Category Archives: Zain

Week on Twitter (September 11)

Another re-cap of a week full of Twitter – @bankelele posts which included issues like – more innovative loans from Equity Bank, why do Kenyan companies make such large PDFs? The fibre cable has reached Mandera in remote Northern Kenya, but piped water is yet to get there, police dogs sniff grass, Zimbabwe ministers text like teenagers, how to get through to safaricom’s notoriously inaccessible customer service, mobile companies know how to keep Kenyan ministers happy, Kenyans laugh at their failings, pre-paid internet gets cheaper, another bank to list at the Nairobi stock exchange while another joins twitter, more awards for women, more jobs at the central bank of Kenya, and the UNEP toys with Kenya

– @TChenya @KumekuchaChris was just at Equity Bank; amazed they have loans for water tanks http://bit.ly/AoYg4
– This #Safaricom portal is going to be the Kenya borg http://portal.safaricom.com…
– Do cops favour their own matatus, leading to traffic jams for other motorists? http://www.coastweek.com/32…
– R/T @baldaufji #Zimbabwe minister text messages leaked http://bit.ly/2KkUIx U c the strait jacket vakuru [old man] is being given 2 wear
– The koinange family starts development of the parking lot next to kencom Nairobi
– Just registered to get my Safaricom dividend by cellphone m-pesa in November @saitonne m-pesa dividend registration ongoing around the country till 30 September, mostly at supermarkets – which one is near you?
– Cold call from a bank offering an unsecured personal loan at 24%!
– @egm_photo @jmugambi its soooo wrong for fibre cable to reach mandera before piped water!
– Gabon09 election resembles kenya08 but little concern in Kenya
– #TPF3 Tanzania is 0-2: EABL endears itself to that beer market
– (Sad to hear) R/t @estoni #samburu insecurity rife, tourist vans attacked, some travel companies are canceling Kenya safaris
– @kainvestor the most blatant on-going copy cat is ‘citi shuttle’ aping ‘citi hoppa’ with same green, same routes #thuo should do something
– (i) #shagslife a police dog from anti-stock theft unit just tracked down some stolen bales of hay to a nearby compound (ii) Hay and fencing was ‘stolen’ from farm of local MP last night. @coldtusker, this police lassie did an impressive job over many KM
– More bank for twitter @Standardbankgrp the official account for #stanbic (found at @kainvestor)
– R/t @saitonne are you stuck trying to call #Safaricom customer care 100 number? Try adding some zero’s and no’s e.g. 1000055
– R/t @kachwanya Yu to launch money transfer service on October 1. (Now where’s telkom, been almost 5 years in the making?)
– Watching morning news – #Safaricom seem to trend #CSR projects to home area of sitting communication minister
– Family bank march to listing at Nairobi stock ex @nsekenya on with plans for share split and rights issue pending approval
– you know you’re Kenyan goes viral (i) #youknowyourekenyan when you understand (and agree with) Francis atwoli (ii) #youknowyourekenyan cause your “najivunia kuwa mkenya” cap is made in china

– NHC rescinds sale of houses to 102 #madaraka estate residents (for non-payment?) while NSSF threatens to repossess some tassia-embakasi plots
– @ kainvestor how do Kenyan corporations create such huge huge PDF? E.g. quarterlies from NSE site (i) Mabati Rolling Mills half year results (large PDF) http://tinyurl.com/ldyk22 (ii) @kainvestor #KenGenPIBO information memorandum dead D link on site at http://www.kengen.co.ke/PIBO/
– Nominate an African woman achiever for a Graca Machel award http://www.civicus.org/media/Graca_Machel_Initiative_Call.pdf D/L 30/9
– R/T @gishungwa @shiroh: Central bank of Kenya is hiring http://tinyurl.com/lu6bbo
– @inexes @shiroh while standard chartered will take divas to South Africa for shopping for $1,000, family bank has week-long trip in October for business customers for $2,000
– Eh @intelligensia, plans underway to (dredge &) raise the water level of masinga dam by 1.5 metres
– New Zain Kenya unlimited pre-paid internet bundles costing $3 per day, or $30 per month
– NTV’s Rita Tinina on GoK begging UNEP for Mau Cash http://bit.ly/2m8BUu (look for a toy truck near end of vid)

Money Transfer in Kenya Evolves

Part 5

Since the last look at mpesa developments in mobile money, there have been another raft of new deployments as Kenya’s two main mobile companies – Safaricom and Zain who have been signing up partners for their respective MPesa and Zap money transfer platforms. Here’s a recap

Banks using M-pesa: Commercial banks have been long whispered to have a lot to fear from m-pesa but I disagree. Yes bank are going to have to step up and use the mobile phone to reach their customers better, and they are in a better position to do this than mobile companies. Mobile money itself is not the sole reason for the loss of relevance of some banking products since fraud, insecurity, transport costs and transaction costs have also contributed e.g. banker’s cheques have been plagued by fraud which means that banks now subject them to the usual 4-day clearing cycle, while landlords and schools now ask clients to deposit funds in their (own) payee accounts and furnish deposit slips as proof of payment.
Banks have gone the option of launching their own mobile applications for their customers including include Barclay’s m-money and these include Barclays, Equity, Family Bank, ABC and others. A few others have gone on to collaborate with mobile companies. Two notable ones are:
1. Consolidated Bank whose customers can transfer money from their bank accounts to m-pesa
2. CFCStanbic whose customers can pay their suppliers by mpesa from their bank accounts: more here

Investor Relations: Pay Dividend payment by mobile phone – last week, Safaricom shareholders approved the payment of dividends from the company to their fellow 830,000 shareholders via m-pesa. This will happen in November 2009.

More corporate partners a glance at Safaricom mpesa list of partners now includes airlines (jetlink, safarilink, east African safari air), micro-finance institutions (Kadet, Kenya women finance trust), media houses (Nation Media Groups to pay for classifieds), KBC, Family TV, , banks (ABC, CFC, Family, Postbank), government agencies (youth enterprise development fund, national hospital insurance fund, higher education loans board) , and several insurance companies and SACCO’s (savings & credit societies)

Airlines last is the airline, because it shows again, the difference between zap and mpesa. Monday’s Nairobi Star had an advert from Jetlink showing that their passengers could now pay for airline tickets by M-pesa– up to the maximum m-pesa limits of Kshs. 35,000 ~$500.

That should have been the end of the airline section, but I was reading the latest issue of African Business magazine which had an interview with Tito Alai where he mentioned that Zain had signed up Coca Cola, and – Kenya Airways (KQ) saying “a passenger can book a KQ ticket online, pay by zap, and check in at airport with his mobile phone” great right? But Kenya Airways have not launched this program – and their customer care told me to only pay by cash or credit card. Kencell/celtel/zap have a history in Kenya of coming up with innovative products, but Safaricom market/apply theirs better. Is this another case with KQ? That the company is up for sale (again) is not a positive sign for development of new partnerships & products. Then on the news of August 24, it was reported that Zain Kenya had launched 3 Zap applications – zap distro (web tool to manage dealerships), zap transact (collect cash from numerous sources direct into bank accounts), zap master pay (ease cash administration – so a company pay up into up to 1,000 zap accounts at a time). Maybe now KQ and Coca Cola will reveal their plans for Zap

User innovations:
But as many innovations as the large corporates come up with for mobile money, the users are the ones who will come up with the innovative, creative ways of adapting them to their lives. Here are a few examples

24 hour M-Pesa had a lunch at a joint that had a rather rude manager, after he spotted me taking a picture. Anyway, many mpesa dealerships tend to close at 5PM, while others like Uchumi (supermarket) can do transactions up to about 8 PM. But now bars, who are open for many more hours e.g. Taidy’s (Nairobi west), are offering 24 hour mpesa banking.

Overcoming challenges Also, while the country is ongoing a power rationing for the next few month, M-Pesa is largely unaffected, as it is not dependent on electricity which the banks are. But M-pesa down time & system outages, agent, and lack of float for several hours a day may compromise its integrity in the eyes of consumers, who may see Zain’s Zap as a reliable back up channel

Money transfer across networks: since their introduction, the mobile companies have been walled in I.e. M-Pesa can only be sent to Safaricom customers, while Zap money to zain users. There have been calls for cross-network transfers to be allowed, with appeals to the regulators (CCK, CBK) to force this to happen. But in this market regulation trails innovation, and this wall has been broken down,- as explained by @Gishungwa “from zain you can send money to Safaricom, it costs the sender 10 shillings, but the recipient pays 30 shilling to withdraw cash and it works well”

Other Uses
– harambee (fundraisers) where more money is sometimes raised by m-pesa than from cash collections at the event. This is also safer and money goes direct to the intended recipients
– Televangelists: every Sunday morning religious show on TV will have a prominent display of mpesa and zap numbers for viewers to send in cash for prayers
– Others are dowry payments, bar bill payments, petrol payments at fuel stations

Reading the Tea Leaves at Safaricom

Safaricom have published their annual report (download here). In a cost-cutting measure they will not be printing or mailing out these reports to their 829,000 reporters, nor will they serve any refreshments or give gifts at their annual general meeting in August 2009.

image from sambazanow

A to Z excerpts from the report

Performance: Company had Revenue of 70.4 billion ($915 million) and a pre-tax profit of 15.3 billion ($198 million). Income was 59 billion from voice, 8 billion from data & SMS, but compared to 2008, growth is 8% and 80% respectively.

M-Pesa:

  • Earned almost 3 billion from the money transfer system.
  • Vodafone hopes to take their money transfer model to other countries, though it has not fared well in Tanzania. Safaricom also hope to extend into international transfers from the UK via Western Union: it’s in test now (and hopefully will be cheaper than the current WU rates from UK to Africa).
  • Also plan to extend it to bulk payments (e.g. low-end salaries in large organizations)
  • Agents now recruiting sub-agents.

Directors

  • In September 2008, CEO Michael Joseph (US citizen?) joined the board, while Information Permanent Secretary Bitange Ndemo left the board. Kenya Government still has the Treasury and Privatization heads on the board.
  • Susan Mudhune joined the board and was rumoured to be the next chairperson to replace (70+) Nicholas Nganga.
  • Both Michael Joseph and Les Baille have 2.35 million shares, the Chairman has 850,000, and privatization secretary Esther Koimett has 637,000.

Education: Working with JKUAT and Moi University on curriculum to get the graduates with the rights skills in telecommunications to join the company.

Investment: The company bought 51% of One Communication Ltd, a Wimax service provider. One owns Comtec training & management (has local loop license), Comtec Integration (has digital carrier network operation license), and Flexible Bandwidth Services (has ISP license). One was technically insolvent. It had net liabilities of -66 million, but Safaricom paid 186 million for a stake in it after estimating it had goodwill of 219 million.

Licenses: Safaricom has 5 licenses with a span of 15 years; international operator license (1999), international gateway (2006) and 3G (2007). Also acquired two more by buying into One Communications – local loop operator, and data carrier network operator.

Liquidity: Safaricom has trade payables of 11.9 billion, receivables of 4.3 billion, and cash of 4.3 billion. Their financial statements note that current liabilities (35.3 billion) exceed current assets (17.3 billion) by 18.2 billion ($236 million), but that the company generates sufficient cash (about 30 billion) to meet operations; also that a significant portion of creditors relate to network expansion costs and this is expected to continue in this period of intense network expansion and they will borrow if there is a shortfall. should the auditors have emphasized this?

Media Crunch?: Sales & advertising was 2.28 billon ($30 million), basically unchanged from the year before, and this was despite facing an expensive marketing campaigns from rival Zain

Shareholders:

  • Pension giants – National Social Security Funds of Uganda (160 million shares) and Rwanda (96 million shares) are in the top 10 shareholders but Kenya’s NSSF is missing.
  • Has 465,000 shareholders who own less than 1,000 and while another 300,000 own less than 10,000 shares. The former will be getting dividend payments of 100 shillings ($1.30), which makes the toll-free payment dividend a very smart option to apply for.
  • No mention of Mobitelea in report which recently exited from the shareholder register.

Submarine/Fibre: Safaricom is a shareholder in Teams fibre optic cable system. It has committed 1.6 billion shillings ($21 million), which it estimates will reduce cost of communication by up (only) to 33% over 5 years.

Tax Break: Will pay 27% income tax for 3 years from March 2010, instead of 30% since they listed. Other Kenyan companies pay 30%.

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).

Mobile phones lower the cost of business

Money Transfer Within Kenya Part 3

A comment from @alykhansatchu on Money transfer lead to an update of the first post about money transfer from about 3 ½ years ago before the advent of mobile money transfers.

At that time, the cost of sending 10,000 shillings (then about $136) within Kenya was Kshs. 1,700 ($23) with Western Union and 1,850 ($25) with Moneygram – working out to a remittance cost of about 17% – 19% for an instant money transfer. This was mostly done at a few commercial bank branches, some foreign exchange bureaus, and at post offices around the country within banking hours.

90% savings: A lot has happened in the last few years mainly in the form of the arrival of money transfers via mobile phones by MPesa from Safaricom and more recently Zap from Zain.

A recent post last week noted that Western Union in Kenya have just lowered transfer costs to flat rates of 2% i.e. almost 88% cheaper than what they were at the time.

In the last few years, millions of Kenyans have moved on to mobile phones for money transfer and I can’t recall anyone who uses banks for these transactions. Mobile phone have maximums of about $430 (35,000 shillings) for money transfers, but this is more than enough to cater for most remittances, including the emergencies that necessitate instant transfers.

And mobiles are still cheaper; the 2% western union charge to transfer 10,000 shillings works out to about 200 shillings. A transfer of the same amount by Zap costs 75 shillings (0.75%) and 105 shillings (1.05%) by M-Pesa (after combining sender and receiver fees)

International remittance to get cheaper?: Zain hope to link Zap to allow transfers to customers of Zain in different African countries. And Safaricom are setting up a link for transfers from the United Kingdom to Kenya. When these are established, we should also see the cost of internal remittances, whose sometime high cost is a cause for complaint for many Africans in the Diaspora, also drop significantly.