Monthly Archives: March 2008

Kenya Easter Tourism Expo

Compared to last year’s expo, the first tourism expo of the year at Sarit Center had fewer stands, foreign exhibitors, and focus was on getting domestic tourists to rediscover the usual haunts.

You have to salute the industry for going ahead and trying to rebuild after two months of violence wiped out a decade of steady growth. While they were advertising Easter packages (discounts of about 10% if booked at the fair), their goal was to get the sector back on track in the long term.

Here are a few of the offerings still have a bias for the Coast;

New

  • Holiday Homes Kenya, a network of fully staffed private homes for the holidays.
  • New Man Eaters Camp by Voi Wildlife Lodge at the site of the infamous man eating lions that terrorized railways builders in 1898.
  • Mombasa Continental hotel (former Intercontinental hotel) opened in December 07 (days before the election) has introductory rates valid up to December 20, 2008.
  • Wild Waters theme park in Nyali – which closed in January when the tourists left but reopened over the weekend (March 9)

Coast

  • Jacaranda Beach flying package from Nairobi for East Africa residents for Kshs. 22,400 (inclusive of 2 nights)
  • Kenya Bay Beach Hotel has these prices for 2008; Kshs. 3,700 (up to April 30), Kshs. 3200 up to June 30, and Kshs. 3,500 (July up to December 31) (all half-board, per person sharing)– lock in these low rates for the rest of the yeat before the tourism prices pick up.
  • Sun n Sand no special offers, but the hotel is still a favourite for state and private sector retreats at the coast, so may not struggle

Wildlife safaris

  • Discover Wilderness has flying packages to the Mara (Keekorok) and Samburu for Kshs. 24,950 per night and Kshs. 11,950 for extra night – (includes 3 game drives, full board valid up June 30).
  • Serena have flying package to the Mara, Amboseli, Samburu, (2 nights, 2 game drives at 40,000 pp)

Other

Airlines

  • Discovered some ‘truths’ behind Fly 540 airline: low special offers; that $79 Entebbe and Juba $199 fare to Juba re one way and translate to $135 and $279 after the hefty taxes on both routes. So a round trip to Entebbe costs $270 while Nairobi-Juba and back is $558.
  • Air Kenya with their point to point flights are the best way for a tourists to avoid Kenya’s roads and get around in as little time as possible – so you can fly from Mombasa to Masai Mara, Mombasa-Kilimanjaro, fly from Nairobi to Lewa, from Samburu to Masai Mara etc.
  • Virgin Atlantic have $425 Nairobi to London and $829 fares to Los Angeles or San Francisco

Elsewhere
not at the trade fair, but in the news over the weekend

  • Lewa marathon sponsored by Safaricom is open for registration up to 23/5
  • Vipingo Ridge, a housing estate/golf course under development in Kilifi (40km north of Mombasa) by Rea Vipingo was a sponsor at the Kenya Open Golf Course. Some plots of land are still available but not much info is online yet about it.

Failure to Learn

March 5 2008 marked the end of the 2nd 6-month statutory management period after the collapse of Francis Thuo stockbrokers. It also came to mark the beginning of a 6th month statutory management period for another stockbroker – Nyaga Stockbrokers which was a much larger operation than the former.

In the collapse of the second stockbroker, there is a failure to learn from the mistakes of the former, and also myopia in regulation and awareness.

The CMA and NSE continue to treat Nyaga and FT stockbrokers like a rogue computer that has gone amok and chewed up stockbrokers funds. It was not – it had directors, managers, and employees. Who are these people? We have not heard any names or their stories, explanations, their questioning / arrest / convictions / disbarments/fines etc.

It’s a trend we have here: looking at all the recent financial scandals we have had Charterhouse, Invesco, Francis Thuo, Euro Bank, and even the Electoral Commission of Kenya (bad math in 2007) – an organization is condemned (after it collapses), a beautiful report is written (and filed away), while the principals/employees walk away scot free.

From the big scandals of the past, over 40 bank collapses in the 1990s, including giants Trade and Trust banks, not many lessons have been learnt. We have a culture that does not allow us to learn from the past, and dooms us to repeat those mistakes in future. It was only with Goldenberg (and to a lesser extent Anglo Leasing) where after the principals and officers were called forward to explain their odd (& previously secret) actions that some level of truth came out. That should be a model for dealing with other and future scandals; public hearings, not behind boardroom doors, and public reports, which will make it easier for anti-corruption prosecutors.

It is a dark secret in banking that very few employees are ever convicted of financial crimes and scams at their place of employment. What happens to these bank and stockbrokers employees, and where are they now? I don’t want them to move to CFC, but chances are they will get jobs with other brokers and bankers. They will lie low, but it’s only a matter of time before the easy money trap sets in again; if they have amassed enough, they may even dabble in politics, or go for MBA’s.

There, I hope they encounter business classes looking at past scandals, case studies on Goldenberg, Trade, Trust, Prudential Building Society, the genesis of Consolidated Bank, and the collapse of stockbrokers in 2007/08. Etc. Otherwise, such events will recur in 2009 and 2010.

But some things can’t be fixed, and one Kenyan bank will collapse about every other year, a trend that is likely to continue as the industry continues to absorb the shocks of the post-election period.

Other timely reading
– Are the shocks over? Coldtusker hints at other brokers
– Riba Capital’s infamous rogue broker alters from October 06 and April 2007, the second of which had Nyaga brokers at the top of the list

Nyaga Stock Brokers
Nyaga Stockbrokers has received a warning from Capital Markets Authority in regard to their issuing of Bouncing cheques something similar to what Francis Thuo and Partners did.

This broker has been struggling for several months to clean up its act to avoid being suspended but the problems have been running deeper with the MD claiming that the only bouncing cheques they issued were those of Eveready IPO refund a claim which Eveready refutes and which other stockbrokers disagree with.

There are reports also that this broker was involved in illegal ‘shorting of the market’ whereby they would sell clients shares without authority on a market peak and buy back on a market slump. The CMA is said to have summoned the broker 2 weeks ago and given them an ultimatum to clean up something which the NSE had raised much earlier. If this does not happen, then we could see another broker going down due to money trouble.

– How to change your broker

Skunkworks: Nairobi March 4

A Skunkworks (blog) meeting yesterday was hosted by (7 month old) Google Kenya, and it was attended by an interesting mix of engineers, webhosts, designers, admins, bloggers and rivals of Google, – who all listened as Google employees explained their aps and maps.

some scribbled notes

  • There’s an ongoing Google East Africa competition for students to develop gadgets for Google (closes March 17)
  • They are mapping the country with Google map’s – started with Nairobi, Mombasa, Kisumu and Nakuru, with a Kenyan team, doing the mapping work, using the tools. Ideally the next step will be for maps to stream into local yellow pages
  • Safaricom has the largest customer base of any kind in Kenya – 8 million strong – and so Google partnered with them to give all their subscribers free e-mail. Many people’s introduction was and still remains, accessing an email account.
  • Ushahidi was cited as an example of enhanced use of a Google platform.
  • Google in Africa for the long term, with an altruistic motive of sharing local content & information – and currently get less than 1% of revenue from Africa. They helped NTV set up a Youtube platform that has been a big success in terms of Kenyans abroad now able to watch local news online. They monetize in three ways – videoads, adsense, search box advertising. Kenya/Africa needs to get more local content up. Already some local web sites are making good money off adsense that is enough to sustain their online operations.
  • Hot point #1 was bandwidth; or the performance of connectivity, service providers and other operators. They are known in the industry for short-changing consumers who are not wary and in the face of a regulator (CCK) who does not seem to care. There was a call for users to take the initiative, to test bandwidth speeds, and identify those with superior speeds and those who were short-changing consumers (a model from Australia called Whirlpool to test broadband was mentioned as a model that could be used to do this)
  • Hot point # 2 was the lack of investment in infrastructure/or the wrong kind of investment. Examples: There are 4 ethernet cables in Nairobi, but no cooperation between providers. Government is building data centers, but with no servers there. Local loops are not benefiting end users. It would be nice if government required new building developers to also install connectivity in buildings
  • Other challenges with local advertising – does it work? Yahoo never advertised in Kenya; yet have more e-mail accounts through word of mouth. Google is working with universities to give them free e-mail as a way of building a long term relationship. There’s also a move to alert local advertising companies to the presence of local sites to advertise on.

There were many other conversations but they were drowned out by sounds of mouths slurping pizza slices and mshikaki’s.

Kutwa Tuesday

West to East: Following Bank of Africa (2004) and Ecobank (taking over EABS), West African’ leading bank, United Bank of Africa (UBA) is making an entry to East Africa starting with Uganda and have also applied for a license to bank in Kenya.

Venture Capital Fund: From the East African Development Bank (EADB) is now operational, with small and medium enterprises (SMEs) in East Africa are eligible for funding.

Uchumi’s turnaround : Uchumi have finally published their financial results of the receivership period from 2006 to 2008. The turnaround has been remarkable and in the half-year ending December 2007, they surpassed full-year sales from 2006 (year of collapse). The current ratio is still poor (less than 1), but that’s about three times better than it was when the company sunk.

The company lost 751 million in June 06, which improved the first year of receivership to a loss of 257m in 07 – and are on track to make a profit in 2008 – while operating fewer stores. It’s probably too soon to be re-listed (there would only be sellers, no buyers) and a dividend would not be likely for 5 years as the company still has an accumulated loss (negative reserves) of about 1 billion shillings ($15 million)

peeves two things irritate me though at Uchumi (i) their cashiers never have any shilling coins and insist on giving out sweets in lieu of change (ii) Cashiers’ who take advantage of my not having a u-card to top up their accounts with points I pay for.

Insurer collapses: Invesco assurance finaly goes under. The company which insured many matatu’s is now under statutory management and can’t make any policy payments or sign up new business. And when the history of the company is written, one paragraph must address why almost every insurance company (including Invesco) decided to put up an expensive office building in the Upper Hill area of Nairobi, far away from their core clientele.

Kenya Re profits: How much did Kenya Re earn in 2007? An interesting discussion at stockskenya.

Diaspora dollars: How much do Kenya’s abroad remit to the country (through official channels)? CBK reports $54 million in January 2008 and the country is on track for an increase from the $573 million sent in 2007.

Dollar launderer: A Nation report cites US concern about money laundering in Kenya which has weak laws regarding the crime. The State Department report notes the difficulty as Kenya is a hub that mixes regional trade with exports to East & Central Africa, donor aid & NGO’s (managing over U.S. $1 billion annually), remittances from expatriate Kenyans estimated at $680-780 million annually, and Eastleigh Estate which handles unofficial remittances by the Somalia Diaspora. Also, though banks maintain records of transactions over U.S. $100,000 and international transfers over U.S. $50,000 (and report them to the CBK) they fear customer reactions to such release of information – and this was hammered home by a November 2007 court award that ordered Barclays Bank to pay a customer 400,000 shillings ($5,700) for providing customer details to the British High Commission.

New boards
– The Kenya college of communication and technology (KCCT) board now has Michael Joseph, Nick Nesbitt, Naushad Merali and Paul Kukubo to guide some relevance in communications training.
– The Resettlement fund (for election victims) has retired archbishop Ndingi, former minister Akaranga, and retired athlete Kipchoge Keino on board.

Wanted

Savings A/C
I wanna be with “_____ Bank” but KCB need not apply
I want a savings account- that has no ledger fees, no monthly fees, or EFT fees, that has a reasonable minimum balance and sends statements out frequently. I want a savings account that emphasizes savings, not fees. Short-listed banks include ABC, Barclays, Consolidated, Equity, Stanbic, and Standard Chartered. Any other suggestions or referrals?

Kenol shareholder
I’d like a Kenol shareholder to volunteer and write up an account of the company’s AGM this coming Friday. Full credit will be given.

E-bill
Ever since their MD looked like he was about to leave, Kenya Power & Lighting Company’s revolutionary system of billing (by SMS or e-mail) have stopped. I have yet to see my bill and fear a power cut soon as this company is quick to cut of subscribers who default. I’ll pre-pay an estimated amount tomorrow just in case – to avoid the cut & expensive time-consuming reconnection hassle.

Explanations
Why this and Why that? – Or is it business as usual?