Author Archives: bankelele

About bankelele

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

NSE Ibuka

The Nairobi Securities Exchange (NSE) “Ibuka” is an incubation program that aims to identify Kenyan companies and fast track their development and governance structures that will gain them exposure from investors. Several companies have joined the program which was launched and entails a ten-month course that will hopefully lead to an eventual listing at the NSE.

The companies that have signed up so far are:

  • (1) January 31 2019 – The NSE admitted APT Commodities, a leading tea exporter with a wide portfolio of brands such as Jambo Chai Tangawizi, Hassan Tea and Equity Green Tea, to join the Ibuka Program.
  • (2) March 15 –  Globetrotter Agency is a leading travel and tours company with enhanced domestic and international travel solutions, offers a wide variety of services including medical tourism.
  • (3) March 21 – Moad Capital provides independent commercial real estate advice and consultancy services.
  • (4) March 27 – Bluenile Rolling Mills is a leading hot rolled steel and wire products manufacturer with an annual turnover of Kshs. 4.5 billion. Established in 2007, it provides high-quality products across the region under its signature brands – Kifaru and Kifaru. It produces over 6,000 tons per month and has 800 employees.
  • (5) April 3 – Myspace Properties (Kenya), established in 2008,  is a private properties company serving the housing and property needs of real estate clientele.
  • (6) April 12 – Vehicle and Equipment Leasing Limited (VAELL) provides bespoke leasing services across in Kenya, Rwanda, Tanzania, Uganda, and Zambia and has correspondent relationships with other leasing firms in South Africa and India.
  • (7) May 3 – Polygon Logistics, a company that was co-founded by a husband and his wife in 2010, does clearing and forwarding, imports and exports shipments as well as air charter flight services and airline representation.
  • (8) May 9 – Nile Capital Insurance Brokers provides general and life insurance products. Established in 2013, it is one of Kenya’s fastest growing insurance brokers and a preferred broker for domestic and international underwriters.
  • (9) May 13 – Nyali Capital, the company led by the best woman in business in Mombasa in 2018, is a non-deposit taking microfinance providing credit facilities, financial advisory services and training programs with special focus on empowering women and youth-owned businesses.

  • (10) May 14 – HomeBoyz Entertainment became the first entertainment company to join the program. Established in 1992, it offers bespoke services in event production and is listed as one of the top 10 event production companies in Africa.
  • (11) 30 May – TSG Realty, founded in January 2010, it focuses on serviced and furnished apartments, town homes and commercial real estate in the high-end, luxury market.
  • (12) June 25 – Naveah Capital Insurance Agency was established in January 2018 and aims to become the leading champion of wealth preservation in Africa through the provision of risk management and financial planning services.
  • (13) July 10 – Capital Power was formed in 2013 to undertake various renewable energy projects in Kenya.
  • (14) July 23 – Masumali Meghji Insurance Brokers is one of the largest independent insurance brokers in Mombasa, and has served the region for more than 36 years, offering commercial and industrial covers to its clients.
  • (15) Aug 1 – Tusker Mattresses (Tuskys), which currently serves over 10 million customers monthly across 63 branches in Kenya and Uganda and on its premium e-commerce platform, aims to enhance its growth as the leading retail chain in the region. Founded in 1990, it has 6,000 staff and 3,000 suppliers.
  • (16) Aug 13 – Ceven aims to enhance service delivery among electricity customers in Kenya. It currently serves two contractual assignments with Kenya Power for distribution of pre-paid electricity tokens and processing post-paid payments.
  • (17) Sept 5 – RentCo East Africa seeks to leverage on the NSE Ibuka Program to enhance its growth as the leading asset leasing company in the region. The company leases out construction equipment, vehicles and aircraft to both public and the private sector. (via Business Daily)

Kenya’s Capital Markets Authority (CMA) envisions having four new listings on the NSE every year.  Other companies expected to list, not necessarily through Ibuka, include Cytonn,  Jamii Bora, Vitaform, Bank of Kigali (Rwanda) and National Oil (NOCK).

Hopefully, the Ibuka program will eliminate the taint of the GEMS listings when new companies introduced to the NSE like Atlas Africa (already exited), Home Africa and Kurwitu have under-performed and disappointed investors who now view them as not being ready for a public listing.

UNCTAD report shows an unequal digital global economy

The increased use of digital platforms in everyday lives across the world is leading to a divide between under-connected nations from hyper-digitalized societies

The Digital Economy Report released by the United Nations Conference on Trade and Development (UNCTAD) shows that China and the USA have done the most to harvest the digital economy and now dominate the rest of the world and leading to an unequal state of e-commerce. The two countries host seven global “super-platform” companies – Microsoft, Apple, Amazon, Google, Facebook, Tencent and Alibaba that account for two-thirds of the total market value of the seventy largest digital platforms with Naspers as the only African company in the group.

Google and Facebook collected 65% of the $135 billion spent on internet advertising in 2017, while, in Australia, Google took 95% of the “search advertising” revenue while Facebook took 46% of the “display advertising” revenue.

Europe’s share of the digital economy is only 4% while Africa and Latin America combine for 1%.  In Africa, progress has also been uneven with four countries – Egypt, Kenya, Nigeria and South Africa accounting for 60% of digital entrepreneurship activity. They are followed by a second tier of Ghana, Morocco, Senegal, Tanzania, Tunisia and Uganda (with a combined 20%)

The Report showed that the evolving digital economy has a major impact on achieving sustainable development goals (SDG’s) and calls for governments in developing nations to focus efforts on things like:

  • Skills development & re-education e.g. consider that in the Western world, you can do a whole university degree online.
  • Revising policies on data privacy & sharing e.g. have restricted local data sharing pools and have tariffs on cross-border data.
  • Revising competition regulations e.g. curb the tendency where platform companies tend to capture/acquire young promising companies in the developing world.
  • Taxation e.g. developing country governments should seek to tax digital platform companies.
  • Employment e.g. by setting minimum wages & work conditions for gig-economy workers.
  • Break down silos: no longer think of government as being separate from academia, private sector, civil society and tech communities.
  • Also, while the US and Europe have divergent views on data protection, it cites a survey which found that Kenyans had the least concerns about data privacy (at 44%).

Speaking at an unveiling of the Report in Nairobi, Dr. Monica Kerretts-Makau said that the world is trending towards a captive society where you have to be on a platform to transact in an economy and that presents problems and opportunities in the African context.

The 2019 issue of the Report, that was previously focused on the “information economy”, can be downloaded here.

Toxic Business: Banned in the European Union, poisoning Kenya

Agriculture is one of Kenya’s key income earners contributing 24% of GDP and employing 75% of the population either directly or indirectly. As a result, the demand for pesticides is high and increasing with the need to increase agricultural production to keep up with population increase. Imported chemical pesticides in the market account for 87% and has more than doubled in four years from 6,400 tonnes to 15,600 tonnes in 2018, yet there are few safeguards to control application.

Every year fresh produce from Kenya is rejected by the European market when it is found to have harmful levels of chemical residue. When returned it finds its way to local fresh produce markets and consumed by unsuspecting Kenyans. The result is a huge healthcare burden on households as more people, especially children, fall ill.

A report by Kenya Plant Health Inspectorate Service (KEPHIS) showed that 46% of the fresh vegetables sold in Kenyan fresh produce markets have high levels of pesticides with harmful active ingredients, with Kale (94%) having the highest level of pesticides and herbicides that are harmful to human and animal health.

A small-scale farmer Joseph, who has adequate training in the handling of pesticides, prepares to spray his crops by mixing the chemical with water in a backpack sprayer pump, using his bare hands and no protective mask or clothing, he gives the pump a firm shake to mix the ingredients in it and then proceeds to splash water on the exterior of the sprayer pack to rinse off the chemical overspill with his hands. The small quarter acre, gently-sloping vegetable garden surrounds his family’s house, which further exposes his family to harmful chemicals. He is not aware of the danger of handling these pesticides, only focusing on their efficacy in pest control.

At the local roadside Market, Daniel Maingi of Kenya Food Rights Alliance purchases green capsicum and spinach to take for testing at the University of Nairobi’s Pharmacology & Toxicology Laboratory at the Department of Public Health, where Professor Mbaria confirms harmful levels of chemicals containing toxic active ingredients on the sample vegetables.

The “Pesticides In Kenya: Why our health, environment and food security is at stake” report by Route To Food Initiative (RTFI), makes a distinction between the toxicity of the active ingredient and the toxicity of the chemical product. In the European market, the manufacturer of a chemical product first registers the active ingredient, which is then tested and must be identified by name on the product label.

Of the “247 active ingredients registered in Kenya, 150 are approved in Europe, 11 are not listed in the European Database and 78 have been withdrawn from the European market or are heavily restricted in use due to potential chronic health effects, environmental persistence, and high toxicity to wildlife.”

In a case of double morality standards, these chemicals are available to Kenyan farmers threatening the health of both citizens and the environment by contaminating the soil and water. Most of these pesticides take years to degrade and therefore persist in the environment for many years and many are acutely toxic causing severe long-term toxic effects, disrupting the human endocrine system, harming wildlife and other non-target organisms that are crucial to the ecology.

The Pesticide Control Products Board (PCPB) set up by the Government of Kenya under the Pest Control Products Act of 1982 regulates the importation, manufacture, distribution and exportation of pest control products. PCPB has registered 247 active ingredients in 699 horticultural chemical products, with more products registered than active ingredients as one active ingredient can be by several companies. Of these, a quarter are banned in Europe and they include big brand names such as Syngenta, Bayer and BASF.

In Kenya, chemical companies host robust carnival-like events where smallholder farmers are bussed in from across the country and paid a stipend to attend. Throughout the festival, no mention is made to farmers about safe handling or protective clothing when mixing the chemicals for application on the crops. The farmers appear to completely trust the chemical companies to have their best interests at heart and do not ask any questions. At these marketing events, several chemicals are presented as solving multiple problems and are touted as the best in the market.

Glyphosate-based agrichemicals have received an enormous pushback globally for its carcinogenic properties. However, there are other harmful ingredients that should attract much more attention in use in Kenya, but banned in the European Union. Carcinogenic active ingredients include Chlorothalonil, Clodinafop, Oxyfluorfen and Pymetrozine. Mutagenic active ingredients include Cabendazim, Dichlorrvos and Trichlorfon. Endocrine disruptor pesticide active ingredients include Acephate, Carbofuran, Deltamethrin, Omethoate and Thiacloprid. Active ingredients that hamper development and are harmful to reproductive health include Abamectin, Carbendazim, Carbofuran, Gamma-cyhalothrin, Oxydemeton-methyla and Thiacloprid. Neurotoxic active ingredients include Abamectin, Acephate, Dichlorvos, Glufosinate-ammonium, Omethoate, Permethrin and Thiacloprid.

Before the advent of chemical herbicides, farmers would weed their farms by hand and using hand hoes, this has been increasingly replaced by pesticides even for the smallholder farms under five acres. Mono-cropping or monoculture where one crop is planted year in year out, depleting the soil of nutrients and necessitating the increased use of fertilizers to improve yields with each subsequent year, also encourages the spread of crop pests which require chemicals to treat. Another area that receives little focus is post-harvest storage pesticides. If fertilizers are subsidized, why not include hermetic storage technology (HST) storage bags that provide moisture and insect controls, without pesticides, in this policy?

If we continue to consume chemicals, consciously or subconsciously through the food we eat, the water we drink and the air we breathe, then the next generation we produce will be of a lesser quality than ourselves, as will subsequent generations.

A guest post by Velma Kiome 

BA 2119: The Flight of the Future exhibition

A guest post by Elsie Kibue-Ngare.

I was fortunate enough to be invited/gifted a ticket to an interactive exhibition by British Airways in collaboration with students from the Royal College of Art (RCA) at the Saatchi Gallery as they showcased the future of flying in the next 100 years.

This year, British Airways is celebrating its 100th Anniversary as being part of a predecessor company AT&T (Air Transport & Travel Ltd) and this exhibition is a celebration of that long history by looking at aviation through history via FLY, an interactive, multisensory, virtual reality experience that turns you into a time traveller from being a bird, into Leonardo Da Vinci’s studio in Florence all the way to 100 years into the future to what aviation might look like with an aircraft that is guided to land by sight as one of the possibilities of air travel.

Together with FLY, eight other concepts were showcased at the exhibition. These included:

  • AVII (AVY), which I particularly liked as a concept to improve the experience of travellers using Artifical Intelligence (AI) in collaboration with cabin crew. The idea is to submit your needs as you book your flight, for example, if you have particular dietary needs and this information is fed back to the cabin crew who in return provide personalised service throughout your flight without even you asking.
  • Another concept, TASTENATION, uses data collected from DNA and body health to 3D print food for a new multi-sensory in-flight dining experience. This idea does away with food waste as meals are prepared from scratch onto edible cutlery and plates. Yet at the same time provide the necessary nutrients whilst on the air as it prepares the body to adjust to the cuisine of the traveller’s destination.
  • In line with reducing waste, THE FUTURE OF LUGGAGE is another concept that can also be realised. The vision where travellers would travel without any luggage as they will have to upload their clothes onto a digital wardrobe together with their measurements and depending on the weather, duration of their stay, etc. and the idea that you would arrive at your destination and find a set of clothes waiting for you at the airport lounge at your destination is pretty awesome. Clothes will be made from recycled materials that at the end of your trip, you drop them off at the airport where they are recycled.

There was so much to detailing to see at this exhibition from personalised wearable seats called AIRWEAR, to flying green with AERIUM, where the air we breathe and the water that we drink whilst flying is generated through bioavionics systems integrated as part of the plane. CURIO, a hypersonic modular aircraft with zero emissions and weird seating is one I did not get. And so did AER, a shape-changing smart luggage transportation concept.

Of the concepts, I saw at the exhibition, AVII(AVY), AERIUM, TASTENATION and THE FUTURE OF LUGGAGE looked like the ones that are likely to happen in the near future leading up to 2119 with the other concepts looking very unlikely, but I could be wrong and years beyond 2119, these other concepts could be a reality for many.

All in all, it was amazing to see how history and the advancement of technology inform us of the ideas and innovations of what is yet to come.

How can the US engage in Africa, and go around China?

.. Extracts from “Deconstructing the Dragon: China’s Commercial Expansion in Africa,” a recent report by Aubrey Hruby that postulates what the United States can do to reposition its influence in Africa whose governments have received extensive assistance from China, mainly in terms of infrastructure projects.

The looks at the nature of infrastructure deals that have come to be dominated by China state-owned enterprises through a combination of feasibility studies, negotiations financing through Chinese loans, and eventually mobilization to start construction. Quick-decision making is a factor and McKinsey found that over half of investment decisions for Chinese construction and real estate companies were made in under a month.

The US can counter to these mainly be through US government to African business initiatives, while contracts with China’s “government to government programs.

Recommendations include:

  • Niche infrastructure that fall within the US competitive advantage like renewable energy, oil exploration and urban/smarter city solutions. However on the last one, the report points out that China has made significant inroads in media, telecommunications and security services.
  • Push for anti-corruption agenda, as this will level the playing field for US companies. This can be through supporting African government efforts to investigate and prosecute corruption cases.
  • Generate a pipeline of projects, data, and trade links to assist US businesses to invest in Africa. This can be through sponsoring competitions and investor trips.
  • Support the creativity and education sectors. There is an opportunity in the entertainment spaces as recent deals involving Netflix, Mavin Records and the National Basketball Association have shown. Also a quarter of African children (66 million) could be studying in private schools by 2021.
  • US financial institutions can work towards providing working capital, which remains a great challenge for individuals and small businesses in Africa.

It also notes that more US intuitional investors have opened up to putting more funding to African venture. These include the New York State Common Retirement Fund, which has allocated $6 billion to investments in Africa and the Chicago Teachers Pension Fund that have invested in two African private equity funds.

EDIT: A story in the Africa Report shows how a new US Development Finance Corporation (DFC), which combines the Overseas Private Investment Corporation (OPIC) and the Credit Authority of the U.S. Agency for International Development’s (USAID) is part of the broader economic and trade battle led by the USA against China.  

The new organization has more latitude than its predecessors in that, it will be able to make equity investment in private firms (previously they were restricted to debt) and a restriction that OPIC could only support projects with “a significant link with the American private sector” has been removed.