Monthly Archives: June 2007

Expensive water

Bottled water companies have been lamenting about the excise duty they have had to pay for years – and it got even worse after the budget was read last week, increasing excise duty from 2.05 to 6 shillings excise tax per litre. This is likely to increase the price of water by 3 shillings per bottle. But at least they dodged a bullet with the postponed increased in the price of plastic (Those small plastic bottles you use and throw away cost about 10 shillings each, including plastic labels)

Still it is an odd paradox of life that a litre of water [which anyone can make at home] could (until recently) cost more than litre of petrol [imported from thousands of miles away and undergoes several complex processes].

Mostly Safaricom II

Safaricom, the largest, (acknowledged) most profitable company in Kenya has returned a profit of Kshs 17 billion ($250 million) for the year ended in March 2007 – 40% better than the year before. What are the seven deadly sins again? I just want a decenet election year IPO.

Mostly Safaricom

The ban on plastic paper announced in last Thursday’s budget has temporarily been reversed. It was an amorphous declaration covering all manner of plastics (consumer, industrial) that was likely to lead to an unintended increase in the price of many items.

Safaricom

  • Has lowered rates for phone calls and SMS from today. Mobile companies have become increasingly competitive with Celtel and Telkom Wireless – who have deployed VoIP and roaming features – nipping at the edges of Safaricom’s base. Are free weekends from Celtel the next offering?
  • Safaricom has opted to recycle numbers now that they were running out of lines(prefix 0720-0729. Unused phone lines (not used/topped up) for 4 months can now be reclaimed by the company and be resold (previously they expired after 1 year)
  • I’ve noticed on my recent travels in South Africa, Uganda and Tanzania – that all Vodafone-affiliated networks have a cool feature that lets you know where you are (location). It was tested once in Kenya last year but the flip side to this is that it reminds paranoid people that the phone companies (and other interested authorities) know if you are at Ngurdoto Mountain Lodge, Johannesburg airport or the Speke hotel and that they can find you and perhaps not wanting to spook some subscribers have not activated the feature in Kenya. [Read how it affected a lion’s phone choice and more on big brother from Uganda and South Africa]
  • 30% of Safaricom up for an IPO this fiscal year.

Sports TV: G TV are expected to have 80% of premiership games this year. Is that reason enough for DSTV to panic? (I am not a subscriber). There’s also Oxygen (cable) TV (costs Kshs 999 per month), and free TV (Nation (with La Liga), Citizen (rename them ChelseaTV), KBC, KTN and other channels with various sports offerings. The big attraction of DSTV is sports, but also the other channels like Movies, MNET and Discovery. DSTV now assures that they will still have games of the big four (Arsenal, Chelsea, Liverpool Man U – listed alphabetically, not by rank)- two every Saturday, two every Sunday, and one on Monday night. So what is 80% worth if it features teams like Blackburn, Man City, Sunderland and Wigan at a cost of about Kshs 2,200 per month?

Bank Roundup (June 07)

all banks share capital raised from 250 million to 1 billion. At the beginning of the year, 25 of 43 banks were below this mark (with 7 banks below 500 million). This is an update/reversal of an older proposal to lower the share capital when some banks were struggling a few years ago. Not many mergers expected though it may prompt some mid size banks to go for a public listing to raise cash (only 3 banks lost money last year)

Central bank has advertised for some currency destruction contracts as the east African reports on talks for the government to invest in the current currency supplier DE La Rue

Diamond Trust to venture into Islamic Banking

East African Development Bank profit went up by 229% to $4.6 million – up from $1.4 million the year before. Assets increased to $262m dollars and their non-performing portfolio reduced by 11%

Equity bank won an international award – the 2007 global vision in microfinance award. Also KTN reported that the that the bank will open three women only branches in Nairobi

Two month old Family Bank is seeking a new managing director

KCB to expand into Uganda as it also wins an international award – the Africa investor for best performing stock in Africa award (shares price up 97% ) > but the company also held one of the longest dreariest AGM’s in history on Friday

National bank finally got recapitalized. NBK could receive 346 million in 2007 and 2008, a bullet payment in 2009 of 4.3 billion, 220m in 2010 and 2011 and another bullet payment of 5.2 billion in 2012. For 2013 – 2015 123m each and in 2016 a lump sum of 5.2b. 2017 to 2020 58m each and a final payment of 6 billion – for a total of Kshs. 22.48 billion ($340 million)

NIC to increase authorized share capital via a rights issue. The board approved it on June 14, but there was no mention at the AGM on May 16. This follows a Fitch Report indicating that mid-size Kenyan banks need to increase their capital

opportunities

East African breweries is accepting applications for a graduate management program. Details online and D/L is 22/6

Family bank: chief executive officer, credit manager. Apply through deloitte – esd@deloitte.co.ke by 29/6

Kenital solar : sales & marketing manager, technical manager, engineer sales executives (5) regional managers (4). Apply to cm@kenital.com by 22/6

Country manager at Steadman Tanzania . Apply to janis@steadman-group.com by 22/6

A dozen IT, research and engineering jobs at Safaricom

Writers at a new Swahili newspaper. Apply to gazetijipya@gmail.com

Project management specialist at USAID.apply to hrnaiorobi@usaid.gov

Rhodes scholarships: 2 for Kenyans to pursue full time post graduate study at the University of Oxford. Apply to rhodeskec@wananchi.com by 15/9

Real estate: for the monied in the Diaspora, those who have worked hard and are looking to return in style, consider investing in Kihingo village a gated community development in Kitusuru where prices start at $500,000.

2007 Budget A to Z

6.5 to 7% economic growth expected in 2007/08 and the budget will focus on strengthening the financial sector, reducing the cost of doing business, enhanced productivity and fixing infrastructure.

Some measure mentioned in the budget speech today (only heard 1/2 of it) include:

alcoholduty up on spirits, wine and some beer
auto spares Reduce import duty 25 to 10% for oil filter, but with increased excise duty on imported used spares
Banks minimum share capital increased from 250 million to 1 billion (over the next 3 years) and benchmarks will be set up to be adhered to
battery to protect local battery companies, a duty imposed on imported recycled batteries
Cigarettes tax up
east African investors get the same treatment as Kenyans, – i.e. withholding tax of 5% on dividends and improved allocation chances (will be treated same as Kenyan in pool expanded form 25 to 40%)
energy rural electrification to be continued as mini grids will be set up in large towns. 8 billion has been allocated to deal with (anticipated?) energy shortages so they don’t hamper manufacturing processes and the government will also complete the oil pipeline to Uganda and refurbish the refinery at Mombasa (even though other shareholders have refused to chip in)
Educationincreased funding for free secondary education, implement increased teacher salary agreement and hire 7,000 new teachers
hawkers 400m to be spent to construct a market for them in Nairobi
ICT 1 billion ($15 million) for TEAMS which is expected to be completed in mid-2008. Also a national fibre optic network will be in place to reduce the cost of communications. In addition a 200m ($3m) endowment fund for innovation and research will be set up and the private sector invited to top it up.
insurance companies minimum share capital raised. For Long term (50m to 150m), general (100m to 300m) and composite from (150m to 450m) – within 3 years.
leasing: Zero rate leasing of some equipment and removal of withholding tax requirement
licenses for businesses – eliminate 205, reform 371 others
Medical equipment duty removed
milkZero rate milk powder to promote local processing and value addition
mineral water tax imposed
police 25,000 new officers to be hired
plastic bags tax imposed while thin plastic bags are banned to improve the environment.
Privatization 36.1b shillings ($0.5 billion) expected from privatization: Telkom Kenya (get a strategic partner this month), Safaricom IPO on the NSE, more shares sold of Kengen (when price corrects) and National bank [these shares could be offloaded to 3rd parties and not through the exchange]
Pyrethrumextracts are zero rated to promote local insecticide production
real estate duty exemption for developed of low cost housing (but not in slums). Also pension savings can now be used as security for home loans (not just as down payment)
retirees monthly pension benefits will be exempt from tax. Also social security will accept voluntary contributions from those whose employers don’t take part
sugar development levy removed from imported industrial sugar
textiles removed import duty
trade import duty reduced from 2.75% to 2.25% for all goods from all outside east Africa and none from within east Africa
transportation removed TLB from non passenger commercial vehicles,
Tourism 2 million visitors expected this year and as benefited the local air and hotel sectors. Will develop eco and lake tourism and will create resorts in Mombasa, Turkana and Isiolo.
universities (private) duty removed on goods and services supplied to them
VAT refunds to speed up refunds (which business community has complained about), will become automatic for those companies with a proven track record
women a 2 billion shilling ($30 million) women enterprise fund to be set up – starting with 1 billion this coming year, and call on corporates to assist the fund.
youth fund allocation increase by 250m to 1.25 billion with a goal of taking it to 2 billion