Bankelele

Water Moment: Understanding Nairobi Water Bills

Have you been getting more and more visits from the water meter crews from Nairobi Water (NCWSC), demanding payment?

For years, I’ve been paying every month the same amount of about Kshs 500 (~$5), without seeing my bill, but of late, the bill has always remained over Kshs 1,000 even when I have paid twice within the month. One day they even came around with a bulldozer which they told area people was to yank out meters from people who have not paid.

So I had some tweet chats and went to the NCWSC offices and found out some stuff:

They no longer send out statements or hardly do. They have cut back on mailing statements via the post office. They won’t even issue you with a bill event at the office
They increased their rates at the end of 2015. The guy who came with the bulldozer and another at the NCWSC office said the rates doubled at the beginning of the year.
They have instituted a charge of Kshs 1,000 on every unpaid or overdue bill. This means even if you’re late on a Kshs 204 bill (the lowest bill you can get), you get charged Kshs 1,000.
You can check your bill via *888# on your phone. Sometimes the SMS comes through without information but you still get charged Kshs 10 for the service.
They have an online platform for one to check bills but not ready. Alternately there is a There is a Jambopay Water Bill checker that’s free to check your bill. It is accurate, but often offline.
It costs Kshs 33 to pay your water bill via M-Pesa (assuming Kshs 30 goes to Safaricom and Kshs 3 excise tax charge of the financial service.
The due dates for bills vary in the month, depending on when the water readers come round to read or estimate the amounts.
Water, electricity and other utility companies can now report customers to credit reference bureaus over unpaid bills.. but who is the customer to be reported? The person who pays the bill? This is often a tenant of a house or building. Or the registered owner of a property with a meter? Sometimes this is the landlord or the contractor who put up the building.

Other water tales:

A few years ago, IBM Research in Nairobi gave a talk on the water situation in Nairobi. There are 3,000 known boreholes in Nairobi and it can cost $10,000 to drill one as you have to go deeper than 400 meters instead of 200 in the past.
IBM also reported that 40 – 50% of water sourced is lost (just doesn’t get to consumers) AND that 50% of hospital visits in Kenya may be water/sanitation related.
A feel good story about water supply and the World Bank in Kenya.
Are water charges going up again? – Not sure if these are even more new charges from October 2016
Adding value to water: How the business of bottled water went mad ..How did a substance that falls from the air, springs from the earth and comes out of your tap become a hyperactive multibillion-dollar business? (The Guardian)

Even with the new water rates, getting water from the NCWSC is a lesser evil than paying for your lorries, but…

Residents of an estate in Langata went out and bought a water lorry to ensure they get reliable and affordable water deliveries.
Water supply via lorry is a lucrative business.

$ = Kshs 101

Banks adjust mobile phone loans

Mobile banking has really come of age in the last few years. As Carol Musyoka wrote CBA has moved from about 64,000 accounts before M-Shwari to 12.9 million accounts as at December 2015 primarily due to this virtual platform (i.e. M-shwari) without any exponential growth in its branch expansion.

The ability to save and borrow money just by using a few clicks on your phone has been revolutionary. Over at Equity Bank, CEO James Mwangi talks about the application for loans that start at 1 am, with approval being done in a few hours and the loans being disbursed to borrowers phones at 5 a.m. – long before the bank branch doors open at 8 a.m.

The interest rate-capping bill (Njomo) which covers loans has been deemed to cover all bank loans, but this has seen different interpretations at the leading banks that offer dedicated phones banking services:

Apply and get a loan directly on our phone

CBA: Have insisted that the 7.5% fee that they charge is not interest, but a facility fee. This has been the case since M-shwari launched back in 2012. The are said to have issued Kshs 40 billion by the end of 2015, and across the border, CBA has got 60,000 mobile bank customers in Uganda in just two months in partnership with MTN (MoKash)
Coop Bank: Disburse mobile salary advance loans at 1.16% and business loans at 1.2%. They don’t charge any facilitation fees and loan are payable in 1 to 3 months. (Simply sial *667# to apply for a #CoopMobileLoan). Coop are reported to be processing about 1,300 loan applications a day up from 250 per day before the rate cap. (70% of its new loan applications this month were requests for refinancing of existing loans). In 2015, the service had 2.7 million users, and 183,000 loans were disbursed.
Equity: Adjusted all their loans, including credit cards and mobile bank loans to 14.5% (Previously “Eazzy Loan” and “Eazzy Loan Plus” products had an interest rate of between 2% and 10% per month) . The loans are said tp have a 1% facilitation fee
KCB resumed lending their m-pesa loans after a three-week technical hitch. They have adjust loan rates to 1.16% with a one-off negotiation fee of 2.55% resulting in a total of 3.66% (including government excise duty tax) on loans. The loan duration has also been reduced to just one month – with no more 3 or 6 month loans.

More and More

Reading the Tea leaves at Centum, Kenya Airways, Safaricom – Part II

Follow up from two years ago

Three companies that had their year-end in March 2016 have just published their annual reports which are now found on their individual websites. On Thursday both Centum and Kenya Airways boards will face their shareholders at the annual general meetings (AGM’s). Centum is ending a 9 year dividend drought, and Kenya Airways which had another a record-breaking loss, now believes the worst os now behind them. Meanwhile Safaricom will create 6 ‘mini-Safaricoms’ that operate in six Kenya regions and create more segment products like Blaze.

Centum:

Has a (massive 192) page annual report (up from 160 pages), and the company has 37,325 shareholders.
Will pay Kshs 665 million in dividend (1/= per share) ending a long dividend drought (since 2009)
Significant joint ventures are Amu Power (51%) and Two Rivers Lifestyle Center (50% – following a partial disposal). Old Mutual advanced Kshs 5.7 billion to Two Rivers with the debt convertible to 40% in the equity of Two Rivers, with shareholders loans previously held by AVIC and ICDC offset against the consideration. Further developments at Two Rivers include luxury apartments, a five-star hotel and residences, a healthcare facility and additional structured parking. Property owners who have purchased plots at Two Rivers include South Africa’s City Lodge Hotel group who are establishing a three star hotel; and Victoria Bank, who are constructing an office block.
The completion of the transaction on disposal of interest in Two Rivers and the acquisition of additional interest in Kilele, Sidian Bank and Almasi resulted in a net gain on disposal recorded in equity of Kshs 2.5 billion.
The half-year report will be available online to shareholders who register.
NAS, where they own 15% will continue diversifying its income streams by launching two Burger King restaurant franchise outlets in Kenya.
Will enter the healthcare business with a significant investment this year
Centrum plans to build 20 schools across Africa in the next three to five years, as part of a tripartite consortium with SABIS and Investbridge Capital. The consortium has acquired a suitable site along Kiambu Road that will host the first SABIS school in Sub-Saharan Africa, offering both 8-4-4 and K-12 education curricula with a capacity of up to 1,700 students.
In agri-business, Centum incorporated Greenblade Growers and acquired a 120 acre farm in Ol Kalou that will be used for value addition and will have a capacity to process 10 tonnes of fresh produce per day, to key export markets of Netherlands and later the UK.
Energy: to date, the company has invested Kshs 3.1 billion in the development of two landmark projects – Amu Power and Akiira One Geothermal.
At the AGM, Centum Chairman James Muguiyi, retires after 13 years and also the Principal Secretary – Ministry of Industry, Trade and Cooperatives, (representing the Kenya government) will retire from the board and not seek re-election.
Shareholders will be asked to approve the incorporation of Zohari Leasing, Rea Power Company, Le Marina (Uganda) and Two Rivers Development Phase Two. Also that the acquisition of 100% shares of Vipingo Estates and an additional 29% of Longhorn Publishers be ratified (they paid Kshs 393 million for the new shares).
Shareholders will also approve a name change from Centum Investment Ltd. to Centum Investment PLC.
Shareholders will approve an indemnity of the company directors .. against all relevant loss including any liability incurred by him (her) in defending any civil or criminal proceedings.. the directors may decide to purchase and maintain insurance, at the expense of the company.

Kenya Airways (KQ)

The report is 149 pages (up from 130 pages) and KQ has 78,577 shareholders (a slight increase as their share price has dipped)
The Group operates domestic flights and flies to 53 destinations in Africa, Middle East, Asia and Europe.
After their 31 March 2016 year-end, they received Kshs 10 billion from the Government of Kenya, (being the second and final tranche of the KShs 20 billion (US$ 200 million) bridge financing that has been on-lend from African Export–Import Bank (Afreximbank), and they sub-leased two Boeing 787 & three Boeing 777-300 aircraft as part of the turnaround initiatives in order to improve its liquidity position.
JamboJet tax losses stood at Kshs 856 million, and Kenyan income tax laws allow for carry forward of tax losses for a maximum period of 10 years.
Short term facilities were drawn down from Equity Bank, Jamii Bora Bank, Kenya Commercial Bank, Commercial Bank of Africa, I & M Bank, Chase bank, National Bank of Kenya, Diamond Trust Bank, Co-operative Bank, NIC bank and Eco bank. During the year, the airline negotiated for extended repayment periods for all short-term loans ranging from 4 – 7 years except for Kenya Commercial bank. The Government of Kenya Loan is at 10.20% far much more than previous financing that was at 4-7%. Citi JP Morgan Kshs 78 billion is at 1.5% , Afrexim Bank 23 billion is at 4%, while other short-term Kshs 22 billion is at 9%
In addition to the Kenya government, KLM, and IFC, top 10 shareholders now include Mike Maina Kamau, Vijay Kumar Ratilal Shah, Gulamali Ismail and Galot International.
They implemented a business class upgrade system in January 2016, under which economy class passengers can bid & buy upgrades to fly on business class.
A total of 63 bird strikes were reported in the year (down from 77 last year).

Safaricom

The report is 172 pages (up from 136 pages) and the company has 600,000 shareholders (down from 660,000).
At the AGM a few weeks ago, shareholders approved payment of a dividend for Kshs 0.76 per share for 2016 and also a special bonus dividend of Kshs 0.68 per share.
According to a True Value report (they commissioned it, and it was done by KPMG), the total value the company contributed to Kenyan society in FY15 was Kshs 315 billion and they sustained over 682,000 jobs.
Bonga points totaling Kshs 3.2 billion are a liability to be converted to revenue as customers utilize their points
Lent Kshs 500 million to Safaricom money transfer services, a subsidiary that derives revenue from international money transfer services.
The license fee for M-pesa dropped from 10% to 5% from August 2015.
Donated Kshs 414 million to the Safaricom foundation
Spent Kshs 9.3 billion on the National Police Service communication project that’s now 92% complete.
They now require all new business partners to sign up to the “code of ethics for businesses in Kenya” during the on boarding process, and 269 companies have signed this.
They were fined Kshs 157 million by the Communications Authority of Kenya for not complying with its quality of service thresholds.

Banks Yield (Capping Kenya Bank Interest Rates Part V)

Yesterday, CFC Stanbic became the first bank to extend the capping of interest rate loans to apply to existing loans.

While most banks had announced they would adjust loan rates for new facilities to a maximum of 14.5%, they were waiting to see what the Central Bank (CBK) would say about existing facilities.

But within the space of a few hours, the Kenya Bankers Association announced this was extended to existing facilities. Other banks like Cooperatie Bank, KCB Group, and Diamond Trust also announced the extension of the new rate cap to existing loans and (edit) Barclays too.

“…Consequently, the KBA wishes to announce that its members have agreed to prospectively reprice existing loans, which will see existing customers enjoy the benefits of the new law once it is operationalised. Each KBA member bank will therefore notify their customers on the process and new terms as the industry engages with CBK on the implementation.”

The big banks are leading, but there’s still silence from a few large ones (~~Barclays~~, Equity) and most of the smaller ones, except Transnational and (edit) GT Bank. KCB also clarified that the new interest rates do not affect mobile (phone) loans. i.e m-pesa loans

The reduction in loan interest rates will mainly have the effect of enabling people to pay off their loans faster than originally scheduled. The above banks have all invited their loan customers to visit branches to discuss the repricing of loans. New loan agreements will have to be drawn if they choose to adjust their loans, as some banks had issued fixed rate loans. Loan installments may or may not change, and the difference will depend on the size of the original loan.