Sunday, July 29, 2007

Economic Matrix


watch me inflate my salary while dodging taxes


This week has been spent learning the ropes of learning new core banking system. We are in a test module, posting transactions and simulating scenarios, testing what/if limits of the system. So I can award myself a seven digit salary increase, borrow ten times that amount, draw cheques, and even transfer funds from someone else's account to repay my loan, all at the click of a button - a real Cool world.

This week our members of parliament gave us another bile inducing moment with yet another attempt to raise their salaries. These are people who live in an economic matrix where they believe that ordinary laws do not apply to them. They raise their own salaries (which other job can claim that?), pay a pittance in taxes, and are able to propose and play with myriad bills – that all concern other peoples money. From day one, when they blackmailed arm-twisted the then Finance Minister (2003) to increase their salaries they have been on a tear as the rest of the country watches. Now there's a proposal to increased their number either through more constituencies or women seats. I'd like to see more women parliamentarians, but I believe i can already name most of the women MP's who will sit in parliament next year – just add up all the defeated candidates and past women MP's, and activists and you get an idea of the next group to get paid by the exchequer. As much as this parliament has accomplished - sexual offenses bill, CDF, education, health, anti-corruption etc. - this parliament will be remembered for salary increases and lack of quorum.

As a citizen, I applaud the economic gains made, but as a taxpayer I lament the waste that the increased tax collection has not been prudently applied. We don't need more ministers or MP's who live an economic matrix of their own.

Anyway, on to other news


Barclays
- has opened 32 branches since it's change of direction last year
- You can pay for Kenya Re and other shares with Barclays Visa card at Sterling, Suntra, CFC, Ashbu and Discount stockbrokers.
- Barclays stretching personal loan repayments from 1 year to 5 years. This way, they will earn more money interest income while postponing some potentially bad debts (in duplum era) after co-op bank did the same earlier this year.

- CFC has an arrangement with postal corporation of Kenya to enable people to buy shares at post offices throughout Kenya. This is the third major attempt to extend a stockbroker's reach after Suntra/Postbank and K-Rep/Ngenye Kariuki partnerships.

Equity bank to take up 20% of housing finance. Spruce up on the banking act, as this is not a popular activity with the Central bank i.e. banks owning shares in other banks. Still, it's amazing how many records Equity continues to break. Last year, they attained the billion shilling profit mark; this year, they achieved that in six months

ICDCI stock to watch according to bloggers - Fintrade Capital and Smart Biz Africa

National bank: Having sorted out its non performing debt problem, will it become a target for Stanbic again, after CFC merger is done? Also Equity is a long shot

NIC: In the week it was dropped from the 20 share index (in favor of ICDCI), it was also the best performing stock after announcing a rights issue and bonus share proposal . This former Barclays subsidiary has been the leading provider of asset finance to individuals and corporations in Kenya.

Other

Kenya Airways receives the first Embraer 170 LR(two more to follow) plane which will serve Zanzibar, Mombasa and Dar es Salaam routes.

Nation media group has had another record profit half year and an interim dividend of 3/= to be paid. They launched the business daily a few months ago, but could they be about to launch yet another newspaper in September?

It may be called the Daily Star, and will come a few months after Kiss FM's Nairobi Star. Both Business daily and the Nairobi Star (where's the John Githongo column and news website?)have faded somewhat from public presence of mind since their high profile launches. B-Daily is a great read online, and should remain so.

The Minister of Finance talks about having virtual meeting to cut costs – perhaps like Vodafone which has an AGM page with webcast and voting items online

Award opportunity
opportunity for 5 dynamic African companies from either Burundi Rwanda Tanzania Uganda or Kenya to earn up to $50,000.

11 comments:

coldtusker said...

Those MPs... sigh... well, I am standing for parliament... you know... can't beat the, then join them???

BTW, the 5-year loan term actually HURTS a bank when they apply the in-duplum rule... which makes no sense in an economy with high interest rates, high default rates, pathetic judicial system...

It remains a political "law" that shifts costs from the "bad borrower" to the "good borrower"

Anonymous said...

Githongo balked at sharing column space with kamlesh pattni

much egg on quarcoo's face!

MainaT said...

I actually read somewhere that our budget deficit for 07/08 is the highest in a long while. The funny thing about that MP very golden goodbye is that it was rejected last yr.
CT-Being an MP in Kenbya has got to be the one of the best jobs in the world. You do jack and then you get to set your own salary which you base on how much you need to keep all your concubines happy.

propaganda said...

The 'new paper' from Nation: Weekly Advertiser goes daily in September. Probably still a free paper model.

inexess said...

Hey Banks, changing the core banking system huh? Thats what i train on.... U should see my account LOL

Dropmyload said...

This is why I feel ICDCI is not such a good investment. However,if they re-arrange their investments,we may see some future.

ICDCI Investments:

Beverage 42%

This is an industry under serious threat. I have spoken to many sales execs,and they are constantly crying about how consumers today would rather buy scratchcards then drink fizzy drinks. I think this is also evident with the recent massive ad campaigns by Coke and Fanta (bamboocha). With 42% of investments so concentrated,I see trouble ahead.


Property 5%

Great Investment,but only 5% won't help too much.

Industrial 16%

Mixed bag here,given the strong competition from imports. Perhaps firms like Eveready should be offloaded,given globally China is king in that industry. Otehrs like Matehr and Platt and NAs should be ok,but we can never know as they don't publish results.


Financial/Services 21%

This is made up of AON Minet and UAP. Both solid and profitable. Good investment,but less than a quarter of full portfolio.


Public Equity

Go NSE!!!!!! But,what percentage do they have? How much stuck in Uchumi?

Fixed Income Securities 5%

Safe and secure,and decent yields.


Transport

This is made up of RVR and GM. RVR is a dud! I just cannot see that firm breaking even in the enxt few years. We ahve seen transport firms gearing up fleets,and those savvy investors would not be buying if they were expecting competition from RVR. Read also this colum from Bankelele...not such a rosy picture.

GM,however,should be ok,but again,globally the company is broke! That should put pressure on the local subsidiary to siphon funds out.

Overall,with 50% of investments in industires under serious threat,I just don't see why anyone would enter ICDCI here.

My take is that this share is a sell.

Tweety said...

Hey you know Barclays hasn't quite been opening new branches, just reopening the ones they'd shut down when they were downsizing a few years ago.

Great blog!

Kip said...

Your posts are always great.Keep it up!
As for ICDCI i still think its is a good buy and anyone doubting it are allowed to have their reservations.
With M.P plotting to award themselves hefty salaries, in a country where 56% of the population is wallowing in abject pocerty with nagging family obligations is unforgivable.
As you might not be aware even staff of the National assembly are also getting pay hikes and are provided for in its Medium Term Expenditure Framework for 2007/2008!!!!
With Barclays going back the old road they so dreaded with closure of several branches years ago is a realization that even the low and Medium class populace can drive the company to such heights of development as seen with Equity. Thumbs up Mr Banks for your work.

bankelele said...

coldtusker: what more can you say about MP's? Best job group in the world, tought to get there, but oh the perks - a 5 year CEO with no performance contract or targets. Good luck.
- banks figure, that extending the loan, postpones the in duplum clock, giving them more time to recover bad loans. BTW best results ae achieved OUTSIDE the court system i.e. negotiated settlement between bank and borrower

Anon: True? good to know

MainaT: Yes, it's the highest projected deficit in a while, but it probably won't happen beacause we don't have the capacity to absorb all the development funds

propaganda: I don't think it will be a free paper, do you? (low circulation) Weekly advertiser has neglible impact IMHO compared to all the advertising in the Daily Nation

inexess: I'm a matrix millionaire with no debt

Dropmyload: Thanks for the perspective, and good point about beverages. Coke have tried to break into the water (dasani) and juice segments (five alive). Are beer, coffee, or spirits next?
BTW ICDCI walked out of Uchumi, & I wonder if they are still in Eveready

Tweety: Applaud Barclays for biting the bullet and seeking to right past strategic mistakes

Kip: Thanks. Looking at ICDCI and Kenya Re from next month. As for parliament, a Nationcolmnist pointed out that the Parliamentary Service Commision needs to be revised as it is the engine of parliamentary greed

toiyoi said...

MPS and Salaries
Honesty, fellas
-i am not saying what they are doing is good, but who among you would not do exactly the same?
-if we have no morals to guide us, we would ALL make ALL laws that benefitted us at the expense of others. Period.

On the BarclayCard MasterCard
-can i still get this card if i am outside the country?

Anonymous said...

there is a lot of talk about equity .. anyway my main thing is that the best way to judge a company is thru crisis management. Equity in this incarnation has not had to experience and economic downturn so its business model is not tasted against against recession ...at some point we w ill have an economic downturn so then and only then will we know that equity is for real. barclays and standard et all had todo what they had to do during in the 90's

so im wiating im buying euity but hedging my bets in barclays. btw i think euity stole K-reps model and ran with it

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