Category Archives: emerging markets

Fintech Moment in East Africa: AmEx FT Pesalink Bitcoin

Recent events in the fintech (financial technology) payment space in East Africa.

Banks

  • The Kenya Bankers Association (KBA) unveiled Pesalink, a digital payments platform that is expected to cut the cost of transactions and transform the way consumers interact with their banks. Pesalink is a fully owned subsidiary of KBA and it will enable customers to make payments between banks in real-time, around the clock, without having to go through intermediaries. It has been approved at Standard Chartered, Co-Operative, Barclays, Commercial Bank of Africa, I&M, Diamond Trust, Gulf African, Guardian, Victoria, Credit, Prime and Middle East banks…“RT @alykhansatchu: .@HabilOlaka says @KenyaBankers will be targeting payments that exceed M-Pesa’s maximum transaction of ($675)”
  • Cooperative Bank: Is a demonstration that the how banks ar moving in the technology space. Kenya’s 3rd bank has adapted to their customers embrace and they enable more customers to use alternative channels for transactions.  They had a valentines’ week promotion to highlight and encourage customers to use alternative channels such as MCo-op Cash (get a loan straight from ones’ phone  at 1.16%  per month and send money to other MCo-op users for free) or at a Co-op Kwa Jirani agent (deposit cash into someone’s Co-op Account for FREE at a Co-op Kwa Jirani agent) or Co-Op cards.
  • KCB will unveil it’s fintech future – a strategy based on a digital finance  in Q2 of 2017
  • Another is EcoBank which launched a new mobile app which integrates Masterpass QR, a mobile payment solution from MasterCard.  It enables customers to send and receive money instantly across 32 other African countries.

Government

  • National Bank has launched cashlite payment solutions suite for county governments, Ministries, Government Agencies, and Departments. The bank has provided a variety of options for payments including mobile money, smart cards, and e-wallet and cash options, aligned with the continuing growth of mobile technology as well as consumers’ expectations for convenient mobile and online payments.
  • Strathmore University has supplied Busia county government with a revenue collection systems called CountyPro® with which the government hopes to grow revenue by 300%. It caters for all the unstructured county revenue sources including parking, market cess and trailer parking.
  • Mastercard is the technology partner for the Huduma Card in Kenya enabling payments for government services.  It is being issued by Commercial Bank of Africa, Diamond Trust, Equity, and Kenya Commercial banks. Kenyans will be able to pay for an array of enrolled Government services such as the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) amongst others. 

Cards

  • mVisa will soon be in 10 countries as Visa expands its QR payment service for safe and easy mobile payments in emerging markets. It is already live in India, Kenya (started with Family Bank) and Rwanda, and will soon be available to merchants and consumers in Egypt, Ghana, Indonesia, Kazakhstan, Nigeria, Pakistan, and Vietnam.. (mVisa) allows consumers to use their mobile phones to make cashless purchases at merchant outlets, pay bills remotely and even send money to friends and family members by securely linking their Visa debit, credit or prepaid account to the mVisa application. Also any bank’s mVisa customer – regardless of where they bank – can transact on any mVisa merchant and merchants do not need to invest in POS infrastructure. Visa has partnered with Co-Operative, Family, KCB, and NIC banks.
  • Mastercard commitED to financially include 100,000 Kenyan micro merchants with Masterpass QR, a simple and secure digital payment solution. It will be introduced through various financial institutions. With it, consumers will be able to pay for in-store purchases by scanning the QR (Quick Response) code displayed at the checkout on their smartphones, or by entering a merchant identifier into their feature phones. Masterpass QR is currently being rolled out in Nigeria, Ghana, Rwanda, Uganda, and Tanzania.
  • Safaricom has issued 16,000 Lipa na M-Pesa cards in the pilot phase of a project that will launch later in the year. The Lipa na M-Pesa card uses pin and chip technology…It is also equipped with Near Field Communication (NFC) (which will) increases the speed at which customers make payments.
  • Verve: A dozen Kenya banks have partnered with Verve International, Africa’s leading low-cost payment network provider, in their push towards interconnectivity, cardless transact ability, and digital payments. Verve, best known as a card issuer has more than 32 million Verve cards and virtual/digital tokens issued across Africa and Verve is used in 19 African countries.
  • Pesapal adds American Express ​Pesapal integrated American Express into its payment platform on February 27, and  AmEx card holders can now use their cards to​ ​transact on any online payment portal that uses Pesapal. This is especially useful for hotels and other companies in the East African tourism space.  Pesapal which is in Kenya, Uganda, Tanzania, Zambia and Malawi and plans to expand to Nigeria in 2018 also offers an online booking engine for Hotels called ReservePort that’s used by Serena and Heritage brands.

Remittances

  • Facebook:  Facebook added international money transfers to its chat app. The service comes via London-based startup TransferWise in the form of a Facebook Messenger chatbot and enables transfers to and from the US, Britain, Canada, Australia, and Europe.
  • Bitpesa:  The company introduced an Africa to China corridor enabling users to send payments from Africa, directly to a Chinese bank account using bitcoin.
  • European choice: How much does it cost to send money from Germany to Kenya?@WehliyeMohamed posted that the global average cost for sending $200 in Q3 2016 was 7.42%, and that It cost him 6.7% to send money to Kenya. Then @MkenyaU answered that it costs 1.5% when he sends €200 from Germany and this reduces to 0.6% when he sends €500. He cautioned that some companies charge zero fees but their exchange rates are horrible as he shared a comparison of a dozen services available to send money from Germany to Kenya.

 

Mobile

  • Safaricom Mpesa: 10-year-old M-Pesa had 6 billion transactions in 2016 and is now in 10 countries – Albania, the Democratic Republic of Congo, Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania, and Tanzania. A new feature in M-Pesa will enable users to see the cost of transactions. In the initial phase, customers will be notified of the costs after, and in the second phase customers will receive a pop up message informing them of any charges prior to the transactions, while the third phase will see the service being made available to value-added M-PESA financial products including M-Shwari, KCB M-PESA, Okoa Stima and M-Tiba. The second and third phases of the update will be rolled out in coming months.
  • There have been some calls and reports recommending that M-Pesa be split from Safaricom. This could have happened years ago, but it is more difficult now that M-Pesa is an entrenched and central part of Safaricom today.
  • Tala raised over $30 million in Series B financing, led by IVP and joined by Ribbit Capital.   Tala uses smartphone data to build financial identity ..  mobile app for Android aggregates more than 10,000 different data points on a customer’s device, including financial transactions, savings, network diversity, and geographic patterns, and builds a customized credit score, or financial identity. Tala operates in East Africa and Southeast Asia with its main top markets being Kenya and the Philippines. Tala has delivered more than one million loans totaling over $50 million, and more than one million individuals have accessed the product in East Africa alone. See how Tala compares to other (fintech) / phone-lending apps in Kenya.  Forbes termed this the largest Series B raised by a woman founder in recent memory.
  •  Zeep is a smart and simple mobile platform that helps young people (teens) nurture good  financial habits. They ‘learn by doing’ within the framework of a secure financial environment with guidance from their parents.

Companies to watch

Irish Tech News released a list of 38 Kenya fintech companies to watch in 2017; these include Abacus, BitPesa, Branch, Cellulant, Chura, FarmDrive, Kopo Kopo, M-Changa, Pesapal, Tala and Umati.

Summit

The FT Africa Payments Innovation Summit will take place on 29 March 2017..it will bring together 250 business leaders from various mobile and financial interest groups and explore challenges and opportunities inherent in these developments: from providing greater financial access to un-banked people across the continent to providing new services and opportunities for an emerging middle class.

 

 

MSurvey: Better Data, Better Decisions

Last month, I got introduced MSurvey  (msurvey.co.ke), a fast simple solutions for companies seeking to collect research data, or other information about their products and service from users. They do this using a nifty platform, all mobile, that is free for respondents – of which the   costs of the SMS/USSD messages are paid for by the customers who are doing the survey.

My 5-minute MSurvey

My 5-minute MSurvey

With MSurvey, it’s also quite quick to set up a questionnaire. This one (attached( took about five minutes to set up, with random questions for farmers and responses came within a minute of it going live from farmers in different parts of the country. Responders are rewarded with airtime prizes, and the process is non-intrusive.

One of their customers is Java House and when you pay for a meal via mpesa, you get to answer a few questions about the service and your experience at whichever restaurant you ate. They are also in the US and Trinidad & Tobago, and some of their other customers are Musoni, (the) Telecommunications Authority of Trinidad & Tobago, Digicell, Safarciom, and Acumen.

Kenyan M&A

Compared to one year ago

On-Going Deals

Auto’s: – This week Al-Futtaim held a press conference to reaffirm their commitment to African market that is being spearheaded by their takeover of CMC  in Kenya.  More than anything the event was meant to showcase that the group founded in 1930,  but which few in Kenya had heard of before the deal, is a serious legitimate company (unlike shadowy China Road & Bridge that has a $3.8  billion contract to construct a standard gauge railway in Kenya.)
 
They have several car franchises 65 years of Toyota in UAE, Volvo, Honda vehicle assembly parts & service, used car business  and is also in engineering, financials services and the retail mall development business in the Middle East  and Asia
 
Al Futtaim  are long term investors will retain the CMC brand as it has a 65 year good history that will overcome the last two bad years . But they will de-list the company as they believe that being a private company will give them the flexibility to move faster and reclaim customers and brands that have been lost such as Land Rover. 
Interestingly, the opportinuity to buy CMC was presented to them by one of their banks who knew of their interest in Africa. The company then had to work very hard to meet and bring the feuding key shareholders on board to back the buyout.

EDIT Kenya’s competition authority has now approved the acquisition of 100% of CMC Holdings by Al Futtaim Auto

– Scania East Africa Limited  have taken over the purchasing, importing, assembling, fitting out, selling, servicing  of trucks, buses and chassis in Kenya that was previously carried out by Kenya Grange Vehicle Industries.

– EDIT Actis buys 36% of AutoXpress, East Africa’s leading tyre distributor, with 20 stores in Kenya and Rwanda.
EDIT  Merali and Sameer complete buyout of 14.9% of Firestone’s stake in Sameer Africa.


Banking

 
CBA returns to Uganda after 47 years
Fina Bank has changed over its operations in Kenya, Uganda and Rwanda to GTBank East Africa after Guaranty Trust Bank concluded the acquisition of a 70% stake in Fina Bank Group for $100 million through combination of a capital injection and acquisition of shares from Fina Bank shareholders.  
– Pakistan’s MCB Bank to acquire Kenya’s Middle East Bank (via the Standard)
– EDIT Kenya’s  competition authority  has approved the acquisition of 73.35% of Genesis Kenya by Centum Investments
EDIT Letshego Holdings  of Botswana has acquired Micro Uganda, a year after acquiring Micro Africa Ltd of Rwanda.


Food &  Beverage
– Art Caffe acquired Dormans increasing their outlets from 4 to to 11 and giving them a presence in more shopping malls like Yaya, Karen and City Mall in Mombasa where Dormans had shops.
 
However the Art Caffe were rankled by a quite in a local newspaper referring to their customers as being upmarket compared to Dorman’s ones. 

  

EDIT: Kenya’s  competition authority  has now approved the acquisition of 7 coffee shops of Dormans by Art-Caffè.

– Pearl Capital partners have invested $1.5 million in KK Fresh Produce. 

EDIT Kenya’s  competition authority  has approved  the acquisition of Rafiki Millers  by Tiger Brands.
EDIT Kenya’s  competition authority  has approved the acquisition of Magic Oven Limited by Tiger Brands.

Beauty: A Netherlands-based private equity fund, TBL Mirror Fund, has bought a minority stake in a high-end Nairobi salon chain that is seeking capital to expand across East Africa.
 

EDIT 

Advertising: Kenya’s  competition authority  has approved the acquisition of additional 16.48% shareholding in Scangroup Limited by Cavendish Square Holdings BV.
Health: Kenya’s  competition authority has excluded the acquisition of 100% of Adcock Ingram Holdings Limited by CFR Inversiones SPA from the Act


Hotels: South Africa’s City Lodge acquires Kenya’s Fairview Hotel  afterFairview Hotel firm agreed to sell the outstanding 50% of the joint venture 

Insurance: Kenya’s  competition authority has approved the  acquisition of 66.38% of Phoenix of East Africa Assurance Company Limited by Mauritius Union Assurance
EDIT  Britism American (BritAM) completes buyout of 99% of Real Insurance


Oil

– Kenya’s  competition authority  has excluded the acquisition of a 55% participating interest in Block 11A from ERHC Energy by CEPSA Kenya
– Kenya’s  competition authority  has excluded the acquisition of a 55% interest in Block 2B in Kenya from Lion Petroleum by Premier Oil 

Transport
EDIT – Precision Air  of Tanzania seeks a bailout from Kenya Airways?
EDIT – Transcentury to reduce stake in Rift Valley Railways (RVR)?

Other

India  Exits

Ambani reports a Kshs 2 billion profit from Kenya real estate.. Ambani’s Reliance Industries in 2007 entered into a joint venture with Delta Corporation, which has developed high-end office blocks and a mid-to-low cost residential estate in Nairobi. Delta Corporation now says it plans to exit its real estate investments to venture into hospitality and gaming businesses. 

Essar to finalise sale of its Kshs 8.5 billion Yu stake in March ..the firm says it needs the Sh8.54 billion immediately and more cash in the short term to widen its footprint in Kenya and upgrade its network from 2G to 3G.

– Essar also faces a Kshs 430 million hit in its Kenya oil refinery exit ..the government and Essar Energy Overseas are engaged in compensation talks following the Indian firm’s decision to exit the refinery.

New Deals

Agriculture: At Rea Vipingo, Bid Investments withdrew their offer and have signed up with Vania Investments who are offering a new Kshs 55 per share  bid – worth Kshs 3.3 billion ($39 million) –  for the company that will leave it listed at the NSE
 
E-Biz: 


– There’s a potential change in ownership, at MyStrawberryStore 

– EDIT-  Kenya’s  competition authority  has excluded the  acquisition of 999 Ordinary shares 

of My Kenyan Network Limited by African Jobs as the two have a combined turnover of Kshs 12.6 million

Regulator Issues

Pepsi came to Kenya and took on Coke but have not made much impact. They are now saying that has Coke been unfair ..PepsiCo says that rival bottle has been curtailing its marketing campaigns geared at gaining a larger share of Kenya’s soda market in the complaint to the Competition Authority of Kenya (CAK).

Synovate directors risk jail, hefty fines..Competition watchdog asks Tobiko to prosecute Ipsos-Synovate’s chiefs for failure to seek regulatory approval of the firm’s acquisition of its predecessor Synovate.

In South Africa The Competition Commission plans to address anti-competitiveness between retailers despite concluding its exclusive lease agreements probe.

The investigation established that the respondents (3 supermarket chains)  were dominant in certain local markets and that they would often compel landlords not to deal with competitors (by entering into exclusive lease agreements with landlords in return for agreeing to ‘anchor’ the centre).

JobsRwanda’s Agaciro Development Fund is seeking an investment office. Deadline is Feb 14.

Blogging in 2013

Top blog posts in 2013

1. Consumer Guide on Solar for Homes
2. Kenya Bank Rankings 2012 (Part I) 
3. Kenyan M&A
4. Private Equity Moment
5. Subway (Restaurants) to Kenya
6. Why Unit Trusts are better than Bank Savings Accounts
7. Chama Management 101  (a book review
8. Paypal in Kenya
9. Base Titanium aims to be a model for the Kenya mining sector
10 Buyouts, Vultures, Divestments

So lot’s of interest in reading up merger and investment activity in Kenya this year, but, overall, the top posts visited were Safaricom/CBA launch M-Shwari and Who Created M-Pesa  both published in 2012.

Private Equity Moment

Following the January  post on M&A deals, here are some recent events.
The Private Equity Confidence Survey was published by Africa Assets and Deloitte and it showed that, in 2012, private equity firms invested $1.13 billion towards 58 deals in Sub-Saharan Africa. This was a a slight decline from 2011, and that Kenya, Nigeria and South Africa accounted for 45% of the deals in 2012.  Also in the survey;
– Despite the enormous hype surrounding Kenya’s growing IT sector, dubbed the “Silicon Savannah”, no IT or venture capital deals were reported in eastern Africa in 2012. This clearly reflects that both the IT sector and VC industry in eastern Africa, and indeed Africa more broadly, remain quite young and underdeveloped. Interestingly, IT-Tech deals were done in 2012 in South Africa, Ghana, Nigeria and the DRC.
–  One conference speaker on VC deal structuring said the problem is ‘Kenyan entrepreneurs believe they each have a fantastic proprietary idea, and they want lots of money up front to develop it, regardless of the lack of business model planning done by many of them. 
– The dominant exit route across Africa is a sale to a strategic investor..and most investors expect the average investment lifecycle to be between two to five years.
Recent M&A deals approved by the Kenya Competition Authority include:
Agri-Business & Food
– The acquisition by Almasi Beverages of Kisii Bottlers, Rift Valley Bottlers and Mount Kenya Bottlers
– The acquisition of Lord Erroll Limited by Koita International Kenya. EDIT – The Business Daily in August 2014 wrote on the Lord Erroll buyout
– The acquisition of Ocean Agriculture (EA) by JH Verwiel.
– The acquisition of Siret Tea Company by Siret Outgrowers Empowerment & Produce Company.
– The acquisition by the Rai Family of shares of Sukari Industries.
Banking, Insurance & Finance
– The acquisition of I&M Bank by City Trust Limited.
– The acquisition of PSJ & Associates by PKF Kenya.
– The acquisition of 66.66% of Mercantile Insurance by Colina Holdings
Building, Energy & Real Estate
– The acquisition of shares in Cemtech (who were to put up a cement factory in Pokot) by Rock Field Corporation.
– The acquisition of Economic Housing by Mali Rasili Group.
– The acquisition of all assets of Mutonga Mutuandaju Small Hydro Power  (a hydro-power project in South Imenti, Meru) by Intrepid Energy.
Health & Beauty
– The purchase of shares in Alexander Forbes Healthcare by Zanele Investments Holding Company
– The acquisition of the health and beauty business (cosmetic & hair brands) of Interconsumer Products by L’Oreal East Africa
– The acquisition of certain assets & liabilities of RTT Health Services by Imperial Group
– The acquisition of Lyntons Pharmacy by Luwada Management
– The acquisition of Star Biotech Lab & Diagnostics (a pathology lab) by Metropolis Health Healthcare
– The acquisition of an indirect interest in the assets of Strategic Industries Limited.
Media & Communications
– The acquisition of Alldean Networks Limited by ISAT Africa Limited FZC and Richard W. Bell.
– The acquisition by EMC Acquisition, LLC and Emerging Markets Communication, LLC of EMC, LLC.
– The acquisition of shares in Dodhia Packaging Limited by Corpak Africa and Corpark Kenya
– The acquisition of  the investment in Rodwell Press held in Interlabels Africa by Interlabels Industries Private Limited.
Oil & Mining 
– The acquisition of Aviva Mining Kenya by Africa Barrick Gold (from Aviva Corporation)
– The acquisition of 87.25% of Pacific Seaboard Investments Limited by Tardigrade International Inc.
Tourism
– The acquisition of East Africa Safari Ventures by Natural Habitat Safaris.
– The acquisition of 80% of Nairobi Tented Camp  by Porini Limited.
– The acquisition of Leleshwa Safari Company  by Natural Habitat Safaris
– The acquisition of Vittoria Limited and subscription of shares in Olarro Conservancy Limited by Arabian Ranchers Property Investments
Transport, Engineering & Logistics 
– The acquisition Swift Global Logistics by DSV Air & Sea Holdings
– The purchase of 55% of Tradewinds Aviation by NAS Africa Aviation
– The acquisition of 60% of Treadsetters Tyres by Bharat Doshi, Aashit Shah and Carlet Overseas Corporation.
– The acquisition of 40% of Tredcore Kenya by Magister Limited
– The acquisition of Vtechnologies (Kenya) Limited by UHT SAS.
EDIT
More deals approves in May 2013
– The acquisition of the remaining shares in Cable Television Network by Wananchi Group
– The acquisition of 99% of Microensure Advisory Services by Microensure Holdings
– The acquisition of Brightermonday.com by Cheki Africa Media.

– The acquisition of 1,680 steers and 792 cows from Delamere Estates by Ngombe Ltd 
– The acquisition of 80% of Altech Kenya Data Networks and 100% of Altech Swift Global Limited by Liquid Telecommunications Holdings
–  The acquisition of the business of Daru Shifa Centre by Viva Afya
– The acquisition of Endebess Estates (Kilifi Holdings)  by Ballobhai Chhotabhai Patel.
 
Other recent deals in the News
– Jacana Partners and InReturn Capital announced a merger, and plans for a $75 million SME Fund
– 88mph and the eVentures Africa (eVA) Fund announced a partnership to improve investment opportunities
– Does Tuskys Supermarket want to buy Ukwala  a rival supermarket chain?
– 90% of I&M Bank shareholders have accepted the takeover by City Trust Ltd and the deal makers have been granted a 2 week extension to reach out to the remaining shareholders. Next steps include a share split.  mandatory acquision of the balance of shares, and a possible NSE-listing on June 12.
–  Airtel signed an agreement to fully acquire Warid Uganda – the combined entity will remain the number two carrier in Uganda with 7.4 million customers  and a market share of 39%.
Fastjet and the CEO of Fly540 agreed to cease their court battles and work towards an acquisition of Fly540  – freeing FastJet to commence Kenyan operations.
– A summary of China investments around the world in the year 2011.
–  In the US, M&A of VC-backed startups are at a four year low.
–  Venture capital merger and acquisition activity in the US dropped in the first quarter of this year, ending with the fewest exits since the first quarter of 2009, according to the just-released venture report from Dow Jones VentureSource.
Some 86 M&A transactions were done for a total amount of $4.3 billion, down 44% in deal activity and a decline of 24% in capital. In the final three months of last year, 113 deals brought in $7.6 billion to the VC-backed startups.
– Companies raised $6.36 billion in the first quarter of 2013, the lowest amount raised since the third quarter of 2010, when $6.1 billion was raised. In the first three months of the year, 752 companies were funded, which is similar to the 732 companies that got funded just over two years ago. Healthcare deals accounted for almost a third of the invested capital.

EDIT Jambo Biscuits food processing business is being transferred Kilimanjaro Foods.