On Thursday at Strathmore Business School, there was a session to highlight some of the opportunities and challenges for Kenyan companies that wanted to get into the farm export business.
Kenya is known for flower exports, but not so much for fruits and vegetables which can be quite lucrative and are better suited to the climate here. An example was cited that a kilo of dhania (coriander) that sells for Kshs 50 per kilo in Nairobi, can fetch €3-4 euros in Europe.
Export fruits and vegetables
Know the markets. Buyers have no obligation to buying from Kenyans. Companies have to know how to sell at expos where everyone is selling the same fruits and vegetables.
Kenyans are known for sending good samples, but the problem that buyers in other countries have with many Kenya companies is that they are later not consistent in quality and quantity of food exports.
How to identify opportunities and threats in the news; Things likeBrexit, earthquakes and climate changes and others like Muslim migration across Europe.
One can’t venture into exports unless they interact with the government – HCDA, Export Promotion Council, KEPHIS and others like the FPEAK, and the Kenya National Chamber of Commerce & Industry. Also, potential exporters must update themselves on changing regulations.
How to manage finance when upfront payments are rare, and there are international frauds who take deliveries but don’t pay. Also how to avoid the many fake consultants.
The biggest challenge in this country is labour, not capital! One solution is shared labour for exporters and farmswhocan’t employ full-time skilled workers.
If one is not in charge of their own logistics, they are not in business.
The Strathmore Business School exploring international markets program class takes place early next year and involves two modules: The first will take the class to the Fruit Logistica in Berlin, in February 2018 which is the world’s leading trade fair for the international fresh produce business where they will learn about the packaging, presentation, logistics, marketing. and other business aspects at the fair that had had 3,000 exhibitors from 84 countries and 76,000 visitors this year. Then at module two in Nairobi, they will learn about local production, logistics, local bank and financial options, obtaining global certification, branding, and other aspects of the food value chain. The deadline for applications is December 20.
On Thursday evening, Standard Chartered Bank launched an SME capacity building program as part of a partnership between the Bank, Kenya Association of Manufacturers (KAM), the Kenya Investment Authority (KenInvest) and the Institute for Small-Business Initiatives at the Strathmore Business School.
Standard Chartered Bank’s Head of Retail Banking, Mr. David Idoru, noted that the Bank’s strategy in opening a relationship club for its business clients was in line with its Business Banking Recognition Program that aims at growing its clienteles’ businesses through the Bank’s networks and partners. Also that Standard Chartered affirmed that it would be increasing its lending to SMEs by over Kshs 12 billion over the year (It’s loan portfolio as at December 2016 was Kshs 122.7 billion).
Members will get a 20% discount when they enroll in entrepreneurship classes at Strathmore and also get a chance to network with other SME’s in China, Malaysia and Singapore.
Recent events in the fintech (financial technology) payment space in East Africa.
The Kenya Bankers Association (KBA) unveiled Pesalink, a digital payments platform that is expected to cut the cost of transactions and transform the way consumers interact with their banks. Pesalink is a fully owned subsidiary of KBA and it will enable customers to make payments between banks in real-time, around the clock, without having to go through intermediaries. It has been approved at Standard Chartered, Co-Operative, Barclays, Commercial Bank of Africa, I&M, Diamond Trust, Gulf African, Guardian, Victoria, Credit, Prime and Middle East banks…“RT @alykhansatchu: .@HabilOlaka says @KenyaBankers will be targeting payments that exceed M-Pesa’s maximum transaction of ($675)”
Cooperative Bank: Is a demonstration that the how banks ar moving in the technology space. Kenya’s 3rd bank has adapted to their customers embrace and they enable more customers to use alternative channels for transactions. They had a valentines’ week promotion to highlight and encourage customers to use alternative channels such as MCo-op Cash (get a loan straight from ones’ phone at 1.16% per month and send money to other MCo-op users for free) or at a Co-op Kwa Jirani agent (deposit cash into someone’s Co-op Account for FREE at a Co-op Kwa Jirani agent) or Co-Op cards.
KCB will unveil its fintech future – a strategy based on a digital finance in Q2 of 2017
Another is EcoBank which launched a new mobile app which integrates Masterpass QR, a mobile payment solution from MasterCard. It enables customers to send and receive money instantly across 32 other African countries.
National Bank has launched cashlite payment solutions suite for county governments, Ministries, Government Agencies, and Departments. The bank has provided a variety of options for payments including mobile money, smart cards, and e-wallet and cash options, aligned with the continuing growth of mobile technology as well as consumers’ expectations for convenient mobile and online payments.
Strathmore University has supplied Busia county government with a revenue collection systems called CountyPro® with which the government hopes to grow revenue by 300%. It caters for all the unstructured county revenue sources including parking, market cess and trailer parking.
Mastercard is the technology partner for the Huduma Card in Kenya enabling payments for government services. It is being issued by Commercial Bank of Africa, Diamond Trust, Equity, and Kenya Commercial banks. Kenyans will be able to pay for an array of enrolled Government services such as the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) amongst others.
mVisa will soon be in 10 countries as Visa expands its QR payment service for safe and easy mobile payments in emerging markets. It is already live in India, Kenya (started with Family Bank) and Rwanda, and will soon be available to merchants and consumers in Egypt, Ghana, Indonesia, Kazakhstan, Nigeria, Pakistan, and Vietnam.. (mVisa) allows consumers to use their mobile phones to make cashless purchases at merchant outlets, pay bills remotely and even send money to friends and family members by securely linking their Visa debit, credit or prepaid account to the mVisa application. Also any bank’s mVisa customer – regardless of where they bank – can transact on any mVisa merchant and merchants do not need to invest in POS infrastructure. Visa has partnered with Co-Operative, Family, KCB, and NIC banks.
Mastercard committed to financially include 100,000 Kenyan micro merchants with Masterpass QR, a simple and secure digital payment solution. It will be introduced through various financial institutions. With it, consumers will be able to pay for in-store purchases by scanning the QR (Quick Response) code displayed at the checkout on their smartphones, or by entering a merchant identifier into their feature phones. Masterpass QR is currently being rolled out in Nigeria, Ghana, Rwanda, Uganda, and Tanzania.
Safaricom has issued 16,000 Lipa na M-Pesa cards in the pilot phase of a project that will launch later in the year. The Lipa na M-Pesa card uses pin and chip technology…It is also equipped with Near Field Communication (NFC) (which will) increases the speed at which customers make payments.
Verve: A dozen Kenya banks have partnered with Verve International, Africa’s leading low-cost payment network provider, in their push towards interconnectivity, cardless transact ability, and digital payments. Verve, best known as a card issuer has more than 32 million Verve cards and virtual/digital tokens issued across Africa and Verve is used in 19 African countries.
Pesapal adds American Express Pesapal integrated American Express into its payment platform on February 27, and AmEx card holders can now use their cards to transact on any online payment portal that uses Pesapal. This is especially useful for hotels and other companies in the East African tourism space. Pesapal which is in Kenya, Uganda, Tanzania, Zambia and Malawi and plans to expand to Nigeria in 2018 also offers an online booking engine for Hotels called ReservePort that’s used by Serena and Heritage brands.
Facebook: Facebook added international money transfers to its chat app. The service comes via London-based startup TransferWise in the form of a Facebook Messenger chatbot and enables transfers to and from the US, Britain, Canada, Australia, and Europe.
Bitpesa: The company introduced an Africa to China corridor enabling users to send payments from Africa, directly to a Chinese bank account using bitcoin.
European choice: How much does it cost to send money from Germany to Kenya?@WehliyeMohamed posted that the global average cost for sending $200 in Q3 2016 was 7.42%, and that It cost him 6.7% to send money to Kenya. Then @MkenyaU answered that it costs 1.5% when he sends €200 from Germany and this reduces to 0.6% when he sends €500. He cautioned that some companies charge zero fees but their exchange rates are horrible as he shared a comparison of a dozen services available to send money from Germany to Kenya.
Safaricom Mpesa: 10-year-old M-Pesa had 6 billion transactions in 2016 and is now in 10 countries – Albania, the Democratic Republic of Congo, Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania, and Tanzania. A new feature in M-Pesa will enable users to see the cost of transactions. In the initial phase, customers will be notified of the costs after, and in the second phase customers will receive a pop up message informing them of any charges prior to the transactions, while the third phase will see the service being made available to value-added M-PESA financial products including M-Shwari, KCB M-PESA, Okoa Stima and M-Tiba. The second and third phases of the update will be rolled out in coming months.
There have been some calls and reports recommending that M-Pesa be split from Safaricom. This could have happened years ago, but it is more difficult now that M-Pesa is an entrenched and central part of Safaricom today.
Tala raised over $30 million in Series B financing, led by IVP and joined by Ribbit Capital. Tala uses smartphone data to build financial identity .. mobile app for Android aggregates more than 10,000 different data points on a customer’s device, including financial transactions, savings, network diversity, and geographic patterns, and builds a customized credit score, or financial identity. Tala operates in East Africa and Southeast Asia with its main top markets being Kenya and the Philippines. Tala has delivered more than one million loans totaling over $50 million, and more than one million individuals have accessed the product in East Africa alone. See how Tala compares to other (fintech) / phone-lending apps in Kenya. Forbes termed this the largest Series B raised by a woman founder in recent memory.
Zeep is a smart and simple mobile platform that helps young people (teens) nurture good financial habits. They ‘learn by doing’ within the framework of a secure financial environment with guidance from their parents.
Companies to watch
Irish Tech News released a list of 38 Kenya fintech companies to watch in 2017; these include Abacus, BitPesa, Branch, Cellulant, Chura, FarmDrive, Kopo Kopo, M-Changa, Pesapal, Tala, and Umati.
The FTAfrica Payments Innovation Summit will take place on 29 March 2017..it will bring together 250 business leaders from various mobile and financial interest groups and explore challenges and opportunities inherent in these developments: from providing greater financial access to un-banked people across the continent to providing new services and opportunities for an emerging middle class.
This week, there was a debate on the future of coal in Kenya and its place in the energy mix for the country. It took place at the Strathmore (University) Extractives Industry Centre (SEIC) Nairobi, and was co-hosted by WWF Kenya). The government plans to put up a coal plant on maInland Lamu and a private developer Amu Power was selected to build it, and is seeking approval from the energy regulatory commission to commence construction.
Coal around the world
There are 3 new coal plants in Africa, and Japan & Korea will build 60 new ones to replace their old coal & nuclear ones.
There are now more global jobs in solar than coal, and solar has gone from 1 GW production in 2003 to 70 GW this year.
Trump got votes from Appalachian coal states where jobs were lost. But coal shares are down as gas has replaced coal.
With or without Kenya, the world is going green – Ethiopia aims to get to 100% renewable., Germany gets 20% renewable (all in the last 8 years), US has gone from 2 to 7% renewable (in 10 years), South Africa gets 2 GW from solar, and Rwanda’s 8.5MW solar is the largest in the region.
No projects happen at Lamu because NGOs on the beach want it to stay marginalized and oppose port, coal, roads etc.
Lamu has high unemployment leaving youth exposed to Al-shabab & drugs. This project will have 1,800 jobs for locals.
It is not the job of private company to create jobs or improve security in Lamu – that is the government’s role
“Save Lamu” groups oppose the plant because all its side-effects have not been quantified, and it will destroy far more (fishing) jobs than it creates.
Other Sources and Energy Mix
Amu Power’s 1050 MW will add 50% to Kenya’s 2,200 MW electricity from the coal plant that is 20 kilometers from Lamu town.
A country’s rate of development depends on availability of cheaper and reliable energy supply. Developed countries get 60% from coal/nuclear and just 3% from renewables on average.
Solar is okay for isolated homes, but it will not recover the cost of national power generation and distribution.
Geothermal costs $4-5 million per well per well & each one generates 5MW – so how many can Kenya get? It’s very expensive for government & IPP’s who often sink many dry wells
Geothermal depends on nature to generate the steam and you can’t tweak the inputs, unlike with coal & nuclear where you can vary the inputs to match demand.
Industries need coal. Moyale which gets electricity from Ethiopia hydro only has supply three days a week
Even today people on the grid will not turn on electric cookers – the main energy sources in Kenya are charcoal and wood, and they are larger pollutants than coal.
Kenya imports all glass because we don’t have the energy to make glass.
Coal is Kshs 7.5 per unit compared to kshs 20 from diesel-fired plants.
The US has lake signs that “if you fish here, don’t eat the fish” – Kenya will likewise have to monitor coal pollution risks
Kenya emissions (excluding extractives) will be 150 MT of carbon by 2030 and the government has committed to reduce this by 30%. How?
How will the plant dispose of the ash, carbon dioxide and acid rain? Lamu does not have infrastructure
An EIA (environmental impact assessment) audit process in Kenya is a compromised one. They are done by auditors hired by investors and will never oppose projects.
Amu Power will use three new clean coal technologies at the plant.
The government must check that industry and investors comply with environmental standards – there was a toxic battery factory in Mombasa. County and national governments need to do their own monitoring.
Energy projects are financed by lenders have strict conditions.e .g IFC/World Bank finance many thermal plants, and they can’t allow plants that compromise the environment. The Amu power one is guaranteed by the African Development Bank.
Yesterday saw the launch of a book entitled “Youth In Kenya: A Ticking Time Bomb” which is co-authored by a friend. The book looks at the challenge and job opportunities for the youth in Kenya, in terms of incentives, appropriate skills, cost of business, and new jobs for the youth, who one guest described as only interested in watching English soccer matches in the villages.
Kenya’s education systems was designed by the British to be a source of raw material and cheap labour.
Education CS Fred Matiangi: No other sub-Saharan Africa has put the resources in education that Kenya has in 50 years, and with 290 technical education institutions, there will be one in every constituency.
George Njenga: There are over 70,000 skilled Kenyans working in South Africa. It is important to look at the training of teachers, so that they also impact good foundation and lessons to the youth and Strathmore Business School has started on that.
Jonathan Mueke: There have to be standards in the Jua Kali sector – thousands of people produce hoes (jembes) that won’t dig, and which Nakumatt (a large supermarket chain) cannot sell
FT Nyammo: We have thousands of available jobs to be done in the coffee, tea, and dairy sectors in rural Kenya, but no youth are willing to do them as they consider them to be menial. Also, the Jua Kali sector provides 80% of employment when the economy is good, and the government should channel incentives there to create more Manu Chandarias! (one of Kenya’s most renowned industrial entrepreneurs)
One of the books’ main authors says he was inspired by media stories from last July, which described the Kenya Judiciary and Ports Authority as being were overwhelmed by job applicants; some had received 80,000 applications for 1,000 jobs advertised and even had stampedes at their offices.
The book was published by Longhorn and sells for Kshs 900 ($10). It’s a non-academic book edited for everyone to read.
Aside from this, last week, the KCB (Bank) Group launched “2JIAJIRI”, a KShs. 50 billion job creation program under they committed to “set asideKshs.10 billion annually in the next five years towards driving this enterprise development programme over the funds which will be used largely to support small and medium businesses run by the youth.” They hope to “reach 500,000 entrepreneurs (both existing and new ones) in 5 years, thereby creating at least 2.5 million direct and indirect jobs.”