Category Archives: Uncategorized

Farewell Easy Taxi?

 It’s been reported that Easy Taxi are on their way out of Africa as a market, following a similar retreat in Asia, to focus on Latin America. They have been here for about two years, signing up operators in Nairobi, and later in Nakuru and Mombasa, with some good traction.

They have done this without attracting the attention that rival Uber does or drawing battles with local taxi drivers. Flying under the Uber radar may have also meant that Uber caught all the funding attention in the taxi hailing world, so even where Easy had a lead, all that was forgotten after Uber arrived in new markets..

Easy had formed partnerships with many Nairobi corporations, events and concerts, and even banks to finance their growing fleet of taxi drivers. The taxi market remains vibrant and there are rumors that other companies may be planning to takeover their operation. Easy Taxi Africa is a part of AIG (Africa Internet Group) which encompasses other locally familiar brands including  Jovago, Lamudi, Hello Food and Jumia.

Do Kenyans Have More Financial Access than Americans?

This week, FSD Kenya released  Financial Access 2016, their fourth report, after others in 2006, 2009 and 2013. This year is the 10th anniversary of FSD Kenya, and much has changed since the first survey was done back in 2006 which showed that 40% of Kenyans were excluded from financial services.  The Financial Access report will now be done annually, and will feature in the national statical publication – the Kenya Economic Survey, from April  2016 onwards.

Central Bank Deputy Governor, Sheila M’Mbijjewe, said that she was happy that the report drilled down into trying to understand the differences in financial access and usage between men and women, and between rural and urban residents, but that the government would now like to see more from mobile money in terms of quality of financial products and impact, as access and usage are no longer enough.

Image by 'Joshua Wanyama ('')

She also said that the study’s finding that 75% of Kenyans have financial services access, was higher than the USA figure of 67%. Another important finding was that, while cash remains king as a payment option for majority of the population, 59% of Kenyans now have more than one way of paying for things – compared to 18% in the first survey.

How Interswitch extends Banking Reach

Interswitch products have been deployed in many African markets and can be used to extend services to bank customers in a variety of ways:

  • The Payment Switch is used by many banks; In Kenya they enable customers of dozens of banks to use each other’s ATM’s and to do account to mpesa and mpesa to their bank account transactions, even at ATM’s where they don’t have to use bank ATM cards to transact. In Nigeria, Interswitch is at at all commercial banks meaning a total network of 13,000 ATM’s are available for customers to use, and in Uganda there are 13 banks with 280 ATMs. Interswitch has just launched in Tanzania, their 6th market in Eastern Africa. Customers of these banks enjoy lower costs of transactions than with mobile providers and seamless transactions as they  cross borders to trade within Africa.
  • Mobile solutions. An example is Centenary Bank Uganda whose customers have mobile wallets known as CenteMobile with which customers can pay their utility bills, take part in fundraisers and transfer funds, among other bank services.
  • Agency Banking & kiosks: Interswitch powers agency banking which is a customer delivery channel that many banks are now adopting to extending their reach, while controlling costs. Interswitch powers all KCB Mtaani – bank agent locations as well as the teller kiosks in Nakumatt where customers go to load points, get mpesa and airtel money or buy airtime.
  • Banks Card : Verve is the leading card brand in Nigeria, and the chip & Pin card has been issued to almost 30 million customers of various banks in Nigeria, West Africa and soon Eastern Africa, starting with KCB and UBA. Verve cards are accepted on Paypal, and one new feature enable Verve cards to send one time pay codes to friends or family members so they can withdraw set amounts at ATM’s.
  • Loyalty Programs: Interswitch powers loyalty programs for banks such as First Bank Nigeria; Customers earn points for carrying out transaction on their bank accounts  or by using their Verve cards; They can get cash back for card usage, and can get gift items and discounts at select merchants, some of who are online.

Kenya Companies Act 2015

This morning, a session was held by the law firm of  Anjarwalla & Khanna in Nairobi to advise stakeholders abount the new Companies Act and Insolvency Act that are now law.

The Cabinet Secretary for Industrialisation, Adan Mohamed, said that the day when President Uhuru Kenyatta signed 4 bills into law – the companies act, insolvency act, special economic zones act and business registration act – was his proudest day in two years in the Cabinet.

Partners at the law firm explained various sections of the new companies act including:
  • It makes businesses easy to register and operate – and one person can form a company.
  • Memo (can be one page long) & articles are simpler
  • Role of the company secretary has been clarified. Corporate governance has been clarified with penalties for directors and management including for conflict of interest.
  • 30% local shareholding in a foreign company. Adan said this was a mistake that the government would rectify. The team from Anjarwalla & Khanna said that while the 30% rule  is probably constitutional it’s impractical, and the AG & government agree. They also explained that it is for new branches only – and does not apply to existing branches, or to any subsidiaries of foreign companies
  • It gives minority shareholders court powers if main shareholder/management are prejudicial or make bad decisions / transactions on behalf of the company
  • New company is able to do anything including borrow unless if it restricted
  • PE Investor oversight: Investors can attend board meetings as observers  and  without being directors or  legally bound by decisions
  • A company must have at least one natural person as a director (all companies have 6 months to rectify this)
  • Companies can buy back shares from other shareholders
  • Kshs. 6.75 million (~$67,500) is the minimum paid-up share capital for a public company (this will affect some land owning companies and large property developers)
  • Public companies need to know who beneficially owns their shares (the true owners behind proxies)
  • Companies are required to have websites and to publish financial statements online
  • Share buy backs are now allowed.
  • All shareholders have rights to preemption when companies create new shares – (and this can only be from profits, not new money)
  • MBO and LBO: Banks could not finance acquisitions, but now they can. e.g. Management can to a  bank and use the assets of the company secure financing to buy it or pay off foreign outgoing shareholders – (this opens another exit opportunity for investors)
Adan also said that the insolvency law, which previously was aimed on recoveries for secured creditors, is now focused on bringing insolvent companies back to life.
November 9, 2015.

Farewell Dubai Bank

Kenya’s smallest bank Dubai Bank was placed into receivership about two weeks ago. It took control and suspended all operations of the bank except to ask borrowers to continue servicing their loans.

A few days after taking charge, the Kenya Deposit Insurance Corporation  (KDIC) as receiver revised its role and announced that Dubai bank would be liquidated, with each depositor paid a statutory maximum of Kshs 100,000 (~$1,000) once they file a claim that’s proven, and any larger deposit customers  would share in the proceeds of the liquidation equitably.

In the past, banks that have been put into receivership rarely ever come back. From Euro Bank, Daima Bank, and even a (strong) Charterhouse Bank never reopened their doors after receivership. This is because banking relies on trust and confidence, and if the public have no faith in an institution, it’s difficult for it to operate, attracting deposits from customers, and entering into settlement transactions with other banks.