Category Archives: Kenya motoring

AA of Kenya restructures for the future

The Automobile Association of Kenya (AAK) is over a century old and a member of the  International Automobile Federation (FIA). It is known for roadside assistance, its driving schools, setting mileage rates, Autonews magazine, car valuations for banks and vehicle inspections. It is also the go-to place for the issuance of international driving licenses, and carnets which are passports for cars to travel across borders e.g to Tanzania, Uganda or for other trips like this bike ride to South Africa.

Before you go on one of these trips, make it easy for yourself and get the following:
Carnet de Passage for each vehicle (get this via AA)
COMESA insurance (get via your insurance company, or buy at the border)
International driver’s license (get via AA)

The AAK had 2019 revenue of Kshs 722 million, expenses of Kshs 643 million and profit of Kshs 79 million. In Covid-affected 2020, revenue dipped to Kshs 472 million, and its net profit was 11 million. It had 100,000 members and net assets of Kshs 252 million.

While other automobile associations around the world do things like operate hotels & petrol stations and do helicopter rescues, the AAK plans its future revenue diversification ventures to include:

  • Establishing service centres in Nairobi, Mombasa, Kisumu, Eldoret and Nakuru.
  • Establish a learning centre called the Africa School of Mobility.
  • Be a leader in innovating mobility products and lead in green technology research.
  • Expand to all 47 counties and later to Rwanda and Ethiopia.

The envisioned projects all take capital so, at a special meeting in October 2021, AAK members voted to demutualise from being an association under the Societies Act and convert to a public limited company (PLC). They overwhelmingly passed proposals, with support ranging from 88% to 99%, including 93% for the AAK to do the demutualization and capital raising project.

The process will see the transfer of assets and investments to Automobile Association PLC, a holding company which will raise capital through a restricted public offer that is open to a new class of “full members.” The company will have an insurance brokerage as a subsidiary and an AA institute as an affiliate.

Currently, AAK members enjoy discounts on petrol (at Total stations), batteries, tyres, shock absorbers, and other services from partner organizations. But in future, “full members” will get shares, voting rights, more discounts on products and services that the AAK will continue to offer, in addition to dividends in future as shareholders. The AAK has also joined the Nairobi Securities Exchange (NSE) Ibuka accelerator program.

One can now enroll for full membership by paying a one-off fee of Kshs. 50,000 through card, M-pesa or deposit at the Cooperative Bank before December 31, 2021. This has been discounted to Kshs 40,000 for anyone who was an ordinary member of the AAK before the meeting date of 19 October. AAK transaction advisors are Standard Investment Bank, MMC Asafo and Tim Sky Media.

Nairobi Real Estate Moment: 2021

  • The Nairobi Expressway construction that will span from the Jomo Kenyatta International Airport to Westlands, has reached downtown Nairobi and is causing disruptions to real estate and traffic .. some changes to retail include..

  • Changes to Malls – many of which are largely idle above the first floor. Quite a bit of foot traffic there is from bank customers visiting their branches which have now been relocated to the third and fourth floors of Nairobi malls.

Other real estate stories.

  • An EFG Hermes report on Nairobi real estate found the demand for affordable houses has a disconnect that has seen prices are softening in Nairobi – at high-end residential (-27% below 2017 peak), and commercial properties (-13% off-peak). Also, the tough Nairobi office market is very visible (vacancy rates of 22% compared to 9% in 2011) with exposure to some financing banks including KCB and Housing Finance.
  • Orbit Group and Grit Group have partnered on a 25-year $53.6 million sale & leaseback transaction for a light industrial (warehouse and manufacturing) property on Mombasa Road, supported with a $25 million loan from the IFC. Orbit Products Africa, controlled by the Sachen Chandaria family, is a leading contract manufacturer for brands in personal care and home care products and its clients include Reckitt Benckiser, Unilever, Colgate and Henkel. They will expand the plant by an additional 14,741 m2 warehouse space and improve it to modern FMCG industry standards to achieve an IFC EDGE green building certification on completion. As part of the deal, $31.5 million will be a “perpetual note”, raised from Ethos Mezzanine Partners GP and BluePeak Private Capital and additional proceeds from this will be invested in the St Helene Private Hospital in Mauritius, an idea that was conceived by Catalyst Principal Partners. Grit Real Estate Income Group is listed in London and Mauritius 
  • A Knight Frank report, the “Africa Logistics Review” finds that Nairobi had the best real estate market between 2018 and 2021 for prime warehousing and logistics.  “Nairobi recorded the highest increase in average prime rents across Africa, from USD 4.70 psm in 2018 to USD 6 psm ” – and developers have grown over 170,000 square meters in the last five years. Kenya has the highest concentration of special economic zones (SEZ) in Africa (61 of the 180 SEZ’s). The country is also making good progress to grade A warehousing and in growing a real estate investment trust (REIT) ecosystem.  Also because of high land values in Nairobi, developers have sought towns/areas beyond traditional industrial hotspots Read more.
  • Speaking of REITs .. Acorn Project (Two) LLP, the Issuer of the Acorn Medium-Term Green Note (MTN) Program, closed the final tranche on 16th July 2021, raising Kshs 2.096 billion against the target of Kshs 1.438 billion representing a subscription rate of 146%.  As part of this transaction, the Acorn green bond was converted into the Acorn Student Accommodation Development REIT (ASA D-REIT). Read more.
  • The Architectural Association Of Kenya reported on development challenges within the Nairobi metropolitan area. A decade after an electronic construction-permitting system covering Nairobi, Mombasa, Kiambu, Machakos, Kisumu, Kajiado and Kilifi was deployed with the support of the World Bank Group, it is plagued by frequent disruptions and system downtime. In Nairobi, the system has not been operational for more than three months of 2021 and in a survey of AAK members, 46.7% of the respondents indicated that they had to wait for over 6 months for their applications to be processed or granted approval.
  • Kenya’s Lands Ministry is doing a digitization of title deeds through a National Land Information System (NLIMS), referred to as ArdhiSasa with a goal to have all land records digitized by the end of 2022.  The Lands Cabinet Secretary indicated that the Ministry has scanned and digitized 30 million documents in Nairobi.
  • A Cytonn Real Estate report on properties in the years 2020 found that “residential units in Thindigua, Syokimau and Rosslyn recorded the highest returns to investors and land asking prices recorded an overall annualized capital appreciation of 2.3%.” According to the report, Gigiri was the best performing office node in FY’2020, followed by Westlands and Karen, In the retail sector, Westlands and Karen were the best performing nodes while in hospitality, Westlands-Parklands was the best performing node. Read more in the report.
  • Cytonn is now doing a restructuring and has applied to wind down two funds – the Cytonn High Yield Solutions LLP and Cytonn Real Estate Project Notes LLP through administration and has invited creditors to submit their debt claims, with proof, to Kereto Marima who is the appointed administrator – by November 29, 2021.
  • Hotels are not doing well with many iconic sites closed or on sale due to Covid-19 and the resultant curfews and travel bans that have affected the flow of tourists into Kenya.
  • Many hotels expect a steady recovery once the curfew is lifted (which happened in October 2021). See a survey of hoteliers by the Central Bank of Kenya.

Some hotels that are gone: Intercontinental and the Nairobi Dusit/ D2 which recovered after the January 2019 terror attacks only to succumb in the Covid-19 aftermath.

Some hotels currently closed: Mt Kenya Safari Club, Norfolk, Radisson Blu.

Some hotels on sale: Outspan, Treetops (should the Queen buy the hotel ahead of her 100th birthday?), Fairview and Country Lodges, Jumuia (Nakuru).  

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.

Safari Rally return Postponed

Today was supposed to be the start of the return of the Safari Rally after several years of preparation had resulted in an announcement by the President of Kenya and the WRC in September 2019 that the race was back. 

The Safari Rally was legendary as being one of the WRC’s (World Rally Championship) toughest rounds with a route, at about 5,000 kilometres, that was twice as long as other rallies. It used to be run around Easter, which is usually the long rain season, and in some years, showers would transform dry, dusty trails into mud baths.

It was run over four or five days and nights, on open roads that drew in more hazards, such as encounters with other motorists and wildlife and all these ensured that a Safari win was one of motorsport’s most coveted prizes for drivers, teams, and car manufacturers.

But rallying has not aged well in the era of modern TV and having drivers race for several days and nights on open remote roads means it is tough to sell the action to a global television audience.

This years’ rally, that was set to take place between July 16 – 19, and now been pushed to 2021, had evolved to fit the modern-day WRC. It is organised by the WRC Safari Rally Project, a joint venture between Kenya’s Sports Ministry and the Kenya Motor Sports Federation to return the Safari to the WRC calendar which it had been dropped from in 2002.

But its Safari character remains, with racing on challenging dirt roads,  with picturesque African scenes. It was to be based in Nairobi with the service park and stages on closed roads in the Hells Gate National Park and around Lakes Naivasha and Elementaita in the Great Rift Valley.

Before the Coronavirus shut down world travel, it was expected to feature several, if not all of the current top WRC teams and cars. These include the Hyundai i20, Ford Fiesta, Citroen C3, Toyota Yaris, and others from Skoda and Volkswagen that are all 4WD cars with 1.6-litre turbo engines able to reach 200 kilometres per hour.

Here is a Pinterest series of older WRC Safari rally pictures.  

Other:

  • Kenya has an annual local rally series sponsored by banking giant, the KCB Group.
  • There has also been a classic safari rally series featuring older rally cars. sponsored for many years by Kenya Airways, and more recently by Safaricom, it took racers around East Africa in the grand old style of the 1960’s rallies.

EDIT Oct 9, 2020: Kenya’s iconic Safari Rally and Japan, which were both included in this year’s schedule but cancelled due to the pandemic, are on the 2021 WRC calendar. Kenya is slotted for 24 – 27 June, 2021 as the WRC returns to Africa for the first time since 2002.

SWVL and Little shuttles shut in Kenya

Unique shuttle services by SWVL and Little Ride were ordered to halt operating this week by Kenya’s transport regulator, the National Transport and Safety Authority.

Excerpts from a recent  column about the services:

SWVL has interesting routes all over Nairobi from residential areas to business hubs. Examples are for people who make daily commutes from Ruiru or Kahawa Sukari to offices in Westlands, or others who live in Kitengela and work in Upper Hill. Traditionally they would have to use two (matatu) vehicles and walk across the central business district (CBD) which they only pass because it is where most bus routes terminate. 

 But now, enticed with free introduction rides, they can get to work in half the time, by booking a ride in advance on an app, and paying a flat fee of Kshs 200 per journey. Some get to ride in comfortable shuttles with Wi-Fi, not the old, creaky matatus, that serve many ‘posh’ areas of Nairobi. Little Shuttle has now branched into long-haul services with several daily trips between Nairobi and Nakuru.

The news was first revealed by Kamal Budhabhatti, Chief Executive of Little in one of his regular email updates to customers of Little. He noted that the shuttles they used were from partners who were fully licensed  but that the NTSA had said it was not the correct license. 

He asked that the NTSA do dialogue with them as a technology companies trying to change public transportation through a popular service that had run for almost a year and which has been very popular. He added that when Safaricom launched M-Pesa there was no regulation on mobile  money and that the Central Bank of Kenya was able to come up with a legal model afterwards. He also wondered if the decision to stop Little was instigated by pressure from the public transport cartels.

On the SWVL side, the General Manager, SWVL Kenya, Shivachi Muleji, stated that: We have been engaging with the government and are still in the process. There have been a few milestones and we are happy with the progress. We’ll remain committed to ensuring that we build a business that’s fully compliant.

Government Initiatives: Meanwhile the Government’s plan for Bus Rapid Transit system and a Nairobi Metropolitan Area Transport Authority (NaMATA) are still at the drawing plan stage. It’s also been a few years since Google and Equity bank tries to reorder the finances of the public transportation sector.