Spanish delivery company Glovo enters the Kenyan market.

Glovo is a four years old Spanish delivery company started by Oscar Pierre and Sacha Michaud. Its headquarters are in Barcelona, Spain and Glovo has been expanding globally, and just recently begun operations in Kenya five months ago, with Morocco and Nigeria being the other two African countries using the Glovo app services.

Glovo actually means balloon in Spanish to signify the way a balloon moves easily from one place to another. Kenya has seen some new delivery companies but is yet to experience one which can deliver even a personal item that you forgot at home. We are used to the traditional delivery of items by people we know but now this app will very well facilitate an easier way. The one challenge being how safe or how trustworthy Glovo delivery people are which, and the company has placed safeguards for this.

The Glovo app is found on Google play store for Android and App Store for IoS and it doesn’t take more than five minutes to start using the app. What makes them even more competitive is their pricing which is quite the saver.

Glovo performance is improving by the day. William Benthall, the General Manager for Kenya stated that the number of Glovo bikes he’s seen around town keeps increasing with time. Just like other delivery services, with Glovo, interested partners sign up their machines, for instance, bikes, to the app and can from there, connect with clients who need items delivered.

A guest post by @themkare 

Kenya unveils new currency banknotes with a demonetization shock

The President of Kenya unveiled new generation currency notes at the 2019 Madaraka Day Celebrations in Narok on June 1.

This was after a speech by the Governor of the Central Bank and comes after a case last year cleared the way for bank notes to be printed and also a few months after new coins had been unveiled. The Governor mentioned that there had been extensive public participation in the process which led to the themes of green energy, agriculture, social services, tourism and governance (an image of Parliament!) on the new notes.

The Governor also mentioned that Central Bank had observed that the Kshs 1,000 note (equivalent to about $10) was being used to illicit financial flows and is being counterfeited. They had therefore moved to withdraw the old Kshs 1,000 notes by October 1, 2019, after which they will no longer be legal to use.

Going by the recent wave of a government moves in Kenya, we can probably expect a few challenges to the decision in the Courts and Parliament that will delay the new notes rollout over issues like:

  • The image of a statue of the First President of Kenya remains prominent on every new note.
  • On the demonetization of old 1,000 shilling notes, Parliament’s Committee on Delegated Legislation will say that it should have approval over such a radical move.

EDIT  On Tuesday, June 3, the Governor of the CBK held a press conference where he announced modalities for the transition to the new currency which is already being issued to commercial banks:

  • Persons exchanging currency notes for amounts not exceeding Ksh.1 million of the withdrawn currency notes will exchange at their Commercial banks, CBK Branches and Currency Centres, or any nearest commercial bank.¬†
  • Bank customers exchanging currency notes for amounts Ksh.1 million to Ksh.5 million of the withdrawn currency notes will exchange at their respective commercial banks, under the normal procedures and requirements.¬†
  • Persons without bank accounts exchanging currency notes for amounts exceeding Ksh.1 million will require an endorsement from CBK.¬†
  • Persons exchanging currency notes for amounts exceeding Ksh.5 million (bulk exchange) will require an endorsement from CBK.

CBK launches Stawi SME pilot credit facility

The Central Bank of Kenya has launched a pilot credit facility targeting informal unbanked traders in partnership with local institutions. ¬†This will be through an app, marketed under the name “Stawi”, that will initially be managed by five banks ‚Äď Commercial Bank of Africa, Cooperative Bank, Diamond Trust, KCB Bank and NIC Group.

The pilot phase lasts two weeks and will involve 3,500 traders without bank accounts, who have turnover of Kshs 30,000 to Kshs 250,000 (~$2,500) per month and who are at least six months old. To register, besides providing their ID details, traders will need a valid business permit and an email address to create an account Рthis is an unusual as mobile apps just require a national ID number to match with the phone number of the loan applicant.

The businesses will be able to borrow between loans of Kshs 30,000 to 250,000 (~$2,500). Loan charges are at an interest of 9% per annum, plus a facility fee of 4%, insurance fee of 0.7% and excise tax on the facility fee – all adding up to about 14.5%.

Other features of Stawi:

  • Loans are repayable between 1 – 12 month and borrowers can top up loans once 80% has been repaid. Loans are only¬†disbursed¬†through the¬†app as will all repayments be done.¬†
  • The loan rates are not cheap, but they are mild, and this program is targeted at the unregulated lenders who charge as much as 300% p.a. There was a draft financial markets conduct¬†bill formulated to protect consumers from such practices.
  • There are also transfer fees and Stawi customers can also¬†link up with¬†Pesalink¬†which allows much greater daily transfer amounts (up to Kshs 1 million) than the mobile money wallets. ¬†
  • For now, there is no Stawi in the Google store as the program is still in a test phase. (There is an app called Stawika that has no affiliation)
  • A second round of the pilot will target 10,000 other traders.

While trying to forestall the arrival of interest rate caps back in 2016, banks, through their umbrella Kenya Bankers Association committed to set aside Kshs 30 billion for lending to SME’s including Kshs 10 billion to micro-enterprises owned by women and youth and lend to them at no more than 14%. They also committed to rank borrowers by high, medium and low risk and to work to reward low-risk borrowers with low-interest rates.¬†To date, the credit reference bureaus piling up data on loan defaulters which good borrowing records are ignored or not rewarded with lower interest rates.

KWAL at 50

This week, Kenya Wine Agencies Ltd (KWAL) celebrated fifty years of business. At a Nairobi dinner event to mark the occasion, KWAL Managing Director, Lina Githuka, said that the company, which had been privatized four years earlier, had renovated its portfolio and improved its operation. These had resulted in volumes going up threefold and, with profits up ten times, had set the stage for a second round of privatization.

During the event, there were clips and narrations showing the history of the company,¬†which was¬†established in 1969 by the Government of Kenya to bottle wines and spirits.¬†initially, and up through the 1990s when Kenya’s economy was¬†liberalized, KWAL¬†had a monopoly to import leading international brands like Martell, Hennessy, Bacardi¬†and Campari¬†which they worked with local business owners to distribute to hotels and shops.¬†Later in the 1980s, they¬†opened a commercial winery and embarked in the manufacturing, process and bottling of local wines. While grapes are not easily obtainable here, they used other fruits, starting with pawpaw from Kakamega and later Pekera, and “Papaya”¬†became the first domestically produced wine in Kenya. They later added variants based on passion fruit (Passi Flora), strawberries (Kingfisher), and apples (Woodpecker).

KWAL, under KWA Holdings E.A, is now a subsidiary of Distell, which owns 55% of the company after acquiring a 26% stake in April 2017 for Kshs 1.1 billion.  The company produces 20 brands locally including Kingfisher for the last 36 years, and through its partnership with Distell, also distribute many top international brands. The KWAL portfolio includes Yatta juices, ciders (Savanna, Hunters, Kingfisher) wines (Nederburg, Drostdy-Hof, 4th Street), Amarula, and Viceroy.

Distell reported that Kenya had a stellar year (in 2018) with volume up 32% and revenue up 27%, which was partly attributed to the impressive performance of local brands like Kibao and Hunter’s Choice. KWAL plans to open a production facility at Tatu City, near Nairobi, their first new manufacturing plant in two decades, at a cost of Kshs 3 billion to meet the demand of fast-growing brands.

Kenya’s Cabinet Secretary for Industrialization, Peter Munya,¬†who was the chief guest at the event, ¬†said the Government was prioritizing value addition and local content in investments and that the Cabinet had recently approved an investment policy to legally safeguard all the incentives offered to investors.¬†He applauded the privatization process which had rejuvenated KWAL, and he hoped this would extend to the sugar sector where private companies were doing very well, unlike the Government-owned ones.

MTN Nigeria Listing

MTN Nigeria has received approval and will proceed to list its shares on the Nigerian Stock Exchange on May 16, 2019. The company entered a settlement in December 2018 paying $53 million to the Government of Nigeria out of $8.1 billion tax demand and the listing is believed to be an extension of this process.

MTN entered Nigeria in 2001 and it has grown to be a key market for the Group. It accounts for 55 million of their total 210 million subscribers in Africa and the Middle East. 25% of their subscribers are in Nigeria compared to 13% in SA. They get 30% of revenue from Nigeria, compared to 29% from SA, with Nigeria growing in the double digits. MTN which has 79 million data customers and 27 million mobile money customers in 2018, plans to introduce mobile money in South Africa, Nigeria, Afghanistan and Sudan this year.

The Group owns 75.81% of MTN Nigeria through a Mauritius company while Nigerian shareholders own 18.7% through special purpose vehicles. 1.76% is owned by the Public Investment Corporation of South Africa.

With its shares introduced at 90 Naira each, based on recent private share sales, MTN Nigeria is valued at about $5 billion. All shares of the company are being listed and all shareholders will be able to trade their shares. MTN plans to get more Nigerians to increase their stake in the company to about 35% through the listing and a public offer that may follow. Besides Nigeria, the Group also plans to increase local ownership of its operations in Uganda and Zambia during 2019.