narok Governor Tunai, Cabinet Secretaries for Tourism (Balala)  and also for Internal Security (Matiangi). Leslie Roach who had donated $200,000 when the Conservancy was started, also visited the Triangle with her family. Also, John Ward visited Serena, a day before the 30th anniversary of his daughter Julie’s death (Apparently Serena was the last place that Julie was confirmed being seen alive). Some MCA’s visited, requesting assistance and David Attenborough also visited the Mara. He is making a film about the loss of biodiversity in his lifetime and his crew also did some filming for a Netflix series on ecological habits that will be shown in August 2019.  
  • The audit for the year to June 2018 was done by  Deloitte who reported that the Triangle had income of Kshs 263 million and a profit of Kshs 10.5 million after expenses of Kshs 252 million.  
  • KAPS removed three members of staff for possible fraud.
  • Some large Flircameras donated by WWF need repair but that organization no longer has funding for the camera project.

Deloitte on African Art and Finance

The value of African art can grow tremendously over the next decade with investment and support from buyers both within Africa, and others who live beyond the continent, as well as from African art schools, governments, museums, galleries, art professionals and banks to stimulate and support more interest in African art.

These are some of the findings from the Art & Finance Report 2017 that was unveiled at Deloitte’s 10th Art and Finance conference at the Italian Stock Exchange in Milan this week and which estimated that the value of art owned by Africans collectors was $12.7 billion in 2016 and that it  could grow to $20 billion by 2026. This still accounts for less than 1% of the global art market currently estimated at $1.6 trillion with an annual turnover of $50 billion.

Some key findings of the report which looked at the global art markets include:

  • The art market should be self-regulated and there is great support for art to be part of wealth management offerings to customers at more private banks.
  • Banks need more specialists to properly value and manage art markets.
  • Art can be used as collateral, enabling art collectors and galleries to realize liquidity without having to make unfavorable sales to meet short-term cash-flow needs. See this on how to borrow against art.
  • Art as an investment class poses risks that are no different from others that banks manage and have to guard against, including vices like price manipulation, insider trading, money laundering and terror financing.
  • The top categories in the global art market are  “post-war & contemporary art”, followed by “modern & impressionist art”, “Chinese & Asian art” and ” jewels & watches”.

Some excerpts from the report on the African art market include:

  • International dealers and auction houses like Bonhams and Sotheby’s are seeing a gradual shift in the African contemporary art buyer base from mainly African art collectors to a more international and diverse group of art collectors.
  • London experienced a 12.5%  rise in African art auction sales between 2015 and 2016, with Bonhams controlling a 65% market share.
  • Sotheby’s London joined the African art auction trend in 2017 with its first auction focused purely on African contemporary art. It achieved total sales of over $3.6 million and 79 of the 116 lots were sold.
  • In 2017, record-breaking hammer prices recorded at auction for contemporary art were achieved by Nigerian artist Njideka Akunyili Crosby, whose work sold for less than $100,000 at auction in 2016. However, less than a year later, the artist’s piece “Drown” sold for a record-breaking US$1.1 million at a Sotheby’s auction and a few months after that, her 2012 painting “The Beautiful Ones” sold for US$3.1 million at a Christie’s London auction.

There is currently an inter-section of art, wealth, and technology with the possibility that bitcoin / block-chain can be used to assist banks and financiers with tools to help with transparency authentication, copyrights and ownership of art objects and there are already platforms such as Blockai, Ascribe.io, Chainmark, and smArtchain etc. in use.

The greatest demand for African art is currently from high net worth individuals in Nigeria and South Africa, which are the two largest economies in Africa. The report also notes that there is increasing demand from corporations such as the Nigeria Stock Exchange

Elsewhere In Kenya, Stanbic was working on investor management portfolio offerings that include wine and African art, while Nigeria has Access Bank in Nigeria. There are also other innovations coming up in African art and finance from leading banks and galleries in Kenya, South Africa and Europe.

KCB to Unveil a Digital Finance Future in Q2 of 2017

KCB is working on revolutionizing their banking strategy that will culminate in a digital finance rollout in a few weeks. This was revealed by KCB CEO Joshua Oigara at a financial technology forum at the Capital Club in Nairobi that featured futurist & author Brett King. Oigara said that in their 100 years of existence, KCB had gained 5 million customers, but in the two years since launching KCB M-Pesa, that number had doubled.
KCB is working with King and Deloitte, on new digital finance products and strategy, which they had already shown to the Central Bank of Kenya (CBK), who have to approve banking products and changes in the country.  Oigara said that customers are adaptable and don’t mind the changes, but that it is banks that have resisted innovation, and that said he has met many young KCB customers who have never been to branches (mobile is all that matters for them).

Numbers from KCB’s last Investor briefing (Q3 2016) show that 73% of KCB transactions were done outside branches (up from 62% a year earlier). Also, 75% of customers use mobile phone banking services and 91% of loans transactions are processed this way – and they averaged 80,000 loans per day after adjusting bank loan terms in line with the banking amendment law late in 2016.

Digital banking was worth Kshs 641 billion ($6.4 billion) to KCB and of that Kshs 332 billion (52%)  was from mobile. 18% (Kshs 116 billion) was from internet channels, while ATM was responsible for 17%, 9% from agency banking, and 4% (28 billion) from merchant channels.

Rumours are that the bank’s strategy would be akin to Equity Banks’ 3.0 strategy .  This would enable KCB to manage customer accounts, cash, loans, insurance, as they send money or buy airtime, and sell them other products at a lower cost than agents and branches, while also integrating better with their customer lifestyles.

Writing in the Business Daily on the financial technology revolution that’s coming to East Africa, Oigara cautioned that, currently, a lot of the innovation in finance is happening outside traditional banking and finance institutions and beyond the sphere of regulators to manage risk in banking.
KCB will be having more fintech forums in the coming months.

Reading the Tea Leaves at Chase Bank: Part II

Yesterday the directors of Chase Bank appeared before a parliamentary committee looking at the closure of the bank. They traced the events at their bank, back to the sudden close of Imperial Bank which was followed by a slow down in liquidity in the banking sector, and finally late disagreements with their audit firm – Deloitte on some items in their financial statements, including reconciliation of Islamic bank products.

 These Islamic loans were reclassified, at the auditors insistence as insider loans, and new sets of accounts were published in the newspapers, which the directors did not sign. Later, the same day, the Chairman and Group MD also said they were forced to resign. All this bad news coming out on one day precipitated a run on the bank.  There were also a few (in-camera)  sessions at parliament from which the media were barred.

This public spat between Chase and Deloitte all adds to what’s been an unusually busy news cycle for auditors and audits. Chase was big in Islamic banking, and in their 2015 memorandum to raise funds though a bond issue, the noted that they started Sharia compliant banking solutions in 2008 and these now amounted to 12% of  their customer deposits. KCB over Chase

This is close to the size of fully complaint Shariah banks like Gulf and First Community, and far larger than other more established banks who had ventured into Sharaih banking like KCB and Barclays.

Since reopening at the end of April, Chase Bank has opened its doors, apps, and platforms to its customers. In conjunction with KCB and the receiver manager at the Kenya Deposit Insurance Corporation they were able to avail funds to depositors. But the bank is yet to resume loans and lending – and that is the life blood of any bank.