Trying to fathom how or why Kenya’s smallest commercial bank City Finance would be interested in acquiring micro-financier Jamii Bora which has over 170,000 members.
Nevertheless the Kenya Finance Minister has cleared the way for the deal to go through with Jamii Bora who are in the money, having recently repaid Acumen Fund their $250,000 loan (~Kshs 19 million) and completed a substantial portion of their housing project in Kitengela.
There will be no SWAG from Safaricom at their annual general meeting that will be held on August 19 – so the company boldly proclaimed in a media briefing on Wednesday.
Even while projecting that just 30,000 of their 830,000 shareholders to turn up, the company budgeted a total Kshs. 352 million (~$4.5 million for the event) which they cite as being too expensive. They even have compared the cost of the day’s events to be the equivalent to one month of all their leases, of 1 ½ months worth of administrative expenses – all channeled to a one day event!
Yet two things are clear:
1. Much of the burden is regulatory: They estimate it will cost Kshs. 240 million to print and circulate an annual report (Co-Op Bank, the most recent listed company has a 150-page report). Dividend will be distributed to shareholders, and they estimate that it would Kshs. 73 million to send these by EFT to a fraction of investors. Truth is most dividends and paid by cheque, very few by EFT.
2. SWAG generosity is not that expensive (but these are tough times): Kshs. 40 million for shirts, lunch, caps, and umbrellas is not much money for the company to spend, even if they don’t provide transport to the venue (about 10 kilometers from town). However, these are cost-cutting times even at the largest companies. A few years ago, Nation Media Group (NMG) would hire buses to take their shareholders to their Nation AGM at their premises (beyond Jomo Kenyatta Airport) where they’d would have lunch and get some SWAG items. This year’s event was at KICC in the middle of town (no transport costs) and shareholders only got copies of newspapers with their buffet lunch.
For Safaricom to take a harsh stance on SWAG is rather cold unless the directors and manager also adopt a similarly Spartan lifestyle e.g. no water for directors at the meeting and no breakfast /giveaways for media and institutional investors when they announce quarterly results. Still I expect a few thousand shareholders to turn up, not believing that there will be no SWAG
Hi-Tech Cost Cutting: Safaricom is combating the high cost of annual general meetings and investor relations through technology
1. Annual reports will be downloaded from their website, which is probably the best in Kenya among NSE listed firms in terms of communicating with shareholders. It is updated constantly, even on the same day with CEO briefs to media and institutional investors.
2. Use M-Pesa to pay dividend. Odds are that most of their local 830,000 shareholders are also their (13 million +) customers; many will not have bought shares since the IPO – meaning their dividend cheques are perhaps just 20 shillings $0.25), so by employing M-pesa this will be a much cheaper channel than cutting and posting cheques for such small amounts.
The logistics of doing this are quite significant, it will involve partnering with the company registrar, perhaps the central depository settlement corporation (CDSC), and M-Pesa agents, to ensure each person gets their 10% dividend payment in the correct formula (a reversal will be a nightmare). Once this is done it will be an eye-opener for some of the other companies with large shareholder bases +50,000 including Kengen, KCB , Kenya Re, Mumias, Co-operative Bank and Kenya Airways who had a their loss-making year in a decade.
Other Development: The media release media release (PDF) also mentioned two recent developments at Safaricom:
1. Investor road show where they visited institutional and fund investors and talked in detail about the company in London (T Rowe Price, Genesis Investment, Charlemagne Capital, Marshall Wace, Renaissance Investment, Eton Park Capital, JP Morgan Chase, Aberdeen Asset, Henderson Global, ROBECO Group, Cyrte ), New York (EMS Capital, DWS Scudder, Morgan Stanley, Galleon Partners, McKinley Capital, Harding Loevner, Goodman), Boston (State Street, Wellington, Fortis ), Johannesburg (Stanlib, RMB, Visio) and Cape Town (Investec, Allan Gray, Coronation, Fairtree).
2. Their investment with Jamii Telecom which will include partnering in use of fibre in metro areas , and resale of excess capacity on TEAMS and Seacom, among others.
Read also ratio magazine Dont Come to Safaricom for Lunch post