Ethanol for Kenya Part II

Thank you for the very informative links, responses, comments, and tips from yesterday’s post on ethanol for Kenya


Some highlights
- Kenyan Pundit on ethanol production efforts in Southern Sudan and our archaic sugar sector (linked by AfroM)
- Mashatall for mentioning in Sasol in South Africa is minting crazy chums selling ethanol
- Anonymous for the link to dogwood energy which included a do-it-yourself (DIY) guide to make ethanol at home
- Persona for noting that Muhoroni's Agrochemical & Food Co. and other local companies have been producing Ethanol in Kenya for years – and for noting that all the cheap 'whiskies' and 'vodkas' that we have contain it
- ChumviKiasi for mentioning that switchgrass is the most efficient bio fuel crop

Great Resource
This post from Timbuktu Chronicles contains references to a DIY ethanol kit, how to use solar power to make ethanol, and how to run a petrol engine on ethanol, among others.

More applied brewing
- Sierra Brassiere is a Nairobi restaurant / micro brewery located next to the Panari Hotel (on Mombasa Rd.) that brews and sells two in-house beers (sierra blonde and sierra amber) @ 120 shillings per glass - and if you are there on the right day, you can even get a factory tour of the micro brew process.

- Fromgeishablog a simple guide to how Sake is made in Japan.

June 30 Jobs

Most appear in the Friday daily papers


Bidco oil refineries
- Manager communications & PR
- Marketing officer
- Accountants
- Legal officer
- Territory sales supervisors
- Area sales in charge
- Graduate trainee engineers
- Operators refinery/ packing/ soapery
Apply to careers1@bidco-oil.com by July 15.

Carlton products (EA)
- Quality assurance manager
- Junior accountant
Apply to the HRM P O Box 78105-00507.

Celtel
- Customer care manager operations
- Segment manager SME
- Assistant segment manager
- Events manager
- Events coordinator
- Geo-marketing coordinator
- Windows server engineer
Apply to hr@ke.celtel.com by July 7.

Cooperative insurance company
- General Manager finance
- Chief internal auditor
- Investment manager
Apply through pricewaterhousecoopers at ess.ke@ke.pwc.com by 30 June.

East African Cables
- Project manager
- Maintenance manager
- Mechanical engineer - projects
- Mechanical engineer - maintenance
Apply to bkowitti@eacables.com by 14 July.

Chief executive of the East African Tea Trade Association. Details here.

Equity Bank
- Human resource manager employment relations
- Human resource manager training & development
- Credit manager
Apply to jobs@ebsafrica.co.ke by 14 July.

SME Specialist at FSD Kenya. Details at their site and deadline is 10 July.

Executive director at the International Commission of Jurists Kenya section. Apply to info@icj-kenya.org by July 18.

International Finance Corporation (IFC)
- Investment Officers -Sub-Saharan Africa
- Senior Investment Officers -Sub-Saharan Africa
Details at their site and deadline is August 1.

Judiciary Service Commission
- Principal ICT officer
- Chief ICT officer
- Research assistants (20)
- Kadhi II (2)
Apply to the Secretary JSC 30041 by July 21.

Roses supervisor at Oserian Development Company. Apply to jobs@oserian.com by July 12.

Pricewaterhousecoopers
- Marketing & communications manager. Apply to recruitment.ke@ke.pwc.com by July 3.
- Operations financial analyst
- Database administrator
Apply to recruitment.ke@ke.pwc.com by 14 July.

Royal Media
- Radio marketing manager
- Head of sales Chamge FM
Apply to the HRM P O Box 7468-00300 by 14 July.

Standard Group
- Legal officer
- Security manager
Apply to the HR P O Box 30080-00100 July 7.

Telkom Kenya
- Call centre coordinator
- Call centre team leader.

Senior Health Sector Program Manager at USAID Kenya. Details here.

Ethanol for Kenya

I was reading this NY Times article on how the US corn sector is abuzz over ethanol production with significant subsidy and incentive support from the government.

After that, I decided to google (Kenya + Ethanol) and was pleasantly surprised to find out that there are moves spearheaded by progressive Mumias Sugar (who already into electricity production) to develop ethanol from sugar. (more here).

Pipe dream or not, it’s good to get started and maybe one day Kenya can be fuel self sufficient like Brazil through local ethanol production.

Nakumatt fights back

In a paid advertisement appearing in today’s papers, Nakumatt sets out to correct some inaccuracies mainly in the financial numbers that have been mention in the media comparing the recent performance and taxation between Nakumatt and Uchumi

Turnover Nakumatt's was not 20X times Uchumi’s and they have always had fewer stores than Uchumi. They have gone from 7 stores in 1997 to 17 today while Uchumi has gone from 14 in 1997 to 30 in 2004 and down to the 17 which they closed on June 1. Nakumatt had lower turnover up till 2005 - their 1997 sales of 2.7 billion shillings (2.7b) rose to 7.1b in 2004, 11b in 2005 and estimated 11b in 2006 while Uchumi’s rose from 5.2b to a high of 8.9b in 2003 before dropping back to 5b in 2005 with the closure of 13 stores.

Profitability Nakumatt made profits of 60 million shillings (60m) in ‘97 and ‘98 each, lost about 200m each year (401m in 2000) from '99 to 2002 and returned to profitability in 2003 (111m), 140m in ‘04, 287m in 05 and an estimated 459m in 2006 while Uchumi had increasing losses from -246m in '03, -654m in '04, -1.2 billion in '05 and an estimated 600m in ’06.

Inspection Nakumatt say all their suppliers are complaint with the Kenya Bureau of Standards, which is not entirely true as many of their goods are imported and have not been verified for the last few years.

Taxes Claims they paid 21m in ‘04, 222m in ‘05 and 383m in '06, and are ETR compliant. Electronic tax registers (ETR) were introduced by KRA to ensure VAT amounts collected were remitted to the government.

Outlook
The statement is a commendable start by Nakumatt which needs to do a lot more on the PR front. It is assuring that they have stated that they employ 3,000 Kenyans, have 600 local suppliers and that their books are audited by Deloitte & Touche.

The company needs to be more open in its dealings with the public since their image which has taken a public battering from parliamentarians and money laundering allegations. They should make more mileage from their philanthropic efforts, hire a spokesman or firm, and put forward a board of directors, preferably with a reputable Kenyan as Chairman to be the corporate face of the company.

Uchumi
I don’t put much faith in the recover of Uchumi which has lost so much ground to other supermarkets. If it ever reappears on the stock exchange I’d sell my 500 shares immediately. The Nakumatt statement claims that they currently have an estimated stock of 3.1b compared to Uchumi’s 330m - which paints a bleak picture for Uchumi since both firms had 1.2b worth of stocks in 2004.


I don’t see a KMC (Kenya Meat Commission) style comeback for Uchumi - speaking of which I can’t wait for see KMC to start selling their very tasty corned beef again.

Closure of Charterhouse Bank

It was the 26th largest bank in Kenya at the end of 2005 with assets of 4.2 billion and made a profit of 122 million shillings. It was the financial arm of the Kingsway Group which includes Creative Innovations, Kingsway Tyres, Digital World and the landmark Village Market in Gigiri.

While it is rare for a financially sound bank to be shut down, the Finance Minister made a good point that he wanted to prevent a run on the Bank. Rumours & stories about a takeover/restructuring/ownership change at a bank can truly cause panic in the banking sector since Kenyans have over the years lost billions of shilling in collapsed banks. At a recent bank meeting a Chairman was very candid that some depositors had withdrawn huge amounts from his bank following some inaccurate reports appearing in the media.

Likely Outcome
Despite this, the legal grounds for the closure are not very strong although the Bank has weathered several money laundering storms over the years.

Charterhouse which was formerly Middle East Bank Kenya and at one time 10% owned by Nakumatt who also hosted several branches should re-open in a few months with the help of some smart lawyers and an aggressive market campaign.

Way Forward for the NSE

The Nairobi Stock Exchange (NSE) will in a few months start electronic stock trading - which is expected to triple the volume of share traded at the exchange daily. Also the current allowed price spread of 10% will be increased to 20%.

NSE Chairman Jimnah Mbaru has over the years made several speeches advocating for the NSE to forge trade partnerships with the Johannesburg Stock Exchange (JSE)including having Kenyan companies’ cross-list on their board. Kenyan companies that can consider cross listing include East African Breweries, which was ranked the 76th largest in Africa, and possibly Kengen.

The JSE which recently went public saw the volume of trading and liquidity increase many times over when it began electronic trading a few years ago.

Minister Appeal

In a full page paid advertisement in the Sunday Standard, Minister for State in the Office of the President (in charge of provincial administration and internal security), John Michuki appealed to the media to tone down their arrogant, sensational reporting of this government and the country. He writes that media is serving their own interests, and that the Standard is the worst offender. He also notes that even such interactive media like call in talk shows (radio & television) and internet blogger forums are increasingly being abused - some of them are full of content that is unmistakably hate oriented.

Separately: The Artur Commission which will begin public hearing this week has an e-mail address arturcommission@kenya.go.ke

World Cup financial plan

I love attending sports events, especially major world events. I have been fortunate enough to attend grand prix’s, basketball games, football games, the Kenya vs. Sri Lanka (Cricket World Cup 2003) match, local rugby, the ill-fated Kenya vs. Moroco game, and others.

I have been fortunate to see live icons such as Michael Schumacher, Michael Jordan, Tiger Woods and others excel at their sports. And with the euphoria of the world cup, I have to seriously think about attending the next world cup in South Africa n 2010.

This will be as geographically close to Kenya as possible, and perhaps if our soccer bosses had got their act together, FIFA would have assigned some group matches to be played in Nairobi (like the Cricket World Cup in 2003). But our soccer administration remains a mess and SA is as close as Kenya will ever get to a major world event. not counting 2007 Mombasa X-country race

While we are busy waiting to see who the defending champions in 2010 will be, it is also time to make plans for such a trip - which will not be cheap. Air tickets, match tickets, hotel, restaurant, and entertainment, are some of the costs to be incurred. Air tickets are about $400 now - but will cost more because everyone will want to make a buck from the WC. E.g. a grand prix runs for 2 hours on Sunday, but hotels in the host city will typically require guests to book for a four day weekend stay at inflated rate.

I could sell cows, my car or all my shares, or throw in my savings to finance the trip. Even better, UAP insurance has put together a savings plan to enable Kenyan to meet the costs of such a trip. Even if I sign up with UAP but don’t go to SA, I will have still saved a huge chunk of money over the four years.

It is always fun to travel to such events in group, so it is important to identify pals who can seriously plan and save to go for the event with me. I do have friends who I sit around and watch the world cup with every evening, and who say we will all be in SA in four years. But are they serious? Only time will tell.

Mid-week Business

Fuel racket
The post budget 3 -4 shilling hike which has taken the price of a lire of fuel from about 73 to above 82 shillings per litre is the second such increase in just over a month.

Kengen
Refund cheques and physical share certificate are now ready for all Kengen shareholders and can be collected from stockbrokers. I already got and spent my refund last month.

Uchumi lifeline
Trade & Industry Mukhisa Kituyi says Uchumi could resume operations in just under a month under a governemnt approved plan. No word yet on the fate of (us) shareholders.

Naku Crash
- Uchumi’s main rival Nakumatt are having a sale this week at their ‘Mega’ branch (Nyayo Stadium) which is driving housewives, techies, and electronics shopkeepers, crazy. For the last week there’s been a mad rush each morning for flat screen TV’s, fridges, cookers, microwaves, radio’s and other electronic items which are have all been discounted by 50%.

- Meanwhile the company’s directors have failed to heed a lesson that the corporate world has learnt - which is that you don’t mess around with Government ministers. From Michuki (Standard & KTN), Tuju (CCK, KWS, KICC), Ngilu (Narc-K), Munyao (KMC), Kirwa (Kenya Seed) Maitha (city councils) and now Kituyi who has turned his fury at Nakumatt for interfering with his revival plan for Uchumi and retaliated on two fronts against the company – one is the non-inspection of their goods and the other is on the low taxes they pay (1/10th of Uchumi’s VAT).

New Bank
Family Finance Building Society will be licensed as a commercial bank at the end of this month and add on 5 new branches by the end of the year.

New University
Following the launch of Gretsa (U) in Thika last month, Kenya Methodist University in Meru will receive accreditation papers later this month.

Housing
New houses are on sale at the under-construction Balozi Estate off Muthaiga road. The 4 bedroom houses are going for 6.5 million.

Buy a minibus
Easy coach is disposing of 14 buses (10 38-seat Mitsubishi’s and 4 25-seat Isuzu’s). More details from easycoash@wananchi.com

Sleeping giants want you back
Telkom is waiving charges in a bid to get customers to reconnect their disconnected/out of service telephone lines. Reconnection and other charges from when the line was disconnected have been waived and the company will arrange repayment plans to settle the old bills.
Posta reminds Kenyans that it has over 80,000 mail boxes available at post offices around the country at an annual cost of 1,300 shillings for individuals and 4,000 for corporations.

Tagged

So I have been tagged by Kipepeo

Rules:
1. Post six weird facts/habits about yourself.
2. These cannot be used against you later on.
3. At the bottom name the six people you will tag next. Leave them a comment to let them know they’ve been tagged and to read your blog.

1. My family think I was a Muslim mostly because I don’t eat pork. This all comes from the fact that I have good friends from West Africa from College who were devout Muslims and I even went to the million-man march.

2. Despite this, I eat with my left hand. I am right handed, but I have always eaten with left hand. This is awkward when I sit with friends to eat Ethiopian food, coastal, nyama choma or other communal meals from same dish. So I sometimes wig out by ordering food that require an individual plate & spoon or don’t eat at all.

3. I hate chewing gum. Can’t stand it - and the sight of gum put on/under furniture makes me nauseous to the point of changing seats or tables. If someone at the table is chewing gum I will edge away from them the way people with allergies shy away from cigarette smokers. I support Singapore, which has banned this vice in the country.

4. I read everywhere and always carry a book/web article or newspaper to read – bank queues, in matatu, in bar. But I stopped reading while walking in town after a close call, when my bag was almost snatched by a parking boy. I looked up just in time, stared him down, and he walked past me and went and snatched a window cover from a parked car instead.

5 Am a plane spotter and airport junkie, I know all large commercial aircraft (non Russian) and get a rush from being at JKIA and identifying all the aircraft and airlines as they come in to land or taxi to take off. I will escort anyone to the airport if they put Tusker on the table.

6. I can’t count to six.

Am a bit late to the tag and can’t think of anyone. So if I have met you or you have commented here in the last week, please consider yourself tagged.

Stanchart goes I-banking in Africa

Standard Chartered PLC will buy 25% of First Africa Group later this year. (AFX)

Hidden Tax (Fuel) Increase

One of the bold declarations by Finance Minister Amos Kimunya in his maiden budget speech was a proposal do away with road licenses, and the tax from these would now be recovered by an immediate 3 shilling increase in the price of fuel.

The move was probably targeted at rural areas where cars and farm vehicles without licenses or insurance are driven on remote roads and the only way the government can tax them is though taxing their fuel.

But in urban areas it is a different story where price of fuel has already jumped by between 3 and 4 shillings at the pump e.g. from 76 to 80 shillings per litre. My scenario: Earlier this year I paid for my car road license, which cost 2,500 and it, is unlikely that we motorists will be refunded. My fuel bill last month was 5,020 shillings ($70). The new increase of 4 shillings a litre translates to about a 5% increase and my fuel bill will rise to about 5,284. Over the next 12 months, I will pay 3,420 more – which is 1,000 shillings (36%) more than the license fee I paid in January.

Also I drive a popular small engine 1,600 cc car and my daily commute to work is a very low 3 kilometres that takes about of 15 minutes. For other transporters and commuters the cost will be much greater and we have been told severally that oil price increase in the Middle East translate into higher local fuel & transport costs and inflation across all sectors. Now the government has straight up added 5% to the petrol and diesel cost from which it already extracts a healthy percentage.

The proposal should be rescinded because it will not stimulate growth in the economy. I don’t expect the proposal to be sustained because the police, KRA, and insurance companies are likely to complain about the new directive. By looking at the documentation required to renew a license, it is likely that some motorists will stop paying insurance, while others will find it easier to evade taxes on cars in Mombasa or in transit through Kenya. Also the police (who are sometime a nuisance) will have no reason to inspect suspicious (non-Artur) vehicles on the road - which may ultimately result in higher crime.

Business Briefs

Unga profit warning
The company has issued a profit warning notifying the public that it’s after tax profit for the year ended (in June 06) will be less than 40m shillings. Six months ago they had reported half year profits of 73m, but these have been eaten away by the collapse of (debtor) Uchumi, power rationing in Uganda, and the bird flu scare.

Hello Juba
Something I learnt during the first world cup weekend - there is a Kengeles Restaurant in Juba, S. Sudan already. Also a KCB branch.

Ciao



One story the investor-mercenary-brother duo told checks out - they were involved in the construction of a low cost housing scheme in Nairobi.

Jobs & Other Opportunities (June 16)

Most of these appear in the Friday Nation.

Jobs
APA Insurance
- Head of ICT
- Internal auditor
Apply through KPMG at esd@kpmg.co.ke by 30 June.

Coca cola: Vacancies at Coast Bottlers, Mombasa including sales manager, sales supervisors, representatives, and technical jobs at apply to the HRM at careers@coastbottlers.co.ke by 30 June.

Communications Commission of Kenya
- manager/policy & economic regulation
- manager/project monitoring & evaluation
- senior legal officer
- assistant compliance & enforcement officer
- officer/consumption protection & service quality (2)
Deadline is July 14.

Air mechanics at Emirates to be based in Dubai and work in line maintenance, base maintenance, cabin maintenance and overhaul workshops - earning tax free salaries.

Housing Finance Company of Kenya
- product development manager
- information systems auditor
Apply to human.resources@housing.co.ke by June 23.

Kencall is looking to hire over 200 telesales executives. Applicant to enter details online at their web site then go for interviews after. The company is also hiring a marketing & business development manager, senior accountant, and 8 financial reporting analysts.

NIC Bank
- branch manager
- internal audit manager
- communications & corporate affairs manager
Apply to the head of human resources p o box 44599-00100 by 30 June.

Teachers at Oshwal Academy. Apply to oerb@visaoshwal.org by June 22.

Marketing & communications manager at Pricewaterhousecoopers. Apply to Recruitment.ke@ke.pwc.com by July 3.

Several jobs at Safal Limited (parent company of Mabati Rolling Mills and Insteel including finance manager, senior accountant, internal auditor, internal audit manager technical marketing executives (5) export executive, production supervisors (2), security officer, maintenance engineer. Apply through Hawkins Associates Nairobi.

Project Manager at UNDP Somalia Details at http://jobs.undp.org/ and deadline is June 19.

World Bank - Sudan
- program assistant
- team assistant
Deadline is June 30.

Scholarships
(2) Rhodes scholarships for Kenyans to study at Oxford University beginning in October 2007. Detail from British council or rhodesksec@wananchi.com and deadline is 15 September.

Free Money
The Kenya Revenue Authority will pay you if you snitch on a tax cheat. For information leading to the identification of an undisclosed tax, reward is 1% up to 100,000 shillings and they will pay volunteers 3% of the collected undisclosed tax. Send you submissions to Firimbi@kra.go.ke or whistleblower@kra.go.ke.

Budget 2006/07

To gauge the importance of the budget speech given today, it is useful to look at 2005/06 budget speech from last year. Minister Kimunya gave his first budget speech as Minister, which was a progression from his predecessor, Minister Mwiraria who resigned at the beginning of the year.

He has several popular positions: He will have correctly read the mood of the country leading to the 2007 elections, the resentment the public has for ever fattening MP allowance packages, and also noticed the Rwanda example in cutting back on government limousines, while at the same time having to keep the government moving on taxes, without factoring in donor support. Again, he depends on Parliament to pass several bills to enable the government to meet its goals.

Economy
Has grown for 3 straight years, hitting 5.8% with 460,000 new jobs created last year. That statement by the Minister produced groans from MP’s within the first 2 minutes of his speech prompting Speaker Kaparo to ask them to wait and comment on the truth of that statement later. The Minister however noted that the rich - poor gap was unacceptably high. He called on the private sector to lead economic growth while admitting that the government had gotten embroiled in some scandals, from which they had learnt their lesson.
Outlook GDP to increase by 5.8%
Jobs 1.4m new jobs created over the last 3 years
Inflation
- T-bill rates stable at 8 to 8.5%, even though the trade deficit has widened
- He expects inflation to decline to 5% by year end from 13% in May
- Government will stick to the 29.5 billion shilling borrowing limit
- Increase money supply by 10% by next June
Alleviate poverty: Budget allocation to health, agriculture, rural development, education and infrastructure sectors combined increased from 60.7 to 62.7% and to 66.5% next year.
Taxes, not Donors: As with Mwiraria, he is not factoring in donor funding. Therefore it’s importance to maintain revenue growth (i.e. though taxation). He also thanked taxpayers for their contributions several times during his speech.

Investors
Bonds and the NSE
- Country will fund infrastructure projects through bonds
- The government will encourage parstatals with good cash flows to develop bonds to support their funding requirements
- Asset backed securities for infrastructure will be exempt from income tax
- All listing costs on the NSE to be tax deductible
- Exempted interest income for bonds for infrastructure and social services with at least 3 years maturity
- Also tax deduction to support the creation of ESOP’s. (Employees ownership programs)
- Dividends unclaimed after 7 years will be transferred from companies back to the CMA investor compensation fund – from where investors can claim it if/when they ever resurface

Real Estate Property owners took a major hit with the government now re-introducing capital gains tax on the transfer of property. However generous deductions were put back for 1st time home owners and mortgage buyers.

Member of Parliamnent
Happy
- CDF up by 40% from 7.2b to 10 billion per year. This is an increase from 2.5 to 3% of national collection (but much less than the 7.5% MP’s are demanding)
- LATF will increase and each constituency will have about 40 – 50m each year with about 11m for roads (and MP’s are in charge of this). They will also get extra funds for bursaries and police stations.
- The minister advised MP’s to use the funds carefully as it will affect how they will be judged by their constituents in the 2007 elections
- Funding for political parties allowed
Sad
Their salary and entertainment allowances in addition to that of other constitutional office holders will now be taxed.

Government spending
- 461b budgeted (26% of GDP) for the year and Kimunya called on officers to use scarce resources efficiently
- 2/3 of the wage bill goes to health and education
Monster trucks banned
- New transport policy for public service goes into effect on July 1 which will reduce cars pools expect for key sectors such as police and health
- Ministers, their assistant and permanent secretaries will have just 1 official car
- No use of official vehicles to and from duty (wheelbarrow maybe?)
- The Government will dispose of extra vehicles by 30 September
- No provision for purchase of motor vehicles this year – and constitutional offices must first get approval from treasury

Banking/financial sector
- Government intends to reduce discrimination in the sector by amending the banking act. This will allow for institutions like Muslim banks which will lower the cost of banking
- He will create an independent insurance authority
- He will also create an independent authority for micro finance institutions
- The central bank of Kenya (CBK) will have an independent chairman – and the governor (who currently chairs the board) will be an ‘MD’ who is answerable to board
- Lease financing: Generous waivers wer given for this, but still subject to withholding tax

Privatization
In 2006 - 07 the government will;
- Restructure and privatize Telkom and NBK
- Sell government shareholding in Mumias and Kenya Re
- License a second national telephone operator and other gateway licensees
- Concession the Mombasa port

Corruption
- Government will hire more lawyers
- National anti-corruption plan to be launched next month with measurable indicators
- Findings and recommendations on Anglo Leasing and Goldenberg investigations to be implemented

Improve Business
- KPA, KRA, KBS and Police will now work 24 hours at the port of Mombasa to ease congestion
- KPA, KRA, KBS license costs to be rationalised
- Of the existing 1,300 business licences, 150 to be eliminated and 700 simplified.

Taxation
- reduced VAT burden – any business with a turnover of less than 5 million is exempt from VAT registration
- monthly allocation for VAT refunds will go up by 46% to 900m which should cover legitimate refunds
- priority will be given to businesses who are electronic tax register (ETR) compliant. Also companies not ETR compliant after December 31 will not be allowed to recover the cost of installation from VAT and will have to foot the bill for ETR
- He will curb fake refund claim by penalising a person twice the fraudulent claim lodged and a 3 year prison term
- Motorists: No more road licenses for vehicles. This tax will be recovered from fuel charges effective tonight

Infrastructure
- Quarterly reports will be given to the public on roads progress
- 3 new roads bodies created
- Set standards for road construction and contractors who don’t meet this will be blacklisted

Sin Taxes
- All up are tax up on portable spirits, excise tax on wines and spirits and excise tax on malt beer However Excise tax removed on non malt beers i.e. Senator which will cost as little as a soda.
- Cigarettes tax up by 10%

Insurance
- Insurance tax down
- Limit to be set for accident compensation
- Brokers to remit cash immediately to insurance companies

Others
Kenyans Emigrants will be allowed to collect their full retirement benefits when they leave the country. The rest of us have to wait till 55 years to access employer’s contribution to our pension.
- bread zero rated wheat flour which should lower the price of bread
- mothers zero rated diapers napkins feeding bottles
- bicycles zero duty on unassembled bicycle imported by local assemblers. Also reduced duty on assembled ones (and motorbikes ) from 25% to 10%
- solar No import duty on solar equipment (including batteries). Also removed duty on energy saving bulbs
- computers Removed VAT on computers, parts and accessories.
- agriculture Zero rated tractor tyres and parts, transportation of agricultural produce. Also Sugar levy burden will be borne by growers not consumers after January 1. This will make cane growers more vigilant on the use of the funds.
- Youth Increased allocation for the youth ministry, polytechnic and the NYS. Also 1 youth polytechnic will be set up in each constituency
- Entertainers Kenyan ‘artistes’ in sports, music, and drama are exempted from paying VAT.

Pesa Point web site

Pesa Point are working on a web site that finally shows where one can find their ever increasing ATM locations. Still a beta version before being transferred to the official site.

Uchumi: more good money after bad

Yesterday a nearby Uchumi opened to enable customers to buy up dairy products at a 25% discount before the produce spoilt. I bought some mince meat and butter from the roped-off deli section that also included ice cream, eggs, cheese, and frozen chicken. Uchumi has not yet reached the 50% 70% and 90% going out of business sales discount stage, but will it ever get there?

Looking Back
Royal Investment Management Ltd was engaged to advise the Uchumi board on a fund-raising strategy in 2005. In an October 2005 issue of Business Post magazine, the firm’s MD Mr Hardy Pemhiwa wrote that "the initial plan presented to the board was for a strategic equity partner (SEP) to bring in management and capital. However the plan was changed after they realised that all the SEP’s wanted to buy Uchumi cheaply, turn it around and reap huge capital gains. SEP’s had even suggested de-listing the company (which has now happened) and re-list it after a turnaround which would have (unfortunately) hurt Uchumi’s loyal but minority shareholders. So the SEP idea was dropped in favour of a rights issue where relatively unsophisticated, Kenyan investors (myself included) re-capitalised the company which collapsed only seven months later.

What next?
There are stories of South African supermarket executives in town with plans to pick and pay for the remnants of Uchumi. But plans to turn round the company quickly are already being thwarted by aggressive suppliers who are silently supported by frustrated shareholders. You would be hard pressed to find a judge who does not have an interest in Uchumi shares or future – and judges are not sympathetic to Bank’s in many receivership and loan disputes since they have also probably had bad personal experiences themselves with Banks.

The June 19 deadline for the sale of Uchumi’s stores is likely to be pushed far into the future because once bank cases go to court they can take years to resolve. Much money will be spent in legal bills to unravel. Meanwhile the parallel investigations are likely to draw in suits against/or proposals for action by the auditors, parliamentary committees, CMA & NSE, maybe KACA and even the government - any of which may take years to implement.

Expects some fireworks at Uchumi lead banker KCB’s AGM on Friday June 16.

Money transfer gets cheaper

Western Union has announced generous price reductions (a.k.a. ”crushed prices”) in the cost money transfer within Kenya and East Africa. E.g. where it used to cost 2,250 to send 20,000 shillings and 3,650 to send 50,000 shillings within Kenya, it will now cost 700 and 1,800 respectively, meaning price reductions of between 50 and 70%.

A day in Parliament

Cross Posted at Mzalendo

Bank Hangman Part 1

Get into an anonymous taxi car and quietly drive towards a company’s office on Mombasa Road. You are all quiet in the car as you contemplate the mission you’ve been assigned this morning. Your weapon is contained in a new brown envelope that occupies the middle back seat of the car. It would be disastrous to loose this weapon - blown away or picked through the open window by a street thief, or to have it damaged by coffee stains or tears.

Finally you get there and sit for a minute to calm down the nerves. No need to go over your game plan again as you have discussed it several times over for days.

Doors open and team A calmly steps out, leaving reserve team B in the car. Team C and Team D are also on standby.

You stroll in to the company just before lunch time and tell the bored secretary you’re her to see Mr. Pape Badeta. And she casually waves us in to his glass office.

Pape rises to greet us; “Hi, it’s been a long time. Normally you call before you come here, you want to see the new product samples?”
“Yes, we’re fine”
On to business
“We'd like you to accept this on behalf of the company”
Pape opens the sealed envelope, and read the letter
"Oh dear"
Silence
“You’re recalling the loan?”
“Yes, can you pay the full 10 million shillings today?”
“I can’t believe it”
“I’m sorry”
“I talked to your MD last week about the company’s problems and he never said anything about this”
“Sorry, management has decided”
Silence
“Can you pay the 10 million today?”
“No! From where? you know my financial situation!”
“Ok thanks, we’ll leave now, sorry again”
Exit Building
Return shortly with team B from the car outside.
“Mr Badeta?”
“Yes” (Still in shock looking at letter on his desk)
“My name is Shilling Sing. The bank has recalled its’ loan and since you are unable to pay, they have also decided to put the company under receivership and appointed me as receiver manager. Here is my instruction letter; you are relieved of your duties. Please hand over the office keys and leave. I am in charge from now.”

More Uchumi fallout

According to the East African, the closure of Uchumi was triggered by a standoff among the board of directors abou the company's plan to raise another 500 million shillings ($7 million) on top of the 1.2 billion raised last year in the rights issue.

The East African also highlights dumping of shares on the day before Uchumi closed. In the last few months, certain investors offered blocks of shares at the NSE - 11.9 million (December 27), 6.2 m (December 29) and 5.2 m shares in mid-April.

Kirubi re-appears
The former Chairman and largest shareholder for many years (till 2004), Chris Kirubi, appeared on KISS FM’s political show Crossifre on Sunday evening. Despite the twin controversial events of Saturday - launch of Narc-Kenya and the anointing of William Ruto as a Kalenjiin elder, the entire hour was spent discussing the closure of Uchumi with Kirubi on the spot as he defended his tenure and role at the company.

Some revelations:
- Kirubi stated that the 2005 rights issue was criminal - and that the public should never have been allowed to inject 1.2 billion shillings into Uchumi give it’s precarious situation.
- The management misled the board with projections and information about the company’s expansion and performance. The board also fired MD Thairu for these reasons.
- Kirubi felt that the company did not have the expertise to manage modern supermarkets which was why he made arrangements to have a South African partnership.
- Senior managers robbed the company for many years.
- Kirubi defended his supplier role at the company, saying he did business for many years before he became chairman and he saw no reason for this to stop.
- The Minister of Trade is playing politics, by threatening to investigate of Uchumi – since the Ministry PS has always been a member of the board of Uchumi and was privy to all board matters.
- He said having government as a shareholder in Uchumi was detrimental and limited the company from being competitive. Government has no business being in business.
- He also read out portions of his 2004 resignation letter as Chairman, which he said was copied to all directors, regulatory bodies and the Government warning of an impending collapse of Uchumi.

My Uchumi loss

My shares portfolio has just lost about 10,000 shillings in the form of 500 Uchumi shares. I am comfortable with my loss, because I understood the risks, but I feel bad for others who bought Uchumi shares on my advice, as well as for others who borrowed money to buy Uchumi rights.

Mine is especially painful because I did not buy during the rights issue, but after when it appeared that the re-capitalised company had turned round and was now on the path to recovery. I bought at about 20/=, based largely on the persuasion of the new management and one investment bank report that predicted/priced Uchumi shares at about 33 shillings.

What next?
Investors are looking to the compensation fund for redress, but I don’t see anything coming out of it given that enough information was made available to the public about Uchumi’s precarious position. And to make payment in this case will undermine the entire premise of risk taking on the NSE – Will investors start suing when share prices drop in future?

At the company’s last AGM, long time shareholders turned their wrath on the auditors when they were told that the company’s previous management were basically off the hook for the company’s record losses.

Look Back
All fingers are now pointing to the now discredited expansion strategy of the company. Take a look back at the rosy beginnings of the strategy (in this 2001 interview with the then new MD of Uchumi), which was immediately challenged by a sceptical reader.

Odd point
I have friends who bought Uchumi rights and have spent the last two months trying to cash in their profits at 16, 20, 15 shillings etc. - they hade no warning, premonitions, or tips about Uchumi’s demise, - they just wanted to invest the money elsewhere. At first they were told that Kengen IPO made it difficult for other shares to be traded, and then they were told nothing. Maybe their broker was incompetent, maybe they were not aggressive enough with their broker though they were certainly persistent as they called him almost every other day up till Wednesday May 31 to ask how, with Uchumi trading almost a million shares a day no one bought their shares!

Bank Briefs

Bank Rate
The Central Bank OF Kenya launched a bank rate of 9.75% to the benchmark for all bank lending, replacing the 91 day treasury bill.

Bank of The Year
Next Wednesday, Market Intelligence will host a gala night marking banking excellence awards for 2006. My pick for bank of the year likely to be KCB given their profitable year, share performance, and expansion into investment and regional banking. Their only recent black eye is the bankruptcy at Uchumi whose business KCB had jealously kept from other banks.

Bank-less at Uchumi
Stanbic Bank is a big loser in the Uchumi shutdown, given that they had set up several in-store branches and ATM’s at the newer Uchumi stores. Other in-store partner who have now lost out at Uchumi include Easy Coach, Steers and White Rose

Advertising Swipe
In a new advertisement that escalates the flat fee competion, Standard Chartered Bank takes a swipe at Barclays claiming their all-in-one garden account is better than any Barclays bouquet account.

Pesa Point everywhere
Pesa Point has crossed the one hundred ATM mark – but I wish they would set up a website mapping their new ATM locations for better service. Otherwise you just keep bumping into them in odd places like Nandi Hills town or right below Florida nightclub in Nairobi

Name Change
Industrial Development Bank is now IDB Capital.

KLSA Pannell Kerr Forster is now PFK Kenya.


I-bank jobs
IPO period good time to get an internship or temporary positions at stock broker, investment bank or financial institution as they volumes of IPO paperwork can easily overwhelm some office staff who then have to hire outside help.

Bus company crisis

After Uchumi, the next urban icon likely to go down in the face of faster, fitter, and smarter competition may not be a surprise.

When Citi Hoppa shuttles first appeared on the Nairobi scene, they were outnumbered about 10 to 1 by big blue Bustrack buses. Now it’s the other way round with the ever-expanding fleet of green citi hoppa's outnumbering the reduced fleet of road-worthy bustrack buses still on the road by about the same margin.

And like Naukmatt over Uchumi, Citi hoppa's aggressive drivers seem to delight in overtaking their creaking, struggling, blue-bus competition (which also break down often) especially as they climb hills and race to pick up passengers.

Bustrack/KBS, which seem to have withstood and adapted to the introduction of Matatu’s to the city, have not been able to adjust to the Citi Hoppa onslaught.

June 2 Jobs

Several leadership positions at the African Development bank. Details here and deadline is June 9.

HR Manager at AIG Kenya insurance company. Apply to hr-kenya@aig.com by 15 June.

Key account manager at East African Cables. Apply to bkowitti@eacables.com by 14 June.

Group 4 Securicor
- ATM operations manager
- ATM reconciliation supervisor
- ATM reconciliation clerks (2)
- Credit controller
Apply to jobs@ke.g4s.com by June 12

Senior Scientist – Livestock Systems Evolution at ILRI. Details here and deadline is June 30.

Evaluation consultant at Japanese International Cooperation Agency (JICA). Apply to eyrecruit@ke.ey.com by June 16.

Head of market risk at Kenya Commercial Bank. apply through Deloitte at esd@deloitte.co.ke by June 16

From Kenyan Pundit: Safaricom is conducting recruitment interviews for Kenyan professional overseas.

UAP Insurance
- senior underwriter
- underwriter
- legal assistant
Apply to recruit@adeptsystems.co.ke by 16 June.