Category Archives: inflation trend in Kenya

IPO daylight

IPO hangover: Went to visit stockbroker today in an unsuccessful search for the elusive Housing Finance prospectus – and instead found several notices on the wall:

– no mas they have suspended opening new CDS or receiving transfers from other stockbrokers for a month to 30/6( until they sort out their applications post-Safaricom IPO applications)
– investor awareness they advise how investors can watch rogue trades in their accounts and how to report them including getting correct address in the system. They also assure customers they are with a solid stockbroking firm that has over 40 billion shillings in assets
– cost increases – nominee accounts will now attract quarterly fee and transaction fees over and above commissions costs
– 1/2 way to DRIP: they will no longer en-cash dividend cheques, but they can be endorsed towards new purchases of shares.

Oil and manufacturing: Looking at the price warning from Sameer Africa, makes one wonder about the impact that the escalating price of oil will have on manufacturing based company shares (e.g. cement is up about 40%) – and whether it is wiser to invest in ‘service’ companies like Safaricom whose impact from oil prices will less direct (share of wallet)

Full year results
– Safaricom revenue to 61.4 billion [$990 million] (up 29%)
– Safaricom pre tax profit 19.9 billion [$321 million] (up 16%)

Petro Politics & Policy: Reading Thomas Freidman’s columns can scare any one cares about the future of America, foreign policy relations and other manufacturing industries.

Writing recently, he notes:

– The failure of Mr. Bush to fully mobilize the most powerful innovation engine in the world — the U.S. economy — to produce a scalable alternative to oil has helped to fuel the rise of a collection of petro-authoritarian states — from Russia to Venezuela to Iran — that are reshaping global politics in their own image.
– If this huge transfer of wealth to the petro-authoritarians continues, power will follow. According to Congressional testimony Wednesday by the energy expert Gal Luft, with oil at $200 a barrel, OPEC could “potentially buy Bank of America in one month worth of production, Apple computers in a week and General Motors in just three days.”
– America has taken its many natural assets — its research universities, free markets and diversity of human talent — and assumed that they will always compensate for our low savings rate or absence of a health care system or any strategic plan to improve our competitiveness.
– “Call it the triple deficit,” said Mr. Rothkopf. “A fiscal deficit that will soon have us choosing between rationed health care, sufficient education, adequate infrastructure and traditional levels of defense spending, a trade deficit that has us borrowing from our rivals to the point of real vulnerability, and a geopolitical deficit that is a legacy of Iraq, which may result in hesitancy to take strong stands where we must.”

From Banks to Chips

IFC funds D-Trust diversification: Diamond Trust Bank will get a $45 million (Kshs. 3.2 billion) loan from the Investment Finance Corporation this year: a subordinated loan of $15 million; and $30 million for housing finance, on lending to SMEs, consumer financing, education/student loans, health-care, and agribusiness financing. (Note: I own shares in Diamond Trust)

Super Barclays: Barclays Kenya is the first bank to announce ‘its profits for 2007. They are up about 7% from the subdued profit of Kshs. 7 billion ($100 million), but the profits of Barclays makes in African Countries mean that the units are too expensive for Absa

From the Blogs
– Local TV leader KTN follows NTV by expanding into Uganda
– Just how free is free secondary education?
– Inflation update: One common item I missed in inflation tracker is Chips (French fries). They are a popular Nairobi meal that’s cheap, and filling, often goes well with a ¼ chicken from Kenchic. But the price of chips has shot up in the post election period – from 20- 30 shillings ($0.4) for a pack/plate, to abut Kshs. 50 – 60 ($0.85) at the same Kenchic joints. The price of cooking oil has also gone up by about 30 – 40% in supermarkets – which may be contribute, as would the availability of potatoes which were produced in clash-hit areas.

Urban inflation index

back to normal

Compared to a year ago

This shows that not much changed for those in Nairobi able to travel around and shop properly at Uchumi that life is pretty normal as far as shopping is concerned.

Litre of petrol: 87.99 shillings (~$5.50 a gallon) and up 18% from a year ago (then 74.29) when you drive around Nairobi you can get prices from about 85 to 92 this week For petrol prices, I have been tracking a brand name station that tends to have slightly lower prices than may parts of the city where the price is at around 91 shillings. And these are expected to go up this year as are electricity bills which are already being billed at 12% higher for residential house. Energy Minister Kiraitu Murungi sounded out another warning yesterday to petrol companies to adjust the prices downwards when international oil prices drop – but the companies have, over the years ignored previous warnings from Ministers and government officials, and not passed on any savings to motorists.

Maize meal ugali (2 kg. unga) 52 shillings (50 a year ago)

Sugar (2 kg. Mumias pack) 150 shillings (no change from a year ago)
Fresh food prices have gone up also. Milk and bread have increased by a few shillings depending on where you shop. The prices of vegetables have gone up, some even up to 4X what they were before the election, but vegetable prices are seasonal and once supplies and fresh harvest kick in, the prices should adjust downwards.

Tusker beer: 120 shillings at local pub – up 20% (from 100 a year ago)
some pubs experienced shortages in the post-election period until the only beer they were left with was Guinness

(Safaricom) Mobile phone promotion: a year ago Safaricom had introduced Saasa – with 8 shillings per minute calls during off peak hours. This year they have extended the hours that off-peak applies, while rival Celtel has lowered the bar with 4 shilling per minute calls to 3 preferred numbers
What i really want from mobile company is for one tariff to focus on cheap data charges – SMS, Internet browsing – while voice can remain expensive

US Dollar exchange rate: 70.7 shilling to the dollar – unchanged (was 69.97 a year ago). But this is abnormal as it does not capture the the strength of the Kenya shilling which had appreciated to about 63 just before the election – from December it has lost 10% against the dollar and 17% against the Euro (overall it is 15% weaker against the Euro a year ago.

Urban Living Expenses

Continuing on the expense tracker series, as well as writing on urban inflation and spending. index

After trying various online expense tools, I fell back and used Microsoft Excel to track expenses by a simple spreadsheet. It’s easier because I can work offline to add entries unlike the online offerings – and so far I have five months of data, tracking discretionary spending. These are payments made voluntarily – not statutory ones like taxes, pension, loan repayments of which I have no control.

The numbers

less than 1 %

– other expenses0%: These are various uncategorized or one off expenses that don’t full into any category

– Bank charges 0%:There are actually higher but since I am on a flat rate account plan, only pesa point charges appear on the radar.

Recreation 1%: Very low, but I have avoided the golf course so far this year

Education 1%:only registration fees for 2008 and will be much higher next year

Personal 1%: haircuts etc.

Repair 1%: no car service done yet owing to very low mileage over the period (more on that later)

Clothing 1%: Men don’t shop for clothes, but this will actual be proved incorrect later

Newspaper 2% – shockingly high. When you realize that you’ve spent a few thousand shillings on newspapers in just 5 months, the daily habit of reading newspapers seems rather expensive, for information that is available through so many other means.

Communications 3%: Again, men are different than women I’d argue and our Safaricom/celtel costs are much less for men than women in the same occupation. In fact a typical bill airtime unit will be spent as follows 50% text messages, 25% phone calls, 25% phone Internet browsing & e-mail). Cyber cafe charges also fall under this category.

Groceries 3% : rather high considering that groceries/food are not in my docket.

Electronics 3% one off purchases

Utilities 3%: water, electricity can remain low if you know what to look out for and understand/adjust your habits.

Investments 5%: The figure is much higher but this only captures discretionary, not automatic investments and share repurchases.

Dining 7%: like with newspapers, another shocker, because a lot of it is so unnecessary and could be easily avoided and should be reduced.

Drinks7% The reason EABL will over time make more money than Safaricom, and why you should buy more shares. So much of our social life, and networking in Kenya is fueled by a round of drinks.

Co-related expenses

Transport: Early on in the first month i realized that car parking was going to be a major unnecessary expense, while driving to work was sometimes inconvenient (leave early & return late or sit in traffic with 100,000 other cars ) – so i chose to use public transport more – and relax, read, watch music videos etc. and leave the driving headach to others. Also with the increasing cost of petrol (89 shillings [$1.40 ]per litre this week) this week, and with further increases expected, driving is an evening and weekend activity. The low mileage means no car service incurred, despite pestering calls from the garage/mechanic. Results are over the months are Parking 2%, Transport 4% (matatu/citi hoppa/KBS – but also some holiday travel) and Fuel 7% .

Relatives: men don’t shop for themselves, but adding up the cost of giving in cash and kind tends to others can add up – and I had no idea it would be this high. Gifts 2%, Charity 4% and Family 5% means 11% is going out – mostly to relatives.

Rent 39% : You could argue that this is not discretionary, but it is and shows why i can’t afford a mortgage now, which will cost about another 20% of my funds.

Off to next year, and to capture increased education and recreation expenses some things will have to cut back.

Job offer
From wazobiajobs.com: a job with Cisco Systems as a Global System Integrator Channel Account Manager in Nairobi.

Urban inflation index

August 07 – changes from 6 months ago

– Litre of fuel Kshs. 80.79 ~ $1.21 (up 8.75%)
– Maize meal (2 kg. Unga) 50 shillings (no change)
– Sugar (2 kg. Mumias pack) 150 shillings (no change)
– Tusker beer: 100 shillings at local (no change)
– Safaricom promotion: Then: was Saasa – with 8 shillings per minute calls during off peak hour. Now is new shape of Safaricom including a new Super Tariffic tariff which has calls 38% cheaper and SMS 30% cheaper than the previous Tariffic tariff
– US Dollar exchange rate: Kshs. 66.50 (5% weaker against the shilling)
– Plastics items are not being tracked, but milk and bread have gone up since the budget speech read in June.

Personal expenses
I tried using various online services to track expenses, but eventually fell back to Microsoft Excel and built a tracker that fit my needs. For July 2007;

– Rent 30% (high, but it’s safe and close to town)
– Charity 14% (one time event)
– Electronics 11% (new phone, but do I say)
– Fuel 8% (lower than expected, but my daily commute is short)
– Drinks 6% (Rather low, so should not feel guilty)
– Relatives 6% (unavoidable, non recurring expense)
– Investments 5% (should be higher, but there’s nothing promising till end of August)
– Dining 5%
– Parking 4% (take that Mr. Mayor)
– Newspaper 2% (rather high)
– Gift 2% (for every time I visit someone’s’ house)
– Utilities 2% (electricity & water)
– Communications 2% (mostly Safaricom)
– Groceries 2%
– Personal 1%

sports
– I love the new G TV advertisement which compares the three English premiership soccer packages
Get 3 games a month for 0 shillings i.e. Nation TV (NTV)
Get 6 games a month for $70 ~ i.e. DSTV
Or 32 games a month for Kshs 2,750 (i.e. GTV)
but this weekend, Supersport will show opening matches of the big four teams Liverpool, Arsenal, Chelsea, and Manchester Utd
-With all the fallout from the Hungarian Grand Prix, it should be pointed out (to non-F1 fans) that Hamilton started the fracas on Saturday when he deliberately ignored a direct order from Ron Dennis (team Boss) to let Alonso past on the track during the early stages of qualifying three.