Monthly Archives: September 2009

Paying investor dividends by mobile phone

With 829,000 shareholders Safaricom, Kenya’s largest mobile phone company is taking the step of enhance investor relations by using m-pesa, its money transfer system, to pay out the annual dividend to shareholders.

At just 0.10 shillings per share, it will not amount to much, with several thousand shareholder receiving a divided of Kshs 22 (~$0.30) , and if shareholders get paid by bank cheque, the traditional method of paying dividend up to now, it will cost them more to do so (typically Kshs. 50-100), than the cheque is worth. Paying my m-pesa will reduce the cost to Safaricom and its investors – as it’s a good bet that a vast majority of shareholders are also M-pesa users (there are over 5 million registered)

Last week the company published a list of locations where shareholders can register for the m-pesa dividend payment option through the month of September for payment in November 2009. All an investor needs is their identity card and proof of shareholding e.g. CDS statement (and photo copies of each). If it’s successful, it will likely be taken up/imitated by other listed companies e.g. Kengen, Kenya Re through their registrars and other mobile companies like Zain (with Zap money transfer) and Yu (launching a money transfer next month) as another mobile partnership possibility.

Salute to Kenyan Stockbrokers Part I

Salute to Kenyan stockbrokers, investment banks and fund managers, and the capital markets authority (CMA) for their moves to improve transparency at the NSE of late.

When the new rules were announced early this year, few doubted that licensees (especially stockbrokers would comply, but the early signs are good.
One of the milestones was for the publication of financial statements by Collective Investment Schemes, Stockbrokers, Dealers, Fund Managers and Investment Banks twice a year; and this they did, many baring their losses, some with dubious figures or cosmetic summations, and some omitted profit & loss, but which their auditors will hopefully be able to reconcile at the end of the year.

The compliance was notable in that the intermediaries were able to publish their June 2009 summarized financial accounts,

Investment Banks: 100% (missing was Juanco (now Equity IB?), while FCB Capital was only licensed in June 09)
– Stock Brokers: 100% (missing was Discount (collapsed), Bob matthew (is now KingdomSecurities), while African Alliance is now an investment bank)
– Authorized Security Depositories: 100% (all 12 are commercial banks)
– Collective Investment Schemes: 100% (all are fund managers)
– Fund Managers: 94% (missing was Aueros, while African Alliance reported as an investment bank, and amazingly CIC who were licensed in June 09 already complied)
– Investment advisories 10% they are not required by the law to report, but Dry Associates and Tsavo Securities did

The results were harsh (more on that later) as the downturn at the Nairobi Stock Exchange has had a shocking effect on these companies. But they have recognized that and started taking measure in the form of mergers, re-capitalization staff reductions. When the NSE improves, they will reap the dividends. The signs are good for frontier markets and African markets, but the Kenyan political scene is still a cause for concern for the recover of the NSE and its brokers.

2009 Nairobi Motor Show

The 2009 Total Kenya Motorshow was held over the weekend. Since the last motor show was held in 2007, much has changed in the motor industry, mainly the global economic downturn, Kenya electoral violence and the dip in the fortunes of car manufacturers & dealers.

Who’s missing? Kenya Revenue Authority, CMC (Ford, Land & Range Rover Mazda, VW, Audi)

who’s here?

GM Kenya the Hummer is now old news in Kenya, and the highlight of their display was a dressed up a Chevy Optra. The 1800 cc car that costs Kshs 2.46M was outfitted with a Government of Kenya Flag and made for a very elegant slap in the face of Government Ministers who have resisted giving up their fuel-guzzling Mercedes limousines that costs 3X as much. NTV reports that the Government is buying over 100 new VW Passat’s, but it will be interesting to see if the top leaders will hand over their Mercedes cars, and what will happen to the fleet afterwards.

DT Dobie: had the new E-Class Mercedes which costs EUR74k (~Kshs 8M) while the smaller C-class Kompressor cost 6.2M and the new B class costs 4.7M. Also an icon of Kenya roads, the 1200 Datsun/Nissan pickup has finally been replaced with the NP200, a 1.6 litre pickup that cost 1.2M. They are big in trucking and the award-winning Actros was on show at a cost of about Kshs. 9.9M for new trucks, which can take a few weeks to order and deliver. Many local transporters import used Actros trucks from Europe at about ½ the cost. The dealers also sell the Chrysler 300 for $72,600 (~Kshs. 5.5M)

Toyota Kenya Toyota is the most popular car in Kenya, and they often advertise the slogan the car in front of you is always a Toyota They had the Land cruiser VX cost Kshs. 12M, but the diplomats, local NGO’s and donor groups can have it for 7.58M. Also, the popular Prado costs 5.6M, with the duty-free price is 3.74M and the hardworking Hilux double cab costs 3.69M, with a duty-free price of 2.45M

Simba Colt: the long-time dealers of Mitsubishi are now the new franchise holders for BMW of which they brought a whole range of cars; these included all diesel models of the 530D at 90,300 euros (~Kshs 9.3M) which is about 1.3m more than an E-class Mercedes favoured by the Kenya Government), X5 diesel for 100,000 euro (~10.9M) and vying for the title of new status symbol in Nairobi (currently held by range rover sport)is the (ugly?) X6 whose diesel version is 95,000 euro (~10.4M). The company also had the usual stock of Mitsubishi cars and trucks including the Fuso prime mover which costs 9.04M

Subaru: Had several cars including the Tribeca which Kshs. 6.8 million, and the 2009 Forester that costs Kshs 4.15M. Also, car owners can order Subaru spare parts by phone, pay for them by M-Pesa and have them delivered.

Dealers for Indian Car companies were there for Tata, Mahindra, Ashok Leyland. Mahindra got a bad reputation in Kenya many years ago when the police acquired some sub-standard used vehicles through political middlemen that did not last long, and that image is yet to be cleaned up. They had a double cab pickup for 2.45M. Tata had many trucks and vehicles on display, and sales guys said that the Nano will be available in two months in Kenya, at a cost of Kshs. 250,000 (~$3,300 after our hefty vehicle taxes)

Dealers for China Car companies were also present. These included Transafrica for the increasingly popular FAW, Nelion (whose Beiben truck closely resembles a Mercedes Actros) and Abson Motors. You see many Chinese trucks on the road these days, mostly working on government building projects being done by Chinese road construction companies. -FAW prime movers cost about 5.9M, and are increasingly popular with transport companies because of their manual features (not too heavy on the electronics, computerization of the Euro trucks), while the company also had a new pick up truck, the admiral, which costs 1.4M

Auto accessory companies these included lots of anti-theft/car tracking (rivercress, stoic) companies, fleet management (AFMS), driving schools (Automobile Association of Kenya, GlenEdmund), body-builders like Sai Raj who even fibreglass boats and bus builders KVM – who lamented the shortcuts that other bus (body) builders use in construction e.g. use of arc welding, which results in weak buses that are easily shredded in road accidents, leading to high casualties.

Also present in a big way was G4S – as the former security company has diversified into a whole range of services including fire fighting, ambulances, home fires safety (extinguishers blankets), training (fire safety), vehicle tracking, all to go along with their traditional 24-hour burglary response

Auto financiers present were several banks (KCB, NIC, Bank of Africa, Diamond Trust (best bank in asset finance), Stanbic) and car insurers Heritage, CIC and CFC Life (who all had very aggressive salespeople)

Related past Total motor shows from 2005 and 2007
Ref: Euro = 109 shillings, US dollar = 76 shillings, M=million kenya shillings