Direct Flights to US?

Delta expands
From African Flyer: Delta Airlines (US) has announced new African destinations including - New York to Nairobi via Dakar (Senegal) four times a week

Kenya Airways has toyed with the idea of flight to Miami oo Atlanta for several years

Compe for KQ
There have been a lot of protects from Ugandan about the high cost of flights to Nairobi (at ungodly hours) to connect to other Kenya Airways (KQ) flights – with tickets costing about $340 for the 300 mile journey. Of course short flights are really lucrative in Africa – and Air Kenya makes a killing with their $100 flights to Masai Mara, other games parks, and holiday destinations.

So along comes an Aga Khan backed airline set to begin on the Entebbe - Nairobi route operating as Air Uganda who will begin flights in November.



one of their new planes

Tax Collection is Unprofitable

KRA shocker
The Kenya Revenue Authority, the organization which has re-written our donor relationship, championed responsibility/awareness of tax paying among citizens, spurred parastatals to start paying dividends back to the government (instead of draining it) and enable the fixing of the economy – is not profitable!

Year end results (June 2006) show the tax collector with income of 4.8 billion and expenditure of 6.0 billion – meaning a deficit of 1.2 billion and that compares to 2005 when they just about broke even 5.1 billion of income and expenditure. They also don’t have the title deed to their headquarters – Times Tower worth 2.5 billion that is still in the name of Central bank (for whom the tower was built)

Stanbic CFC merger approved
The Finance Minister has approved the merger between Stanbic and CFC paving the creation of the country’s 4th largest bank (see bank rankings and an earlier comparison of the parties)

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)

Capital markets authority (CMA) approval should be a formality, as they have already been assured that the new bank will remain listed on the NSE.

MP behaving badly
A high flying MP has grabbed i.e. taken over and fenced the parking lot of a popular Nairobi Sports Pub which he frequents the place – even as he is trying to extract an exorbitant rent from the pub for use of the yard.

Wikileaks: Charterhouse

Charterhouse revealed
Fresh off the kroll reports, Wikileaks moves on to another Kenyan financial saga - uncovering secrets of charterhouse bank .

The bank was placed under statutory management in 2006 after a long battle with the central bank governor, finance minister, amid allegations of money laundering and tax evasion that almost brought down Nakumatt supermarket who banked with them and hosted several Charterhouse branches.

Euro needs more marketing
The US Dollar keeps dipping lower, not just against the shilling, but is all over recording lows against the Euro and now achieveing parity with the Canadian dollar (no more cheap buys from Canada).

I feel bad when I travel to another country with my Dollars and they don't go as far as tehy used to, or as if I had carried Euros instead.

While the dollar is laid low, there is no other currency stepping up to grab its space. The pound is a colonial relic and the yen is too far & exotic.

The Euro needs to step up and lobby to become the currency of choice for hotels, shops, forex bureaus, Kenya airways, Somali & Sudanese businessmen, companies and most important the Kenya government

Family Bank gets cheques
After applying for a waiver (and getting it), Family Bank finally is now fully fledged with cheque books for customers and access to the Central Bank clearing house. This meshes will with their growth plans – as a recent report found they had the highest new account growth among all banks last year.

IPO savings loan
From Transnational Bank, comes the Fanikisha enabling people to save money and buy IPO shares on the NSE – which TNBL will finance up to 2 ½ times what you have saved. The account is aimed at Kenyans abroad – but my question is with the fractional IPO applications yielded (1/4 or 1/3 of shares paid for) what gain is there in taking a loan for an IPO?

Story con or cover up?
KTN had a story this week about the Tesco supermarkets (local chain – not UK-related) who just ended their Uchumi franchise partnership. KTN said they had seen documents showing that Tesco was insolvent with negative share capital, numerous bounced cheques, rent arrears of many months at its stores, and suppliers reclaiming their merchandise. The story ended there with not follow up in the Standard (KTN sister paper) or any other newspaper. So was it hushed up, or was it a case of more mud slinging in the supermarket wars?

New Bank; Gulf African

Gulf African Bank has been licensed and will become Kenya’s 42nd bank.

While earlier billed as a Sharia only bank, it’s hard to see how that would have been sustainable and it now appears that the bank will also be open to non-Muslims. Mainstream banks like Barclays, KCB, I&M and Dubai already have shariah complaint products.

With a 1.75 billion capital base starts off around 14th largest bank largest bank. It has advertised for top jobs over the last several months with a view to becoming a regional powerhouse backed by its wealthy shareholders.

Opportunities
most from the daily papers this week

Jobs
- Business analyst sub Saharan Africa – at BAT
- Alliance For A Green Revolution In Africa (AGRA): Director for Market Access Program, Program Officer for Market Access Program. Apply through KPMG
- Electoral commission of Kenya : returning officer, assistant returning officers, trainer of trainers (but must be over 35 years for most jobs). D/L is 2/10
- Investment Officer at the IFC - Nairobi Kenya. D/L is 8/18
- Kenya Airways: Database Architect, Head Of Corporate Security Services, Manager Materials Planning & Procurement, Team Leader Motor Transport
- Head of IT at the Nairobi stock exchange . Apply through Deloitte at esd@deloitte.co.ke (Ref HIT/09/07) by 28/9
- National Museums of Kenya: marketing/PR manager, development manager (resource mobilization). Apply to dgn@museums.or.ke
- Safaricom: M-PESA New Business Sales Officer, M-PESA New Agent Sales Officer, CRM Support analyst, M-PESA Operations Officer
- Agribusiness specialist at USAID Kenya D/L is 21/9
- USIU: senior research associate, webmaster. Apply to jobs@usiu.ac by 30/9

Real estate
- a 5 storey shopping mall in Eastleigh on sale for 150 million shillings ($2 million) from Lloyd Masika
- Have Man U star Rio Ferdinand as your neighbor by buying into this luxury complex in Uganda
- develop houses for USIU on 45acres in Athi river.

Taxes, IPO's and Unit Trusts

Taxing corruption
So Parliamentdealt another blow to the war on corruption by denying the Kenya Anti-Corruption Commission with the authority to investigate crimes that happened before it was formed (2003).

KACC as a body has aimed high (going after high profile figures - CEO's, Ministers) but mostly caught small fry leaving many Kenyans dissatisfied and who now consider the Commission to be a waste of money

But there’s another public institution - the Kenya Revenue Authority (KRA) that has achieved milestones in the war of corruption that KACC can only dream of. They have gone after untouchables, and some lawyers and MP’s have had their accounts and salaries frozen and asset seized. Now if only they could publicize this.


RICO in Kenya?

Why not legislate a tax on corruption, so if you’re named, you could lose 90% of property, leaving the accused with 10%? This is humane, but is as good as taking back everything - and bypassing court processes. Hitting Pattni with a tax bill would end 10 years of court injunction and delays and realize some significant gains in cash recovered.

Kenye Re slipping away
My strategy to bypass the IPO of Kenya Re not working as well as I thought. I placed orders at 13 shillings, only for the share to zoom. It's tempting to buy the shares at 17 or 18 and then the balance when they drop (if ever).

Unit Trust get more accessible
Market leader, Old Mutual, has lowered their minimum entry amount for unit trusts from Kshs.500,000 to Kshs. 200,000 (about $3,000). The offer runs till December 2007.

Alternative banking solutions

replacing credit cards
I keep writing about one Equity Bank product because it's unique and lucrative. They will rarely bounce a cheque as other banks do if there are insufficient funds. Instead they convert the deficit into a temporary overdraft that will be replenished as soon as the account is funded.

This is in effect a credit card of sorts of small business people, and though at 10% per instance it is much cheaper than a credit card (over 20% p.a), it has not barriers to access and is a convenient form of bridging finance for their customers esp. SME’s.

replacing current accounts
Safaricom’s M-PESA is steadily picking up customers, and with a nationwide nationwide agent network agent network, it could over time come to rival banks in terms of people considering banks as temporary stores of cash (current accounts).

Motoring moment: Schools, traffic jams & motor shows

motor show

The 2007 Total motor show was held at the Ngong racecourse over the weekend. Of late only the Concurs (classic car show) seems to run regularly, but it was great to have the motor show back after two years where we can always see the latest new vehicles and dream of buying them with Safaricom millions.
Nairobians can also look forward to the Nairobi air show to b held on October 7.

Who's here?: Heavy presence by American brands (hummer, Chevy, Cadillac, Chrysler, jeep), while also upcoming is India (Tata, Mahindra), and China (FAW and great wall)

Also present were several banks (NIC, CFC, Barclays, bank o Africa, and Consolidated) all offering vehicle purchase finance plans

who's missing?: some prominent British (Land rover), and German (BMW, Volkswagen/Audi) brands, and the Kenya Revenue Authority. It’s interesting (and sad) to realise how much tax is paid on new cards – as some car companies chose to display both the regular price and duty free price (which the government, embassies, or national of other countries - Sudan, Uganda, Rwanda etc. pay for the same car)

some prices

Cars
Chevy Optra 1.9m
Chrysler 300C 7 million (only 4.1 million duty free)
Mercedes E class 6.4 million [EUR 70k] (only 3.7 million duty free) [EUR 41k]

SUV
New Pajero 6.1m , older model Pajero 3.3 million,
Toyota Land Cruiser VX 9.7m (5.8m duty free), Land Cruiser Prado 5.2m (3.2 DF)
Jeep grand Cherokee 5.7m [$85k] (3.2m DF) [$49k]
Mercedes ML 8.5m (4.9m DF), GL class 11.8m (6.7m DF)
GH Humvee
Cadillac SPX

Lorries
Mercedes Actros 3340 prime mover8.3 million (only 7.1 million duty free)
Mitsubishi Fuso prime mover 8.2m
Trailer by Randon 2.5m

Buses
actually have the same chassis as lorries, just the upper body is different
Tat school bus (62 seats) 4.9m
Nissan 51 seat (i.e. Citi Hoppa) 4.3m
Mitsubishi Fuso (51 seat) 2.8m
Nissan 67 seat 8m

Pickup
Toyota Land Crusier4.8m (2.8m DF)

schools & traffic
last week has marked the beginning of third term for most schools kids – and the impact on rush hour traffic has mde bad traffic situation even worse – commutes have gone up by 30 min at least each way, and it is often faster to get off the matatu and walk passed a major intersection. The increase is from more passengers (school kids) on matatu's, more school buses on the road, but mostly from parents’ droppings kids off at far away schools across town before cutting back to the office

What would happen if parents were required to school their kids within a certain radius of their homes or offices? And the rule was given a 5 year grace period for investors (or teachers) to get funding (government loans) and other incentives lile land to create quality schools within neighbourhoods? What kind of impact would it have on traffic? There are negatives, but kids would be able to get to school/back home at a decent time (in daylight) or even walk. Parents would not have to make long commutes to quality schools for their kids, and the road would be much clearer even when schools are open. A wishful idea, but totally unenforcable

Gotcha

they finally got to me - halfway at least, almost a year and a half since the last known attempt. There may have been more attempt, but they were probably thwarted by round the clock security and other precautionary measures employed such as tipping night sentries and never straying from safe houses.

The perpetrators took advantage of a rare lapse in judgment and were swift, silent, and deadly in their attack.

The fateful moment came when I went to the bus station to pick up someone visiting the city. As is the case with many such visitors, they believe there is no food in Nairobi so they come armed with several sacks of fresh fruits and vegetables.
So for a few seconds I stepped out o the car (leaving it unarmed and exposed) to help my force the sacks into the boot – and for those few seconds, the car doors were open and the alarm was off.

As soon as I drove off I knew something was wrong – and sure enough when I stopped to check there was a huge hole where my indicator light used to be!

That’s one plague of driving very popular and very common Toyota is their parts are in great demand – much so that thieves are always ready to snatch your mirrors and lights to sell the last motorist who has lost his – and front indicator lights are a prized item that is likely to be stolen anytime.

TED Talks: Andrew Mwenda

Next up from TED Global Talks in Arusha is Ugandan editor Andrew Mwenda's talk from TEDGlobal2007 who defined on of the themes of the summit with his calls for investment and trade opportunities and not for more aid for Africa. (Another great TED synopsis here from Ethan Zuckerman)

Unfortunately, Mwenda now appears to find himself wrong footed, when one of East Africa's premier investors, the Aga Khan, chose to suspend him in a bid to appease the Ugandan government and ensure smooth survival of his business interests in the country.

Kenya Bank Rankings

June 2007 [ and change from June 2006]

Tier I banks
1. Barclays Kshs. 136.54 billion in assets ($1.95 billion) (up 21% from June 2006)
2. Kenya Commercial 96,532 [17%]
3. Standard Chartered 92, 743 [13%]
4. Cooperative 58,712 [3%]
5. CFC /Stanbic 55,534 +
6. National Bank of Kenya 42, 142 [25%]
7 Commercial Bank of Africa 36,217 [10%]
8. Citibank Kenya 36,147 [8%]
9. Equity 29,888 [116%]
- CFC 27,926 [25%]
- Stanbic 27, 608 [62%]
10. NIC 27,583 [22%]

Tier 2 banks
11. Investment & Mortgages 24,494 ($349 million) [19%]
12. Diamond Trust 24, 484 [37%]
13. Baroda13,253 [24%]
14. Imperial 11,039 [30%]
15. Prime 10,773 [25%]
16. Housing Finance 9,665 [-2%]
17. Bank of India 9,552 [21%]
18. EABS 9,049 [5%]
19. Fina 7,688 [25%]
20. Bank of Africa 7,347 [26%]
21. Family Finance 6,698 [73%]
22. K-Rep 6,358 [43%]

Tier 3 banks
23. Habib AG Zurich 5,393 ($77 million) [5%]
24. Giro 5,317 [3%]
25. ABC 5,282 [10%]
26. Guardian 4,970 [2%]
27. Chase 4,826 [74%]
28. Southern Credit 4,581 [8%]
29. Victoria 4,081 [2%]
30. Consolidated 4,001 [28%]
31. Development Bank of Kenya (DBK) 3,876 [35%]
32. Equatorial 3,832 [5%]
33. Habib Bank 3,485 [10%]
34. Middle East 3,309 [-9%]
35. Credit 2,963 [5%]
36. Fidelity 2,779 [43%]
37. Transnational 2,720 [24%]
38. Paramount Universal 2,271 [27%]
39. Oriental (formerly Delphis) 1,624 [17%]
40. Dubai 1,437 [26%]
41. City Finance 510
-- Charterhouse 3,938
+ Merger, awaiting approval

Asset growth
industry average 24%
Equity 116%
Chase 74%
Family Finance 73%
Stanbic 62%
K-Rep 43%

Profit growth
average 76%
Bank of Africa 825%
Habib bank 467%
Giro 300%
Paramount universal 300%
Fidelity 222%
EABS 200%
Southern credit 186%
Chase 179%
Oriental 115%
Equity 107%

Loan grwoth
average 19%
Equity 785
Family Finance 67%
K-Rep 66%
Diamond Trust 51%
KCB 49%

Deposit growth
average 25%
Equity 111%
Stanbic 95%
Chase 84%
DBK 63%
Family finance 57%

Kutwa Monday

The Capital Markets Authority (CMA) seeks to extend the statutory management of Francis Thuo stockbrokers stockbrokers (by the Nairobi Stock Exchange) for another 6 months (this is due to expire on September 6)

Are we ready for Basel II
Diamond cash again?: 1 ½ years ago the bank raised 735 million shillings, and now they're back for more cash as are NIC also with a rights issue (and bonus share). These fast growing mid-size banks want to comply with Basel II by 2010 which requires that they have adequate capital to cover not just credit risks, but also market and operational risks

Mumias glazing: Mumias dressed up some bad news glazed over reduced sales (-10%), profit (-9%), and cash with the promise of a dividend and a 2 bonus shares for each held – which apparently worked as the share closed 8% up on the previous week. . Still even the Business Daily was moved to decry insider trading in Mumias and EABL shares this past week

Opportunities

Road audits: from the Kenya Roads Board for engineering firms to team with financial audit firms to audit road construction work on behalf of the government by performing technical, performance and financial audits. D/l is 24/9

Strathmore finance seminar: on Friday September 7 at the Hilton on Kenya as an emerging capital market

Jobs

Celtel: revenue assurance & fraud manager, treasury & tax manager. D/l is 7/9

Director of information & public communications of the government of Kenya. details here and d/l is 7/9

Marketing managers (3) [branding, core network, wireless] at Huawei: apply to Kenya@Huawei.com by 14/9

Editorial staff at the Nation media group: they are looking for website editors, owners of popular blogs in east Africa, sub editor with niche publications - in their 20''s and 30's. apply for positions by picking any story in the nation or east African, rewrite it and send it back to editstaff@nation.co.ke by 10/9

Popote wireless: head of sales, IT account manager, sales engineers. Apply to hr@popotewireless.co.ke 14/9

Safaricom: principal credit controller, retail center agent, sales analyst, senior marketing & planning analyst. D/l is 7/9

Governance advisor - Kenya for the World Bank - d/l is 13/9

Best investment for a book lover

Book villa anniversary: Two years of great reading great reading courtesy of Book Villa.

I got my statement today for my second year in the Book Villa club which shows I read 25 books, ½ of which were non fiction – a slight improvement from year one

So, if you leave reading books, desire variety, or find the cost of new books prohibitive, check out Book Villa.

Mo(i) money, more problems

That was an amazing look at the inner working of the top of Kenya’s finance.
It appears to be largely based on the work of John Githongo as a lead into tracing and digging into banking channels
- The report appears incomplete and in need of a Kenyan partner to edit for misspellings of Kenyan names and correcting aspects of company ownership such as Bamburi, CFC, Kenol, and Bidco
- Proves that tabloids like the Weekly Citizen are often correct in their investigative business stories - you can't make this stuff up
- Scary that a company called government of Kenya existed
- Some people fingered by Kroll as willing to give information may have to be on the look out

Download here