Category Archives: Sidian

All about EADB

The East African Development Bank (EADB) is a development finance institution, headquartered in Kampala, Uganda and has country offices in Kenya, Tanzania and Rwanda. It was one of the  few institutions that survived the collapse of the original East African community. Its main products are medium-term financing and its long-term loans for projects that can be durations of 12 years. 

The bank is in the news over a case involving Kenya’s Cabinet Secretary Raphael Tuju over their demand that he repays $13.6 million (~Kshs 1.4 billion) that arose from a $9.19 million loan in April 2015. 

Excerpts from the 2019 EADB annual report:

  • The bank is owned by four East African countries; the Governments of Kenya 27%, Uganda 27%, Tanzania 23% and Rwanda 9.5%. Other shareholders are the African Development Bank with 8.8% and FMO Netherlands with 2.7%. 
  • EADB has $374 million in assets, which includes $190M in cash in the banks. It earned a profit of $8.7 million (~Kshs 944 million). It is exempt from taxes in all members countries but pays no dividend as their policy is to build up capital of the bank.
  • Had $152 million (~Kshs 16.5 billion) of loans of which $58M (38%) are to Tanzania ventures, $39M to Uganda, $36M to Kenya ones and $17M to Rwanda borrowers. $109 million (71%) of the loans are in US dollars which is the preferred currency of most borrowers.
  • Of the loans, $92M are in stage one (performing normally), $52M in stage two (higher credit risk) and $7M are in stage 3 (impaired). 
  • During the year, existing clients – Kayonza Tea Growers, Centenary Rural Development Bank, Opportunity Bank, and the Government of Tanzania all increased their borrowing. Also in 2019, some long term loans paid off and exited the bank including Nkumba University, Sugar Corporation of Uganda and New Forest Company. The bank also participated in the official launch of the Lake Turkana Wind Power which they partially-financed while Strathmore University completed a Law School Centre for which EADB has provided a Kshs 422M loan.
  • The bank disbursed $21.3 million to new projects during the year. Some were: in Tanzania (National Housing Corporation, $30M to Iyumbu Satellite Centre, and to Tanzania Petroleum Development Corporation to distribute natural gas to 30,000 households), in Uganda ($6.3M for a medical consumables manufacturing plant in Kampala), in Rwanda ($10M to a new cement plant and four lines of credit to a national development bank) and in Kenya (Kshs 30M working capital to Jumuia Hospitals in Huruma), Sidian Bank (EUR 2 million credit line) and Musoni Microfinance  (EUR 1 million credit line). 
  • They have borrowed $81 million from multilateral development banks and other financial institutions including the European Investment Bank, African Development Bank ($22M), CBA ($9M), the Arab Bank for Economic Development in Africa ($10M) and a new line from KFW Germany ($7.8M) whose recipients include Sidian Bank, Musoni Diary and West Kenya Sugar. 
  • Kenya’s  Treasury Principal Secretary, Dr. Julius Muia sits on the board while Treasury Cabinet Secretary, Amb. Ukur Yattani sits on the Governing Council along with other East African finance ministers.

Older notes on how EADB is different from a typical commercial bank:

  • EADB disburses payments to third parties e.g. supplier or contractors for work done/services rendered to sponsor. Disbursements are made against presented supplier invoice or completion certificate for building works. They insist that sponsors procure through open tendering as much as possible.
  • Most EADB loans are repaid quarterly except leases which are monthly. Projects are required to set up standing orders for loan repayment. 
  • They don’t have a deposit-taking, commercial bank so borrowers make repayments to special accounts at other banks (escrow accounts) e.g. payments from buyers of apartments financed by EADB are made into such accounts.
  • Companies are required to submit quarterly accounts for monitoring and failure to submit accounts can delay further disbursement to a project.
  • EADB lending approval decisions are made based on the loan amount involved and applications that are larger than $1 million are approved by the board of directors.
  • As a DFI, some criteria for the financing of projects include economic measures such as increasing the level of real consumption, contribution to government revenue (corporate tax, VAT, excise, export taxes), foreign exchange saved, and employment opportunities created.
  • Projects in arrears get transferred to their “Work Out Unit,” a special department that determines how to resolve these – either by a recovery (sale of assets), write-off (after selling assets), or a turnaround (reviving projects to normal) which is the preferred and most successful option. Sometimes, the borrower is asked to recommend a buyer of assets (provide leadership) if it becomes necessary to sell some of them. 
  • The bank enjoys immunity from prosecution and this has been raised by Tuju’s lawyers in several pleadings. In the past, EADB has also faced challenges including petitions to wind it up, such as a decade ago when they trying to recover over $13M from Blueline, a Tanzanian transporter.  

Banks that Serve Blackberry Apps

I am a Blackberry (BB) user. It’s been a struggle to keep up with the world as not many new apps are being created or updated for Blackberry.  While the number of BB users has flat-lined, many remain loyal and tied to their devices.

They also appreciate the platform and new apps that improve the phone experience. The app world today is considered to be either Android (Google) or iPhone (apple)  – and developers and institutions are primarily making apps in these two formats only. So it’s nice to see a few banks still coming up working apps for with Blackberry, and the BB10 (platform). Here are a few:

IMG_20160506_203327Chase Bank (Mfukoni): Chase customers always rave about Mfukoni online. But starting the BB10 app starts with a somewhat sinister request for loads of data, even to open and run the app. This includes a request to connect with, and invite other BBM users, location data, shared files, calendar contacts, camera, SMS, email & PIN messages etc. If you decline, you can’t do things like search for branches or ATM’s without enabling location settings.  Once connected, It seems you can open accounts,  view products (youth current, women accounts, etc), request insurance, and ATM cards.  But it has a few dead menus too.

Co-Op (MCo-Op  Cash): From the start, you can log in or do self-registration. You really can’t browse the products, or see how rich the app experience is for customers until you first register. But this is an easy process, that does not require much information – just your name, telephone number,  national ID number, birth date, and your existing account number (if you’re already a Co-op customer).

Family Bank (Pesapap): The app also starts with a request for lots of information like the Mfukoni one. So, once again, it wants to access your camera, device information, location data, microphone, text. email & PIN messages, calendar, and contacts. Later, you can log-in, request for cards, get locations of branches & ATM’s, but while it only took a few MB to install, it sometimes kicks you out, with a warning that your phone needs more memory.

Sidian (Vibe): It’s nimble, light, and not intrusive, with good navigation and responses. It has a  menu that you can jump back to, sending you back to the main menu if you cancel (e.g if you’re checking out a service that requires you be registered / or you don’t have an account).

Self-registration, and signing in is simple, and you only have to enter you user name (usually your mobile phone number) and a PIN. Even from the outside, you get to see a lot of what account holders can do – merchants, ticket sasa, you can search for branches and ATM’s , and they show up on a map, after which you can enter a starting point (in lieu of it pulling your phone location data) and it will give you driving directions, and even traffic information enroute, (Google has activated for Nairobi). It has the crucial m-pesa link (bank account to m-pesa, and m-pesa to bank account) and if you click to contact the bank, one click starts a call to the bank, or creates an email message to the bank.

Bank of Africa (BMobile): Also asks for the voluminous info as some of the other apps, but you can bypass that request. Once you get to the products, the navigation is not very good as the menus are limited, but if you get stuck there’s a home button which takes you right back to the start. It also has a few dead menus like the debit and credit card types.

Sidian Financing for Entrepreneurs

Some of the Sidian loan products for entrepreneurs include:

  • Retail business loans of Kshs 2 million to Kshs 10 million repayable over 5 years.
  • SME corporate loans of Kshs 10 million to Kshs 300 million, repayable over 8 years.
  • Chama Biashara loans – for members of chamas (investment groups) in which individual members can borrow up to Kshs 500,000 which are guaranteed by their groups.

Lady, #OwnTomorrow

  • Kilimo Plus Micro – for farmers to finance land preparation, inputs, machinery etc.
  • For individuals, there are both (i) emergency loans of up to Kshs 500,000 (repayable in one year) and (ii) check off loans up to Kshs 3 million for salaried employees (that are repayable over 6 years).
  • They also have other loans for medical sector entrepreneurs (MCF Medium) under which the medical assets  purchased can be used as collateral, for water service providers (Maji ni Maisha), for small (e.g. kiosk) entrepreneurs to buy business stocks (Jaza Stock Loan), and for tea farmers (chai loan).

$1 = Kshs 102

Easy Taix

Bank Capital Raising Season

Away from the Chase Bank saga, banks continue to raise money to support their fast growth in recent years. It’s a bit harder to raise money and it’s clear the Imperial Bank fallout affected other bond and stock offerings that came in its wake.

In the News

  • Family Bank has a rights issue coming up, to be approved by shareholders.
  • Duet Private Equity Limited, part of the Duet Group, will inject Ksh1.9 billion into Fidelity Commercial Bank to strengthen the Bank’s core capital, and support its local and regional growth strategy.
  • EDIT Jamii Bora Bank just raised $12 million through two Private Equity funds – Equator Capital Partners  (through its managed fund, ShoreCap II) and Progression Capital Africa  (through through its managed fund, Progression Eastern African Microfinance Equity Fund). 
  • KCB Group shareholders are to approve a rights issue and (another) name change to KCB Plc. KCB is also paying shareholders a Kshs 2 dividend, with Kshs 1 in cash, and the other Kshs 1 as a scrip dividend. The intent of this is to allow its Shareholders to derive value on account of higher dividend in future due to increased shareholding. This is automatic, but shareholders have the option to receive the Kshs 1 in cash by  filling and returning a scrip election form to the bank by June 17. If all shareholders opt for the scrip, and get new shares at a price of Kshs 38 per share, this will increase the number of KCB shares by 2.5%.
  • National Bank was expected to have a rights issues in 1Q2016, and the government expected to raise Kshs 4.99 billion from a the issue in February 2016. The process has been delayed and it now appears that NBK may still be combined with two other smaller state-controlled banks –  Consolidated Bank and the Development Bank of Kenya.
  • Sidian Bank (formerly K-Rep), is expecting its minority shareholders to  provide Kshs 400 million capital to support its growth plans.The new capital comes after the majority shareholder, Centum Investment, injected its share of Kshs 1.2 billion last year after raising its stake in the lender to 67.5%.. Sidian chief executive officer Titus Karanja said  “They gave us their commitments and we are expecting the money by end of May.”
  • SMEP Microfinance Bank shareholders are expected to have a rights issue to increase their  share capital, issue a bonus (1 for every 6 held), and also create an employee share option program (ESOP). They  will target less than 100 people or institutions for the privately placed capital raising.
  • EDIT Credit Bank expects that Fountain Enterprises Programme (FEP Holdings) will pay Kshs 5.4 billion for an additional 70% stake in the bank..via a private offer priced at Kshs180 apiece and limited to members of the chama (investment club) which has a large following in the UK and US.

Away from right issues, some banks have recently signed funding deals:

  • CfC Stanbic Bank signed a $135 milllion dual tranche term loan facility in which Emirates NBD Capital Limited (ENBD) and Mashreqbank PSC were the Initial Mandated Lead Arrangers and Bookrunners of the financing. The financing, which will be used for general corporate purposes, including, trade-related finance, was oversubscribed from the initial launch amount of US$ 100,000,000.
  • Commercial Bank of Africa (CBA) and Standard Bank of Southern Africa (SBSA) executed a $25 million cross-currency repo transaction.  The deal, facilitated and guaranteed by Frontclear, is a first of its kind transaction and paves the way to a more robust, stable and inclusive interbank market in Kenya. In the transaction, CBA receives $25 million in 1-year funding from SBSA and provides Government of Kenya Bonds as collateral.
  •  The African Development Bank (AfDB) recently extended a $40 million, 10-year line of credit to the East African Development Bank (EADB) towards support of regional infrastructure, manufacturing, agribusiness and education sectors with a bid to increase economic and government revenue growth in the member countries.
Not forgetting Chase Bank:
  • The Chase Bank bond that was oversubscribed last year was suspended. The bank had also undertaken a private placement in which high net worth investors bought shares at Kshs 2,760 each. Chase Bank had said that proceeds of the private offer would be used to shore up the lender’s thinning capital ratios, grow the loan book and invest in technology.

What other bank rights issues are there?

 $1 = Kshs 102.

Sidian Bank is Born

Last week saw the rebranding of K-Rep bank into Sidian Bank. This followed the acquisition of acquiring a majority 66% in K-Rep bank by NSE-listed investment firm, Centum Investments (through Bakki Holdco), for about Kshs 2.3 billion, in November 2014.

As Sidian, the 32-year-old bank will take on a new direction with a focus on entrepreneurs, and with the tagline #OwnTomorrow that’s rolling out at it’s 37 branches.

Managing Director, Titus Karanja, explained that the name Sidian, was inspired by the Obsidian rock, which was one of the first commodities used in barter trade – by the Mayans in middle America.

Centum now has 16 subsidiaries.

$1 = Kshs 90 in November 2014.