Category Archives: KPLC

Kutwa Tuesday: Corporate Mysteries

and other Bank Twits

Twitter is a micro-blogging tool that is really nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter where there was some interesting discussions, but so far yet to unravel mysteries at Kenya airways, Safaricom and Athi river mining? and some replies

June 15: nairobbery Reading about a Nairobi scam where people actually throw themselves on the windscreens of slow moving cars and later ask for compensation
Kenya central bank study shows popularity of MPesa; users rate it cheap, fast, reliable & accessible http://tinyurl.com/nozxe3

June 16: Media mystery: what happened to the Bamburi vs. Athi story? there were many reporters there but was story buried? http://tinyurl.com/n2k5o8 replies @nakeel It’s called the power of advertising and who pays your bills..

June 17: Economist says Africa’s next country South Sudan “will fail before it has even been born” http://tinyurl.com/kwlw9w
DT Dobie advertising that a Mercedes E200 kompressor is 1796cc and therefore compliant with new Kenya Government rules for Ministers cars
Anti-corruption initiatives falter around Africa http://www.nytimes.com/
Racial Discrimination at World Bank?http://bit.ly/fNXUy
CNBC TV show President Obama killed a fly during an interview. Take it away FOX
Is the Kenya rugby safari sevens tourney over-priced at 1,500 ($19) per season ticket? http://tinyurl.com/m9yhmb
Two new independent (non stockbroker) directors at Nairobi Stock Exchange – NSE Board http://tinyurl.com/n8qqvx

June18 KPLC is going to increase the birth rate in kenya if they keep failing to supply electricity.

June 19: Kenya and Uganda Catholic churches in a race to hell with simultaneous abuse scandals; media coverage in UG is NSFW http://www.redpepper.ug
Michela Wrong to visit the World Bank http://bit.ly/LpJHy

June 20 Discovering the mysterys of white cap, EABLs no.2 that survives recessions without any advertising
replies @coldtusker I didn’t say it ‘failed’ but IMHO its core consumer base isn’t GenX but my mzee’s generation. What happened to WC lite? White Cap’s demographics are skewed to stable, older, wealthier, ‘old dogs’ market. It has failed among the ‘younger’ drinkers. @Fintradecapital thats really true. Its drinkers r consistent.
I use nivea creams, but all their posters and adverts scream i am soooò not their target customer!
replies @uhusiano is cos they are all jungus? @coldtusker Are you thinking of doing a chaz bono? re: nivea – not their target market… LOL… @devonwhittle I’m also a Nivea customer, but their “skin whitening” products and ads worry me – @karuoro I use Nivea shower gel but prefer Vaseline lotion..find nivea lotions too..sticky (don’t know if that makes sense) @Ethnicsupplies I’ve never liked the smell @Shiko_Msa we the target customers that is. feel welcome. Even though they dont welcome we do.
Stomping through kilelewshwa – many apartment complexes have ‘to let’ signs

june 21 Safaricom selling cheap internet ready phones including nokia 1680 for $38 replies @alykhansatchu I was reading that @ thinking 13m Subs converts to 2m x $1.00 a day internet
@coldtusker also former Kenya Airways director is CEO air uganda. Seems KQ is now finishing school for sub-saharan airline bosses. replies @coldtusker Hugh Fraser (ex-KQ now CEO of Air Uganda) was in the very important Commercial Director post @ coldtusker Neil Canty (former CFO-KQ) went to Gulf Air though he has left them for another gig. Africa again?

R/T @airlineroute KLM to operate MD11s on Nairobi-amsterdam for Kenya Airways from july to september! What will the 777s be doing?

Unexpected dividend cheque from stanbic uganda ~$15 in the mail today #migingo
replies @PinkM How do you cash your Stanbic UG cheques?I haven’t cashed for 2 years now. Thanks.Will try that. I wish it was possible to bank at CFC Stanbic even for CFC a/c holders

Kenya retain rugby revens title, but Is that DJ CK on pitch with team at #safarisevens? He’s kenya’s top gate crasher replies @kenyanpundit hehehe, DJ CK was EVERYWHERE at the WEF in Capetown @kachwanya you just made me remember almost similar incident sometime back during Orange launch..yeah he somehow did that

June 22 Kenya’ anti-aid author envious of @dambisamoyo http://bit.ly/mBdFg
replies @kainvestor Many African anti-aid champions see sinister agendas in the success of @dambisamoyo. She wasn’t the 1st to write against aid >>>
Safaricom shares pick up after managers visit Europe & US fund investment firms http://tinyurl.com/lewfyn #safaricom #investorrelations
Family Bank 25th anniversary
President @mwaikibaki encourages banks to use mobile phones to reach beyond the 22% ‘banked’ kenyans
Have more twitter followers than feedburner subsribers; what does that mean?
people who vandalised the Kenya Railways Kibera railway, may also have got paid to fix it after http://tinyurl.com/c9ykra

June 23 Any well wishers to donate a PC or laptop to Mamamikes who were recently robbed? http://www.mamamikes.com/bl…
59% of small business owners rely on credit cards for working capital! scary http://preview.tinyurl.com/

Urban Inflation Index – June 2009

Tracking changes in the three months since the March 09 index and to approximately a year ago with the July 08 index

It’s going to be a tough year given the financial results that we have seen so far. Safaricom had reduced profits, while Zain and surprisingly Kenya Airways also recorded losses for the financial year. And while most banks have growth of 30 – 40%, GTV went bust.

The arrival of the submarines/fibre cable are expected to bring down the cost of communications sometime in the future, but at the same time it is expected that the Kshs. 109 billion ($1.4 billion) to be raised from local financial markets in the next few months to finance the services, programs, and deficit of the Government of Kenya will in the process also push up interest and borrowing costs for individual and businesses.

Gotten cheaper

Fuel: A Litre of Petrol fuel (at local petrol station) is now Kshs 72.5 (~$4.18 gallon) down 3% from 75 in March 2009. A year ago, petrol was retailing at over 100 shillings per litre.

Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 92, down from 96 in March. However this is still much higher than the Kshs. 73 a year ago and a high food prices remain a sore point for many consumers – both urban and rural.

Communications: While phone calls through leading mobile company Safaricom are largely unchanged at about 8 shillings per minute (~$0.10), calls are cheaper at Orange and Zain, but probably from subsidizing consumers to lure them away from Safaricom. What has gotten cheaper is the cost of data. A Safaricom modem now costs Kshs. 4,000 ($51) and has been dropping periodically since it was introduced in 2007. Safaricom has also several ongoing promotions for laptops, blackberry’s and data-enabled phones as it competes with the likes of Access Kenya, Orange who sell the I-Phone, and Zuku from Wananchi who last month slashed in ½ the price of unlimited broadband.

Foreign Exchange: 1 US$ equals Kshs. 77.94 having appreciated from 80.07 three months ago. It was 67.4 a year ago, but few expect it to edge downwards for the next few months.

Unchanged

Entertainment: A bottle of Tusker beer (at local pub) is Kshs. 130 ($1.60) unchanged from three months ago, and also priced the same as last July. While prices have not changed, beer sales may on shifting sands. Former Trade Minister and member of parliament Mukhisa Kituyi was interviewed a few weeks ago on TV and he made some remarks on how the economy is impacting the mwananchi (ordinary man) – he said before someone would go and watch a soccer match on TV in a sports pub and have 4 beers, today that same person will nurse a single beer for the duration of the match (was he talking about himself?)

More Expensive

Electricity: my bill last month is Kshs. 2,100 ($27) up from 1,800 three months ago (comprising fuel cost of 436c/kwh, and forex adjustment of 63c/kwh – it was lower 649c/kwh last July). The expectation is that with drying rivers and water dams, electricity generation and consumptions costs (Kenya is still hydro or diesel fuel dependent) will become more expensive. In his Budget Speech last week, Kenya’s Finance minister proposed to remove taxes on generators and other power production equipment, perhaps in anticipation that more companies may be buying these soon. Already, blackouts (announced and unannounced) are becoming more common either from transmission failure or vandalism (some brave people steal wires or fuel from transformers!)

Of concern also is the quality of electricity supplied. In the last week, my microwave and kettle have been knocked out, while a neighbour lost both water heating boilers in her house. The inconsistent electricity supply also knocked out my TV a few months ago and I’m scared of charging my laptop except late at night when i expect supply to be stable!

Other food item: Sugar (2 kg. Mumias pack) is Kshs. 175, up from 165 three months ago, and a year ago it was 145 (now costs 21% more than a year ago).

Urban Inflation Index: March 2009

Changes in the three months ago since my last review in December 2008 and also compared to February 2008, which was just over a year ago.

In 2009, oil prices and maize prices have become the national talk as scandals, shortages, and price hikes have plague these industries causing grave concern that the country could be destabilized.

With maize, a shortage of maize flour on supermarkets coupled with shady deals were highlighted in the media all leading to a motion of no confidence in Parliament against the Agriculture Minister in February 2009. it was shot down

In oil/petrol, the collapse of Triton petrol, a small politically-connected oil marketer had ripples across the industry. The firm appears to have made a big gamble and purchased and stored excessive stocks in the expectation that oil prices would remain high, but when they dropped, the firm imploded and the chief executive fled to India. It has become a monster scandal with staff losing their jobs, banks suing the government (through the oil storage and pipeline companies) and calls for another no confidence vote in Parliament, this time against the Energy Minister.

changes in the last three months

Gotten cheaper

Fuel: A Litre of petrol fuel (at local petrol station) is now Kshs. 75 (~$4.2 per gallon) which is about 20% cheaper than it was 92.7 in December 2008. Shell Petroleum led the price drop, forcing other oil marketers to follow suit and probably did in Triton with their price cut in December 2008. Petrol was Kshs. 88 a year ago

Unchanged

Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 96, compared to Kshs. 97 in December 2008. However it cost just Kshs. 52 a year ago

Communications: Despite the presence of two additional phone companies, the mobile price war has cooled and calls cost about Kshs. 8 (~$0.10) per minute. With Zain, the price applies across all networks, but for Safaricom it’s within their network only. New companies are offering gimmicks like Yu’s Kshs. 0.50 per minute (after making calls for two minuets at Kshs.7.50). However other prices, notably in data and equipment (handset prices) have dropped. Safaricom modem’s cost less than ½ their introduction price, and features like Picture messaging (SMS) now costs Kshs 3.50 ($0.04) (it was introduced at 20) a year ago Safaricom calls were also about 8 shillings per minute

More Expensive

Electricity: my bill last month is Kshs 1,800 – slightly less than the bill a year ago. However by looking at the components that make up the bill – fixed charge is Kshs. 240 (was 175 a year ago), fuel cost adjustment is 427c per kwh (was 199c a year ago), forex adjustment was 63c per kwh (was 31c per kwh) – all causing my bill to cost about 70% higher than my approximate consumption a year ago. This is also a sore point with Kenyan manufacturers and industries who have complained (PDF) about the high tariffs even as Kenya power & lighting company announced improved profits for 2008.

Foreign Exchange: 1 US$ equals Kshs. 80.07, it was 79.08 in December 2008. Remittances to Kenya which have dropped every month since October 2008, are partly to blame. US$1 was 70.7 shillings a year ago

Entertainment: A bottle of Tusker beer (at local pub) is Kshs. 130 ($1.60) up from Kshs. 120 in December 2008. East African Breweries, Kenya’s leading brewer, has complained about high input costs and new taxation, and for once their share price is almost as cheap as the recommended retail price of their main seller – a bottle of Tusker beer was 120 a year ago

Other food item: Sugar (2 kg. Mumias pack) is at 165, it was Kshs. 160 last December. 150 a year ago

EDIT: Also, more expensive is Housing – the rent was hiked 40% in January 2009; however that’s still about ½ what I’d be comfortable paying for a mortgage in the neighborhood.

Property Expo

The Property & Home Living Expo 2009 was held at Sarit Center this weekend. It was rather subdued (fewer banks and exhibitors) compared to the last homes expo held in October 2008. The only banks in attendance were perennial mortgage lenders Housing Finance and (KCB) – Savings & Loan

Most of the exhibitors were property agents including:
– Knight Frank Vipingo Ridge golf villa for Kshs. 19 million, rents at Riverside Park and the (under-construction) Sameer business park
– Villa Care
– Regent (also the Hacienda eco-city Africa’s first eco-city, 2,3,4 flats & bungalows in Mwakirunge – north coast and (under construction) Green House a huge shop /office complex next to Adams Arcade)
– Others were Sedco and Vidmerck

Other exhibitors included a Dubai property company, the Kenya Power & Lighting Company (KPLC) who now have a stima loan for new customers to get loans through Equity Bank to pay for electricity installation/connection charges, Climacento green tech (info@climacento.co.ke) who advertise 50% savings on electricity bill through their solar water heater and Mekan Mattress experts (found at Nakumatt)


Electric Slide

Kengen: the Kenya electricity generating company will have its third AGM later this week – and while shareholders may be happy with a Kshs. 0.90 dividend they will also be asked to approve (i) 30% investment in a geothermal development company to be created by the Government of Kenya (ii) invest in a coal plant (iii) participate in other ventures – (perhaps buy into another IPP independent power producer?)

The proposals to shareholders are vague and without any spending amounts attached, they should not be presented to a vote. When the Access Kenya board got shareholder authority to make other investments, they capped them at Kshs. 200 million each – this one has none, and the third proposal doesn’t even limit Kengen from investing within the energy sector so it could probably buy a sugar company or tea company (for cogeneration?) with that mandate.

Anyway, Kengen has undertaken a lot of geothermal work with three Olkaria plants and is it really necessary for the Government with strained recourses to create another parastatal at this time? Shareholders who were also spooked by plans of a secondary listing of shares and plans to hive off a geothermal company from their assets two years ago will also not be happy to see that the plans are. still active.

KPLC: The much-heralded VAT reduction in electricity bills has not amounted to much. It was effected in the November power bills, but the reduction in VAT from 16% to 12% appears to only cover the fixed charge of a Kshs. 240 per meter – so the savings amount to just Kshs. 9.6 per consumer.