Author Archives: bankelele

About bankelele

Writing on banking, finance and investments in East Africa. Email bankelele_at_hotmail.com, Instagram: Bankelele, Twitter: @Bankelele.

Nairobi Hub Spaces in 2022

Interesting times in Nairobi the last few weeks as Microsoft launched its Africa Development Centre (ADC) office. The Kenya ADC, was launched three days after another one in Lagos, Nigeria that will serve the West Africa region. Across Africa, the company now has 450 staff and engineers working at ADC’s in the two capitals.

The new office also houses the Microsoft Africa Research Institute, its first on the continent as all as a Microsoft Garage, an incubation hub, joining others located in the USA, Canada, Israel, India, and China.

Visa launched an innovation studio in Nairobi, its first in Sub-Saharan Africa to showcase payment solutions and innovations. Visa will co-create e-commerce solutions for the future with partners in the new space that was launched by Patrick Njoroge, the Governor of the Central Bank of Kenya. Visa has other innovations centres in Dubai, Singapore and USA (San Francisco) – which is its flagship “One Market”. There are already partnerships in Africa with Paga and Safaricom.

Who’s next?

It’s not just about technology; NSE-listed agricultural firm Kakuzi has launched an online “Avocademy” hub for farmers to learn about the processes of growing and managing avocado – the current “green gold” crop.

Other Hubs and co-working spaces:

Amazon announced that a new AWS Local Zone would be available in Kenya providing cloud infrastructure. Companies can use it to host their applications by connecting through Amazon local partners including Safaricom.

Google has announced that they will be opening a product development centre in Nairobi and is now hiring engineers, product managers, software engineers, user experience (UX) designers and researchers. Perfect timing as their pioneer Country Manager, Joe Mucheru will continue to serve as Kenya’s Cabinet Secretary for ICT, Innovation and Youth Affairs for the next few months.

Dominoes.

Corporates Loving Golf

Historically, golf has been considered to be a costly sport in Kenya with difficulty in accessing equipment kits and membership clubs to play at. But now golf is enjoying increased corporate attention and bank sponsorships in the post-covid period. Some of these initiatives had begun in the period before the shutdowns in 2020, but the increased need for individuals to exercise in open spaces boosted more interest in hiking, cycling, jogging, and golfing. Golf clubs were previously seen to be losing touch with young people, and many of the new initiatives are designed to turn this around. 

Some ongoing corporate golf partnerships are:  

  • Kenya has been a multiple winner of Africa’s Best Golf Destination at the annual World Travel Awards and the Kenya Tourism Board is keen on using golf to promote tourism both by local and international travelers. Golf is played year-round in Kenya and the country has easy connections to other tourism facilities. KTB cites a consultancy research report that golf travelers spend 2.5x more than leisure travelers and stay for longer periods 
  • Absa Kenya has a long-running sponsorship of the Kenya Open Golf tournament which, with the support of the Government that aims to boost tourism into the country, is known as the Magical Kenya Open and is part of the European Tour. The 2022 edition tournament was played in March at the Muthaiga Club and was won, for the first time, by a Chinese golfer, Ashun Wu.
  • This year, Kenya Airways joined as a corporate partner and had aircraft fly past over Muthaiga on two days of the tournament and, as an official sponsor offered discounted rates to golfers and fans while ferrying in PGA officials working at the tournament. 
  • NCBA has the NCBA Golf Series with ten tournaments around the country that was in Kitale last week and will next be in Kampala, Uganda.  In 2021, the series had 13  tournaments that attracted 1,700 golfers. Some juniors golfers who participated won qualification to two international events – the Rome Classic (Italy) and the Big Five (South Africa).  
  •  The Safaricom Golf Tour has received sponsorship of Kshs 100 million, for a 14-leg tournament that will involve outreach to local communities and make the sport more accessible – it will rope in corporate and amateur players, juniors (play on Sundays), caddies (compete on Mondays) at the different legs. It aims to find new talent for the sport, especially young golfers, and winners of different legs will feature at the finale at Vipingo Ridge in August. The Vipingo Ridge course was launched in 2010 and continues to host several leading international golf tournaments. 
  • Also on the European Tour is the Magical Kenya Ladies Open which is played at the Vipingo course. The Kenya Tourism Board (KTB) is the main sponsor of the tournament which this year featured 90 golfers from 25 countries. The tournament also got a Kshs 20 million sponsorship from Safaricom’s M-Pesa who held a junior golf clinic.
  • Crown Paints and Prime Bank are part sponsors of the US Kids Foundation golf series along with Safaricom and NCBA. The three-year program will be run through the Junior Golf Foundation (JGF) to promote golf development through the training of up to 40 coaches across the country and supports local golf tours to introduce more young people to the sport. It has held events at Limuru and Muthaiga and will have more at Karen and Royal (Nairobi) all leading to a finale at the Muthaiga Golf Club in May 2022.
  • Kenya Ports Authority will have tournaments in different cities of its operations – Nairobi, Mombasa, Kisumu. 
  • The Tannahill Shield one of the largest amateur golf tournaments in the country is ongoing at the Royal Nairobi Golf Club this Easter Weekend. It is sponsored by Jamii Telecom, Rentco and Chipper Cash, a remittance company. 
  • In 2021, Absa Kenya sponsored the Savannah Tour Classic a new event created for the European tour in the recovery from Covid and was staged ahead of the Kenya Open. 
  • The Johnnie Walker Classic golf series resumed after eight years, sponsored by EABL’s The Johnnie Walker Classic golf series resumed after eight years, sponsored by EABL’s Kenya Breweries. “Road to Gleneagles” will have amateur and professional golfers compete at 20 clubs across the country ahead of the finale in May 2022 where the winning team will receive an all-expenses-paid trip to play at the Gleneagles in Scotland which is one of the top golf courses in the world. For the professionals, participation will help them to improve their competitiveness for the European tour events played in Kenya. 
  • Insurance companies including ICEA and Liberty (a Stanbic affiliate) also support golf as do other companies in the sector. 
  • EDIT: Amateur golfers are invited to enter the Race to Vipingo Ridge by registering and submitting scores achieved during “club nights” at their home clubs between 18 April and the end of June for a chance to win a chance to play in the finals at Vipingo Ridge, with their transport and accommodation careered for. Note, there is an entry fee for the qualifying rounds.
  • EDIT: NMG has the Nation Classic Golf Series again for 2022.

Missing Bits in Media

Excerpts from a chat on Colonial Legacies in Media Reporting in Nairobi, Kenya

  • A young Aga Khan came to Kenya and set up the Nation as an independent media house, hired fleet street writers who did a good job knowing that they would write themselves out of their jobs.
  • When a journalist is sent to do a story on a car accident, their editor will not consider it complete until they interview the OCPD (local police boss)
  • A media house put together stories about Kenya’s former President, Daniel arap Moi when he passed away in 2020, but they did not get much online traction. When they analyzed why they found that the top search query was ” who is Daniel arap Moi?” It was a realization moment that Moi’s rule ended in 2002 and the average age of the online media audience is 19 years.
  • In 1976 President Jomo Kenyatta attended a lunch at the Serena Hotel with the Aga Khan at the Serena Hotel, the Standard group Chairman Udi Gecaga and his nephew Ngengi Mungai, newly returned from the USA – and the purpose was to ask if Ngengi could be made Chairman of the Nation group.
  • Stories on Africa are relayed using wire services and take the same path as planes – as they go to Europe and then back to reach other parts of the continent. Kenya will get most news stories about neighbouring Ethiopia from the BBC or Radio France.
  • Two families from Tunisia have controlled pan-African media for 60 years through respective ownership of the New African/IC Publications group in London and Jeune Afrique Media group in Paris.
  • In 1988, the Nation reckoned it had an audience of 500,000 and with the growth of the middle class, expected that this would only expand exponentially. But today, they have a much smaller audience, yet legacy media controls much more of the online, print and broadcast media spaces.
  • The news media was created in colonial times to amplify the government’s message and this logic did not change after independence.
  • Kenya has four national languages: English, Swahili, Silence and Gossip.
  • If you want the news in Kenya, listen to/follow gossip.
  • Viewers expect too much of this media ecosystem when the terms of the ecosystem are set to a different reality. It’s like buying a Zebu cow and expecting it to produce milk like a Fresian.
  • If the news was important to Africa, the OAU would have invested in it
  • Why is the newspaper which is given out for free the least circulated one in Kenya?
  • This town is littered with the broken dreams of journalists.
  • Over two hundred studies commissioned by media on what readers found lacking and why they were not consumers was because the news had “no women” and “few young people.”

Kenya 2022 Investment Outlook from EFG Hermes

Managers at Kenya’s largest stockbroker, EFG Hermes, held a media briefing on the state of investing in Kenya in 2022. This is at a time that the Democratic Republic of Congo is about to join the East African Community, potentially doubling its market size from over 100 million to 200 million and making the region more attractive to investors due to the regional transports links.

EFG Hermes Head of Frontier Market Research, Kato Mukuru said Nairobi is now the capital of East Africa and that local banks have become regional champions such as Equity which is now the largest bank in the DRC. The next step should be a common currency in East Africa but he lamented that different African governments were unnecessarily chasing digital currency (CBDC) projects. 

EFG Hermes Kenya which has a 30% share of Nairobi Securities Exchange (NSE) trading activity, largely from institutional investors has now invested in wooing retail investors through an app they launched last August. The NSE has had shrinking liquidity, and the value of stock trades that used to be $8-10 million per day, is now at $2-3 million per day – and if liquidity can be pushed back up, other new products on NSE such as derivatives and day-trading will become more viable.

Excerpts

  • Overall EFG researchers think Kenya is on right track despite concerns about its debt, inflation and currency, the agriculture sector should keep the Kenyan shilling stable and compensate for increased energy prices – and they don’t expect currency depreciations movements like seen in Egypt and Pakistan.  
  • The government needs to have a privatization agenda to boost the NSE. Safaricom was listed at the end of post-election violence in 2008 when Kenya was at its lowest and that produced one of the most valuable companies in Sub-Saharan Africa.
  • East Africa needs to create more formal jobs. Kenya has 5M formal jobs for a population of 50M while Vietnam has almost 50% formal employment. It may take the government to initiate a more planned economy system that targets creating real formal employment that goes beyond agriculture as it can’t rely on informal jobs forever.
  • Tanzania’s late President Magufuli has shown that a country can transform within one administration. 
  • The way out of food inflation caused by the Russian war in Ukraine is by sourcing foods from other parts of East Africa e.g. start to eat matoke. The region is very resilient and will not be shocked as much as Egypt which is dependent on wheat imports from those states. The East African region is largely self-sufficient in food supply and Kenya, which may have droughts, could import other foods from Tanzania, Uganda or Rwanda. 
  • DRC is very attractive in terms of its resources and the EAC would be further boosted if Ethiopia also joined. Kenya has strong links through the Nairobi-Addis highway and LAPSSET projects in which Ethiopia has been invited to participate.
  • With its balance sheet, Safaricom has the capacity to take on debt for their Ethiopia venture. They borrowed $400 million locally for the license and they can syndicate that, or draw on vendors or DFI’s, to fund more while continuing to pay dividends to shareholders.

Absa Kenya resumes dividends after record FY2021

Banking seems to have gotten over the shocks of the last two years, going by the outlook of Absa Bank Kenya. The bank released its 2021 financial results in Nairobi today and signalled a recovery with a resumption of dividend payouts similar to pre-Covid times.

The bank recorded assets of Kshs 429 billion and pre-tax profit of Kshs 15.6 billion for 2021, up from Kshs 5.6 billion in the previous year. Its deposits of Kshs 269 billion and loans of Kshs 234 billion had grown by 6% and 12% respectively. Absa Kenya will pay a dividend of Kshs 1.1 per share to its shareholders, equivalent to a sum of Kshs 6 billion or 58% of its profits. This comes after a dividend freeze last year in which the bank had rescheduled 30% of its loan book to accommodate its customers whose business and lives had been affected by the Covid-19 trade disruptions.

Absa Kenya Managing Director, Jeremy Awori said that 95% of the rescheduled borrowers had since resumed making loan repayments and the bank was able to lend another Kshs 128 billion in 2021.

The bank grew income by 7% to Kshs 37 billion and impairments decreased by 48% to Kshs 4.7 billion. The results were booked without the weighty exceptional items as it has completed the separation, rebranding and transition exercise from Barclays Kenya to Absa Kenya.

Chief Financial Officer, Yusuf Omari said the bank had strong capital and liquidity ratios and was in a good position for 2022 and onwards. He added that the capital position is stronger than in pre-Covid times, and the bank’s bad debt ratio is now at 7.8% compared to the Kenya banking sector average of 13%.

Awori said that the country’s GDP was on the rebound and services, notably tourism, were expected to recover with the removal of travel and quarantine restrictions that had kept business people, tourists and other nationals from visiting the country. There was however caution given the ongoing conflict in Ukraine following the invasion by Russia and which is expected to drive up food and fuel prices across the globe.

Chief Strategy Officer, Moses Muthui said that the last five years had been about growing revenue, driving transformation and bringing down costs. He added that with the separation done, Absa could focus on further diversifying its retail products, growing business banking, and building a regional powerhouse in corporate and institutional banking.