Category Archives: tanzania

Kenya’s Money in the Past: Bethwell Ogot Footprints on the Sands of Time

My Footprints on the Sands of Time is an autobiography by Professor Bethwell Ogot (wikipedia),  an eminent academic scholar. It is a tale of a young man overcoming incredible hardships, and going through early schooling at Maseno, and later through winning scholarships and prizes, on to excelling at Makerere, St. Andrews (Scotland) and teaching with Carey Francis at Alliance High School. It also touches on his work and roles in the establishment of the University of Nairobi, and Maseno University, and at his travels to present papers and speak at prestigious conferences and other institutions across the world.

Ogot narrates tales on growing up in Luo culture, seeing emerging economic changes e.g. he took a honeymoon trip to Uganda in 1959 traveling on first class from Kisumu to Kampala via Nakuru, a twenty-seven-hour train journey. Later, when his father died on August 30, 1978, this was the day before Kenya’s first president Mzee Jomo Kenyatta was to be buried, and it was a period when the sole broadcaster – the Voice of Kenya refused to publish any other death announcements, newspapers would not publish any other obituaries as a sign of respect to Kenyatta, and coffin-makers were not willing to make any other coffins.

He was close to former schoolmates, who were now in government and its leaders. Ogot was waiting to meet Tom Mboya for lunch at the New Stanley Hotel when Mboya was shot (his death was not unexpected to his friends), and Ogot had an encounter with Mboya’s killer who was fleeing the scene.  He writes of his work to establish and get government and financial support for the Ramogi Institute of Advanced Technology – RIAT and a delicate dance with community leaders including Oginga Odinga who was firmly out of government.

The book has a wealth of information on corporate governance and management from Ogot’s time at regional bodies, parastatals, international organizations, donor-funded ones, universities that were in slow decline and government. He writes of working in research and publishing, and struggling to document and publish African history. Also of his times at the East African Publishing House that published books on political science, history, geography and a modern African library with much opposition from British Publishers who controlled publishing and later from government officials who set out to shut down independent academic stories. They published Okot p’Bitek’s Song of Lawino that some critics considered a terrible poem ahead of its publication but which went on to be celebrated and sell over 25,000 copies.

There are also stories of navigating the East African Legislative Assembly, travels around East Africa, interacting with leaders and observing actions that were either supporting or undermining the East African Community. Uganda’s President Amin spoke of supporting the community even as he launched Uganda Airlines that he said would only do domestic flights in Uganda. There was also the importation of goods for Zambia through Mombasa that undermined the Dar es Salaam port and the Tazara railway, so Tanzania banned Kenyans trucks with excess tonnage from using their highways, and Kenya retaliated by closing its border with Tanzania. Officials in different countries also tried to keep community assets from leaving their borders, and Kenya grounded planes and withheld fuel of East Africa Airways which owed money to Kenya banks in a move designed to hurt vast Tanzania the most.

The most shocking tales are from his time working at the Museums of Kenya and its spinoff that saw Ogot as the first director of The International Louis Leakey Memorial Institute for African Prehistory – TILLMIAP (see an excerpt). It is a serious indictment of Richard Leakey who regarded TILLMIAP as his personal family fund-raising institution and who, with the support of Charles Njonjo in government and diplomats and donor agencies to warded of transparency and Africanization efforts – and were eventually to hound Ogot out of the institution.

Another tale is of when, as the candidate representing Africa on the executive board of UNESCO, he ran for the Presidency of the General Conference. But what should have been a formality of confirming his position became a long process after a surprise Senegalese candidate emerged to run against him – and France lobbied Francophone countries to only vote for a French-speaking African candidate, rules were changed, documents forged, and additional multiple election steps added before Ogot finally won.

The 500+ page book by Prof. Ogot does not have an index, but it’s worth reading all over again.

EAVCA: Fintrek explores Fintech opportunities in East Africa

This week, the East Africa Venture Capital Association (EAVCA) with Intellecap Advisory Services released the Fintrek – which explores fintech opportunities in East Africa, new frontiers in fintech (defined as firms using technology to deliver financial products/services or capabilities to customers or others firms) and fintech investments in East Africa.

Asia Pacific and Africa have been harbingers of mobile payments and that is transitioning into fintech now. The Fintrek report notes three underlying factors driving fintech uptake as:

  • (i) the use of alternative data to generate credit takings of the unbanked (and deliver services to them cheaply e.g no need for bank branches),
  • (ii) peer to peer networks (decentralized collaboration, payments across borders, unregulated) and
  • (iii) the emergence of nontraditional players (telcos, wallets like Google Pay & Apple Pay, e-retailers like Amazon)

smartphones offer fintech opportunities.

Regionally, Kenya is seen as a leader in the region owing to its levels of deposit penetration, deep financial sector penetration, and smartphone ownership (at 44% compared to less than 10% for Tanzania Uganda Rwanda and Ethiopia). Kenya is where most fintechs are setting up, and Kenya-based fintechs have raised $204 million between 2000 and 2017 which is 98% of the funding to the region.

Funding: In terms of funding, fintechs are still in early stages as seen in the small deal sizes: seed funding provided 47 deals (averaging $447,000) and 60% of all funding was to impact areas renewable energy/off grid lighting and health care (microinsurance). Five companies M-KOPA, Off-Grid Electric, SunFunder, Angaza, Azuri) have raised $345 million (through debt and equity) accounting for 55% of the funding between 2010 and 2017. Another finding was that while 53% of all funding between 2010 and 2017 was from venture capital funds, their average deal size  ($6 million – e.g. from Apis, Madison Dearborn)  is lower than those of corporates ($15 million – e.g. from Stanbic, Commercial Bank of Africa) and foundations ($10 million – e.g. from Calvert, Emerson, Omidyar Network) deals.

Fintechs needs a balance of debt and equity investments to grow, but they are struggling to get debt financing (mainly bank loans). Fintechs in East Africa had debt-equity ratios of 1:1 compared to 3:1 globally, indicating they have capacity to absorb more debt but are not doing it. The EAVCA report cites one of the funding challenges as investors want proof of traction while fintechs need working capital to demonstrate proof of concept, lack of funder knowledge about local markets, East Africa fintechs don’t look like what foreign investors expect, currency fluctuations make it had to raise debt and there is a lack of fundraising skill among local fintechs who can’t afford the teams that will enable them to raise money.

The Fintrek report identified 11 fintech opportunities models and 47 sub-models and identified 4 sub-models that have flourished in East Africa:

Payments and Savings: digital wallets (M-Pesa, Alipay, Tigo pesa – which pays 7-9% interest and now attract high-end users), payment intermediaries (Cellulant, Direct Pay, Jambopay) and digital currencies (Bitpesa, Coinbase, Belfrics – a crypto-currency platform).

Lending: direct lending (Branch, Tala – with 1.8M customers in Kenya, Kreditech, Umati capital), P2P lending (Lendable, Pezesha – has 6,000 borrowers & 200 lenders), and lending aggregators (lakompare). Also, there is telco-based nano lending (M-Shwari, KCB-M-Pesa, Equitel – which issued $57 billion worth of loans – and telco-bank lenders in Kenya account for over 76% of total loan accounts, but only 4% of the loan values)

Financial Management: Insuretech (Bimaspace, BimaAfya, Microensure), Investech (Abacus, Xeno) and personal finance management – (Chamasoft, Caytree).

FS Enablers: (Jumo – credit underwriting for 5 million customers and 20 million loans), Arifu, FirstAccess, NetGuardian – fraud identifier), FarmDrive, Sasa solutions, Lendddo).

Some recent fintech deals in East Africa include Farmdrive (from the Safaricom Spark Fund), Pezesha (DFS lab), Pula (DFS lab, CGAP), M-Kopa ($80M – Stanbic, CDC, FMO, Norfund), Tala ($30M – IVP), Jumo ($24M – Finnfund), Mobisol ($12M – FinnFund), Angaza ($10.5M – Emerson), Flutterwave ($10M – Greycroft), Netguardian ($8.5M – Freemont), Trine ($8M – Gullspang), Lendable ($6M – Kawisafi, Omidyar, Fenway), Direct Pay ($5M – Apis), Azuri ($5M – Standard Chartered), Bitpesa ($4.25M – Greycroft), Branch ($2M – from high-networth Kenyans and funds – arranged by Nabo Capital)

Production of the Fintrek report was supported by Financial Sector Deepening (FSD) Africa and Netherlands Development Finance Company (FMO).

See more of the EAVCA Fintrek report and other fintech opportunities at the 5th Sankalp Africa Summit on March 1-2, 2018 in Nairobi and see their private equity snapshot report.

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Tanzania closes 5 banks

In notices released today, the Bank of Tanzania (BoT) revoked the licenses and directed that five banks proceed to compulsory liquidation, by the country’s  Deposit Insurance Board (DIB).

BOT found that the banks – Covenant Bank For Women {Tanzania}, Efatha Bank, Njombe Community Bank, Kagera Farmers Cooperative Bank and Meru Community Bank were found to be critically undercapitalized and that their continued operations would be detrimental to depositors and a risk to the stability of the financial system.

In another notice, depositors, creditors, and debtors of the five banks were asked to be patient as the liquidator (DIB) makes arrangements, collect debts, and works out a payout plan.

 

Kenya’s Money in the Past: Spymaster Memoirs by Bart Kibati

Excerpts from the Memoirs of a Kenyan Spymaster, a unique autobiography by Bart Joseph Kibati who worked in national intelligence for over two decades, where his job was to, with others in the business, identify and analyze threats and advise the government. It is a revealing look at many sectors of his life (he got married the same day that Tom Mboya was shot), Kenya’s transformation in the independence era, the business environment, and the state of security in East Africa and international relations, while serving in two administrations during  which he interacted with Presidents’ Kenyatta and Moi.

Spymaster excerpts

Police & Cattle & Remote areas

  • Cattle rustling by cattle raiders – Ngorokos (former soldier) has long been a feature in Kenya, with Laikipia and Samburu raids spilling over to Turkana, Baringo and Isiolo areas. Suguta Valley where over 40 police were killed in 2012 is a place that police have long avoided going to for years because of the dangers.
  • While the ‘Ngoroko’ plot against Moi, was a myth, it was based a well-intended idea to have an elite fighting unit to chase and deal with bandits.
  • For decades, Lamu’s Boni forest, which is near the Somalia border, has been a hideout for poachers & bandits and this has been sustained by poor policing practices in the area and support by local tribes.

East Africa & Leadership Styles

  • Some keen observations on some of the factors such as economic desires, ideology & actions of leaders  – Kenyatta, Nyerere and Obote/Amin and other political party & government officials in the run-up to why the East Africa community collapsed.
  • Two days after the signing of an East African a treaty in 1963, there were coup attempts in all three EAC countries.
  • To make their decisions, Kenyatta relied on finished intelligence information, while Moi wanted raw information.
  • Moi wanted to know why the Kikuyu hated him and Bart told him about quotas in education and government, and the collapse of their banks (which were rolled into Consolidated Bank) and area infrastructure, to which Moi replied: “How can the government build infrastructure if they ask donors not to release funds?”

Industry & Economy

  • Beach plots allocated by the President and partnership with hoteliers resulted in massive hotel empires at the coast or wealth from selling utility plots – by people around the president.
  • The greed of property developers and corruption of environmental regulators.
  • The government moved to grant duty-free cars to university lecturers in a move to pacify their radical ways.
  • Coffee smuggling from Uganda, through Chepkube, opened the eyes of many people in government, including police, to quick great wealth that could come from corruption.
  • The Numerical Machine Corporation was a success. It just could not shed the ‘Nyayo car’ tag.

Human Resources  & Working in the Government: 

  • When he finished form four at Mangu High School, he had job offers to work at East African Airways, Barclays Bank, the Post Office, Kenyatta University, and also the option to continue his schooling at A levels!
  • The recent repeal of indemnity for security forces (and TJRC) makes it hard to do police work such as combating terror threats and is a demonization of patriots.
  • How colleagues, and politicians scheme to transfer, promote or demote other security staff.
  • There is no pension for older Kenyans who, while experienced, are discarded under the guise that they are preventing youth from getting jobs. It seems the Government hopes they will die soon and stop draining the meagre government pension.
  • There were no successful coups in Kenya due to (long-term spymaster chief) Kanyotu and the Special Branch. The 1982 coup was unnecessary;  It could have been stopped but for a leak and bureaucracy. But Kanyotu was later misled by Pattni into the Goldenberg scam.
  • The more open that national intelligence services become, with things like having a visible head (of tee NIS) and a website, the less effective they have become.
  • Finally, he ends by asking if Kenya is facing more terror attacks, urban crimes, and rural banditry today because the country doesn’t have a functional intelligence collecting unit. Or there’s more reliance on technical intelligence than human intelligence by a demoralized, ethnicized spy unit.

Some revelations in Spymaster are shocking, but many of the stories have been cited elsewhere with different interpretations, and many of the people named have passed on, or circumstances have changed. Also another story elsewhere, quotes Lee Njiru a long time civil servant who says that: (the) Official Secrets Act binds civil servants to keep secrets for 30 years and the period had elapsed and he was now free to share what he knows.

Also read The Birth of an Airline by Owaahh, which narrates from the Spymaster book, about the break-up of East African Airways and the birth of Kenya Airways.

Tegeta Escrow

Yesterday Harbinder Singh Sethi and James Buchard Rugemarila were charged with obtaining $22 million and 309 billion Tanzania shillings from the Bank of Tanzania in what’s been dubbed the Tegeta Escrow case.

Perhaps the best summary of the Tegeta Escrow case comes from Africa Confidential (Vol 55 – N° 19) dated 26 September 2014 –

  • Heads may be about to roll after revelations about the contested transfer of 200 billion Tanzania shillings (US$124 million) from an escrow account in the central bank, the Bank of Tanzania, to Harbinder Singh Sethi’s Pan Africa Power Solutions Tanzania Limited (PAP, AC Vol 55 No 13). The complex details of how Sethi acquired Independent Power Tanzania Ltd. (IPTL) and then raided the BoT account have now been pieced together by two opposition members of parliament, Zitto Kabwe and David Zacharia Kafulila, with the help of The Citizen and Mwananchi newspapers.
  • If Sethi’s critics are proved right, this is the country’s biggest corruption scandal to date. Based in South Africa, Sethi is a Tanzanian-born businessman with a reputation for dubious past dealings in Tanzania, Kenya, South Africa and the United States. Sethi claims to have bought 70% of IPTL’s shares from Malaysia’s Mechmar Corporation, now in receivership. Yet Standard Chartered Bank Hong Kong (SCB-HK) claims to have purchased IPTL’s debt for $76 mn. in August 2005 and says Mechmar was already in liquidation when Sethi claimed to have acquired the shares.
  • The Tanzanian behind IPTL, former BoT employee and self-styled international consultant James Rugemalira, is also under investigation over the $75 mn. that he was paid by Sethi for his company’s 30% share in IPTL.
  • Both Sethi and Rugemalira have lived up to Kabwe’s description as ‘aggressive litigators’. Their strategy has been to steer the acquisition of IPTL away from non-Tanzanian jurisdictions (Malaysia and Britain), from other interested parties (SCB-HK) and lawyers, receivers and liquidators in Malaysia and Hong-Kong. In this way, SCB-HK’s property rights in IPTL have been summarily dismissed and attempts by SCB-HK’s lawyers to negotiate a compromise with Tanesco have all been blocked. Furthermore, the findings of the International Centre for Settlement of Investment Disputes over IPTL’s overcharging Tanesco for power supplied and the proposal for a solution involving SCB-HK claims have been ignored. Tanzanian courts have been complicit in rubber-stamping IPTL’s transfer to Sethi’s PAP. None of this helps improve the country’s image abroad.

Other

  • The unfolding details about the Tegeta Escrow case resulted in the removal of four ministers back in 2014. On Saturday, the energy minister, Sospeter Muhongo, resigned over his alleged role in the affair last year that saw $180m (£116m) taken from the country’s central bank. The move follows the removal from office of the attorney general, Frederick Werema, the energy secretary, Eliakim Maswi, and the housing minister, Anna Tibaijuka, who was sacked over the transfer of $1m to her private bank account Chairs of three parliamentary committees have also resigned following the scandal: Victor Mwambalaswa, energy and minerals committee; Andrew Chenge, parliamentary budget committee; and William Ngeleja, legal affairs and governance committee.
  • Back in December 2014, Stanbic Bank Tanzania released a short statement on the-then parliamentary report on Tegeta Escrow and their role.