Category Archives: Covid19

Safaricom’s Ethiopia License

This week marked the deadline for bids for two new Ethiopia telecommunication licenses on April 26. Two offers were received in Addis Ababa; one by MTN (Mauritius) and the other for a “Global Partnership for Ethiopia”, a consortium by Vodafone, Vodacom, Sumitomo and Safaricom.

This is part of an overdue privatization push by Ethiopia that has continued even as political tensions have flared up in different parts of the country. The licenses do not include mobile money, but that is something that currently monopoly, Ethio Telecom has been granted and hopes to launch soon. It is expected that others who did not bid for mobile licenses such as Orange may bid for the partial privatization of Ethio Telecom which has 50 million subscribers.

Can Safaricom grow in this market 110 million population strong-market? That has been a goal of Safaricom’s management for the last few years. But a January 2021 report by Citi Bank was negative on the “high risk, high return” venture which will impact Safaricom’s earnings in the short to medium term. This was due to the impact of Covid-19 on the risk profile of all potential investors in Ethiopia, but also as, by taking a controlling stake in the consortium, the Ethiopia operations will be consolidated in Safaricom’s financials. Citi expects that Safaricom would raise half a billion dollars of debt to contribute to the consortium which would put an end to special dividends paid by the firm.

After technical and financial evaluations of the two qualified bids, a decision is expected by mid-May 2021.

Also, see more about MTN, from their Nigeria listing.

EDIT May 24, 2021:

  • The Global Partnership for Ethiopia welcomed the award of a license to operate telecom services in Ethiopia. Safaricom is the lead partner in the consortium which will establish a new company in Ethiopia that aims to start providing telecommunications services from 2022. The country has 112 million people and is introducing competition as part of economic reforms supported by the International Finance Corporation.

EDIT May 25, 2021:

  • The consortium bid $850 million and will get a 15-year license, with the possibility of one extension of the same duration. Safaricom has incorporated an SPV, the Vodafone Ethiopia Holding Company in the UK, in which it owns 90% and Vodacom 10% – which will own a company in the Netherlands, that it intends to move to Kenya, and get shareholder approval at their upcoming AGM, to operate it as a subsidiary. The SPV will own 61.9% (Safaricom 55.7%, Vodacom 6.2%), and other shareholders will be Sumitomo (27.2%) and CDC (10.9%).

EDIT June 8, 2021:

  • Vodacom CEO Shameel Joosub said their group serves 180 million in Africa with 58 million accessing financial services on M-Pesa, Africa’s largest mobile money platform that processes $24.5 billion a month. It has now expanded to international money transfers, loans, savings and lifestyles ad lifestyle and could be used to enable small Ethiopian businesses to access e-commerce. Also, the launch of mobile money services in 2022 will ensure financial inclusion and close the gender gap.
  • Prime Minister Abiy Ahmed Ali said Ethiopia will next offer 40% of Ethio Telecom to a foreign investor with another 5% to the Ethiopian public. Also, they will adjust policy (mobile money) and re-tender the second national telco license as he called on all the telco players to coordinate to connect everyone.

EDIT July 5, 2021

  • Safaricom appointed a new Managing Director for Ethiopia, Anwar Soussa.
  • Safaricom released the notice for the AGM on July 30 where shareholders will be asked ratify the Ethiopia deals.

EDIT July 15: The Ethiopian Communications Authority (ECA) issued a fifteen-year telecommunications operator license to “Safaricom Ethiopia PLC,” a newly incorporated local company.

EDIT: October 6 2022: Safaricom Ethiopia launched its mobile telecommunications network and services in Addis Ababa, Ethiopia, with 2G, 3G and 4G mobile services in 11 towns. While it builds a network to span 25 towns by April 2023, it also has infrastructure sharing and interconnection agreements with Ethio Telecom.

Also comes with a mobile money license for M-Pesa:

Continues

Equity Bank’s War Chest

Equity Bank has been on a tear, signing deals with other banks for affordable lines of credit for on-lending. The latest ones are with the African Development Bank and FMO.

The recent financing agreements include:

In 2020:

  • September 2020: $50 million (Kshs 5.5 Billion) loan facility with the IFC.
  • October 2020: $100 Million from Proparco (Agence Française de Développement Group) to enable Kenya MSMEs, women entrepreneurs who had been particularly affected by the economic shock of the COVID-19 crisis to create jobs. It is expected to impact 240 MSMEs firms which will create over 5,000 direct and indirect jobs.

In 2021:

  • March 4: EUR 125 million (Kshs 16.5 Billion) loan facility signed with the European Investment Bank. The long-term loan will support Equity customer to sustain and scale their operations, with Kshs 6.5 billion to agriculture and Kshs 10 billion to MSMEs.
  • March 10: $100 Million (Kshs 11 Billion) facility with DEG of Germany, CDC Group of the United Kingdom, and FMO of the Netherlands to support MSMEs cope with COVID-19 over three years.
  • March 15: USD 75 Million (Kshs 8.25 Billion) loan facility with the African Guaranty Fund to lend to women-owned and managed micro, small and medium-sized enterprises in Kenya, Uganda, Rwanda and DRC.
  • March 23: $10 billion (Kshs 11 billion) from the African Development Bank to support its expansion into Central Africa. The  tier-two facility with a 7-year maturity is also to support lending to women and youth entrepreneurs access capital to recover and thrive in a post-COVID environment.
  • March 25: $50 million (KShs 5.5 billion) NASIRA loan portfolio guarantee from Netherlands FMO, covering loans provided to MSMEs affected by the COVID-19 crisis, including women and young entrepreneurs and companies in the agri-value chain.

Kenya Airways 2020 results

Kenya Airways (KQ) recorded an unsurprising record loss for a year in which Covid-19 saw grounded aircraft and closed airspaces. After the worst year for aviation since 1999, KQ’s Chairman Michael Joseph said he expects that the airline will not recover to pre-Covid growth and revenue levels till about 2023 and will use the period to right-size its fleet, and deal with legacy issues & contracts. A bill currently in Kenya’s Parliament will place the airline in an aviation holding company with the Kenya Airports Authority.

KQ flew 1.8 million passengers, down 66% from 2019, and they were grounded by Covid-19 through the summer which is usually their most-profitable period. For the year, revenue was down 60% to Kshs 52 billion, and while operating costs were down 39%, it still resulted in a loss of Kshs 36.2 billion. 

KQ Group MD Allan Kilavuka said the airline has resume flying to routes that are safe and which provide steady revenue (China is their best route but all airlines are restricted to two flights a week). They have also revived cargo, delivering more flowers, food and pharmaceuticals. They added a new cold storage facility (300-ton capacity) and converted a 787 Dreamliner into a preighter (adding 50 tons of capacity). The airline also started a Mombasa – Sharjah cargo flight, resumed weekly cargo ones to Delhi, and in Southern Africa, they obtained 5th freedom rights to operate cargo flights between Johannesburg, Harare, Lilongwe, Dar es Salaam and Maputo.

This year, they will explore partnerships with other airlines (in Africa and Europe) as their joint-venture with KLM comes to an end, by mutual consent, in September 2021. They also plan to convert another aircraft into a preighter and will explore commercial drone operations, after having bought four for training.  

Stanbic Kenya to pay dividends after Corona-hit year

Stanbic Kenya bucked the expected trend that banks will by dividend-shy after a year of the Covid-19 and became the first bank to announce their full-year 2020 results, and with an unexpected dividend for shareholders.

During the year, the bank, part of the largest financial group in Africa, set out to support the resilience of their customers, staff and the community. 60% of staff now work from home, and 80% of transactions are done on mobile phones. For customers, they extended moratoriums on Kshs 40 billion of loans, that benefited 7,200 customers, and that included Kshs 3.1 billion to SME’s. They also waived charges on digital transactions and paid out 400 retrenchment insurance policy claims. While the banking industry repayment moratoriums that were set in March 2020 lapsed this month, management, led by Kenya Chief Executive, Charles Mudiwa, said that 80% of Stanbic’s customers had reorganized themselves and resumed repaying their loans by December 2020.

Also, the second half of the year was one of recovery of growth and overall, they managed to grow deposits by 12% to Kshs 217 billion and loans by 4% to Kshs 158 billion, while reducing their cost to income ratio, from 56% to 52%.

Stanbic Kenya’s profit after tax was Kshs 5.2 billion, down 19% from the previous year, but the pre-provision profit was up 2%. The bank will pay shareholders Kshs 3.8 per share for a total payout of Kshs 1.5 billion. This is equivalent to 29% of their earnings, and the bank’s management said that, with its strong capital and liquidity, they should also support Stanbic Kenya’s shareholders. They retain a positive outlook for 2021 even as Covid-19 continues, amid the ongoing distribution of vaccines worldwide.

Idea Exchange: Antler, Forbes, Museums, ODM.

New, and ongoing, opportunities to apply for.

  • As part of their one-year anniversary celebrations, Absa Kenya has invited people to write in on “Wall of possibilities” of community-uplifting things that they would like to Bank to fund. Each idea may get up to Shs 2.5 million and the deadline is 5 March.
  • Antler Global is seeking new startup companies to support with funding and mentoring. The Nairobi deadline is in April, and here’s a glimpse of the 2020 cohort at Antler.
  • Nominate the Woman Entrepreneur You Admire Most to the COMESA 50 Million African Women Speak Platform.
  • DFC, the U.S. International Development Finance Corporation is offering financing of between $3 million and $50 million to African companies in support of the continent’s COVID-19 recovery – via Asoko. 
  • The Forbes Africa 30 Under 30 Class of 2021 in categories for creatives, sports, and business and technology.  Deadline is March 31.  
  • Apply for the 2021 Global Teacher Prize ($1 million) and the new sister award, the Chegg.org Global Student Prize ($50,000). Deadline is 30 April.
  • The Hack the Normal hackathon takes place between 5 – 7 March 2021, invites participants to develop new products, services and business models with commercialization potential in these businesses and create solutions for financial challenges, sustainable living and healthy living.
  • The new Kikao64 co-working hub at Eldoret has 50% discount for non-profits, athletes and startup businesses, while others who sign on through the end of April 2021, get discounts of 25%.
  • The Konza innovation challenge offers $5,000 of funding for startups to pilot their innovations at the Konza Technopolis. Deadline is March 19. 
  • edit The Communication Authority of Kenya 2021 Kuza Awards rewards excellence in broadcasting. Regulatory awards are for compliance, local content, children & broadcasting, regional broadcaster, upcoming broadcaster and copyrights. Also, People Choice awards for favorite radio station, TV station, pay TV, news Radio station and TV station. This year has a theme for “Preserving our Heritage through Broadcasting (Kenya a Heritage of Splendour)”, and there is a Patriotic Award category with awards for Uzalendo Award (airing announcements on Covid-19) and Mzalendo Mkuu Award (educational content). SMS Kuza to 15601 to vote for free.
  • Mask Art awards are open to schools and young people under 25 in categories of the school of the future, young entrepreneur and environmental activist. Deadline is April 1.
  • The East Africa Maritime Awards (EAMA) recognize and award notable users of the Port of Mombasa. Organized by the Kenya Ports Authority, it is open to shipping, ports, services, engineering, and leisure marine industries with operations in Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo (DRC).  The deadline has been extended to March 31.
  • edit From the MasterCard Foundation comes the Baobab’s Got Talent challenge, an exciting storytelling opportunity for young creatives (animation, graphic design, video production) in Africa. Deadline is March 15.
  • From MIT Solve, the 2021 Global Challenge and Solve’s first US Challenge on Antiracist Technology are now open. Anyone anywhere can submit a solution to become part of the 2021 Solver class and access more than $1.5 million in funding.
  • The National Museums of Kenya is seeking historical memorabilia on Kenya, from the year 1800. The items, including photos, film, memorabilia, weapons, musical instruments, farm tools, art, newspaper cuttings, passbooks, etc. can be donated or shared on a long-term loan basis. The deadline is 19 March.
  • For the presidential candidate at ODM, the party is seeking a committed, passionate disciplined and dependable party member who can mount a successful campaign. The entry fee is Kshs 1 million and with a reduced amount of Shs 500,000 for women, youth or persons with disabilities. Deadline is 31 March. 
  • Post Office boxes are available across Kenya. Pick one up by March 31 and get a 30% discount.
  • edit SEED, the Stanford Institute for Innovation in Developing Economies, partners with entrepreneurs (CEO’s / founders) in Africa and South Africa emerging markets to build thriving enterprises that transform lives. Applications deadline is April 15.
  • edit The Eastern and Southern African Trade and Development Bank (TDB) and Asoko Insight have launched a Renewable Energy DealRoom to accelerate the financing of renewable energy projects in the region served by TDB.
  • The Thunderbird School of Global Management is offering a unique scholarship for Africans to attend the online Masters of Applied Leadership & Management with a specialization in Public and Global Affairs starting on March 8, 2021. African students will pay a special tuition of $12,000, compared to $33,000 for other students, representing a scholarship of $21,000.
  • The Tony Elumelu Foundation has the seventh round of its entrepreneurship program in which, with partners, they are seeking to boost 1,0000 businesses and also assist others to recover from Covid-19. This year, 1,000 businesses will receive $5,000 in seed capital, business training, mentorship, and global networking opportunities.  Apply before March 31. 
  • edit The Visa Everywhere Initiative targets fintechs to join a global innovation program. Apply by May 7.
  • edit Nominations for the Africa Food Prize 2021 are ongoing, a $100,000 celebration of African agriculture achievers.