Bank Sold

Name this bank?
The deal of the year brings together Stanbic and CFC Banks merge together and is expected to be finalized next month with only Central bank and CMA approval left.

The combined, but yet to be named, bank will have assets of over 55 billion shillings ($800 million), deposits of 43 billion, loans of 30 billion and a pre tax profit as June 2007 of 934 million ($14 million)

Mzalendo bank account
Commenting on the report on bank charges released this week, The Governor of the Central Bank called for a Mzalendo bank account which would probably be akin to mzansi from South Africa which is a low cost account at several banks (with wide branch networks – e.g. KCB, Equity, Postbank) that has similar features and charges at all the banks

banking is not cheap

A recent report released on the banking sector shoed that banking not cheap is not cheap for most account holders .

This should not be a surprise to the public who read about the bank profits or the authorities who are sent all charges and tariffs by the banks each month

There’s already been grumbling from research firms ho say a local firm could have carried out the survey and some banks who say the report is inaccurate.

Earlier, some advertised banking is unexpectedly not as cheap

Bank for sale

The Government intends to sell a portion of Development Bank of Kenya (DBK) to a strategic investor.

The goverment, through ICDC owns 90% of the Bank which was almost merged with Housing Finance in 2005.

DBK is Kenya's 34th largest bank with assets of Kshs. 3.9 billion ($55 million)

Soaring Monday: Kenya Re opens above the FT Ghost

We are almost at the end of the month of August which Kenyans consider to be jinxed. So far national tragedies have included the annual floods in Budalangi and a village in Kakamega that was destroyed in mud slides, while Nairobi has had the occasional tremors continue since July.

Anyway;

lessons learnt from FT? The statutory manager of Francis Thuo Stockbrokers will begin paying off its clients (who had filed loss claims) from Monday 27th to September 7 – using money paid by new stockbroker Renaissance Capital.

This should not be the end of Francis Thuo and a comprehensive report and sanctions of the company's management needs to happen. More so because, illegal selling of shares by brokers without permission of some unfortunate shareholders is still going on. Francis Thuo was not a robot selling shares. It had managers and staff who wilfully robbed shareholders of their investment. Has no investor reported to KACC reported them to KACA (even anonymously)? What’s more shocking is that the NSE wants to reward/gift the collapsed stockbroker with more money!

Kenya Reaffirms the IPO dreams of investors by almost doubling to in price on Day 1 after the IPO. The share price reached 18 shillings before settling at 15 – but the allocation to retail investors was measly 12%

Nairobi Wifi II
One drawback to finding a great hotspot is that you have to lug around a $500 laptop to/from parked cars in an anonymous bag – which you then wrap around your chair leg so it does not disappear. But an even worse situation is to arrive there and find that for some reason the network is offline and they can’t fix it till the next day.

Still it’s better than paying $11 an hour for internet access at a hotel, which is even more expensive than before. Ultimately the goal is to have home internet access which is a whole other story.

Here’s Safaricom ISP - in form of their new Bamba net service. It’s a plug & play USB modem which costs 6,000 shillings to connect and 2,000 ($28) per month for unlimited net usage up to 700MB then 10 per MB thereafter – and is available throughout Kenya

Parliament to scrutinize privatization: the Finance Minister has been ordered to gazette a privatization law passed by parliament. This will bring such measure under scrutiny of parliament like the Safaricom IPO, and (witchin the banking sector) - moves to privatize Consolidated and National bank, or anytime the NSSF wants to divest in shares.

KCB back to UK
KCB to reopen London branch to serve Kenyans living abroad.
http://mjengakenya.blogspot.com/2007/08/kcb-back-in-london.html

KQ soars as Uchumi shrinks
Kenya Airways was ranked 99 among world airlines in terms of operations. And in the first quarter (April to June), the company results showed that with increased capacity (deployment of larger aircraft), they were able to carry 640,128 passengers (9% higher than 2006), but aircraft were less full owing to increased competition.

Meanwhile Uchumi has withdrawn franchise rights to Tesco who have closed their Uchumi branded branches (including the one at railways). from a KTN report

Recent grads can't be MP's.
Beacaus the higher education loans board (HELB) wants them to clear their loan dues before they can run for public office including Parliament.

Jobs on Offer
most from the daily papers last week

Anti-illicit trade intelligence analyst at British American Tobacco. D/L is 7/9

Central bank of Kenya: head of procurement, senior economist(s), manager forex bureaus, financial analyst, lawyer(s), executive director – Kenya school of monetary studies. Apply to the director of HR P O Box 60000-00200 Nairobi by 6/9

Constituency development fund: account managers for 41 constituencies including Makadara, Kamukunji, Starehe, Kasarani, Embakasi, Langata, Likoni, Mvita, Limuru, and Eldoret south . women encouraged to apply and the deadline for applications to cdf@wananchi.com is 21/9

East African Breweries: Buyer, Group Head compliance, indirect tax manager, group tax manager, direct tax manager, finance director, head of supply finance (Uganda) business performance implementation manager financial accountant(inter comp account), head of group procurement, procurement controller cost accountant advertising & promotion analyst service delivery manager

Principal legal officer at the east African development bank. d/l is 7/9

Branch managers at Family Bank. d/l is 5/9

HLB ashvir : audit manager, audit seniors (Mombasa). Apply to audit@hlbashvir.com by7/9

Private sector development specialist at the IFC. d/l is 10/9

Kenya airports authority: auditor operations, auditor finance, auditor information systems. Apply through Hawkins associates

Kenya commercial bank: manager in non-electronic fraud, and investigator - forensic services. Apply to recruitment@kcb.co.ke by 7/9

Macroeconomic and financial management institute of eastern and southern Africa (Zimbabwe): director debt management program, program officer – external markets & financial markets development, program officer – financial sector supervision. Apply to capacity@mefmi.org.

Chief executive officer at the Privatization Commission of Kenya to be created. apply through Deloitte at esd@deloitte.co.ke by 6/9

Website editor/content coordinator at UNDP Somalia (Westlands office). Apply to registry.so@undp.org by 7/9

Mid week mix

Fractions of Kenya Re
It appears retail investors will get about 12% of the share that they applied for – leaving a minimum refund of about almost Kshs 17,000 (of the Kshs 19,000) that they applied for. So on to step two of my plan my plan and wait for the shares to open within a reasonable mark up of their IPO price. This is also a reminder to do the same in case of a Safaricom IPO unless they offer a trillion shares

Salvation for investors
So customers of Francis Thuo will get paid from the windfall ($3.5 million) payment by new stockbroker Renaissance Capital. But this should in no way let other brokers and authorities off the hook as they had promised a comprehensive report on what went wrong at the company. And if no NSE investor has lost money since 1954, where are my Uchumi shares?

KCB elite
KCB launches Advantage banking, joining Barclays (with Prestige) and Standard Chartered (with Diva) as offering exclusive banking services for their high net worth customers.

Safaricom is not elite, but...
(i) It’s new in a million shilling promotion cuts of buyers of their low denomination Bamba 50 (50 shilling) airtime cards
(ii) Its EDGE service (internet access) has not been working for moist of this month.

New Bank, New Stockbroker (II)

Women’s Bank: They may not have been able to get special seats in Parliament, but women can count on having their own bank when the Kenya Women's finance trust converts to a commercial bank, probably in 2008. Having a women’s only bank is a long running proposal to address some of the challenges women face as borrowers and bank customers.

KCB has diversified into asset finance, a field dominated by Barclays, Diamond Trust, CFC and market leader NIC (which was a Barclays spin-off initially)

A survey ranks Citibank as the top Kenyan bank and finds that 3 banks dominate the country.

Renaissance Capital was all set to be the next stockbroker at the Nairobi stock exchange, until Old Mutual snuck in in and doubled their bid with an astonishing ½ billion shilling ($6.5 million) offer. That leaves Renaissance to have to buy into one of the smaller stockbrokers, some of who have been patiently waiting for a big payday.

In an unprecedented move, Kenya Airways postponed it's 2007 AGM. A mail mix up is to blame, and to think how for many years shareholders heaped blame on Barclays registrars, but at least they got the mail part right. KQ this year was handle by the ambiguously named custody and registrar services

Kenya RE fraction:Retail investors are not likely to get more than 200 shares apiece.

Communications
Safaricom ball: Having pulled out the rug from the Kalonzo Musyoka side with a party takeover this week, Raila Odinga’s next move was to step in front to halt the Safaricom IPO, which most investors can’t wait to receive (and which could be a vote winner ).
- The Government has reduced the local ownership requirement in the telecommunications sector to 20% from 30% before. The 30% rule has derailed three ventures in the last three years and so far it appears the Sameer Group is the only local company to have invested more than 30% in any venture.
- Blogger Gathara points out another equally troubling aspect about the media bill.

Trade & Aid
Going to China: The Kenyan Ministry of Trade has opened a commercial office and posted a commercial attaché in Beijing, China.

CARE Cares: CARE has handed a lifeline to African farmers by turning down US Food aid.

Energy: The Olkaria geothermal plant to expand as a Mitsubishi consortium has been awarded a contract to add a 35MW plant for Kengen there

Tourism
- The Narok county council has stopped the development of Wasafiri tented camp on the outskirts of the Masai Mara but other camps are still being put up (read here)
- Fly540 to start flights to newly reopened Wajir airport, Jetlink will start international flights (probably in the region), but the Kenya wildlife services have been refused a license to offer passenger flight services.

upcoming
- Bioken a new distiller factory in Athi River
- New hotel in Gigiri
- Three hills housing estate(6,000 houses) in Mwakinye Mombasa
- New casino at Nyali Cinema Mombasa

opportunities

- Opportunities for artists from Nairobinow
- MD of the Kenya film corporation. Apply to info@filmingkenya.com by 21/8
- Transformation manager at the Kenya women’s finance trust. Details here and D/L is 30/8
- Join the Kwani sales team. Contact marketing@kwani.org
- Pan Africa Trust Fund: Chief Executive Officer, Grant Administrator, and Finance Officer. D/L is 24/8
- Business executives at the Standard / KTN

(Poor) Defence of MP's Salaries

In 2003, Transparency International - Kenya published a booklet (PDF here) as a result of a survey they had carried out on Kenyan parliamentarians and the burden of dealing with (paying for) constituents needs – mostly though giving funds

It’s useful to look back on it at a time when the same parliamentarians want to increase their salaries again (because they can and will) the survey consisted of 8th parliament – expenditure of 7 MP's and questionnaire of about 20 others

The survey was done before Constituency Development Fund (CDF) and the last salary increase (2003) and found that;
- Of their (then) Kshs. 395,000 gross salary, MP’s typically took home less than 50,000
- 2/3 of those surveyed claimed to spend between 200,000 and 300,000 pr month of their salary i.e. ½ to 2/3 – and it’s interesting that for those who TI tracked, they projected that their expenses would exceed their salary & expected income (TI did not pursue this point)
- Reasons for giving funds: to get re-elected got 3X as many responses as to help people. Longevity in parliament is maintained by being generous to constituents
- Ominous point for Kenya, most - over 2/3 of elections are not closely contested i.e. the winner gets double the votes of the loser signifying the importance of being in the right party. This places the burden on party nominations (see ODM-K, NARC, NARC-K, Shirikisho, Ford K....) which are often not observed, and are less free & fair
- TI Kenya defended the MP's - asking for them to get higher remuneration (to ease the stress and deficits brought on by their constituents requests) and also supported CDF (at that time was only a proposal) But the latter is self defeating because the more the public knows that MP’s have increased their salary, only makes them ask for more from MP’s.

Now today, MP’s have CDF, get funds to set up office in their constituencies, control funds for school bursaries, are off the hook from free primary education (and soon secondary), and have almost doubled their salary from before the survey.

But CDF also helps voters decipher useless MP's who can no longer lie to them that the government was denying them resources to do A, B, C. CDF reduced 'problem solving' but not all since most MP's giving to their constituents consists of individuals and harambees.

So MP's will increase their salaries, because they have to - and can.

Pre KQ AGM

For the first time in many years, I'm likely to miss the Kenya Airways (KQ) Annual General meeting to be held later this month – as I sold all my shares earlier this year.

It's a shame because attending one was inspiration for this site and the company's AGM's have been among the most colorful to attend.

From backroom drama played out before the public, to who’s whos' appealing for votes to join the board - next to activists, to inane questions, KQ has had it all.

KQ has always had a large customer base and so has had to tweak their AGM model each year for improvement – and that has served as a model for all the recent (over-subscribed) IPO companies like Kengen, Scangroup, Eveready and now Kenya Re to emulate.

This year KQ has moved from Bomas of Kenya which seemed to be a natural home for the event with it’s ample parking, large screening area far from venue where KQ would hand out packed lunch boxes and t-shirt at entrance (some shareholders would turn back at that point having achieved their target for the day), large auditorium (where some would eat right away), huge TV screen and even had a second spillover hall for other shareholders if the main hall got full. This year's will be at Kasarani gym (not stadium)

Anyway in the buildup to the event, what is the company saying?

- It carried 2.6 million passengers last year, but profits were down 15% due to increased competition and reduced aircraft utilization
- Turnover was up in all four geographic segments (Kenya, Africa, Mid East & Asia, Europe), but operating profit down slightly on all four (also they canceled Turkey route last week). 69% growth in Asia, 17% in Africa
- Aeropolitics; They are appealing to the government of Kenya to grant visas denied to West African country nationals – warning that those countries could retaliate in granting KQ routes, or those passengers may choose other more hospitable airline/countries.
- Double taxation: They are also lamenting that they are paying income tax in most African and Asian (except china) countries – while they also have to pay income tax in Kenya (Other airlines were able to force Uganda to stop this taxation last month)
- KQ has 4,154 employees and all jobs will be applied for online from this year
- Buy & hold shareholders: of the company's 73,000 shareholders, only 23,000 (32%) have immobilized their shares (enabling them to trade).

Appeal for writers
Any reader here, going for the event can please send in a report? Here are other (2005, 2006) KQ AGM reports to prepare with.

Other happenings

- Free newspapers: According to the NYPost, the New York Times is going to end its Times Select (subscription only) model for it's star columnists/Op-Ed pages. And when you combine that with Rupert Murdoch’s plan to make WSJ site free, what does that portend for other subscription based online newspapers and sites?

Saving our roads: The government is cracking down to
remove overloaded lorries from the roads by reducing axle sizes from four to three (or requiring the last axles on a trailer to also be a steering one). The move will effectively limit cargo capacity to fewer than 30 tones, down from the current situation where some trailers with 4-axles have been carrying up to 60 tons of the road. Good start to get road survival back on on track. But this automatically forces fleet owners to double their fleet size (and increases traffic on the roads)

Broke law : The Nation had a great story this week about lawyers quitting private practice to take up jobs with the government or corporate sector. Meanwhile a prominent law partnership has broken up

Jobs
- Cartoonists at the Nation. Apply to quickdraw@nation.co.ke
- KCB: relationship managers - asset finance, relationship managers - SME’s. Apply by 24/8 to recruitment@kcb.co.ke.

Urban inflation index

August 07 – changes from 6 months ago

- Litre of fuel Kshs. 80.79 ~ $1.21 (up 8.75%)
- Maize meal (2 kg. Unga) 50 shillings (no change)
- Sugar (2 kg. Mumias pack) 150 shillings (no change)
- Tusker beer: 100 shillings at local (no change)
- Safaricom promotion: Then: was Saasa - with 8 shillings per minute calls during off peak hour. Now is new shape of Safaricom including a new Super Tariffic tariff which has calls 38% cheaper and SMS 30% cheaper than the previous Tariffic tariff
- US Dollar exchange rate: Kshs. 66.50 (5% weaker against the shilling)
- Plastics items are not being tracked, but milk and bread have gone up since the budget speech read in June.

Personal expenses
I tried using various online services to track expenses, but eventually fell back to Microsoft Excel and built a tracker that fit my needs. For July 2007;

- Rent 30% (high, but it’s safe and close to town)
- Charity 14% (one time event)
- Electronics 11% (new phone, but do I say)
- Fuel 8% (lower than expected, but my daily commute is short)
- Drinks 6% (Rather low, so should not feel guilty)
- Relatives 6% (unavoidable, non recurring expense)
- Investments 5% (should be higher, but there’s nothing promising till end of August)
- Dining 5%
- Parking 4% (take that Mr. Mayor)
- Newspaper 2% (rather high)
- Gift 2% (for every time I visit someone’s’ house)
- Utilities 2% (electricity & water)
- Communications 2% (mostly Safaricom)
- Groceries 2%
- Personal 1%

sports
- I love the new G TV advertisement which compares the three English premiership soccer packages
Get 3 games a month for 0 shillings i.e. Nation TV (NTV)
Get 6 games a month for $70 ~ i.e. DSTV
Or 32 games a month for Kshs 2,750 (i.e. GTV)
but this weekend, Supersport will show opening matches of the big four teams Liverpool, Arsenal, Chelsea, and Manchester Utd
-With all the fallout from the Hungarian Grand Prix, it should be pointed out (to non-F1 fans) that Hamilton started the fracas on Saturday when he deliberately ignored a direct order from Ron Dennis (team Boss) to let Alonso past on the track during the early stages of qualifying three.

Tech Tuesday

SABC - Highway Africa Awards 2007 for Innovative use of new media technology in Africa. Awards are given in three categories: 1) Individual/Student, 2) Non-profit and 3) Corporate.
- Individual and Non-profit category: communications which find innovative ways to overcome the limitations of the existing African infrastructure.
- Corporate category: creative adaptation of global technologies in an African media context.
- Other criteria (which apply to both categories)is the use of new media to benefit press freedom in Africa and encourage social empowerment in African communities. Also the functionality of websites/blogs/wikis is an absolute must, interactive features, design and use of mobile technology in an innovative way is encouraged.Entries to be submitted online or via fax by 20/8

Digital Village Concept opportunities
(i) Own manage digital village center/kiosk (there will be one in each constituency). Applicant’s must have experience in running cyber cafe, computer lab and already have electricity, steady clients, premises and qualified staff. Details here and deadline is 20/8
(ii) Supply products/services such as hardware/software, loans/finance, stationery, furniture, and supplies. Details here and deadline is 20/8.

Threat to ISP's: Safaricom has applied for a 3G license to offer broadband wireless through their extensive base station network to subscribers.

Congratulations to TED Global Fellow Paul Kukubo who has been appointed as chief executive of the Kenya ICT Board

New stockbroker

Finally a new stockbroker is going to be invited to join the lucrative club that is the Nairobi Stock Exchange. The number of shareholders has gone up approximately ten times from pre-Kengen IPO, but the number of stockbrokers, through which investors must trade their shares has been stuck at 18 all that time (currently 17 since Francis Thuo was suspended earlier this year).

It's only one seat to access this Kshs. 4 billion a year industry, but that can only improve the current situation. Who should win? Ideally a bank or financial institution with an extensive branch network. CFC bank - the only bank that's also a stockbroker has the widest reach nationwide when compared to several one office stockbrokers in Nairobi

Application details here and only firms that can qualify as a stockbroker or investment bank are eligible. The Application fee is Kshs 50,000 ($700) to the NSE, and 2,500 to the Capital Markets Authority. Applications should also include a company profile and statement of financial support/bank guarantee for the bid amount which is reported to have a reserve price of Kshs 150 million ($2 million). D/L of 13/8 is just over a week away.

Other News & Follow up's

- KTN reported that the housing Finance deal (buy in by Equity) could be in jeopardy owing to a burden of borrower lawsuits that could be a major liability for the bank since the introduction of in duplum rules to the banking sector. (One plaintiff won a major case against the bank last month)

- I & M: Two European development finance institutions take up a 12% stake in I&M - Kenya’s 11th largest bank

- NIC shareholders will this month be asked to vote on right issue and bonus share - in addition to modifying the company laws to expand the bank beyond Kenya, enter insurance, custodial, and investment banking, and allow unclaimed dividends by to be reinvested by the Bank until a shareholder shows up to claim them

- Welcome to the Kenya, land of milk & honey: The Safaricom IPO honey pot has attracted interest from BNP Paribas, Citicorp, Credit Suisse, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley and other banking, financial and legal giants

- Next week’s East African reports on a proposed merger in the cement industry between Bamburi and East African Portland Cement companies.

- As expected parliament, without a legitimate quorum, passed the media bill

- Weak laws and evasion are robbin Kenya of tax money.

Opportunities

- Borrow up to Kshs 1,000,000 at 0% interest from Halaal Credit, but eligible only to Kenyan Sunni Muslims.

- Diaspora conference; a conference dubbed Incorporating the Preparatory Kenya Diaspora Home-Coming Forum will take place at KICC on 14-16 August, 2007. some issues will be exploring investment opportunities in Kenya, debate the Diaspora bill 2007 , building partnerships between European and African private and public sector stakeholders, SME and Diaspora sectors be mainstreamed into vision 2030, and proposal that an annual Kenya Diaspora Homecoming week be held every August of each year. Details can be got from info@kenyadiaspora.go.ke

- Design a logo and come up with a motto for the Kenya Investment Authority :

some jobs

- AON: retail broking manager, senior business development executive (health). Apply to HR@aon.co.ke by 17/8
- Chief executive officer at the export processing zones authority. Apply through manpower associates by 14/8
- KCB: branch managers, business banking managers. Apply to recruitment@kcb.co.ke by 17/8
- Safaricom: Investigator, senior fraud analyst, senior information security officer, senior information systems auditor, and a dozen technical jobs. Apply to
hr@safarciom.co.ke by 10/8
- UAP: Relationship officer, internal risk surveyor, agricultural underwriter. Apply to recruitment@uapkenya.com.

Idea Exchange: sponsors & links

Before he went to satellite, radio mega star Howard Stern would occasionally get into hot water in some US cities over the content of his show. This would be manifested by busy bodies in some towns starting a petition/protect outside the station re-broadcasting his show and occasionally threatening to boycott local sponsors of the show. Stern's usual answer to this (besides accusing these groups of racketeering) was to ask his listeners to support the local sponsors of the show (in their towns/regions) by giving them business and mentioning that they had heard about them from listening to the show.

Anyway, I also read yesterday how a major league blogger - John Chow acknowledges sponsors and thought it would be a good time to do the same.

So Thanks to;

Mama Mikes: who have a new promotion where all phone airtime ordered before 5 PM (Kenyan time) is topped up on the same day. Also, several phones can be topped up in one order, all for only $2.49

Business Post: A reminder that not all good writing is online; this monthly magazine offers a great collection of Kenyan business stories.

TED: Thanks for the invitation to TED Global Arusha. They have now begun to stream some of the most popular talks from the conference, starting off with George Ayittey, William Kamkwamba and Ngozi Okonjo-Iweala. These three talks were among the memorable. Ghanaian economist George Ayittey coined the race in African between the hippo and cheetah generation of leaders, while William Kamkwamba, a 19 year old Malawian embodies this as an inventor of a electricity producing windmill out of scrap metal. And former Nigerian Finance Minister Ngozi Okonjo-Iweala, famous for fighting corruption and restructuring her country's debt, who rightly put an end to the aid vs. trade debate by reminding us that both are needed. These should be up on Wednesday afternoon with a fourth from Euvin Naidoo - President of the South African Chamber of Commerce, America on strengthening meaningful corporate ties across the Atlantic.

Readers i.e. you, but especially commenters. No one has a monopoly on information, and I learn so much from comments on investments, and perspectives from readers. I’ve said it before, but anonymous comments are given less weight, no matte how insightful they are – so try and register/come up with a name e.g. bankelele to leave comments and so we can interact better.

Networking
- Linked In: I have not responded to some invites from people on Linked In. I apologize for not following up as I am not keen on that networking aspect – yet
- Pajama Nation - micro jobs and freelance work site.
- piloting request: any ideas where a Kenyan 'A' student with a passion for flying can obtain piloting scholarship?

All on July 31

election 2007 registration closed. If Oprah (no comparison) can endorse a candidate (Obama), then so can I - I support and will be voting for Jonathan Mueke who will be going up in a real David vs. Goliath battle in Westlands constituency. Good luck in party elections which can be more significant than the real election. Best wishes - Bwana J

Kenya Re IPO closed

Uchumi shareholder loan deadline passed. What's the future like for shareholders? Delta Airline (US) is a far different company in another country (different laws), but which emerged from a similar reorganization to chart a new direction. For Delta shareholders;
- The company will issue new shares to claim holders (previous debt holders) as part of its reorganization.
- Other claims remain in dispute.
- Previous shares were canceled and holders of those shares received nothing in the reorganization.