Category Archives: shariah banking

Kutwa Tuesday: December 11

Yesterday was the day the Safaricom IPO was to start, but not a word came except from the courts. The prospectus could be out today, so there could be hope.

Still, the market needs a huge outlet to drain all the excess investment liquidity in the country. So far, everything offered is oversubscribed from company placements IPO’s, to corporate bonds – with the Diaspora, foreign investors, local institutional investors, fund managers, co-operatives, banks and retail investors all chasing the same investments. The latest was the Diamond Trust Bank rights which were oversubscribed by 178%

One controversial issue of Safaricom is the 5 – 10% owned by Mobitelea, which has been extensively discussed in the media and among blogs. However it would be surprising if that shareholding still existed, and surely that embarrassing matter has been sorted out by Vodafone either by swop’s or other payments.

Bank developments

  • Corporate rebranding at KCB at their website (formerly kcb.co.ke) is now kcbbankgroup.com – shedding the Kenyan connotation which would be a burdensome sell in the region with branches in S. Sudan, Tanzania and Uganda.
  • Equity Bank has received more approvals from CBK, NSE and CMA for their recent deals. In addition, Helios (who are buying 25% of the Bank) have been exempted from the banking act provision that a foreign non-bank cannot own shares in the country (until 2016)
  • Imperial Bank has ventured into Shariah banking with a product called Imani while giant Standard Chartered also considering venturing into Islamic banking.
  • The Baraka Fund has taken over the country’s smallest bank – City Finance.

Stockbroking

  • The NSE has announced that they have fully paid all Francis Thuo client claims as at November 30 2007
  • CFC Bank is looking for stock agents in all provinces of the country.
  • NIC Bank’s takeover of Solid Investment stockbrokers has been approved by the Minister of Finance.

Real estate

  • Business Daily looks at real estate investments in the last year and their profitability.
  • Regardless of who wins the election, budget deficits are a sure thing and interest rates should rise in 2008 – affecting mortgages, most of which are not at fixed rates
    New hotels: planned developments include seven coves in chumani kilifim while the Delamere farm will set up ecotourism camp at soysambu ranch

insurance:

  • After insurance companies beat a retreat from insurance sector three years ago, citing fraud and the collapse of medical plans, there’s a mini comeback now with First Assurance going after AAR in a partnership with the Nairobi Hospital Association.
  • The Association of Kenya Insurers (AKI) has announced that from next year all premiums must be paid before any cover is provided

opportunities

Bottle shortage

A sign of changing trends as people seem to have forgotten that they have bottles at home. And now the bottlers want them back and are willing to pay cash for you to scrounge around the houses and surrender their empty bottles.

  • Beer bottles: east African breweries buying them back at 17 shillings ($0.25) per bottle and 335 sh per empty beer crate to uchumi and nakumatt supermarkets. Nakumatt will pay cash while Uchumi will pay in vouchers for shopping at that store!
  • Soda bottles Nairobi Bottlers (a Coca-Cola franchise) is buying coke, fanta, sprite bottles (300 and 500ml) at 10 shillings each, and empty crates at 100 sh.

Awards:

Kenya National Commission on Human Rights 2008 human rights & democracy awards: milele (lifetime achievement), firimbi (whistle blower), umma (public body), utumishi (police), urekebishaji (prisons), utetezi (civil society), mashinani (community based), habari (media), jitolee (business) and special category lochiel@knchr.org or bwire@knchr.org

Africa Investor: Tourism Investor Awards: Tourism Investment Programme of the Year, Sustainable Tourism Investment of the Year, Business Resort of the Year, Best Initiative in Facilitating SME Tourism Investment, Tourism Promotion Agency (TPA) of the Year, Hotel Investment of the Year, Hospitality Management Team of the Year, Tourism Investment Advisor of the Year, Business Airline of the Year, 2010 Legacy Investment of the Year, Business Travel Insurer of the Year. Deadline for the entries is 11 January 2008.

Jobs

from the daily papers last week

  • Chief executive; Constituency Development Fund board
  • Daystar University deputy VC finance, administration & planning. Manpower 14/12
  • CEO at the troubled East African Portland Cement Company
  • Fly 540 airline: looking for captains and first officers for ATR 72, Dash 8, Fokker F27 and BAE 146 aircraft
  • KISS FM: creative writers email gm@kissfm.co.ke
  • K-Rep Bank: branch managers, operations managers, advances managers, advances officers, apply by snail mail – D/L 19/12
  • Kenya Pipeline: helicopter pilot, senior accountant, internal auditor, senior internal auditor, senior IT officer, D/L 21/12, apply by snail mail
  • Financial management analyst at the World Bank – Nairobi

What about Shariah depositors?

A glance at the latest report from the deposit protection fund, omits two Shariah banks licensed this year – (Gulf African and Family Community) from the list of institutions whose deposits are protected by the deposit protection fund (DPF)

A further reading of Islamic banking indicates that such banks guarantee depositors funds – but then don’t all banks do that?

New Bank; Gulf African

Gulf African Bank has been licensed and will become Kenya’s 42nd bank.

While earlier billed as a Sharia only bank, it’s hard to see how that would have been sustainable and it now appears that the bank will also be open to non-Muslims. Mainstream banks like Barclays, KCB, I&M and Dubai already have shariah complaint products.

With a 1.75 billion capital base starts off around 14th largest bank largest bank. It has advertised for top jobs over the last several months with a view to becoming a regional powerhouse backed by its wealthy shareholders.

Opportunities
most from the daily papers this week

Jobs
– Business analyst sub Saharan Africa – at BAT
– Alliance For A Green Revolution In Africa (AGRA): Director for Market Access Program, Program Officer for Market Access Program. Apply through KPMG
– Electoral commission of Kenya : returning officer, assistant returning officers, trainer of trainers (but must be over 35 years for most jobs). D/L is 2/10
– Investment Officer at the IFC – Nairobi Kenya. D/L is 8/18
– Kenya Airways: Database Architect, Head Of Corporate Security Services, Manager Materials Planning & Procurement, Team Leader Motor Transport
– Head of IT at the Nairobi stock exchange . Apply through Deloitte at esd@deloitte.co.ke (Ref HIT/09/07) by 28/9
– National Museums of Kenya: marketing/PR manager, development manager (resource mobilization). Apply to dgn@museums.or.ke
– Safaricom: M-PESA New Business Sales Officer, M-PESA New Agent Sales Officer, CRM Support analyst, M-PESA Operations Officer
– Agribusiness specialist at USAID Kenya D/L is 21/9
– USIU: senior research associate, webmaster. Apply to jobs@usiu.ac by 30/9

Real estate
– a 5 storey shopping mall in Eastleigh on sale for 150 million shillings ($2 million) from Lloyd Masika
– Have Man U star Rio Ferdinand as your neighbor by buying into this luxury complex in Uganda
– develop houses for USIU on 45acres in Athi river.

Telkom Wireless

Previously

Telkom has finally launched wireless services using RUIM cards that are inserted into handheld or desk phones. The basic wireless phone is a Huawei model that retails for about 9,000 shillings while a line (RUIM card) costs another 1,000.

The service is available in Nairobi only for now – roughly covering the area between Mlolongo to Ruaraka, to Banana Hill to Kikuyu and Langata.

Local calls are billed at 7 shillings per minute, calls to mobile at 24/= per minute (billed every 10 seconds), calls to Flashcom/Popote will be at 14/= and international VIOP 888 will be at 15/= per minute.

Data can be obtained (via dialup) at 3 shillings per minute.

You can use Telkom phone cards (denominations of 200, 500 and 1,000) to top up.

But it appears SMS is only possible with other Telkom wireless phones and billed at 2.50 each. Maybe Safaricom & Celtel have not allowed outsiders’ access to their subscribers.

Verdict: A humble start without much fanfare. Expect some teething pains and the savings and possibilities will take a few months to become apparent. As Shiroh noted, peer pressure and word of mouth are key drivers for people to try new services.

Other Observations

Banking
– Did Kenya and other country banks violate laws by sharing bank data with US authorities on SWIFT transactions?
(From Dealbreaker)
– An Islamic bank will open branches in Nairobi and Mombasa by year end running full Sharia principled banking.
– Postbank is implementing a new business model for next year

Other
– The first public Kengen AGM will be held at Kasarani gymnasium in November. I’d have held it at Masinga or Turkwell dams or Olkaria.
– Is Safaricom using VoIP for its help line? When/If you ever get through the call quality is very poor
– Saw a CCK monitoring vehicle driving round the city this week. Perhaps trying to trace some illegal signals?

Bank’s we don’t need

From today’s papers, we have news on two groups applying for licenses to open banks. One is by a group that denies it has any tribal conotations despite it’s MEGA name while the other hopes to offer the Sharia banking services.

The first conjures up memories of the dark days of the 1970’s when tribal empowerment groups sent shivers across the rest of the country. The Bank should not be licensed because it does not serve any purpose or group that it not already accessing banking services.

The second has a clearer purpose and will join Barclays which started a similar service last year, but given the level of paranoia among many Kenyan Christians about anything-Islam, as witnessed during the 2005 referendum, the group efforts might also come up short.

Banking is about inclusiveness (for a fee), not discrimination or controversy – and it is in the best interests of the banking sector if these banks are not licensed.