Category Archives: Kenya privatization

This Week

The Blues
It’s that time of the month again.

Stanchart Top Bank
Market Intelligence published their eighth annual banking survey this week, and ranked Standard Chartered as the top bank in Kenya, followed by Barclays and surprisingly coming third was Equity Bank no. Other rankings are Citibank 9th, KCB 25, National Bank 26, and Co-operative Bank at number 30.

Corruption
The Economist took its bi-monthly look at Kenya and notes that the prosecution of anti-corruption cases will continue to fail as long as they are handled by the Attorney General’s office – and that Parliament should transfer these powers to the Anti-Corruption Commission.

Privatization
Both the Daily Nation and the East African Standard condemned the Privatisation Bill passed last week in Parliament, because it handed the entire privatisation process over to a “Gang of Eleven” – political appointees handpicked by the president and the Minister for Finance and who are not subject to approval of the Parliament . Earlier drafts of the Bill had provided for the involvement of bodies such as the Law Society of Kenya, the Institute of Certified Public Accountants of Kenya and the Federation of Kenya Employers in the privatisation process.

Elsewhere, India has abandoned plans to privatise a dozen profitable state-owned companies.

Airport Hotel booming
The new Panari Hotel is doing roaring business from airline passengers and crews. Because of its location on Mombasa Road, about halfway between Nairobi city and JKIA , hotel guests rarely have to worry about traffic jams on their way to the airport for their flights. It is also quite convenient for Wilson Airport passengers.

Debt forgiveness
The Kenya Planters Coffee Union (KPCU) has re-opened a debt moratorium window 1st September to December 31st 2005. This will extend debt relief to farmers by giving them a chance to repay principal amount (no interest will be charged) from 31st December 1991 to 31st December 2001 with all interest payments forgiven.. However, this is not likely to fly as coffee farmers are asking the government for complete, 100% debt forgiveness including principal.

Sports Weekend
Saturday 20 August
12:30 – 15:00 MNET/SS1 Tri-Nations:: Australia vs SA,
13:00 – 14:15 SS2 Formula One: Turkish Qualifying,
14:10 – 17:00 SS3 FA Premiership:: Man Utd vs Aston Villa,
14:15 – 16:30 SS2 Scottish:: Rangers vs Celtic,
17:00 – 19:15 SS3 FA Premiership:: Liverpool vs Sunderland,
17:00 – 19:15 SS6 FA Premiership:: Newcastle vs West Ham,
19:15 – 21:30 SS3/CSN FA Premiership:: Birmingham vs Man City,
22:45 – 01:00 SS7 Spanish Super Cup: Barcelona vs Real Betis,

Sunday 21 August
14:30 – 17:00 SS2 Formula One: Turkish Main Race,
15:00 – 17:45 SS3 FA Premiership:: Bolton vs Everton,
17:45 – 20:15 SS3 FA Premiership:: Chelsea vs Arsenal,
18:00 – 21:00 SS1 IAAF GP: GP – Sheffield,

Telkom monopoly to continue

Telenor of Norway has withdrawn from the tender for the licence to provide a second fixed-line telephone service.

Parastatal Reforms

Parsatatal reforms are one way in which the government is honouring its pledges to Donors, however getting privatization bills passed in a divided Parliament will not be easy. The government has identified corporations it intends to retain and it will dispose of 59 others.

To be retained include National Cereals and Produce Board (agree), Kenya Broadcasting Corporation (absolutely not), while shares in Kenya Ports Authority (KPA), Kenya Railways Corporation, Kenya Airport Authority and the Mombasa-Malaba road will be made available to the public.

On a positive note, the Government has, so far, admirably demonstrated the transparent process in its privatization (sale of 30%) of Kengen.

Political interference in Banks?

Industrial Development Bank: The takeover of IDB’s current account business leaves more questions than answers. On what basis was Equity selected? Was there a tendering process open to all banks and financial institutions? Given that the assets of a public (state-owned) bank are being transferred to a private Bank, is this not a form of privatisation – that must be approved by Parliament?

Consolidated Bank:  Also, the previous owners of collapsed banks that were folded into Consolidated Bank are pushing the Ministry of Finance to turn over the Bank to them – claiming they are the true owners of the Bank.

Business Briefs

KISS FM firings: Another round of media musical chairs, this time at KISS FM. Most of them should land jobs at other media houses, further confusing listeners who tend to associate the personalities with particular stations. Last month it was Nation TV which poached several personalities from KTN.

Kenya Railways Privatization Plan: Seven bidders have been given till June 15 to submit their proposals to the government to manage KR, and the winner will be announced December 15th. The government has asked the bidders to consider the following in their proposals; (i) retain KR’s 9,000 workers until a World Bank retrenchment plan is adopted (ii) double the volume of cargo carried by KR within 5 years (iii) sign a performance management contract. The bidders have in turn agreed to increase KR’s capacity by 20% a year, and have all expressed no interest in continuing any passenger traffic on KR.

Nation Media Group: Turnover at the NMG increased from 4.5 billion in 2003 to 4.9 billion in 2004, and net profit increased from 602 to 641 million shillings (12 shillings EPS). They will pay a 100% dividend (5 shillings per share?) and in addition, shareholders will receive one bonus share for each three they hold as at May 2005.

Unilever Tea Kenya: Posted a 360m profit, up from 62 million in 2003, attributing it to better tea sales, improvements in production and favorable exchange rates. The profit comes to an earning per share (EPS)of 7.39 for the year, of which they will pay 6 shillings as a dividend. In 2003, they also paid 6 shilling divided, but on earnings per share 1.27 shillings only.

Uchumi: Uchumi lost 632 million in the last six months of 2004, compared to a loss of 217 million in the same period last year. Their turnover also reduced from 4.3 billion to 3 billion. They are renewing their inventory and will dispose of land, buildings & non-core assets to raise 900 million shillings for debt and creditor repayments.