Category Archives: East African Community

Nairobi debate on BREXIT

Yesterday there was a debate in Nairobi on the UK’s referendum on EU membership, on which there will be a vote in the UK (and Gibraltar) on June 23. Europe is the second largest destination for Kenya’s exports (after the rest of Africa) and the UK is second in Europe with about Kshs 40 billion of exports from Kenya, slightly behind Netherlands (a destination for flowers). Overall, the UK is the fourth largest destination of Kenya’s exports (after Uganda, Netherlands, the US), and it imports about the same amount from the UK (Kshs 42 billion).

The debate was sponsored by the St. Paul’s Property Trust and had  Aly Khan Satchu (as the moderator), Graham Shaw (Brexiter) arguing for Britain to exit) and Chris Foot (Remainer)  arguing for Britain to remain in the EU).

 Reasons  to BREXIT

  • If #BREXIT doesn’t happen now, Britain will beholden to unelected decision-makers in Brussels for the next 40 years. Other countries will soon have similar votes.
  • The (bureaucratic) EU has 5 laws on pillow cases, 109 on pillows, and 12,000 on milk.
  • Germany bailed out Greece, and the EU will soon have to bail it out again (Italy is also shaky)
  • EU laws limit Britain’s ability to get top talent (e.g from Kenya) as they have to give preference  to the EU states.
  • Under the EU, the production of a country is controlled (they may have to destroy fishing boats, and Portugal’s wine industry was destroyed by the EU).
  • Britain will have to renegotiate trade deals with 28 (and maybe 32) countries, but probably has no interest in trading with 10 of them.
Brexit debate in Nairobi

Brexit debate in Nairobi

Points against BREXIT

  • The great Winston Churchill wrote a book title “Europe Unite”.
  • 56% of Britain exports are to the EU, – don’t BREXIT.
  • The last time the UK thrived outside the EU, it had a protectionist market called the colonial empire. 
  • There has not been much discussion about the positives of being in the EU – only the negatives – and that is not enough reason to leave.


  • Impact on Barclays Premier League (BPL)? : Arsene Wenger (Arsenal manager) asked Britain to stay in the EU (which is a huge global export, but how many in Europe watch the BPL ?).
  • The world is moving towards integration  (e.g The East African Community).
  • The rise of nationalism in Europe is a concern.
  • Britain at 16%, is Europe’s biggest export market, ahead of the US (14%), and China (8%).

Also see this forum, with the (then) High Commissioner from Britain to Kenya in which he discussed the relationship between the two countries.

Shares Portfolio May 2016

Compared to last quarter  and a year ago. Since February, the portfolio is down 1% while the NSE 20 share index is up 2% this quarter. Both measures are down 19% compared to a year ago.

The Stable


  • Atlas ↓ (down)
  • Barclays ↓
  • Bralirwa (Rwanda) – (no change)
  • Centum (ICDCI) ↓
  • CIC Insurance ↓
  • Diamond Trust ↑ (up)
  • Equity –
  • KCB –
  • Fahari ↓
  • Kenya Airways ↓
  • Kenya Oil ↑
  • NIC ↓
  • NSE ↑
  • Stanbic (Uganda) ↓
  • TPSEA ↓
  • Unga ↑

Summary: Another quarter when most shares are down,  while a few shares were  unchanged.

  • In: None
  • Out: None
  • Increase: None
  • Decrease: None
  • Best performer: NSE (up 22%), Kenol (up 10%)
  • Worst performer: Stanbic (UG) (down 22%(, Barclays (down 19%)

Unexpected Events:

  • Decided to sell out of Bralirwa Rwanda and Stanbic Uganda, but its’ more difficult getting out thatn it was getting in (during their respective IPO’s). For Uganda, you have to open a CDS account there, just to sell your shares.

Looking Forward to:

Oil Pipeline, Economics & Politics

It’s been reported that the oil pipeline from Uganda is going to go through Tanzania, not Kenya. Two forgotten facts about the Uganda oil decision are that; (1) President Museveni of Uganda has been steadfast that he wanted to refine oil in Uganda, not export raw crude (2) Uganda’s oil has been said to be waxy or heavy. This means it would require complex heating to keep it flowing along a complex oil pipeline through the rift valleys and hills – to the coast of Kenya.

M7 poster 2

The cost, insecurity and difficulty of building infrastructure have been cited reasons that Uganda opted to go through Tanzania. Still Kenya has several LAPSSET projects on the cards including an oil pipeline to go to Lamu where there would be a new highway, railway, coal plant and modern, deep-sea port.

Pipeline Impact

Last year at the TDS Nairobi summit, during the 10th  Ministerial Conference (MC10) of the World Trade Organization (WTO), a session was held on local content in extractive (and oil) industries. Some interesting comments there included:

  • It is a legitimate objective for any resource rich country to try to maximize the value of its resources.
  • If a country puts restrictions on raw exports, it may distort the local economy; it creates artificial demand – and if it is not efficient, local related industries will not survive.
  • Kenya energy expert Patrick Obath suggested that Kenya, Uganda and South Sudan have to talk together and implement projects together for projects like the oil pipeline to be viable. That would also have to happen to get more value-addition from the oil in the countries e.g. can the countries plan to get fertilizer from oil?
  • With mining, you have 20 years of opportunity for local suppliers and jobs, but with an oil pipeline that’s only there in the beginning, then goes away once the pipeline is built (there wont be many local jobs after, and communities don’t get an economic boom from having an oil pipeline passing through their land..which may lead to some local frustration).

More on Kenya Pipeline:

oil tankers

  • The Kenya Pipeline Company is charged with transporting and storing of petroleum products.
  • A (presidential task force on parastatal reforms proposes the Treasury incorporate a holding company known as the Government Investment Corporation (GIC), into which Kenya Pipeline Company should be transferred to determine (its) intended privatization.
  • Meanwhile Kenya Pipeline is continuing with its projects including replacing the current Mombasa-Nairobi Pipeline.

Top 5 Kenya Bank Stories of 2015

  1. Imperial Bank collapse: The shock of the year, and probably the decade. Owaahh shows in Part 1,  2, and 3, of “The Sack of Imperial Bank”, that it was actually a 13-year saga that unravelled in 2015.
  2. The new Governor at the Central Bank of Kenya, Dr. Patrick Njoroge, had an immediate impact, not just with Imperial, but also Dubai. He also cracked down on banks that were apparently lax on large payments, legit and illicit ones.
  3. Bank profit drop or flat growth: Whether it was the local economy, bad debts (Stanchart, Bank of Africa), or East African impact (events in South Sudan, Burundi or Mauritius [for Britam], this year tested banks after years of ‘easy money’ and double digit growth in the industry.
  4. Barclays exit from Africa (really, a 2016 story)
  5. Agency banking. Even Family, I&M and Barclays, took this route. While a few branches are still opening in new malls, they are not the main channel for small transactions, as ATM’s phones, social media, and now bank agents handle lost of customer interaction.

What other stories merit ranking?

  • The law on unclaimed financial assets, and the Unclaimed Financial Assets Authority (UFAA) became active

NSE Shares Portfolio February 2016

Comparing performance to last quarter and a year ago, the portfolio is up 0.3% in the last three months, while the while the NSE 20 share index is down 5% since November 2015. Compared to a year ago, the portfolio is down 21% while the NSE is down 29%.

The Stable


Atlas –
Barclays ↓
Bralirwa (Rwanda) –
Centum (ICDCI) ↓
CIC Insurance ↓
Diamond Trust –
Equity ↓

Fahari –
Kenya Airways ↓
Kenya Oil ↑
Stanbic (Uganda) ↓
Unga ↓

Summary: Another quarter when everything is down, except Kenol, while a few shares were  unchanged including Bralirwa, Fahari (I-Reit)  and the now dormant Atlas.

In: Serena
Out: None
Increase: None
Decrease: None
Best performer: Kenol (up 21%)
Worst performer: NSE, Serena, KQ (~all down 10%)

Unexpected Events:

  • The low uptake of the Stanlib Fahari I-REIT which showed that NSE investors are risk-adverse, and won’t flock to new products like REIT’s and derivatives.
  • Going back on the East African dream of cross border investing, there’s much difficulty in cashing a Rwanda dividend cheque (Bralirwa) as many banks still don’t accept Rwanda Franc cheques and KCB which used to have over-the–counter encashing for the Bralirwa dividend cheques (drawn by KCB Rwanda) does not have the facility this year. Stanbic Kenya and Stanbic Uganda have never had any cooperation in that regard as well.
  • The losses and corporate fallout at Uchumi, Mumias, Imperial Bank, and Kenya Airways that were discovered after their high-profile, long-serving, CEO’s departed.

Looking Forward to:

  • Mobile money treasury bonds
  • Kengen rights issue