Thursday, September 14, 2006

EASSY: The Masai – Zulu battle of 2006

Had nice week which started with an unplanned tour of snow capped crater on Mt. Kilimanjaro courtesy of a South African Airways pilot to a Yvonne Chaka Chaka concert , among other fun activities in South Africa.

My comfort is that if that if the Highway Africa / Digital Indaba conferences’ were held in Kenya, the delegates would be drawn from Ministers, MD’s, and other senior corporate and government officials, and not ordinary journalists or mere mortals like myself.

Kenya vs. SA
One of the sessions covered this week was the controversial EASSy project which appears to have been now reduced to a Kenyan vs. South African affair.

South Africa traces its history, not to 1994, but to 1957 when Ghana become the first African country to gain independence. South Africa identifies with that milestone and thus immerses itself as a being proudly African and wanting to take the continent forward together though NEPAD and the African Union (AU) as a way to better all African lives and be more competitive with other continents. EASSy is NEPAD’s flagship project which is intended to bring down the cost of communication for the whole of Southern, Central and Eastern Africa.

SA’s leaders are largely drawn from the freedom-struggle movement are proudly African and strive to combat Afro-pessimism in all at forms. In economic terms, they are disciples of Joseph Stiglitz, who are wary of foreign aid and other donor-championed programs such as privatization, having seen how devastating they have been to many other African countries over the last 50 years.

South Africa proudly champions African solutions to African problems e.g. through NEPAD. It also proudly champions media coverage of Africa by Africans, not western media agencies. The South African Broadcast Corporation (equivalent of KBC) has spent 8 million rand and sent a staff crew of 60 to cover the recent elections in the DRC and already has foreign bureaus in Africa, Middle East, US and Europe and soon to open new ones in the Caribbean and China. Such coverage of the continent is something Kenyans may find unsettling.

Kenyans on the other hand have seen the OAU, East African Community (EAC), Preferential Trade Area (PTA), COMESA and other regional groups come and go with little impact. They are used to having neighbouring countries who are basket cases mired in wars, famines, or other problems and are happy to offer assistance militarily, hosting peace talks, food wise, or hosting refugees. They are used to having to do things alone and the EASSy is just the latest example of this.

They view South Africa as new to the party, but eager to assume a super power role and both economically and strategically dominate the continent. Thus they revel in small victories like when Kenya Breweries defeated Castle Breweries (SA) in the beer wars of the early 2000’s, denying MTN a cell phone license, or frustrating any South African company that tries to take over Uchumi.

Likewise, ordinary South Africans see Kenyans as having a problem with them. When I told a MTN employee that South Africa's Telkom had been short listed to bid for the second national operator license in Kenya, she said Kenyans would never let a South African company win.

Also on Monday, the City Press a prominent black newspaper had two business headlines on Kenya titled Stock trading noise to end (referring to electronic trading on the NSE)and “Kenya credit rating hit by risk and corruption scandals” - an unfortunate spin on an otherwise positive assessment of Kenya by global markets.


coldtusker said...

Banks - Thanx for the info!

I found a stark division between 1st World & 3rd World. That said, there was substantial government involvement in attracting businesses to SA in both the federal & regional levels.

Each province had its own government thus they competed against each other. This has plusses & minuses & mirrors the USA in many ways.

I was amazed that they had currency controls in SA! Nevertheless, the Rans has real buying power in ALL nieghbouring countries thus SA citizens take Rands abroad instead of US$.

There is a huge sense of xenophobia esp for Kenyans but more so for Zimbabweans.

Kenyans will generally laud a local firm's victory over a foreign firm from the sidelines (even though Kenyans don't always buy Kenyan goods!) BUT that is common to most countries including SA.

Unless we know the intimate details about EASSY, it is difficult to assess the benefits of the project. I support the cable to Mid-East & India (extending to Far East) since that region is more important to Kenya than SA.

SA has a strong constitution & a government that is structurally a better democracy than Kenya (or other African countries) thus the "press" has more rights than Kenya's. I doubt the Standard would have been raided in SA.

Kudrinketh said...

I'm very interested in SA and hope to ultimately make some real estate investments there.I think SA has a bright future, what with World Cup 2010 comming up and a strong, diverse economy.

Maybe one day when i retire early i can have a second home there just to get outa kenya once in a while.Could you check out the real estate market, i never trust the internet based home listings,they are always overpriced and targetted at monied jungos.

I already invest heavily (about 15% of my portfolio)in some SA stocks through ETF(exchange traded funds) and SA's ishare msci(symbol EZA)has been very good to me,I got in at $40 when they debuted in jan 2003 and sold during the recent market correction at $110.

I did get into the Telkom SA ipo in the NYSA(symbol TKG) at the same time in 2003.Bought at $15 and currently trading at $72.45, i know i shoulda sold at $110 peak early this year but its hard to know when its peaked, esp if its been so good for so long.

I know telkon SA has huge potential and imma hold on for a while and hope the recent correction is over.

And the moral of the story is;people should look beyond Kenyan or American stocks,there's plenty of ways to cash in by buying country specific ETFs or buying foreign stocks listed in NYSE or NASDAQ.

Second moral of the story, its not just NSE that has had hot IPO's so do not restrict yourself.

I try not to have all my eggs in one basket just in case. and that's why as much as i'm patriotic, i'm not investing more than 15% of my portfolio in the NSE

coldtusker said...

kudri - let's share ideas!
How do I get in touch?

bankelele said...

coldtusker: they are very pro-investor. They also recognize that their communications cost are among the highest in the world and are working to change that through open-source, broadband and other initiatives.

Kudrinketh: Thanks for the portfolio tips. Don't know much about real estate having only heard a few stories about "monied" kenyans with investments here.

HASH said...

That's a very interesting recap of the tension between the two countries.

I remember the Tusker wars very well, all the billboards and magazine ads - average Kenyans talking about how they were going to kick SA out of the Kenyan beer market. Great marketing on Tusker's part, and fun to remember.

Kudrinketh said...


chumviKiasi said...

Keep those tips coming.

Pekiro said...

The Tusker wars! For u to enter Kenyan market, look for a franchise owned by Kenyan..the only successful company 4rm SA is Nu Metro theatres. I think there is one thing abt Kenyans on African products, most shun imports 4rm African countries. Look at retail chain Shoprite, it has controled retailed markets in most African countries right to our neighbour here Tanzania.. Will we see a the exit of the chain after Kenya's leading retail chain Nakumatt Holdings announced its expansion plan to East and Central African countries?

There a wrath of war btw Kenya's and SA companies. But the former might succeed considering its more developed.

coldtusker said...

Competition is good... I think NuMetro misread the Kenyan shopper who is price sensitive.

NuMetro used to source goods from SA & the strong Rand made SA goods uncompetitive. The local manufacturers enhanced their image thus recaptured a large part of the market e.g. Kenylon & Peptang.

Pekiro said...

The problem with SA firms is, they try to compete with local firms offering the same products but theirs are sourcing 4rm SA. Kenyan market is a hard nut to crack by SA companies unlike other African countries which they have dominated the markets. For the EASSY project, i also object to that... SA wanna control the communication system in the region hence it will make any difference on the price charges. Better Kenya lay its own system like the way it is doing laying fibre optic btw Mombasa and Malaba border. This will reduce the communication by more than 1000%.

I support Kenya, dont let other countries control our economy. By the way, our economy has been growing despite IMF and World Bank denying us AID.

mwariwadavid said...

Hi there,
Interesting debate on SA vs Kenya. Well i live in sa so here goes my analysis:
-xenophobia- big time. the moment you don't speak zulu you're here to 'steal our jobs'
-future economic status- am sure you've heard that Zuma is now a free man. He has a huge following... if you add 1 and 1 you know the ans. For those of you who attended higway africa and DCI, i hope you listened Khumalo's presentation. he made a comment like... most pple are saying sa will become another Zimbabwe... well again, here if the Zuma maths works out, you can deduce alot of things, i leave that to you.
-Investing- shares- the stock market here is quite stable, so there is no way will harvest like Mumias and Kengen... kinda slow but sure...

Real Estate- good idea. properties are expensive but are appreciating quite fast... in you are resident here then you have access to finance from the banks. actually they call you and beg you to take loans even to buy clothes, cars, furniture well everything... you only need proof of earning i.e. a job.

Anything else you want to know?

By the way my blog's at

but it is pretty new..


69/\/\ said...

"EASSy project which appears to have been now reduced to a Kenyan vs. South African affair."

I really don't think EASSY has come down to this, Kenya has raised some genuine concerns. We don't want the west african equivalent of EASSY on our hands.

On the 3rd mobile operator licence and Uchumi other foreign firms missed out on the license and no foreign firm has been allowed to take Uchumi so how does this end up being us having a problem with them?

True, SAB were kicked out but because their product was foreign but EABL would have easily done the same to any other foreign brand in their turf.

Pekiro said...

Kenya should lay the fibre optic on its own. The government recently said it will lay a fibre optic cable connecting to the middle East. Thats a good idea, considering what happened in West Africa.


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