Category Archives: Investing in Kenya

Land Rover Defender 90 launch in Nairobi

Inchcape Kenya, the official distributor of Land Rover, Jaguar and BMW has launched the Land Rover Defender 90 to the Kenyan market. The Land Rover brand is synonymous with Africa and safaris and has found a variety of uses in homes, companies and governments where it is known for handling rough terrain, offering comfort, and being a long-lasting vehicle.

The new Defender 90 is a capable, short wheelbase, all-wheel drive (AWD) vehicle, capable of seating 6, and is the first Defender model to receive over-the-air software updates. It is available in four models; the Defender S (standard), X-Dynamic, First Edition and its top range Defender X. Some features on the vehicles include a 10” touchscreen with Apple CarPlay and Android Auto, local navigation, 3D surround cameras, air suspension, and a folding fabric sunroof.

Buyers can pick their Defender from four accessory pack options. They can set up the vehicle further to handle off-road driving even better with options like a raised air intake, a lightweight roof rack, an air compressor for inflating tyres/ mattresses and side-mounted gear carriers.

The Defender 90 is available in four engine options– two diesel and two petrol. Also, the Jaguar Land Rover group has also committed to go fully electric in the year 2025.

Inchcape is a London-listed group that retails vehicles in 34 markets. They launched in Kenya in 2018 and this is now their second-largest market in Africa, after Ethiopia where they also sell Toyota models. 

The Chief Guest at the launch was the UK High Commissioner to Kenya, Jane Marriot who said that vehicles were among her country’s top 5 exports to Kenya, amounting to £31.5 million last year.

The Defender 90 launch comes after Inchcape introduced the Defender 110 in Kenya in August 2020. It sold well after Kenyans got a chance to test drive the models and attracted a young buyer segment. Pricing for the Defender 90 starts at Kshs 17 million. Motorists are invited to Inchcape to make enquiries on servicing, training on vehicle features and a chance to test-drive the different Defender models.

Kenya Tourism Signature Experiences

This week saw the unveiling of the Magical Kenya Signature Experiences collection for 2021-200, by the Ministry of Tourism that is meant to showcase the country’s diverse attractions aside from the traditional wildlife safaris and beaches.

The MKSE program began in 2019 when fifteen experiences were selected. The first group had pricey traditional tourism attraction like the Karen Blixen Museum, Finch Hattons Luxury, the Tamarind Dhow, Il Ngwesi, and helicopter trips to Suguta Valley, which music legend Madonna did a few weeks ago.

MKSE has now added 29 signature experiences in an ongoing process from 59 entries, and the ones that didn’t make it, also get mentorship to improve and qualify. Joining starts with completing an application questionnaire, and one criterion for selection includes that the investor/operator has been offering the experience for over two years. Tourism officials then do a desk audit to shortlist the promising ones, followed by a physical visit to check out the experiences. The Signature Experiences facilities will be marketed by the Kenya Tourism Board at local and international trade fairs.

The second group of MKSE experiences is more diverse and probably more accessible, though price rates were not shared. The big winners on the list are the Watamu coastal area and Nanyuki, with multiple experiences, while operators Watamu Treehouse and Savage Wilderness each feature three unique activities for visitors and tourists to try. 

Some unique additions include: 

  • Bicycling in the Maasai Mara and at Diani.
  • Watersports: Rafting/kayaking at Watamu, Sagana & Tana River and floating adventure at Mida Creek (Watamu).
  • Camel walking safaris with Karisia.
  • El Karama Lodge experience for children. 
  • Warrior Academy with Saruni. 
  • Climbing Mt Kenya and Mt Kilimanjaro with African Ascents. 
  • Golfing at Great Rift, Naivasha. 
  • 16th century stone ruins at Thimlich Ohinga Migori, now a World Heritage site.
  • Interacting with rare rhino: treks at Borana, extravaganza at Solio, tracking at Saruni,
  • Also, two unique experiences are farm ones: At Ololo in Nairobi, there is a farm experience package in which guests can tour and dine on food from the farm. They can partake in picking eggs, vegetables, visit the orchard, milk animals and buy handmade furniture. Then at Olepangi, farm guests can milk cows, make bread, collect vegetables, ride horses, do yoga, and get massages.

The new list also had some of the traditional pricier offerings that draw tourists to Kenya, including Breakfast with Giraffes (sometimes a hot topic), In the footsteps of Elsa (inspired by the story of Joy Adamson’s adopted lioness), and humpback whale watching at Watamu, that controversially featured on CNN recently.

Reading the Kenya and United Kingdom Trade Agreements

Kenya and the United Kingdom had an Economic Partnership Agreement (EPA) signed in December 2020 by their trade ministers, Betty Maina and Ranil Jayawardena, which went into effect on January 1 2021. 

The UK has agreed to provide duty-free and quota-free access to goods from Kenya and in exchange, Kenya will gradually relieve tariffs, except on some sensitive goods. It is a consequence of Britain’s exit from the European Union and represents an opportunity for Kenya as it maintains market access for Kenya as the only non-least developed country LDC) in the East Africa Community (EAC). Kenya is now classified as a Lower-Middle Income Country by the World Bank and meanwhile, all other members of EAC will continue to benefit from duty-free quota-free access. 

Both countries have published some guidance on the agreements, with the UK interpretation and FAQ on what this means for British businesses, as well on the Kenyan side at the Industrialization Ministry.

Summary of the EPA guidance documents:

  • Kenya is the UK’s 73rd largest trading partner and total trade between the two was £1.4 billion in 2019. UK Revenue found that 2,502 VAT-registered British businesses exported goods to Kenya and around 433 imported goods from Kenya.
  • Top 5 UK goods exports to Kenya (in £ million): Vehicles other than railway or tramway stock(67) machinery and mechanical appliances (63), pharmaceutical products (27), electrical machinery and equipment (25), paper and paperboard (19).
  • Top 5 UK goods imports from Kenya (in £ million): Coffee, tea and spices – mostly black tea(121) edible vegetables – mostly green beans (79), live trees and plants – mostly cut flowers(54), machinery and mechanical appliances (21), preparations of veg, fruit or nuts (7). The UK also note that some Kenyan flowers sold to UK consumers may not be counted as they arrive via flower auctions in the Netherlands.
  • UK exports to Kenya will be reclassified from being EU-originating to UK-originating and UK goods transiting through the EU will lose this designation. UK companies also simply can’t label a product as being from the UK, it has to meet some composition criteria.
  • Goals: There will be more favourable trade treatment by the UK for Kenya exports over third countries. Kenya will promote UK private investments and already, the UK is the largest foreign investor in Kenya with over 220 British companies having an investment portfolio estimated at £2.7 billion (Shs 385 billion) and trade between the two countries at Shs 70-90 billion. The Ministry notes that Kenya has continuously enjoyed a favourable trade balance since 2016. The highest was Shs 8.6 billion in 2018 when the value of Kenya’s exports was Shs 40.2 billion, relative to imports valued at Shs 31.6 billion.
  • Expansion: The agreement can be reviewed every five years. If a country denounces the agreement, the effect will happen one year later. The agreement is open to all East Africa Community partner states and will be updated to reflect ascension when it is approved by other EAC countries. The UK includes Great Britain, Northern Island, Gibraltar, Channel Islands and the Isle of Man.
  • Wiggle Room: If a country has balance of payment difficulties, it may adopt some measures regarding the trade of goods in a non-discriminatory way and for a limited duration. Already the UK accepts that elimination of tariffs will be a challenge for Kenya.
  • Scope: The agreement does not cover taxes, security matters such as arms & wars, or other trade negotiations under the WTO.
  • Governance of the agreement will be by an EPA council (of Ministers), a committee of senior officials (of Permanent Secretaries), and a consultative committee (of the private sector & civil society).
  • Some sectors cited: Trade on fish (tuna, marine and inland), standards, sustainable agriculture, rural development. The UK will work to make Kenya goods more competitive including by training of staff. Also, a vessel monitoring system will be mandatory for sea-facing nations in the EAC.

The document is open for “public participation” and Kenya’s Parliament has now invited public views into the Economic Partnership Agreement between Kenya and the United Kingdom. Views are to be emailed to the Clerk at Parliament by February 11.

Absa Kenya on Wills, Trusts and Succession Planning

Absa Kenya has been holding thought leadership seminars since their rebrand in February 2020.

This week they had an investor education connect session on wealth management, with a focus on wills, trusts and succession planning which featured Madabhushi Soundarajan (Managing Director, MTC Trust), Peter Waiyaki (Partner at Mboya, Wangong’u & Waiyaki Advocates) and Anthony Mwithiga (CEO, Absa Asset Management).

Some excerpts 

Wills:

  • People don’t do wills because they think they have nothing – but anyone over 18 who has been working has something to give. 
  • Another excuse of some educated Kenyans is they think they are courting death or will be marked for death by their families
  • Can do a will in an hour or five years. It does not have to be expensive or complex.  
  • A will should have two things to help a will (i)  a residual clause. assets grow after the will make sure any other assets be distributed the way the old “any other assets  (you don’t have o make a new will (ii) creation of a testamentary trust. 
  • Let your family know where your will is kept. If two wills emerge, the latter one will be used. If a will is destroyed, it is not valid.
  • If someone remarries, it invalidates a will because they are considered to have new dependents. 
  • Do not include matrimonial property should not be in a will. Or joint owner – when someone dies the spouse inherits the full property. They should not be in the will. 
  • Also don’t put investment or trust property in a will.
  • Proof of dependence: wives and children do not need to prove they are dependents. This also includes conceived but not yet born and adopted kids. But parents or siblings of a deceased must prove they are dependent. Also in Kenya, a husband/man will have to prove  he was being supported by a woman.
  • Covid situation: Oral wills are only valid for 3 months and must be mentioned in the presence of two witnesses who are not beneficiaries. And for a written will, someone in a hospital, surrounded by relatives is not considered to have the freedom to write a will. 
  • Without a will, only the family of a deceased person can inherit from the estate. No gifts to charities, churches etc. are recognized. 
  • Do not put assets in a will that already have nominated beneficiaries elsewhere e.g. life insurance, pension funds. 

Trusts:

  • Have the philosophy of giving things up as you will nor carry your wealth to the grave – so start thinking about preservation.
  • Banks are getting worried about lending to trusts. 
  • A trust is not a legal entity, a foundation is a better legal entity that can be created to run a school or a hospital.
  • Most common are discretionary trusts and others are ones that founders can create to run businesses for their families
  • A trust is a lengthy document. In a trust, you can exclude rogue children. 
  • To set up a trust; define the objectives, the trust structure, the beneficiaries, the trustees (ideally a corporate) and seek professional advice. 

Investments:

  • Use professionals e.g. in a unit trust to administer investments if you are too busy. 
  • If you have a vision, take a lead and invest in it so that others will follow.  
  • the realty over the last five year is the property prices can go down, unbelievable to many investors of 15 years ago. Covid has hit offices and malls, but there are still investments in residential, logistic and warehousing ventures.
  • Attributes of an ideal asset; gives returns, it should grow, it should be liquid, be understandable and It should also be secure (legal ownership & from damage). Individuals and families have investment portfolios, as it is not possible to get one asset to full all these attributes. 
  • The investment universe encompasses money markets, treasury bills, bank deposits, and listed shares which now includes a New Gold ETF.  Also unlisted shares (shares in a business stems/OTC), real estate, and alternatives such as derivatives, commodities, currencies and infrastructure projects which is a new asset class open to pension funds.

Suggestions:

  • Everyone should discover what type of investor they are and what stage they are on the life journey to understand what to invest in. 
  • Think investments beyond Covid-19.
  • Write a will today; there is no way of running from your dependents –  except through trusts, which allow one to better organize estates.
  • The best non-taxable investment in Kenya is infrastructure bonds.

Sportpesa return flames out

Last Friday, there was a bold tweet by the CEO of Sportpesa announcing the return of the company to full business, with partnerships for sports development to follow.

This comes after a crackdown last year crackdown on gambling companies through a moral push, taxation claims and difficulties renewing licenses, which all led many of the top betting companies to scale back their sponsorships and operations.

But the announcement, just as the English and European soccer leagues that are popular with betting punters get into gear, was followed by a surprising turn of events.

The following morning, the Chairman of the Betting Control and Licensing Board had a press conference and issued a statement about information that Sportpesa Global had granted to Milestone Games permission to operate as ‘Sportpesa’. It went on to say that had licensed Milestone to operate in the country, but asserted that Sportpesa is owned by Pevans East Africa and that no other company can use its name brand, domains and mobile phone shortcodes – asked directed Milestone to use its own website.

Then over the weekend, one of the other Sportpesa shareholders, Paul Wanderi Ndung’u also released a statement on behalf of Kenyan shareholders of Sportpesa and said he had been unaware of the developments with Milestone. He also made some serious claims about the company:

  • Said the problems of the company started in 2017 when its executive directors allied with its foreign shareholders and started running the company without reference to the board. 
  • Said that another director, Asenath Maina, had requested a forensic audit in 2019 on the firm, but that the foreign shareholders, who had been since been deported from Kenya, continue to frustrate the audit.
  • In three years Pevans East Africa (Sportpesa) has transferred $250 million to the Isle of Man, Dubai, the Canary Islands and the UK. Then, after the company closed, it transferred another $17.5 million to Sportpesa Tanzania and $0.5 million to Sportpesa South Africa.
  • KPMG and Deloitte &Touche have resigned as auditors and tax advisers respectively of Sportpesa Global in the UK, while PricewaterhouseCoopers resigned as the auditor of the Kenyan business.
  • Officers from the UK’s Serious Fraud Office (SFO) have visited Sportpesa’s Nairobi office – and this was linked to negative media and parliamentary coverage in the UK.

To be continued . .