Category Archives: Kenya coffee

Kenya Agri Exports to the EU take a Hit?

An ad in the September 22 Nation newspaper  has a statement by the European Union addressed to exporters from the East African Community on changes to the tariff regime starting on October 1 owing to the failure of the two sides to sign an Economic Partnership Agreement (EPA)

There was also an article in the same paper showing that a draft has been agreed to, and that a final EPA may be signed and effected in time, but others say it is too late for this.

The new rates, while still subsidized compared to what other nation suppliers pay to export to the EU, are still a blow considering that some exports will no longer be duty-free.

EU Agri

EU newspaper ad

While some like tea, coffee beans & carnations will remain duty-free, Kenyan exporters will pay subsidized rates  of 4.5% on tilapia exports (compared to a normal EU rate of 8%), 2.5% for roast coffee (not 7.5%), 10.9% for mixed vegetables (not 14.4%), and 5% for roses and cut flowers (not 8.5%) between November and May – which includes the crucial Valentine’s Day period when some flower farms can earn half their revenue.

This caps what has been a tough year for Kenya’s  exports of tourism, tea and coffee which have all been adversely affected, and now this.  The recently released Economic Survey 2014 showed total exports declined by 3% from Kshs 518 billion in 2012 to Kshs 502 billion in 2013 (as per the Devolution Cabinet Secretary).

Kenya will  qualify for the preferential (GSP) tariffs, while Rwanda, Burundi, Uganda and Tanzania are currently considered under “least developed countries” and most of their exports to the EU will qualify for a unilateral 0% tariff.

 

Coffee sector revival?

66 applications for coffee ‘A’ marketing licenses have been made from a broad representation of companies eager to enter the lucrative but locally cliquish industry.

From blue chip companies, to connected holding companies to coffee farmer co-operatives and societies – applicants include Aristocrats Coffee, Cetco, Dorman’s, KPCU marketing services, Magana Holdings, Mbo-I-Kamiti Farmers, Plantation Services (Delamere), Sasini Tea & Coffee, Tetu Coffee, Tropical Farm Management, and Valentine Growers. Applications were also received from 2 firms to be coffee buyers, 6 for coffee milling and 5 for packing.

Syriana & Maendeleo Monday

Banking

Guardian (Bank no. 24) ended 2005 with a pre-tax profit of 56 million (m)shillings.

K-Rep (No. 29 ) pre tax profit was cut in half from 110m to 48m by increased staff and operating expenses.

Oriental (No. 38) The former Delphis and former BCCI is still in the red but showed improvement in reducing its pre-tax loss from 369m to 86m. The Bank also re-capitalized from 376m to 723m.

Dubai (No. 40) Pre-tax profit was about 30m same as in ’04 at the high interest margin bank.

Housing

New housing
(i) 240 houses in Ndumberi, Kiambu, 24 km from Nairobi comprising 3 and 4 bedroom (br) bungalows.
(ii) Phase 1 of Diamond Park housing estate comprising 155 houses in South B next to balozi & hazina estates. The final complex will have 850 4-br maisonettes.

No boom
According to the Sunday Nation the so-called Nairobi property boom was only a speculative bubble that was confined to upmarket areas like kileleshwa and kilimani. A true boom would have seen housing prices appreciate in all parts and in all housing segments in the city.

Agriculture

Tetu kicking
Tetu coffee is still alive despite almost three years of frustrating hurdles. The company has applied for a coffee buyer/dealer license as well as packers & roasters license to process 400,000 kilos of coffee per year.

Relief for farmers
Good news for farmers as a new scheme will enable them to be paid on time. It involves the Agricultural Finance Corporation, Kenya Seed Company, and National Cereals and Produce Board (NCPB).

This will help in the perennial problem of late payments that leave farmers at the mercy of middle-men who extend goods to unpaid (and broke) farmers at exorbitant rates to plant as they await late payments for their previous seasons crop. Also the NCPB has been losing out on deliveries as farmers prefer to sell maize to middlemen who, even though they pay less per bag than NCPB, give cash upfront and collect crops directly at the farms. Farmers are then able to use the money to meet holiday expenses, school fees etc.

It would also be nice to see more trade finance banks get involved with similar products to farmers.

The scheme looks good on paper, but in real life, there are crafty Kenyans who convert schemes into scams e.g. Goldenberg and now others who have imported luxury cars bila duty under a simba scheme that was meant to enable faster clearing of vehicles.

ICT

Bigger site
Alexa.com has sparked a media war between the nation (rank 12,963) and the standard (rank 13,277) over who has Kenya’s leading online media website.

Mobile office
Safaricom has introduced Pocket Office – a mobile email solution.

Consulting opportunities
(i) The East African Portland Cement company is inviting bids for the design, supply, and installation of a new 80-tph cement mill factory. Apply by April 26.
(ii) The GJLOS program is inviting bids for consultants to supply, install, and maintain an intelligence and investigation application system for the Kenya Anti Corruption Authority. Apply to KPMG by April 28.

At the movies
Saw, and enjoyed, Syriana over the weekend which was a very complex & nice movie done by the writer of Traffic and the similarities are apparent in the parallel inter-weaving storylines. However, after watching it, I must say the George Clooney did not deserve a best-supporting actor award and that better performances were given, within the movie by both Matt Damon who plays an energy trader and Alexander Siddig, who plays the prince who plans to save his oil-rich country.

March 1

Banking
After Barclays last week, three other Banks have jsut published their results and with 30 days to go in the month, daily newspapers will have at least one bank printing their 2005 results each day by the march 31 deadline.

Those who have done well will publish their results in two or more newspapers (at a cost of 300,000 per color page) while the few who have performed poorly can get away with publishing the results in the lower circulation Kenya Times or People newspapers.

Kenya Commercial Bank (Ranked No.3 in assets)
Barclays posted a 5% return on assets (ROA) and 47% on return on equity (ROE), while KCB had a 1.9 billion pre-tax profit, 3% ROA and 20% ROE in 2005. The Bank will pay a 1st and final dividend on 4 shillings per share to shareholders after their AGM to be held at KICC on June 16.

Even though customer deposits grew from 52b to 60billion shillings during the year, their loan portfolio remained at 33 billion. The Bank also had to restate their 2004 results as their other income was 477 million and not 785 million shillings.

National Industrial Credit Bank (NIC) (No. 8 in assets)
The Ndegwa controlled NIC Bank posted a 403 million profit before tax, 2% ROA and 16% ROE. The bank’s assets stood at 20.6 billion with customer deposits of 16.6 billion and 14.1 billion in loans at the end of the year. Shareholders will be paid a final dividend of 1.8 shillings per share after their AGM on May 17.

Equatorial Bank (No. 29 in assets)
The Merali-controlled Equatorial Bank (109 million profit before tax, 3% ROA and 19% ROE) ended the year with 3.7b assets, 3b in deposits and 1.8b of loans.

Credit Bank (No 32 in assets)
The Nyachae controlled Credit Bank (90 million profit before tax, 3% ROA and 19% ROE) ended the year with 2.8b in assets, 2b of customer deposits and 1.7b worth of loans.

Bank Jobs
Kenya’s next bank is expected to be Family Finance which plans to convert from a building society into a Bank by June 2006. With assets of 3.2 billion in June 2005, they will rank as about Bank No. 30 in the country and hired Mr. S T Wainaina as their new general manager this week.
As such they are hiring;
– Branch managers
– Assistant branch manager
– Branch accountants / supervisors
– Credit officers
Apply by 16 March to the HR manager at info@familyfinance.co.ke. Applicants must be aged 26 – 35 with a business degree and 3 years relevant experience.

ATM Wars
Pesa Point has put up 80 ATM’s in 4 months, surpassing Kenswitch’s 45 set up over almost 3 years.

Stanbic
Stanbic which plans to acquire some Kenyan banks, has mini-branches at several Uchumi outlets and now offers a finance plan for Uchumi customers to buy household items such as TV’s, washing machines, cookers, fridges, and furniture.

Finance
Sameer
Turnover was flat – a slight increase from 3.27b to 3.36 billion shillings in a year in which the company broke away from the Bridgestone-Firestone company. The change, which entailed increased advertising revenue of the new brands, caused after tax profit to drop from 275m to 205 million. The company’s AGM will be held on March 31 at 11 and a dividend of 0.5 shillings per share has been declared.

Oddly enough, the register for payment of dividends will close on April 5 – after the AGM, not before/on the day of the AGM as is the trend at most companies here. Sameer has also announced that it will cross list its shares on Uganda stock exchange.

ICDCI
ICDCI’s six month results showed that investment income increased from 133m to 278m shillings, largely as a result of their off-loading shares in Uchumi. The company also bought 4% of K-Rep Bank in a continuing diversification program.

Coffee industry
The Coffee Board of Kenya launched a new website on February 24. It has up to date results of weekly coffee auctions but some links not working though. Hopefully this will shine a light on an industry that is booming around the world, but collapsing in Kenya (to a point where farmers are uprooting their trees) where it is tightly controlled by an endless cartels of middlemen who shun new ideas (Tetu) and who suffocate and frustrate farmers and new investors.

Future of Giant Parastatals
The Daily Nation looks at the future prospects of Telkom Kenya and the
Kenya Power & Lighting Company

Jobs
The Standard is hiring business executives. Applicants must have business degrees, 1- 3 years work experience, and be aged under than 30. Apply to hrd@eastandard.net by March 8.

opportunities
– Transport/distribute sodas for Softa bottlers and collect empties nationwide. Email info@kuguru.com
– Manage catering facilities at the UN including quality value menu. E-mail by March 3 to cps.registration@unon.org
– Owing to great international demand, Farmers’ Choice is urgently seeking pigs and paying cash for each delivered for slaughter.

Corporate briefs

air

Kenya Airways has added a once a week 777 direct flight from Mombasa to London. There are several charter airlines that operate flights on this route – serving the tourism boom at the Coast.

East African has also added flights to Malindi

Agriculture

Sasini slump: Sasini reported a loss of 387 million shillings for the year, down from a profit of 771m the year before. Operations generated only 12 million shillings which was a steep drop from 209m in 2004. The company blamed the poor performance on over supply of tea in world markets. Sasini also entered the horticulture business during the year and will maintain a focus on the premium tea sector where demand is high.

Banking

NIC Bank has extended its banking hours and will now be open from 9 a.m. to 4 p.m. on Saturdays.

Communications
New communication Minister Mutahi Kagwe is an advocate of using the government’s shareholding in Safaricom to restructure Telkom Kenya. In an October interview in the Financial Post, he says Telkom is inefficiently run and he believes it can achieve efficiency and connectivity levels similar to India and Mauritius. Hopefully he can restore confidence to the sector after two years of Tuju’s confusion. Surprisingly dropped in the cabinet re-shuffle was Permanent Secretary Rege who has been an active player in the satellite and mobile communications sectors.

Energy
The National Oil Corporation pulled out of the running to to buy BP Oil’s Kenya assets.

Housing

Kenya Commercial Bank staff pension fund will construct 252 houses along old airport road in Embakasi.

Publishing

Cosmopolitan magazine will discontinue its Kenyan issue and resume distributing the South African one locally.

Rail

The concessioning of Kenya Railways may be delayed after pensioners of the corporation filed a suit to stop the deal until their interests are secured.