One of Kenya’s most successful private companies – Mabati is set to launch a corporate bond at the Nairobi Stock Exchange. This is a few months after two tranches of Barclays Bank Bonds, and with the Kenya Government still keen on a $500 million sovereign bond, it appears bonds are back just a year after they were out of favour at the NSE, with the equities markets having cooled off considerably.
Monthly Archives: September 2008
Kutwa Friday: Everything Must Go
It’s been a while since the last Kutwa post. Here’s a rundown of things, most from the daily papers and various sites that have piled up
Banking: Co-Operative bank are deep into the marketing program for their October 20 listing at the Nairobi Stock Exchange. They may also venture into mortgage finance
– Barclays and Standard Chartered will both offer mobile messaging services to their customers
– Rand Merchant Bank (SA) plans to expand to Kenya
– Salary cards are coming to Kenya as FNDS3000 Corp which launched its payroll card program in South Africa and will follow into Nigeria, Kenya, Tanzania, United Arab Emirates and Qatar
What’s in a Name?
a step forward: Telkom Kenya is now Orange: more on their new site and products 
– Nyanza petroleum dealers is now called Auto Xpress
– Chloride exide is now Chloride Solar
– The naming rights for Nyayo national stadium are up for sale to a corporate bidder (will it be Safaricom or Zain Stadium?)
a step back
– A new name is recommended for the discredited electoral commission of Kenya
– Grand Regency is now Grand Laicos Hotel?!
Developments: A new 21 storey 5-star hotel in Nairobi to be situated next to Barclays plaza (and is a stones throw away from the former Grand Regency)
– Kenya anti corruption to build a new headquarters
– Two battery recycling factories will be set-up; one in Changamwe and one in Konza
– Ethacom international will set up an ethanol production plant in in Bungoma
– Nairobi City council is seeking 50 acres for a new cemetery
Airlines: There’s little reporting about a pending strike of Kenya Airways engineers; however K24 TV reported that this may affect plans of President Kibaki to fly to London next week as engineers were going slow on maintenance of his planned aircraft and also other repairs after another little reported aircraft incident. 
Energy: Following last months electric shock it was pleasant to see my electricity bill drop from 2,600 to 1,800 shillings ($26). No thanks to KPLC though, as the savings came largely from taking cold showers that reduced consumption from 161 to 115 units . Meanwhile there was another increase in KPLC fuel cost from 769c/kwh to 778c/kwh this month.
– Why doesn’t the government owned National Oil Corp (NOCK) who are supposed to check against check the high petrol prices charged by oil marketers sell petrol at the Kshs. 100 per litre (~$6.4/gallon) price that Energy Ministry says is correct?
– An S-class with the fuel economy of a Toyota? Pity Merc drivers are not concerned about fuel economy
ICT: The Kenya government plans to set up an official blog by September this year to facilitate better communication between the government and the public. “The blog will allow the government to respond to everyday issues being raised by the citizens,” PS Bitange Ndemo told journalists in Nairobi. “More and more people are turning to the internet to read, write or say whatever they want to say and if such forums were properly utilized, especially during the election period, we would not have experienced the kind of problems we had in the country at the beginning of the year.” hat tip Xinhua News – China
– Also the Kenya Government will set up a $39 million venture capital fund
– Telkom /Orange makes peace with Safaricom
– Controversy about an outsourcing scholarship
– Outsourcing #1: Pioneer BPO Kencall will manage call center for Telkom/Orange
– Outsourcing #2: site stats here show that Mauritius (9%) has overtaken the UK (8%) to be the third highest source of traffic to bankelele – after Kenya (45%) and the US (17%) – but, upon closer scrutiny for true fans there, it turns out the readers actually Kenyan-based – but routed through Mauritius.
Opportunities: The Skunk Awards 2008 is your chance to recognize and reward the leaders in the various ICT fields in Kenya. Chosen by YOU, the real stakeholders in the Industry. Vote for ICT Company of The Year, Best ISP, Most Innovative ICT product, Best Local Website, Best Local eCommerce Website, Worst Local Website, Best Local WebHost, Most Open Sourced (is that a verb) Organization, Best Customer/User Support, Worst Customer/User Support, Best Training Institute, Most Promising ICT Startup, Best Paying Company, ICT Entrepreneur of the Year, Best Local Application, Most Transparent ICT Tendering Govt Branch, Most Successful Government ICT project, and Worst Government ICT project. Send in your nominations to skunkawards@gmail.com before Friday October 10th.
– Apply online to be an Acumen Fund Fellow 2009-2010. D/L is 20 October
– Take part in the Wildman Triathlon in Watamu on October 18.
– Zebrajobs is a cool new job site that has some interesting opportunities in this past of the world
Other jobs: You can’t compete with Kenya’s largest employer, the Government of Kenya. Soon available at the Governments Public Service site will be jobs including at the Ministry of finance principal accountants – 26 posts, chief accountants – 64 posts accountant II – 320 posts!; at the ministry of energy (director of renewable energy, senior deputy director of renewable energy (engineering) , senior deputy director of renewable energy (biomass) ) ; at the Ministry of immigration – immigration officer II – 200 posts; at the ministry of fisheries, chief fisheries officers – 142 posts, fisheries officers – 78 posts; and at the Ministry of medical services – Nursing officers III – 686 posts, clinical officers III – 548 posts, medical lab technologists – 124 posts and Pharmaceutical technologists III – 100 posts. The application process involves a mix of new and old technology – you can download the forms online but applications must be sent in by snail mail (post office) to the to the secretary PSC p o box 30095-00100 Nairobi by 13th October. Thereafter applicants can check the status of application by sending an SMS!
– Dyer & Blair: Database administrator, network specialist systems administrator. Apply through Manpower Associates by 26/9
– Econet wireless rolling out in Nairobi Mombasa Kisumu Eldoret (when?) is hiring head of field operations, field operations engineers, manager – RF optimization, RF Planning & optimization engineers, Manager base station sub systems, BSS engineers Regional managers – passive infrastructure . Apply to techrecruit@econet.co.ke by 29/9
– Equity Bank is hiring credit officers, and debt recovery officers
– Genghis capital: head of stockbroking, head or research securities dealers. Apply by 10/10 to the head of HR at 9959-00100 Nairobi
– Gulf African bank: Area sales manager, manager product development (housing) credit administration manager, head of audit – apply to recruitment@gulfafricanbank.com by 22/9
– HLB ashvir: audit seniors audit manager – apply to audit@hlbashvir.com by 20/9
– KCB branch managers, Business bankers- apply to recruitment@kcbco.ke by 28/9
Anatomy of Local Collapse
With Lehman, AIG, Bear Stearns, Merrill Lynch and other banks in the news, or in need of a rescue, it’s time to look how does this play out locally?
Kenya has experienced several collapses over the last few years – from listed companies (Uchumi supermarket), stockbrokers (Nyaga, Francis Thuo), insurance companies (Invesco), medical plans (Mediplus), Banks (Euro, Daima, Charterhouse), and numerous pyramid schemes.
What are the stages of collapse?
Before: First come the rumours, which can be whispers from clients facing frustrations, or sometimes well-meaning staff leak to their trusted clients that something is amiss. At any given time, a company could face this and currently, there are murmurs about a stockbroker, a transport company, and an insurance company – but none about banks.
During: Next the rumours gather steam and reach serious partners who deny the company access to cash that it needs to survive. The struggling company will by this time have stopped paying on time and will be known for inventing excuses for delays in payment. So suppliers will stop deliveries (bare shelves), customers withdraw cash and banks will refuse to lend to ailing to the company/bank.
An aside – in the current issue of the Financial Post, entrepreneur Dr. Manu Chandaria talks about the secrets of Asian company success including using supplier credit as the expansion capital – and he emphasizes that a growing company must have a perfect reputation with creditors to get the supplier financing to grow.
But eventually, word leaks out and depositors try and withdraw their cash from the bank or pyramid, a major creditor moves to seize assets, any of which may hasten the collapse of the company; Eventually the government or a bank may try and appoint a receiver, but often its too late.
After: If there is enough hue and cry or a serious precedent likely to have far-reaching effects, the government may step in and try and revive the company – the government has capitulated to the cries of shareholders, suppliers, farmers (sugar/coffee etc.) and politicians several times over the years and tried to revive numerous companies that have collapsed.
If it’s a bank, its depositors get paid up to 100,000 shillings ($1,400) from the deposit protection fund, if its an insurance or medical company it’s a total loss for subscribers who will have to source for new cover packages even if the company had enough assets left. The fate of shareholders is still been sorted out at Nyaga and Francis Thuo, while its a total loss for the thousands who ‘invested’ in unregistered pyramid schemes even though millions of shillings of their ‘profits’ remain unclaimed in bank accounts that have been frozen.
Employees of the companies quietly get new jobs and airbrush the unfortunate period from their CV’s
Owners/Principals rarely face prosecutions, and having amassed enough to survive a few years of legal battles, may retire quietly or sometimes end up in parliament.
Locally: So far it appears that the successful AIG Kenya [worth ~$35 million] will be insulated from its parent problems. It will probably be absorbed by another local insurance company or CBA bank who are a major shareholder.
Facing South and West
With the NSE under water, even lower than the post-election period, it may be time to look West and South for investment ideas. Not too far West, where the US where the financial tsunami is still warming up (threatening to take down Lehman and AIG today), or too far South where it will take some adjusting to Zuma time.
Here there’s some previously unthinkable debate about postponing the Coop Bank IPO and how low the fundamentaly sound (PDF) Safaricom (could) be by the December holiday period.
What’s in store in the rest of Africa?
Kenya: Unilever shareholders have till October 6 to decide if they want to get paid de-list the company.
Togo: According to the Business daily Kenyans may be able to invest in Ecobanks’ rights issue to raise $1 billion. 5 new shares can be bought for every 9 held at $0.29 (~Kshs. 20) per share, minimum 500 shares, and closes October 3
Malawi The Real Insurance Company of Malawi offering of 77.5 million shares at kwacha 2.30 (~Kshs. 1.15) per share, closes on September 19
Botswana The Funeral Services Group offering of 36 million shares at P1.00 (~Kshs. 10) per share. Closes September 22
Insular Tanzania continues to lock out foreign, deliberately including East African, investors from their market, so no thanks!
More at africanshareholder.com
Plane truth
Embattled Kenya Airways who are facing local strike threat and customer service issues were ranked No. 93 in Top 100 Airline survey; how did they fare against their regional peers in terms of passengers carried and revenue (euros)?
Airline, passengers carried, revenue in millions of euros
12. Emirates, 21.2 million passengers, EUR 6,801 million
27. Virgin Atlantic —
41. South African, 7.5 million pax, EUR 2,184 million
73. Egyptair 5.7 million pax, EUR 1,166 million
90. Ethiopian 2.29 million pax, EUR 583 million
93. Kenya Airways 2.8 million passengers, EUR 611 million
Real Estate Moment
Thanks to Maishinski and Jim Dandy for real estate advice in advice in recent comments on housing investments for those in the Diaspora – touching on management, financing, project issues – and lead to cost/property price issues. What is the residential cost per square foot in Naiorbi? They are frequently cited for commercial properties, but not for residential properties where houses are marketed by the location (most important), presence of compound, servants’ quarter, pool and finaly – number of bedrooms (whcih can be deceptive – I saw a 3 bedroom house that was previously a one bedroom, and the third bedroom had originaly been a walk-in closet)
More on Real Estate
first Dr Laila Macharia advises on housing finance myths and how to overcome them – These are;
– That one needs to be married to own a home.
– That a single person looking to purchase a home has to struggle for years
– That a family must save for a really long time to set aside money for their dream home.
and second Pesa Tu (hi; welcome back) gives away secrets of a successful housing developer as he reviews the dangers of the Nairobi apartment craze and the dangerous path the housing market is going down – these are
– Buy land in Lavington, Westlands or Kileleshwa
– Get the building plans approved
– Line up financing for the construction
– Put the artistic renderings of your XYZ apartments in the papers
– Sell 80% of the apartments before construction
– Bank your profits
Real estate can be a lucrative but risky investment jungle and if the by-passes and super highways as envisioned by Kenyans are ever built, there’s no reason why one can’t live in Machakos, Thika, Naivasha and be a quick sub-hour commute from the office to home.