Category Archives: Kenya procurement

Cement, Sugar, Governments contribute to Bad Debts in 2017

In a press conference this week the Central Bank of Kenya (CBK) governor spoke about non-performing assets i.e bad debts and highlighted manufacturing, real estate and, trade sectors.

This comes after the half-year 2017 bankers credit survey released by the CBK noted that the ratio of gross non-performing loans to gross loans increased from 9.5 percent in March 2017 to 9.91 percent in June 2017. The increase in the gross non-performing loans was mainly attributable to a challenging business environment

  • Non-Performing Loans: Generally, the commercial banks expect an increase in the levels of NPLs in the third quarter of 2017 with 42 percent of the respondents indicating so. This expected rise in NPLs is attributed to the industry’s perception of increased political risk in light of the upcoming general elections.
  • Credit Recovery Efforts: The banks expect to tighten their credit recovery efforts in eight out of the eleven sectors.

The Governor said that in manufacturing, the bulk of the Kshs 5 billion of bad debts increase could be attributed to a sugar company, two cement companies, and a plastics firm, while  In real estate, Kshs 3.9 billion was due to two projects – one a golf course, and the other was a housing one. But he added that, for all of these projects, the banks that had financed them were working to resolve the loan performance.

On trade, he said that Kshs 2.8 billion increase of bad debt loans was spread across many banks and that a lot of it relates to delayed payments by government – both national and county ones – to suppliers.

Unga AGM 2008

The company which was founded in December 1908 by Lord Delamere to mill his wheat harvest, is now a century old. It is celebrating its fourth straight years of profits on the back of improved sales Kshs. 9.5 billion (~$125 million) and profits of Kshs. 564 million (~$7.5 million). The Chairman commented on the improvement from the time a few years back when they used to record losses and had their financial accounts qualified by the auditors.

slow registration

Excerpts: missed a few minutes of the meeting as the registration was really slow – just two ladies, with no computer. They had to write every shareholder name down, and have them sign, but without verification of their legitimacy

Bonus: The company offering a (1) bonus share for each five (5) held to reward shareholders since the board had opted not to pay a cash dividend this year.

Company structure: The Seaboard Corporation is a management company and shareholder that contributed to the turnaround. However their presence is a sore point with some shareholders unhappy that while they have no divined, Seaboard gets paid a minimum of Kshs. 12 million a year that will escalate as the company gets more profitable. Their agreement has also been extended by the directors for another five years and there was also a question on the loans owed to the company that could be called in at any time – an unlikely scenario according to the board
– Shareholders also asked on the relationship between Nampak (a partner company) and Bulpack which was a joint venture between Nampak and Unga to make bags. The dividend paid that appears in the accounts was paid to Unga from Bulpak, and not by Unga.

(No) Dividend: Though this was the fourth year of profits, the board said it still needed to retain cash for plant & machinery replacement and to also strengthen the balance sheet.

No Maize in Kenya: Later the Unga MD Nicholas Hutchinson gave a talk on the current maize shortage and stated that the company (Unga) had ran out of maize (corn) stock floor eight days ago. He said there is not enough maize in the country, and the late decision by the Government to import maize, means it will trickle to the markets slowly – by mid December. The Cabinet may release more to millers, but the Government also wants to build up grain reserves and assist displaced people (flood, post-election violence victims)

The maize harvest this year was bad – Unga is offering Kshs. 2,500 per and 2,250 in Nairobi and Eldoret respectively but are still not able to get enough maize so they are operating about 35 – 40% which may show in the coming results

For consumers faced with a high retail price (just under Kshs. 100 for a 2kg pack, it’s a good time for farmers, but bad for consumers (dangerous?) – as prices may not drop significantly even after the supply. He said that the Government will be importing maize to Nairobi at Kshs. 2,500 if no duty is paid and that it must speculative ventures – which has affected supply of maize. Also, next year’s maize harvest could be just as bad.

Receivables: are much higher than the year before. Management responded that its from their increased business. They had in fact reduced the number of customers i.e. 55 key wholesalers that they deal (down from 140) with and gave them incentives to pay cash or open bank guarantees.

Outlook: – Asked about market share, management said it was growing. They focus on urban markets and supermarkets, and don’t emphasize rural sales as entrepreneurs can flour mill and sell it cheaper than Unga branded products.
– Other subsidiaries: are performing well like the Uganda one and animal feed division – Unga had anticipated a maize shortage so had started to substitute maize with wheat in their animal feed. Wheat subsidiary is good though the current good prices may fall next year

Shareholder gift

Goodies: Each shareholder present got a voucher for a bale of baking flour. Which retails at about Kshs. 1,500 ($20)

LAG


Interpreting a local American Gangster

Having watched ‘American Gangster’ over the weekend then spent a couple of trips around town with a major business player, you get to understand why a certain group of people with mundane jobs can get so wealthy.

It’s understandable how the police do it (roadside bribes), but you can also bodyguards, drivers, personal assistants (PA’s) and even secretaries to that list

They are not necessarily corrupt but they are around centre of power and power players and have a chance to observe. By working closely supporting business and political leaders, they are unique situated to be around when the big deals happen, know what major developments are taking place and are able to spot arbitrage opportunities before anyone else.

Focus on drivers: They are in the company of ministers and other business leaders who talk deals in the cars and over their phones. Like the Frank Lucas character (played by Denzel Washington) in the movie American Gangster, drivers/bodyguards their bosses to meetings and get to see secret deals/big investments develop made by their boss whether it’s a new block of apartments, factory or even a new mistress. They also overhear conversations between the boss and engineer/architect/banker who’s sometimes in the car or over the phone as the boss dashes to/from meeting these same people.

The boss may be buying a building, but his driver may buy a small piece of land in the area or drop a line to a distant buddy to make another small deal. They observe secrets and learn skills at the same time.

Also bosses are human and have a compulsion to brag and backbite like all the rest of us – discussing with their driver the merits or demerits of an ongoing investment, or whether the person who has just hung up is a genius or an imbecile.

So it’s no surprise when a driver retires, he often has a sawmill, matatu or two, and three pieces of land or buildings, with wives scattered all over the country to manage them

His boss never groomed him and he never waited for Christmas or when the bosses’ good fortune sparked a feeling of goodwill and generosity that made him throw some crumbs at his henchmen.

So the driver creates a mini-empire silently over time to cater for his/her retirement, completely legitimate and by one who uses an opportunity to the maximum.

Who’s Kenya paying?

A noble step in the war on corruption is this website by the Public Procurement Oversight Authority which list all contracts awarded over 5 million shillings ($71,430) by organs of the kenya government . A step further would be to require/ publish all companies who are awarded such contracts to also publish/disclose all the company directors.

Transparent dust
Mwalimu Mati is showing his former employers Transparency International quite a bit of dust with his new venture Mars Group Kenya which unearths more dirt than Transparency ever did.

Improved opportunities for graduates

Two years ago I placed small advertisement in the newspaper to fill a secretarial vacancy. Twice after that, the job holders found better jobs, so I had to do it again – a year ago, and also this February. Within a week of each advert, almost twenty applications were received.

Two years ago, almost all applicants were university graduates; for the second ad, about 2/3 who responded were graduates and this time – of the 20 applicants received in the first week, only half were university graduates. Does this mean that there are better opportunities for graduates? Or they feel better about their prospects that they won’t accept an entry-level job these days. Good times and more opportunities I hope for them

The results of this were a quick experiment. But a caution here; if you apply to a job at high profile company, it may take up to two months (or never) to be called in for an interview or sent a regret e-mail.

jobs
from the daily papers

African development bank (ADB) (Nairobi): Macroeconomist, agriculture expert, infrastructure specialist, procurement assistant, disbursement assistant, IT & telecommunications assistant, administrative & financial assistant. Apply to the resident representative, Kenya country office 4861-00200 Nairobi

Alliance for a green revolution in Africa (AGRA) [ supported by the Bill & Melinda Gates and Rockefeller foundations]: – which will be headquartered in Nairobi, and program operations will be implemented by a supporting organization – program for a green revolution Africa (ProGRA) – also to be based in Nairobi
Executive director, evaluation & learning officer, program officer(for education & training for crop improvement), director for strategy & learning, program officer (for crop genetic improvement & farmer variety adoption), program officer for (agro-dealer development) [2 positions], policy officer, communications officer, program officer (financing seed production systems) apply through KPMG Kenya at agra@kpmg.co.ke by 23/3

Software developers at credit reference bureau Africa (CRB Africa) . Apply online by 31/3

Senior program officer Kenya at DFID. Apply through adept systems recruit@adeptsystems.co.ke by 14/3

Kenya Anti Corruption Commission: Accountant, forensic investigator III (tax expert), forensic investigator III (audit expert). Apply to the director 61130-00200 by 16/3
Related – the Kenya Revenue Authority is hiring detector dog instructors and detector dog handlers. D/L is 23/3

Nairobi Java House limited: general manager, coffee division manager, and HR manager. Apply to hr@nairobijavahouse.com by 14/3

Safaricom: Simu Ya Jamii Area Manager, Simu Ya Jamii Administrator, Network Monitoring Centre (Nmc) Shift Technician, Senior Tax Accountant, Principal ERP Developer, Principal Business Analyst, Data Services Planning Technician, NMC SSS Senior Engineer-OM Senior CRM System Developer. Apply online

Serena hotels: marketing manager, e-Commerce Manager, sales executive, IS Manager (Kigali) and sous chefs. Apply though Hawkins associates – hawkins.asssociates@khigroup.com by 14/3

other bits of news

advertising Capital FM (98.4) are for the second year running their Image plus promotion that offers medium size companies 120 30 second radio advertisements over the course of one year for about 1.4 million shillings – inclusive of production costs.

affirmative action: In public procurement & disposal, preference will be given to local contractors & suppliers exclusively for goods/supply contracts of less than 50 million shillings ($710,000)shillings and Kshs. 200 million ($2.85 million) for works procurement.
– Bidders will also enjoy a margin of preference of 15% if supplies used are sourced in Kenya
– Bidders will also enjoy a margin of preference of 6% where local shareholding is less than 20% and 5% for shareholding between 20% and 50%

aviation tourism revival continues with airline licenses renewed for air Italy, Neos, Livingston, (Italy – Mombasa / Zanzibar), Fischer (Poland – Mombasa), Malav (Hungary – Mombasa), and Edelweiss (Switzerland – Mombasa)

coffee: An expo will be held on March 8th at Serena – facilitated by the export promotion council

housing: the government will put up 400 mixed housing units in Mlolongo – Athi river Kenya slum upgrading network in conjunction with UN Habitat (Mavoko for middle and low income housing)

investor seminar: Strathmore University – SIFE Team will hold an investment conference dubbed Smart NSE Investments 2007 on Saturday, 3rd March 2007 from 8:30am – 4pm at the university auditorium. Charges are KSh.100 (Exclusive of Lunch)

media training: The 5th Eastern Africa Media Training conducted the Inter Region Economic Network (IREN) will take place in Nairobi between March 14 – 16

security: serious stuff on the Somalia Coast where another ship (MV Rozen) was hijacked by pirates this week
– Kenya to buy patrol boats to secure the waters of Kenya and the port of Mombasa
– (kizingiti, siyu, mokowe, kiwayu) patrol bases in Lamu have been upgraded to be police stations