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.

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.

R&R

WC to Malindi: Newly crowned F1 champion Fernando Alonso and his Renault team will return visit to Kenya in December. This has become an annual event that involves team building and physical training at the Malindi estate of the team principal Flavio Briatore.

TV debate: The Media Owners Association has convened a debate on the proposed draft constitution which will be broadcast on most of the major television and radio stations on Tuesday, October 18, at 7:30 PM. Members of the Cabinet from both fruit camps will answer questions sent ahead by members of the public via e-mail. In the countdown to the 2002 general elections attempts were made to have a televised debate featuring the presidential candidates, but which didn’t take place since the big two candidates, Uhuru Kenyatta and Mwai Kibaki, never committed.

Good week for investors: Last week saw the completion of a successful rights issue by Uchumi, confirmation of the Kengen IPO for 2006, and partial privatization of the management of the Kenya & Uganda railways by a South African firm after an extensive bidding process. Meanwhile, right issues have emerged as the preferred investment vehicle for privatizing state companies as they enable firms to raise new capital, gain new shareholding & management and reduce government ownership – since the government opts not to take up its allocated rights – this happened at KCB, Uchumi, and next at KPLC.

Paint obsession: The Nairobi City Council wants the City to look good but only in terms of appearance. They have issued a notice to building owners who don’t paint their dilapidated buildings – which the council considers to be a nuisance – or they will be fined 1,500 shillings per day and charged in court under the publish health act. There are so many old buildings crumbling on the inside and with cracked sidewalks on the outside, that paint is the least of their problems. The Council has also taken to painting road markings, while not really bothering with potholes or pavements.

Debt Relief: The Kenya Planters Coffee Union (KPCU) has again extended its debt moratorium window, this time by 3 months to December 31. This is a waiver on all interest above 18% on coffee farmers debts accrued between 1992 and 2001. Enquiries can be made to the firms’ lawyers.