Category Archives: Kenyaelection07

President Obama

Congratulations to Barack Obama the next President of the United States of America. His name has appeared in these pages five times before today:

– April 2005: Congratulations to Wangari Maathai and Barack Obama for making the 2005 Time Magazine Heroes list. However I fear this achievement will be overshadowed be overshadowed by the drama surrounding Presidential wives.
– August 2007: After Oprah endorsed Obama , I endorsed Jonathan Mueke who was gunning for the Westlands MP seat
– January 2008: One review of the post-election violence in Kenya found that in the pre-election period, the (Kenyan) opposition may have been falsely buoyed by opinion polls which are not sound (& could the same thing have happened to Obama in New Hampshire?)
– Also in January 2008 mused that President Obama needs Equity Bank because 46% of African American household’s don’t have bank accounts – and he should borrow Equity Bank’s revolutionary model to bring banking to the unbanked.
– April 2008: In queing for the Safaricom IPO refers to a Kenyan habit of waiting till the last minute to do things as Obama also took a long time to warp up his party nomination.

Here’s to many more mentions, starting with – US stocks reacted positively on election day, and in the post election victory celebration the Nairobi Stock Exchange(NSE) has also rallied [Top gainers according to stockskenya – National Bank +9.94, CFC +9.91, Kenya Airways +9.91, Sasini +9.83, Diamond Trust +9.79 with no losers yet]

Economic Stimulus Friday

This month US citizens get a second windfall cheque from President George W. Bush as economic stimulus cheques arrive in their mailboxes of at least $300 (~Kshs. 19,000) per person, and more for parents and guardians with children. (The first was after he pipped Al Gore to the presidency and came through with one his main campaign promises).

But they are being rewarded and banks cushioned largely because of blind/(dumb)real estate and investments decisions – buying houses & using up credit on borrowed cash of extending sub-prime finance in anticipation of even higher housing prices.

Kenyans went though a contested election and a period of post election violence, after they did their part and voted faithfully in the presidential election. 99% had no part in the election tallying or violence that followed or the stalemate that paralyzed the economy for two months.

But instead of a stimulus, we are coping with higher food, fuel, and transport prices that are only expected to get higher in the aftermath of rising oil prices, an expanded government, infrastructure repair projects, and the downturn of agricultural produce this year.

Instead of a stimulus, the Government has flatly refused to
lower petrol taxes (which may ease some of the burden on citizens and companies), and civil servants (government workers), are being asked to contribute financially to the resettlement of displaced Kenyans – a target figure has been arbitrarily set at Kshs. 30 billion ($485 million). It remains to be seen how much will be raised from citizens who were able to fork out over 80 billion shillings ($1.3 billion) in pursuit of the Safaricom IPO (and money for which the Government still holds)

So who needs a stimulus more?

Personal banking pays


Peace be upon you, Kenya

Small is big: The whole country is focused on exam results (and peace deals) but my focus is on the banking sector: How do the four banks that have reported compare with estimates earlier estimates?

– 10. NIC – profit 1.05 billion realized against 1.1 billion estimated
– 3 Standard Chartered – 4.9b exceeds 3.5b
– 2. KCB 3.5b underachieving 4.3b
– Barclays 7.08b underachieving 8.5b*

The Kenyan corporate banking market is saturated and banks may have to go after smaller customers (personal banking and SME’s) to continue to achieve super-profits. To prove it, look at KCB and Standard Chartered – Kenya’s No. 2 and 3 banks’. Two years ago (2005) they were virtually the same size 70 billion, and two years later (2007) KCB is 20 billion shillings larger in assets (112b ~ $1.6b) than standard chartered (91b) (corporate focus),

This vindicates Barclays who have gone for personal business and can expect an even better 2008/09 and, of course Equity Bank – who have overhauled the entire mid-size banks sector in four years)

I love exams: For some reason KCPE and KCSE results bring this blog’s biggest single-day traffic – 5X normal (thanks to an obscure post) as parents and students hit google to search for how they can get results online.

opportunities
(some fin jobs, most from the daily papers)

– African Development Bank Young Professionals Program.d/l is 15/3 (details at the Economist )
– APA Insurance: head of business development, chief underwriter (general insurance) business developers (2). apply to recruitment@apainsurance.com
– Director of internal audit at East Africa development bank (based in Kampala). Apply through Deloitte – esd@deloitte.co.ug by 14/3
– Gulf African Bank: relationship managers, business bankers, credit analysts, database admin, IS auditor. Apply to Recruitment@gulfafricanbank.com by 5/3
– KCB: branch managers, call center manager, product development manager (S&L). apply to recruitment@kcb.co.ke by 5/3
– Kenya Airways: Commercial Director, Group Finance Director, Chief Operating Officer (and others)
– Kengen: business development & strategy director, operations director, finance & commercial director, internal audit manager, company secretary/legal & corp. affairs director, regulatory affairs director. apply through KPMG esdkengen@kpmg.co.ke by 14/3
– KIPPRA – young professionals (11). Apply to hr@kippra.org by 20/3
– KPMG: senior advisor – public sector & development, advisor – public sector & devt. (2) – talentrecruit@kpmg.co.ke by 3/3. also manager corporate finance & transactions services/l 12/3
– Safaricom: Business Intelligence Developer, Retail Sales Manager, Retail Centre Manager, Area Retail Manager (and others)

Depressing Banking

Banking can be depressing sometimes. People come to you with their dreams and business plans. They may look promising initially, but after going through the numbers, you have to tell them there’s no way it’s going to work.

Entrepreneurs have such strong beliefs in their proposals;

They run around from bank to bank, each time rehearsing how to improve their funding request, and remembering what tripped them up at the last bank. But approaching each new bank, means a fresh start, explaining your dream again, what you have done, what it entails, and why it requires a small bit of funding to push it over the top.

But just because a bank has a product for group lending, “women entrepreneurs”, “youthful entrepreneurs”, “SME’s”, doctors or pilots, does not mean that you automatically qualify, just because you are the subject of a colouful brochure.

Some desperate entrepreneurs even throw in their house, ancestral farm, in as security to secure a loan, they also go to church/temple/mosque over the weekend, and run around looking for sweeteners to entice the bank, but the decision is made in a cold boardroom on Thursday or Friday that – you are not economically viable.

It’s depressing to be a banker sometimes.

Elections & banking
Because it is not known how badly the political violence will go on and what effect it has had, there’s an unofficial policy go slow on new lending as banks watch the existing loans for signs of trouble.

Banks have to think safety first, as it’s not their money – it belongs to shareholders or depositors, and whatever is given out must be paid back and preferably without having to go to court.

The post-election mess needs to be sorted out, and not just for this month. Dr. Condi Rice has arrived and said that since the election did not ‘produce a presidential result’ it has to come from negotiations.

But we can’t have a repeat of these events in 2012, 2017 or when we next hold presidential elections. We can’t keep inviting and dis-inviting mediators. Otherwise banks will not give loans or will have their loans ending in November 2012 or November 2017 – so that their exposure is minimized come election time.

News briefs
– Stockbrokers Dog ate my homework excuse: Your stockbroker sold your shares and pocketed the money because he was broke. But that doesn’t mean he should go to jail, nor can you find out if he did it, how much he has stolen or and how long he has been doing it until the firm collapses!
– The fabulous Tinapa, advertised heavily on DSTV, may turn out to be a White Elephant
– Two KQ directors resign: If true, these KLM appointees replacements should be announced shortly
– Uchumi claim they are profitable and will soon publish their financial results. At least they have a better (though somewhat stale) website – than many super-profitable local companies who fail to do any updates after their site-launches.
– Diamond Trust Bank has petitioned to have new MP Kipkalya Kones declared bankrupt – which can eventually cause him to lose his parliamentary seat
– New mag: Kenya Weekly – a revival of the Weekly Review – out this week at 100/= each from Oakland Media – not NMG. Magazines in Kenya have a very short half-life though.
– New university – the Pan-African Christian University (Kasarani)
– Mumias Sugar is looking for companies to transport sugar from Western Kenya. Good luck finding someone willing to risk a lorry on some of those routes.

Bank developments
– The IFC giving loans to profitable, registered SME companies – ranging from 3.5 million to 35 million shillings.
– Group accounts: Both K-Rep (Ungana) and Standard Chartered (Diva chamma) have new accounts targeted at women’s savings groups (chamas)
– new branches: KCB has new branches in Buru Buru, Garsen, Kisumu West, Isiolo as Barclays bank has a new one at the main Nairobi University campus.

Opportunities
most from the daily papers
– BPO call centre training at KCCT: it takes 8 weeks and costs 40,000 shillings.

Jobs
– HR manager at Finlay’s.apply to human.resource@finlays.co.ke by 29/2
– G4S; finance managers (3). Apply to career.move@ke.g4s.com by 27/2
Tax senior at HLB Ashvir. Apply through consult@hlbashvir.com
– IFAD regional economist. d/l is 8/3
– Regional grants manager at the international federation of Red Cross & Red Crescent societies
– KCB; Head of SME business, audit manager: group business, support & controls. Apply to recruitment@kcb.co.ke by 22/2
– Renaissance Capital: Associate, VP and Director positions
– Standard newspaper: part-time professional contributors writers@eastandard.net by 27/2. Also writers and photo journalists
– Telkom Kenya; manager – financial accounting, manager – financial reporting, manager – credit control & revenue accounting, manager – financial systems; apply through pricewaterhousecoopers at ess.ke@ke.pwc.com by 29/2

I-banker talks politics

Jeff Koinange has been running a show called Capital Talk on the new K-24 channel in Nairobi. It’s a 1-on-1 interview session, usually with politicians, but occasionally with business leaders. He seems more comfortable hosting these show than he did from say from upriver Nigeria with the rebels on CNN.

Last night he had Maina Mwangi, the CEO of Renaissance Capital, to talk about the future of investment banking in Kenya, impact that the political stalemate is having on the economy, and other issues

Some of Mr. Mwangi’s comments

  • Renaissance is different from other investment banks such as Morgan Stanley (who are doing the Safaricom IPO) because they are here to stay. They have offices here; will have 50 staff, all East African, no expatriates here.
  • The politics must be fixed; we can’t be having upheavals every five years where lives are lost and property destroyed unnecessarily
  • Impact on the economy is serious (i) tourism collapsed, at least for the next three years (ii) impact on transport sector has not been fully appreciated (ii) banks not hit yet, but will take a few months (iv) NSE is a sensitive indicator of the economy (There are about 1 million shareholders and the market was down 15% in 3 weeks) as people buy shares as they are future profits of a company (v) forget about 8% growth this year.
  • Investors are worried, which is ok, but if the politics is not fixed, then they’ll be panic, which is bad
  • Solutions for this year: (i) one was the Safaricom IPO which still can happen, and will give the government some breathing space and enable the budget deficit to remain manageable (ii) but forget about the sovereign bond – as the spreads are too wide now (iii) tax collection will have suffered, but no one knows how much yet (iv) new budget is needed for the country to factor in new spending for towns & businesses to be re-built, resettlement of people.
  • Interest rates: The government will have to control borrowing otherwise that will hit interest rates which is critical; if they go up significantly, that will put the brakes on economic growth – as they make everything more expensive and reduce purchasing ability for housing, credit cards, personal loans, etc.
  • Time: How much time do we have to sort out economic problems? more time than some pessimistic i-banks think, but less time than some government advisers think
  • Renaissance will focus on the wholesale end of (i) consumer spending areas – this will show growth (ii) real estate. They are big in Africa and the Nairobi office runs a region from S. Sudan to Angola.
  • Kenya is a buying opportunity, if you think long term i.e. 10 – 15 years. Kenyans firms understand they have to go regional – and they have a head start

Best case scenario: political solution found and hope & confidence can be restored among investors (including kiosk owners); Kenyans are successful business people as long as politics doesn’t interfere.

Worst case scenario: no political solution; and the economy goes into stagflation – nothing happened e.g. the NSE started 2007 at 5,000 and ended at 5,000. He said investment bankers can make money if the economy is going up, or going down, but not where it is stuck/going sideways

Related post: From January, some Renaissance earlier comments on the economy.