IPhone to Kenya

Today will see the official launch of Apple’s i-Phone (3G) into the Kenyan market by Orange mobile. You could say it’s a case of bad timing as Kenyans are going through tough economic times and perhaps entering a recession period.

Recession or not?: With (very) high prices of petrol (until recently), electricity, maize and other foods, a spike in the government deficit, global financial turmoil, fewer tourists, reduced remittance volumes all signs would point to an economic slowdown. Right?

But not the Central Bank of Kenya (CBK): I have been in the past ‘impressed’ (did I say it was the best bank site?) by the volumes of reports published by the Central Bank, mostly because they are timely, though difficult to decipher the message.

The CBK reports have predicted some hardships but remained very optimistic and rosy about the country’s economy. But it appears that the messages are tailored to suit the tone of the day because Kenya’s leading business newspaper has taken note.

Today’s Business Daily has a very harsh critique of the CBK reports (which many banks, funds, government departments use to formulate their policies). The BD editorial laments the consistency of presentation, shifting periods for which data is presented, differences in figures published by KNBS (statistics bureau) and a determination by its authors to manipulate data through a series of omissions and change of periods under review that makes it nearly impossible to keep track of ongoings in the economy.

Former Nairobi Stock Exchange boss Jimnah Mbaru (who’s also a sometime author) thinks Kenya is headed for a recession and has published a column which ran in some newspapers and appears at Capital FM website titled How Kenya can escape recession. He advocates (like US President-elect Obama) that the Kenya Government spend its way back to robustness. Some of the proposals he suggests include reduce interest rates and cash ratio (which have already happened) but also some strange ones like the government should buy Safaricom shares, sell buildings, and mandates that more sewers be built he also says hedge funds cashing out brought down the NSE this year…hmm.

Blog views: In the absence of a Finance Minister, the Government is engaged in a series of Voodoo economics.

i-Phone outlook: Looking around Nairobi with all the Hummers, new Range Rovers, new apartments complexes etc., it is clear that there’s an affluent class that does not feel the pinch of a (possible) recession and despite the tough year it has been, there have been several new entrants in Kenya.

The i-Phone which has been a worldwide smash, and impressed many (not all) its customers, can be expected to do well here also. Like with the Blackberry before it – which was circulating here unlocked/hacked before its official debut, it will now be licensed and supported after the official launch.

Education Moment

Google hosted the latest skunkworks where the debate was how to design a better computer science curriculum. Present were a team from the Google EngEDU (Engineering Education) which works with campuses to mould student skills that will enable them to adapt to a work environment at Google, and through continuous learning within Google that feeds back into universities through training.

Present was a nice mix of professionals, programmers, coders, Google, who were ex-students of Nairobi, Kenyatta, JKUAT, Strathmore and other foreign universities.

So what ails the Kenyan computing curriculum?
– Universities are large factories, that focus on quantity (of students) not quality (of learning) to support their income streams
– Lecturers are lazy (don’t want to teach new concepts or learn new developments), instead they spend more time outside, on more lucrative consultancies
– Students are programmed to (cram) pass exams, obtain degrees and gain employment. Few are inspired to learn outside, or become developers. They accept poor learning, without challenge, and will riot over food but not poor lectures
– Engineering/ computer science curriculums are static, have not changed in years. It is difficult to change the curriculum as it involves all departments of university, and even consultation with the Government (for public universities)
– There is little research and publishing at universities
– There was an unresolved debate of why JKUAT is a ‘better’ institution for technology programs than Nairobi University which has more resources and ‘better’ lecturers

What can be done?
– Teach children more computer/programming skills (in high school) before university
– Universities should be encouraged to compete more with each other
– Corporations should establish mentorship programs
– More programming languages should be taught, even at schools e.g. python, .net, ruby, java, not just C++ and Visual Basic.
– Engineering students remain highly employable in other sectors like accounts and audit

What else is happening?
– Google now has a director for education for Africa (A sign of better things to come)
– South Africa has signed up to link with TEAMS (submarine cable), and Governments now recognize that skills shortage is the next critical area to address after bandwidth
– Google will be working with Strathmore, Nairobi, JKUAT and with other universities on design of better computer science curriculum.

elsewhere

Safaricom University: the latest Safaricom Options magazine talks about a corporate learning & development initiative the company has with Moi University that began in October 2006. Safaricom helps design the electrical engineering curriculum at the University to produce competent engineers with skills that are useable by Safaricom, with the top performing telecommunication bachelor of engineering students, currently in first and second year, eligible to be offered attachment places at Safaricom. The collaboration is next targeting a master’s telecommunications program (to be based in Nairobi). More on Moi and JKUAT collaborations.

Universities need Change: A very timely post this week from Gukira on the difficulty of doing research from a technological standpoint at Nairobi University. For one who is used to the research recourses available at a US university, Kenyan universities are rather close-minded about IT access to research students’ e.g.

– Internet resources are lamentably bad
– Printing costs are exorbitant.
– Could not get into the library could not even apply to get into the library
– Faculty members teach ridiculously high loads
Read more

Multimedia University: The Government has gazetted the establishment of the Multimedia University College of Kenya, formerly Kenya College of Communications Technology (KCCT)

Multimedia Cows: Over the weekend, I heard about Michigan State University research program with Maasai pastoralists – where they used GPS to track the movement of cattle and their grazing patterns to help pastoralists find pasture for their cattle easier, and by having to walk shorter distances.

University Blog: Diary of a Kenyan Campus Girl is a great read about university life by a female student studying computer science at JKUAT.

Broke brokers?


Buying and selling of shares in a commission generating business. Like at supermarkets, banking halls, movie theatres, pubs, hotels – foot traffic means customers which translates to income and then hopefully a profit.

But some stockbrokers’ offices have gone back to being relatively quiet and in many cases empty for the most part of the day. Offices opened in the hey day of the Safaricom IPO are now empty desks.

Disocunt expanded furthest and fell first. For the others; are they generating enough income? Will they be able to pay the rent? Staff? Or are their customers trading online? Trading volumes at the NSE are down (as will commission income for all) – and not all of them are investment banks able to generate income from other avenues. Even as they wait for another IPO for a boost, will it make a difference? Co-Op Bank, whose IPO ended last month, handled a significant chink of their applications in house, and did not generate much traffic elsewhere

Pepsi to Kenya?

. Nairumour that after an absence of many years, Pepsi will re-enter the Kenyan market in the near future to resume battle with Coca Cola, possibly through their South African partners. If so, it will cap a great year for investment to the country, and that despite 2008 being a relatively tough year for investors and companies, with the post-election violence, business disruption, high fuel and energy prices, depressed consumer spending, P & P madness (pirates and politicians) collapsing stockbrokers, there was a steady flow of new investments and new products that happened this year.

Re-cap of some notable ones

Banking
– Takeovers concluded – Ecobank take over of EABS, and Stanbic merger with CFC (now CFCStanbic)
– UBA licensed (2009)
– Gulf African and First Community (Shariah banking kicks off)

Beverages
– Summit Lager a new beer from Keroche Industries
– East African Breweries launched Alvaro (malted soft drink)
– Coca Cola launched Novidia (another malted soft drink) and also started selling Minute maid
– KETEPA launched Safari Iced Tea

Communications
– WPP buys into Scangroup
– 2008 saw the launch of two new mobile operators – Orange (France Telkom) and Yu (Essar/Econet) to battle Safaricom and a re-energized Zain
– Altech buys into KDN
– A long-running fight over one(EASSY)submarine cable, gave birth to three different ones being laid to Mombasa
– Wananchi launched Zuku (TV, Broadband, Phone)

Transport, Energy & Manufacturing
– Tiger brands buying into Haco
– An investment in the Kenya Oil Refinery at Mombasa was still under battle between Libyan and Indian Investors
– Jinchuan (China) to bail out Tiomin?
– Mirambo and PD Toll to salvage the Rift Valley Railways
– Delta Airlines (USA – but postponed to 2009)
– Air Arabia started flights to Kenya

Tourism
– Libyans took over the Grand (Laico) Regency
– The Tribe opens.

Exits
– Chevron (Caltex) sold out – bought by Total
– Unilever (de-listing from the NSE)
– Roy Puffet from rift Valley Railways

Urban Inflation Index: December 2008

Four months ago last review (should be a quarterly exercise going forward) . 2008 has been a year with high prices and cost of living factors in the news. From the post-election violence in January to the (then) world oil prices, the pinch has been felt in Kenya.

The Government has come under pressure, but without addressing of its own excesses (procurement, new offices & limousines, parliemantarians, councilors and judges who refuse to pay income tax), has likewise tried to run the screw on the corporate sector – resulting in efforts to reduce the price of petrol and now maize flour (staple food)

Gotten more expensive

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. 97 which is 1/3 more than the Kshs. 73 four months ago. Farming woes continue, the crop this year is bad and Unga who said that they ran out of flour, among other revelations at their AGM, also stated that the maize harvest in 2009 will be worse and high prices will continue. There have been allegations of dodgy imports and the Government is today trying to arm-twist the price of Unga down to Kshs. 55 (EDIT – the Government announced today that maize will cost Kshs. 72 in urban areas and Kshs. 52 in rural areas)
Other food item: Sugar (2 kg. Mumias pack) is at Kshs. 160, up from Kshs. 145 three months ago. For Mumias customers and shareholders, the price is even lower for other unbranded sugar(s) on shelves.

Foreign Exchange: 1 US$ equals Kshs. 79.08, (18% weaker) than the Kshs. 67.4 four months go. This is partly the strengthening of the dollar, partly outflows from Kenya (at the NSE) – and comes after the shilling (while strong) had cushioned some impact of high oil prices.

Gotten cheaper

Fuel: Litre of petrol fuel (at local petrol station) is now Kshs. 92.7 (~$5.40 gallon) which is about 10% cheaper than the Kshs. 101.50 seen last time. While that is still higher than it was at the beginning of the year, and oil prices are down over 60% from the record highs of mid-2008, it is remarkable that for once fuel prices have reduced. In the past they have merely stagnated and oil companies, not passed on savings to consumers, but the threat of the government to regulate the prices, and a sustained media campaign (web/radio) has resulted in a slight reduction in petrol prices. (EDIT – A leading oil marketer – Shell announced today that prices will drop by Kshs. 15)

Entertainment: Bottle of Tusker beer (at local pub) is Kshs. 120 down from Kshs. 130 (cheaper by 8% from four months ago). Don’t know if this is one pub decision or the competition from new Summit beet launched by Keroche in October 2008 – the first true local competitor since (South African) Castle folded shop about six years ago. How will EABL fight back, and do they have to? Keroche got off to a good start but there has been little post launch marketing.

Communications: Continues to get cheaper as two mobile phone companies have become operational in the last quarter of the year – Orange (France Telkom) and Yu (Essar/Econet). The tone was set by Zain’s successful Vuka tariff, priced at Kshs. 8 per minute to call any network. Market leader Safaricom responded with Jibambie (up to a 63% discount) which enabled their subscribers to make calls at prices ranging from Kshs. 8 down to Kshs. 3 per minute if they bought a bigger denomination airtime voucher. The battle for subscribers is shifting now from voice calls which have reached unprecedented lows to data and money transfer where Safaricom is effectively Kenya’s largest ISP and money wallet.

No change: Electricity: My November KPLC bill is still Kshs. 1,900, same as it was in August, with a fuel surcharge reduction yet to be effected. High electricity prices have been a major cause for concern among Kenyan companies leading to President Kibaki to call for a reduction in the taxes levied on petrol prices and electricity.

But: Related: Is the quality of official statistics inflation data in question?
EDIT – Challenged by inflation, but with a view to improving liquidity, the Central Bank of Kenya today lowered the CBR rate (implied base rate) from 9 to 8.5% and also lowered the bank minimum cash ratio from 6 % to 5%