Category Archives: Jamii

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.

Co-Op Bank to acquire Jamii Bora

Kenya’s third-largest bank group Co-operative (Co-Op), which is listed on the Nairobi Securities Exchange, has entered discussions to acquire 100% of Jamii Bora bank.

Co-op Bank has an asset base of Kshs 450 billion (~$4.5 billion) and 15 million customers while Jamii Bora has assets of Kshs 12.5 billion (~$125 million).

Kitale branch

Jamii Bora’s assets have been on the decline and it is ranked number 36 by asset size with about Kshs 5 billion of deposits and Kshs 8 billion of loans at last reporting. Three years ago it was to raise $12 million from Equator Capital Partners and Progression Capital Africa, and early last year Jamii Bora was linked to being acquired by CBA, but that appears to have been shelved after CBA merged with NIC.

It is owned by Asterisk Holdings, Equator Capital Partners, Jamii Bora Scandinavia, Catalyst JBB Holdings, Nordic Micro Cap Investments (PUBL-AB), has 650 other shareholders and the CEO owns 1% as the largest individual shareholder of the bank.

Jamii Bora had made a few unfortunate forays in the corporate space, and became the largest shareholder of a restructured Uchumi, with about 15% ownership. It also got swept into the Kenya Airways debt for equity swap.

Jamii Bora has about 350,000 customers and with 17 branches. It has a strategic niche with micro, small, and medium enterprises offering LPO financing, lease finance and trade finance services as well as training and meeting space to business owners at its headquarters in Kilimani.

EDIT Aug 7: The Central Bank of Kenya approved the takeover of 90% of the capital of Jamii Bora Bank by Co-operative Bank of Kenya, effective August 21, 2020.

EDIT Aug 25: Co-operative Bank announced the completion of its takeover of Jamii Bora which will now operate as Kingdom Bank. The Kshs 1 billion deal approved by the CMA and Competition Authority involved the transfer of 224.1 million Class A shares of Co-Op Bank to acquire 90% of Jamii.

When Bankers own Banks

Managers and employees are often given a chance to become part owners in the banks. This ‘aligns their interests’ with the institutions and gives them an added incentive to help the institutions do better as it individually rewards them for the good performance. The incentives are usually facilitated through employee share option schemes (ESOP’s) which convey some tax benefits and discounted buying prices. Typically, in conventional ESOP’s,  there a general pool for all employees and another for senior managers.

The method of calculation and award of these benefits is done in secrecy, usually by board committees. This is to ensure the privacy of employees and security of their families, but one outcome is that any revelation of these perks sparks a lot of interest.  In fact, you sometimes find a higher level of disclosure of compensation practices at listed banks in Uganda and Rwanda, than you do with Kenyan ones.

Stanbic Uganda compensation guide

Consider these examples:

CBA: Shareholders include a ESOP who own 2.5%.

Chase Bank: Employees of the bank own  4.3% of Chase through an ESOP. Elsewhere a bonus to the former chairman was one of the deals that the auditors queried in 2015.

Cooperative Bank: Stories about shares to bank management and directors first surfaced in 2008, ahead of the IPO in which bank staff got 9% of the shares. and has been on twitter this year. The company’s accounts show that the CEO owns 2% and the bank links the story to a smear by a former CEO who has an ongoing tax case with the bank.

Equity Bank: CEO owns 4%, while an employee ESOP owns about 3%.

Jamii Bora:  The CEO own 1% and is also an investor in the largest shareholder of the company.

Family Bank: In 2011, shareholders voted in an ESOP for managers and a transfer of 1 % transfer of shares of the (then-new CEO , which he purchased at a discount as part of his employment package.

Housing Finance: Has has an ESOP since 2006 that’s open to  all employees: Eligible employees pay for the units by cash at a price determined by Trustees either in full or by instalments until price is paid in full. The Unit holder is not allowed to sell, transfer or otherwise dispose of Units registered in his name to another Unit holder or to any third-party whatsoever.

KCB:  When KCB CEO Joshua Oigara declared his wealth (assets of Kshs 350 million comprising land, buildings, motor vehicle, cash bank balances and shares) and salary (with allowances that totaled  Kshs 4.9 Million a month),  last year his statement added that  “..My public declaration is driven by the need for us as private sector players to initiate greater transparency. Kenya is bleeding from corruption mainly driven by secrecy in organizational operations..”

$1 – Kshs 101.

Uchumi: This Is It

It’s hard to believe that I’ve been writing about Uchumi Supermarkets for as long, as I’ve had this blog – about ten years. The company seems to go through a cycle every few years of capital injection, expansion & new store openings, shareholder reassurance, a few years of smooth sailing, followed by diminishing stocks of products, management change (Suresh Shah, Titus Mugo, Kennedy Thairu, Masterten-Smith, Jonathan Ciano), restatement of accounts, change of auditors, restructuring of debts etc.

At the 2010 special meeting of shareholders (during a receivership period), Kenya’s solicitor general (speaking for the government, which had bailed out the company) said nothing was fundamentally wrong with Uchumi when it collapsed, just bad governance.

But this time, it hopes to have put the past behind, and things are now looking up again for Uchumi. Its CEO, Julius Kipngetich, was on a TV blitz last week where he recapped the position that the supermarket is in and the way forward. Uchumi is now lean after laying off 2,300 staff, closing its unprofitable Uganda and Tanzania subsidiaries as well as 7 branches in Kenya, one of which was in a mall (Taj) that was going to be demolished for expansion of a highway. They are in the process of selling non-core assets (3 land properties), re-negotiating with suppliers to settle debts and (in exchange for some equity) resume supplies, and seeking a new strategic investor.

Some of these have now advanced recent announcements that most suppliers have agreed to convert some debt in exchange for  about Kshs 1.8 billion of equity in the company. Also the Ngong Road Hyper branch has been sold (but Uchumi plans to continue occupying it as a tenant) and just this week the Visa Oshwal Business Community, who comprise key suppliers,   agreed to resume supplying stocks, with one of them ending a lawsuit to wind up Uchumi.

Uchumi’s latest restructuring is happening is at a time when supermarkets are ‘apparently’ booming in Kenya. Nakumatt just opened its 61st stores, Naivas and Tuskys are growing, despite the family battles they have, Choppies (of Botswana) has taken over Ukwala and Carrefour has just opened at The Hub in Karen, in upmarket Nairobi.

Uchumi basket

Banks like UBA are ready to support. KCB has been a long terms banker, and Jamii Bora banks is the largest shareholder (15%) of Uchumi, closely follow by the government (14%).

Uchumi stores now have almost all products back on the shelves, but with some familiar brands still missing, for now.  As the CEO, said in one interview, Uchumi aim to serve middle class consumers, who want to buy Kenyan products .

In the next three months, they hope to narrow down a strategic investor to be the anchor shareholder of Uchumi, from a pool of bidders that were invited privately.

Microfinance Moment

A peek at the microfinance institutions sector (MFI) the cousin to the banking sector. During the Africa -Middle East Regional micro-credit summit held in Nairobi in April 2010, several participants also exhibited their MFI products and services

Services to MFI
AMFI the association of microfinance institutions – Kenya offers capacity building, industry lobbying, performance monitoring and linkages to members. On a larger international scale, you have the UN! Doing this through the UN Advisors Group
– Bridging the branchless banking gap by CGAP
Branchless banking equipment includes devices from ingenico and craft silicon and a micro-payment (mobile and online) from Impala to deliver low cost financial and transactional services

MFI product advisory services from MicroSave as well as research and capacity building in micro saving and product delivery techniques – they have advised Equity Bank, Family bank and consulted on MPesa formulation.
Hedging for MFI’s to eliminate currency risk from MFX Solutions
– MFI support from the Grameen Foundation has funded $16 million to MFI’s in Ethiopia, Kenya, Ghana and Nigeria and supported Applab partnership with Google) for information to rural Uganda farmers and Ghana to help new expectant and new-born mothers access medical care via mobile phone.
Management services, and technical advisory to MFI’s from ACCION
– Private finance to MFI’s from Oiko Credit examples of which was Kshs. 71 million to Githunguri Dairy Farmers Society as well as to Uganda Women Finance Trusts, Nyeri Tea Growers, Daystar University (partially supported by Grameen). Also, another from Unitus which raises funds & grants, advises & arranges capital to grow innovative MFI’s 23 in 9 countries worldwide including Jamii Bora Kenya and SKS India.
– Loans in local currency in Africa from BlueOrchard to established MFI’s (minimum $1 million total assets, and at least 2 years old)
– MFI lending cost comparison (APR based) by the MFTransparency (report covering 90% of Kenyan MFI’s will be on their site in a few weeks)
Software to administer MFI loans from Loan Performer a highly rated package.
– Recycle your cell phone into MFI loans with Chiapas

Unique products
Matatu loan insurance accessible to members of the Jitegemea credit scheme
Micro health (Bima Ya Jamii), home beautification and other loans from SMEP and their loans are repayable by MPesa
Medical health (Faulu Afya) plans from Faulu Kenya which can provide inpatient cover up to 1 million (~$13,000) as well as from AAR Credit to pay for AAR Health packages in low installments
Micro-insurance from Microensure. A similar product on livestock insurance was featured in the Economist recently
Goat meat and poultry boiler accessible to Yehu MFI (operates at Kenya Coast
Livestock trading, micro health, business acquisition and other loans from KADET – The Kenya Agency for the Development of Enterprise & Technology, which is an affiliate of World Vision.
– The world famous Money-maker water pumps from Kickstart helping small-scale farmers out of poverty
Venture capital (equity partnership loans up to 150 million or ~$2 million) as well as contract financing and industrial finance from Fusion Capital targeted at SME’s (not MFI’s)
– Various loans for women entrepreneurs from the PAWDEP – the Pamoja Women Development Program
Start-up loans from Elmseed ($2,000 first year, 10% simple interest) small loans, big futures, and Kenya government Women Enterprise Fund and Youth Enterprise Development Fund borrowing is secured by group collateral)

Village savings & loan associations (VSLA) from CARE introduces more people in Africa to financial services than any other international organization

Local Banks
– Citi whose Citi Foundation has lent $80 million to MFI’s over the last 11 years in 88 countries in areas like colleges and neighborhood revitalization.
Equity bank with Vijana business loans targeted at members of youth groups as well as fish loans uvuvi biashara to finance nets, cooling equipment, boats etc.
– KCB with bankika a business package targeted at young entrepreneurs

New Banks
Jamii Bora Bank which bought a small bank in a reverse merger claims that with its over 200,000 members is the largest MFI in Kenya.
KWFT – the Kenya Women Finance Trust Deposit that was licensed this week deposit-taking MFI by the Central Bank of Kenya offers startup funding and LPG (gas) among many other loans. KWFT which claims over 334,000 members slots in as a mid-tier bank