Category Archives: tanzania

Bank Mergers & Musical Chairs in 2016

There’s a moratorium on new banks licences, but still a lot happening in the ownership suites.
Who’s In
  • Bank M (of Tanzania) has bought out and rebranded (the former) Oriental Commercial Bank.
  • Sidian Bank: Centum bought out and rebranded (the former) K-Rep bank.
  • Spire Bank: Mwalimu SACCO bought out and rebranded (the former) Equatorial Commercial  bank.
Who’s Hanging On
  • Chase bank now reopened, but yet to resume lending. An ownership decision  is expected soon (process being managed by KCB)
  • Credit bank:  Discussions are ongoing about a sale to  FEP Holdings
  • Imperial bank (assets will be assessed and managed by NIC bank)
Who’s on the Way Out
  • Dubai bank (proceeding into liquidation)
  • Giro bank which has been bought out by I&M bank.
  • edit The CFC brand as CFC Stanbic Bank and CFC Stanbic Holdings (i.e group) becomes Stanbic Bank Kenya and Stanbic Holdings PLC respectively  – this comes about nine years after their merger of CFC and Stanbic banks.

Kenol Kobil 2016 AGM

KenolKobil had its annual shareholders meeting on May 12, at the Hilton Hotel in Nairobi. The board chairman spoke of the company’s performance in the three years since they had lost Kshs 6.2 billion. They had thereafter embarked on a turnaround that involved reducing costs, divesting from non-performing territories, focusing on profitable business rather than growing their market share, paying down debt, and corporate governance moves (separating the role of  Chairman & CEO role) .

Highlights

Regional Business: 

  • Tanzania: The company would up their short foray in Tanzania where they were losing $2 million a year. They had a depot that was part of their venture was an expensive lease, and while fuel prices in Tanzania are set by the government, many companies sell below that price as they don’t pay taxes. The directors said that Kenol was a responsible company that could not and decided to close shop.
  • DRC: They invested here, but did not ship product there as they were not happy. with the business climate and decided to sell out.
  • Burundi is doing well despite the political turmoil there.

The board faces shareholders at the 2016 KenolKobil AGM

Dividends: One shareholder said the dividend was too low, but the chairman said they have a consistent policy of paying 25% of net  profit as dividend, while the Group MD (GMD) said they still had to pay down a lot of debt.  One long-term shareholder told the meeting, that it was better for the company to be conservative with dividends, rather than aggressive, like other companies, and come back in a  few years to ask shareholders to invest more money in a right issues

Property: They have decided not to put up an office building in Haile Selassie street in downtown Nairobi for now as the office property market is saturated.

Goodies: Lunch box (which Hilton guards would not allow to be eaten on site), and tote bag. Some shareholders pleaded for the company to provide them with caps and umbrellas to promote the brand.

Odd Point: One shareholder asked why the AGM had not started with  prayers. The Chairman said it would not be productive, as they would have to have prayers for Christian, Muslim, Jewish, and traditional African religions  to be fair to all shareholders present.

Oil Pipeline, Economics & Politics

It’s been reported that the oil pipeline from Uganda is going to go through Tanzania, not Kenya. Two forgotten facts about the Uganda oil decision are that; (1) President Museveni of Uganda has been steadfast that he wanted to refine oil in Uganda, not export raw crude (2) Uganda’s oil has been said to be waxy or heavy. This means it would require complex heating to keep it flowing along a complex oil pipeline through the rift valleys and hills – to the coast of Kenya.

M7 poster 2

The cost, insecurity and difficulty of building infrastructure have been cited reasons that Uganda opted to go through Tanzania. Still, Kenya has several LAPSSET projects on the cards including an oil pipeline to go to Lamu where there would be a new highway, railway, coal plant and modern, deep-sea port.

Pipeline Impact

Last year at the TDS Nairobi summit, during the 10th Ministerial Conference (MC10) of the World Trade Organization (WTO), a session was held on local content in extractive (and oil) industries. Some interesting comments there included:

  • It is a legitimate objective for any resource-rich country to try to maximize the value of its resources.
  • If a country puts restrictions on raw exports, it may distort the local economy; it creates artificial demand – and if it is not efficient, local related industries will not survive.
  • Kenya energy expert Patrick Obath suggested that Kenya, Uganda and South Sudan have to talk together and implement projects together for projects like the oil pipeline to be viable. That would also have to happen to get more value-addition from the oil in the countries e.g. can the countries plan to get fertilizer from oil?
  • With mining, you have 20 years of opportunity for local suppliers and jobs, but with an oil pipeline that’s only there in the beginning, then goes away once the pipeline is built (there won’t be many local jobs after, and communities don’t get an economic boom from having an oil pipeline passing through their land..which may lead to some local frustration).

More on Kenya Pipeline:

oil tankers

  • The Kenya Pipeline Company is charged with transporting and storing petroleum products.
  • A (presidential task force on parastatal reforms proposes the Treasury incorporate a holding company known as the Government Investment Corporation (GIC), into which Kenya Pipeline Company should be transferred to determine (its) intended privatization.
  • Meanwhile, Kenya Pipeline is continuing with its projects including replacing the current Mombasa-Nairobi Pipeline.

Imperial Bank Uganda Buyout

While the fate of Imperial Bank in Kenya is yet to be known, it seems to have been concluded in Uganda, where Imperial Bank had a Ugandan subsidiary  with 5 branches, in which the Kenyan bank held 59% of the shares.

Today, in a series of tweets, the Bank of Uganda ‏(@BOU_Official), announced that a new majority shareholder, Exim Bank of Tanzania had bought out the shares, and renamed the bank as Exim Bank Uganda, and with a new board of directors.

They were thus lifting the statutory  management and expect the bank operations  to ‘continue normally.’  No word yet on how much was paid, or who the payment was made to, and if there’s any reaction by the  former majority owners of the bank (Imperial Kenya).

The Business Daily story notes that :

The Central Bank of Kenya (CBK) on Tuesday disclosed that Imperial Bank Kenya’s 58.6% stake in its Ugandan subsidiary was sold to Exim Bank for $6.8 million (692.4 million).

The Sh316.5 million balance between the sale price and the amount to be remitted to the Kenyan unit will be used to cover transaction costs and liabilities of the Ugandan operation. The Kenya Deposit Insurance Corporation (KDIC), the receiver manager of the collapsed Imperial Bank Kenya, will receive the amount.

Corruption is Always a Good Story

Look at these quotes about corruption.

  • Material corruption of the highest magnitude seems to be flourishing in African public life (1)
  • The speed which with 
people in authority amass personal wealth can only point to the assumption that they use their public positions to get rich as soon as possible (2)
  • Although several governments have advisory commissions to suppress corruption and have anti-corruption officers, these measures are ineffective. (3)
  • The president has decreed that all ministers declare their wealth but has exempted himself  (4)
  • The prime minister has in 2 years since taking office, been able to purchase property ten times his net worth, and completed 4 houses. He also owns proportion Washington that he rents out t o the Embassy (5)
  • What worries me is that those in power are not really affected by what we are writing (6)

Obote coverThese are now new, but are from an article called Corruption in African Public Life, that was published in the East Africa Journal (does it still exist?) in November, 1967. That issue had Uganda President Milton Obote on the cover and cost Sh 2.25.

While it warned, in 1965, that corruption was the greatest single cause of the fall of governments in Ghana, Nigeria,  and Sierra Leone, it also noted, in a philosophical perspective, that corruption was not East African creation, and that Plato,  in his “Republic” had posed that leaders should not own any possessions except their power, they should live in communes and not marry. Also that, in East Africa, only Tanzania has taken concrete steps to fight corruption, through the Arusha declaration which banned capitalism &  feudalism, the holding of directorships in private companies, receiving more than one salary, and owning houses to be rented to the government.

 Re: the quotes above:

  • (4) was Kwame Nkrumah in Ghana.
  • (5) was Sir Albert, in 1967 Sierra Leone.
  • (6) was Kenya’s Sunday Nation quoting Chinua Achebe.