Online Nairobi Stockbrokers

Continuing the popular Where to buy shares series, my long-time stockbroker CFC (actually CFCFS) have finally unveiled an online trading and account/portfolio platform. It’s quite good so far, quick registration, easy navigation, and hopefully a secure one. I hope they add share reports, and other useful tips which they can e-mail to users.

My portfolio is correctly displayed and I will make my next trades online (previously I used to e-mail my orders, and get confirmations and statements back by e-mail)

Other brokers with online features (can’t vouch for their quality) include Afrika Discount Drummond Dyer & Blair, Faida and Sterling

Questions
1. What are you online experiences like with your Kenyan stockbrokers?
2. Have any Kenyans in the Diaspora got their Safaricom IPO refunds, or been able to apply them to buy other shares? Have you seen your refund cheques, or know where they are?

Electric Shock

Last month’s electricity bill from KPLC was an all-time high, and who would have thought it could still go up? This month it’s Kshs. 2,590 ($39) – up from Kshs. 1,860 last month. Consumption was ‘161 units’ costing Kshs. 1,000, but that was exceeded by their fuel costs [billed at 769c per kWh – whatever that is ] that added another Kshs. 1,240 to the bill, followed by all the various other government tax and regulatory percentages tacked on to everyones’ bill.

Again ‘fuel costs’ are to blame - Who does KPLC buy fuel from? Retail outlets? If I bought my own fuel, and sold it to KPLC I’d probably make a profit. KPLC spent 14 billion on fuel last year - about the same as Kenya Airways [Kshs. 15.6 billion, but who were able to reduce their fuel bill this year by 5% through hedging contracts] and that's three time as much as electricity generator Kengen who spend about Kshs. 5 billion on fuel [they have a competitive bidding process - to reduce fuel costs, and Total has the contract now] - but I hope KPLC who only distribute electricity address their fuel procurement process in future before passing all costs on to costs to their over-burdened consumers and taxpayers.

So how much are you electric bills this month?

Who Funds ICT Start-Up's?

one entrepreneurs' experience; I have a business plan and have been looking for funding for over 8 months now. I have been unsuccessful because many financiers are more focused on expansion capital - only if you have been in business for 6 months and over is when you would qualify for capital

I'll begin by saying that, apart from Enablis, I haven't found a true venture capital firm anywhere in Nairobi. Although many firms describe themselves as 'investment banks', 'development banks', xyz Funds, or venture capitalists, for better or for worse, they absolutely do not fund start-up companies. They like real-life balance sheets rather than projected balance sheets. is already an Enablis member and does qualify for capital, but it’s an 8-16 month long process of reviewing my business plan and then getting funding

Investeq Capital - It’s very impressive; they have offices alongside Milimani Road I think. They seemed to be genuinely interested in my proposal but they said it was too small. If I remember correctly, they fund between Kshs. 5m to 40m. They have a super-skilled management, btw.

Fusion Capital - They fund expansions; you have to have been in business for about 6 months, but I liked their customer service. I didn't ask about their rates though.

IFC SME centre - Fund expansions. They advertise in the Tuesday newspapers, you've probably seen it. Met with them at their offices. Naturally they were not interested so I didn't get past one meeting, so I don't know their rates.

Grofin - didn't meet with them. How they operate is buy you first sending them your proposal, they review it to see if it meets their criteria, and then they respond to you. They told me (over email) that my plan wasn't up to their standards. It's generally difficult to argue with such an organization because they effectively cut out your argument. They don't even bother to meet with you, so you don't know what it is they found that you could have responded. Another fund I personally know of like this is the APDF but that was a few years ago.

East Africa Capital Partners - They definitely give you time to defend your idea, but it has to be an ICT business. They have big interests in TEAMS and the like and invest heavily in ICT infrastructure. So up to this point they have not looked at small businesses. They are in the process of setting up what they call a 'special purpose vehicle' - basically an SME fund. Right idea, wrong time I guess. I'd approach them in 6-8 months if I was an entrepreneur... wait a minute, I am an entrepreneur!?

Banks - Banks were the first entities I approached with my first proposal, but that was some time back before they began lending like crazy. Basically they want you to have been banking with them for at least 6 months, which for me is out of the question. Again, they look at expansions. If he had approached me, I’d have told him we don’t do start-ups, mainly expansions, who have a few years of audited financial accounts

Youth Fund - The fund is broken into two separate funds, one for Kshs. 50,000 and under and the other for Kshs. 500,000 and over. The rules for the bigger fund are obscure. The fund is run by 'financial intermediaries' which mostly are banks and SACCO's. In theory they are supposed to lend more than half a million but they don’t. I think the youth fund gets funneled to other products of these intermediaries because they don’t mention them. You end up looking for them instead of them looking for you. Family Finance bank is the only one I've found that is a defined youth loan.

Related: Four other SME finance avenues suitable for startup entrepreneurs in Kenya.

Plane Moments

great interesting photos from airliners.net

KQ Outlook: Interesting debate at stockskenya on the outlook of Kenya Airways at a time of high oil prices, whose impact on last years prices were softened by hedging contracts which may have since lapsed. Nice breakdown, but for KQ even financial discussions can be overwhelmed by the PR, service, and communications weaknesses at the airline.

Virgin Nigeria: Just finished reading Richard Branson’s autobiography which was finished before he began his Nigerian airline venture, which now seems to be unraveling amid allegations of blackmail, mafioso tactics, and partly blamed on the former president. Whether the Virgin Nigeria venture survives the fracas which was triggered by a dispute over airport space, it is nevertheless a successful venture.

Cyber squatters: Don’t confuse:
- official Kenya Airways with this one
- official CFC Stanbic with
this one
- official Safaricom site with this site, which was last used by Dyer & Blair during the IPO earlier this year
(any other examples?)

Tiomin Kwale saga

Thanks MM - the Canadian $ is almost on par as the US $

Looking at the accounts of Tiomin and 2008 AGM notes paints an interesting picture of the company for foreign investment deals at a time when Rift Valley Railways is deal is unraveling and Econet continues its four year incubation as the mobile phone passes them by at a growth rate of almost 20% a year

Tiomin, which claims to have invested $86 million directly and indirectly since 1995, secured financing in 2006 but the project was unable to take off and funding was canceled in 2007 on a venture in which the company was to invest $150 million and pay the Kenya government 2.5% gross annual revenue.

The Company had a target to conclude (divest part or all of) Kwale and slashed costs from $450,000 to $70,000 per month (most staff were given notice in March 2008) until divestment which happened in July when the Jinchuan takeover was announced - with the Chinses firm purchasing 70% of teh venture for just $25 million.

What can Jinchuan do going forward to improve on wher Tiomin got stuck?
- Get some local shareholders (they are now shepherding RVR back on track)
- Have a clear communications strategy with locals; go beyond issuing vague press releases.
- Spread the wealth; do more value addition processes here, work with local banks/financiers to raise funds locally, engage in some CSR, and join the Kenya association of manufacturers (KAM)
- Work better with stakeholders; in this case it is local land owners (farmers), the taxman, and employees.
- And don’t blame the ‘government’ on tax matters. The Tiomin AGM notes state that ‘Jinchuan were key’, and were able to ‘facilitate government relations’ which mean the project could resume soon.

Olympia turnaround?

For the first time in years, Olympia has received clean statements from their auditors (DCDM) and the company resumes paying a dividend of this year of Kshs. 0.20 per share.

Also Paul Wanderi Ndungu, a lawyer who made a windfall with Kenya Airways shares, and is now Olympia’s second largest shareholder with 12.25% behind Dunlop properties, has joined the Olympia Board this year along with John Simba.

The company will also take a majority shareholding in Avon Limited, and Mather & Platt in addition to increasing investment in Heri Limited. But its attachment to Kenya is miniscule with just 5% of revenue from here (95% was from Botswana – up from 85%)

See Olympia accounts summary here.

Nairobi City Council Finances

Amid the record half year bank profits, local authorities (town, municipal, county) are also releasing their year end numbers (June 08)

The finances for the Nairobi City council showed revenue of Kshs. 8.1 billion ($123 million) which came from the following sources; government 2.53 billion, (Nairobi) water company 147m, borrowing of 505m, 772m from business permits, market fees 325m, 1.72 billion ($26m) from property rates, and 649m from parking collections.

Expenditure was the same 8.1 billion shillings comprising payments to councilors of 71 million, salaries amounting to Kshs. 3.7 billion ($56m), operations & maintenance 1b, capital projects (investments) 1.1 b, and debt repayment of Kshs. 2.1 billion)

The popular and celebrated town clerk John Gakuo (who’s vilified by others) remains in office despite a change of guard in the chaotic politics of running Nairobi City.

Also, the local government minister published new accounting rules last month for councils to follow which they must as they on average get about 60% of their revenue from the government, and most are dependent on the Government (taxpayers) for their continued operations.

Scangroup sellout, new bank?

Scangoup takeover WPP acquires effective control over Scangroup which was listed on the NSE in 2006, by buying 27.5% of the company, but not taking over or de-listing. They also have pre-emptive rights over a chunk of CEO Bharat Thakar (and largest shareholder) stake when his lock up period expires in 2011. Aly Khan (Rich.co.ke) points out that the slumping NSE offers cheap company shareholding buy opportunities e.g Scangroup and Unilever Tea (going private)

More Libya: 2010 may see another bank to Kenya this time Libyan / Ugandan Tropical bank. Does Kenya need another bank really? And $19 million share capital won’t go very far these days.

Entrepreneur Opportunity: The 2008 Pioneers of Prosperity Africa Awards rewards six business leaders of Africa who serve as role models to Africa’s aspiring entrepreneurs and demonstrate business excellence, innovation and profitability. Submissions will be accepted from Botswana, Cameroon, Cote d’Ivoire, Ghana, Kenya, Namibia, Nigeria, Rwanda, South Africa and Uganda and a total of $350,000 will be awarded to the winners. D/L 31 August 2008.

Safaricom 4s

Safaricom@NSE Day 47: Safaricom dips below the IPO price, touching 4.95 before settling at 5.15 on almost 17 million shares traded

Coop Bank IPO is Next

NSE is overweight with financial shares, and may get heavier with the listing of Co-operative Bank later this year. The listing is expected to raise 10 billion shillings ($150 million) for growth and expansion. The shareholders transferred the assets and liabilities of the bank to a limited liability company (from a co-operative socirty) last week. – and their class B shares (par value Kshs. 100 shillings will be split into shares of par value Kshs. 1)

However as a long suffering customer of the bank, I may not add to might already overweight basket of financial stocks.

edit - Co-Op IPO opens October 20 2008

elsewhere

transport

- Kenya Airways; are offering a novel business trip package – 4 trips for $1,000 to be completed by March 2009 for trips to Dubai, Bangkok, honk Kong, Guangzhou
– Delta airlines open a Nairobi office
Railway destiny in local hands
- The Government wants Rift Valley Railways to increase capacity, lay more tracks, and transfer cargo ASAP. ICDCI looks at RVR as a long term investment, but they hope to get return on the investment within 4 years. They own 10% of the company and will acquire another 10% from IFC over the next four years.

Communications
- Zain will increase share capital by 75% (raising $4.5 billion) from its Kuwaiti shareholders for expansion in Africa. They are already advertising to put up base stations and adding dealers in Kenya
- good to know Econet has the most subscribers in Zimbabwe.. That’s an ARPU in millions?

Dividend cycles
how long goes it take some NSE companies to pay declared dividends?

One month: Standard chartered (interim), Kenol (interim)

Two months: Barclays, BAT, Olympia

Three months Crown Paints, TPSEA (Serena), Jubilee, Nation Media, Total, HFCK, Diamond Trust, Pan Africa, NIC, Standard Chartered (final), Bamburi (interim)

Four months: Centum (ICDCI), Standard Newspapers, Access Kenya, Eveready, Bamburi (final)

Five months: Kenya Re, Kenya airways, Express, Rea Vipingo

Share Portfolio: August 2008

Drowning in Safaricom juice

8-8-08 is supposed to be a good luck date or something. 2008 has been a rough year for most companies since January. The Safaricom IPO was supposed to be the savior for investors, but has instead become an albatross on the Nairobi Stock Exchange

Heres’ my portfolio that has changed May 2008

The stable
Diamond Trust ↓
KCB ↓
Scangroup ↓
Stanbic (UG)↔
Safaricom ↓

What’s changed?
In: Safaricom
Out: Express, Sameer, Total
Increase: KCB, Safaricom
Decrease: --
Dividends Paid: KCB, Stanbic, Diamond Trust, Total, Scangroup
Unexpected gains (none) /loses everything else
Outlook: Shifted focus to banking and communications, and got out of manufacturing related stocks as the political and oil shocks continue to be felt through the economy. No foreseeable changes till next quarter, but will look at Kenya Airways if it dips lower.

Spotlight on foreign investors

after Morgan Stanley & Safaricom

Rift Valley Railways: This week as the patience of the governments of Kenya and Uganda reached new highs, local stakeholders finally got rid of the managing director. More stories are now coming out on the (lack of) financial strength of the backers of the railway. The East African newspaper has (consistently) had the best coverage of the railway management over the last two years.

About a year ago, the former MD gave a talk on the difficulties he faced in reviving the railway and the way forward for the 25 year program.

Tiomin is another ‘foreign investor’ who never had financing that was sufficient enough for them to launch their operations in Kwale, even after the government and the courts gave them go ahead

Zain is the new brand of the former Celtel Group that is expanding all over Africa. But according to their group financial results for the half year, Kenya is the only African country where they did not gain subscribers over the last year. At June ’08, Kenya had 1.9 million subscribers compared to 2.4 million in June 2007. Compare that to Uganda 1.8m (up 100%) and Tanzania 2.8m (up 48%). Half year revenue and loss was $79.4 million and $26.4m compared to %100m and a loss of $4.2 million at the same point in 2007 Safaricom is blamed for defending their market turf

Google have bought into Mobile Planet a leading local provider of value added mobile services (and also a Safaricom partner).

Media opportunity: 2008 Highway Africa Awards

The 2008 Highway Africa takes place in September 2009 in South Africa. The deadline for nominations is August 15 in categories of (1) individual / student, (2) Non Profit / Non Corporate and (3) Corporates.

Nairobi Expense Account

Finally have one full year of data on expenses incurred. As part of an experiment I have tried to quantify daily spending over the last 365 days (and categorized them as follows)

Rent 37%, Investments 9%, Education 9% (bound to go up each coming year), Being a good guy 8% (Gifts 4%, Family 3%, Charity 1%), Fuel 7% (offset by more public transport use), Drinks 7% (socializing & entertaining), Dining 5%, Groceries 4% (not my docket) Communications 3% (take that Michael Joseph), Transport 3% (reading novels in the matatu), Utilities 3% (cost may double this year), Furniture 3%, Recreation 2% (I can afford to play more golf and get a decent handicap), Newspapers 2% (keeping up with politics & finance), Clothing 2% (FYI: Dr. Manu Chandaria only has 7 suits), Repairs 2%, Parking 1%, Personal 1%, Electronics 1%.

Old Mutual Toboa

Old Mutual Loosens Up Part II (Corrected, thanks Joyce)

A few years ago Old Mutual unit trusts in Kenya had a minimum entry amount of Kshs. 500,000 ($7,462). Last September, they dropped this to Kshs. 200,000 and now they have gone even lower.

Old Mutual Kenya has launched the Toboa Investment Plan which costs just Kshs. 7,500 ($112) per month to start other funds in the family are money market and balanced fund. Speakers at the launch included Deputy Prime Minister Musalia Mudavadi, NSE CEO Chris Mwebesa, CMA CEO Stella Kilonzo, the new boss of Old Mutual Kenya, and Laura Chakava head of Old Mutual Assets in Kenya – who all spoke of the need for affordable collective investment schemes in the country

- Mudavadi said that while local government act mandated that the town councils should have savings and capital funds to cater for unexpected expenses, these are largely ignored – with only 40 of the 175 councils able to comfortably pay their salaries. Also high savings are a part of Vision 2030, but Kenyan savings rates which were already below the average of other African countries, were dropping
- Mwebesa lamented the 1.5 to 1.8 million CDS account holders in the country; the number is un-serviceable (mailing budget for statements of the CDSC costs almost $1m per year – and this compared unfavorably to account holder level in South Africa (100,000) and Brazil (500,000). He said more people should access the market through collective investment schemes such as unit trusts but whose entry levels had been high (elitist) until now
- Kilonzo and Mwebesa both alluded to a recent survey on investors (June 2008) that showed the level of investor education in teh country was not good. Most people relied on the media for share investment information, and were ignorant of the risks of investing in shares.
- Chakava said Kenyans have appetite for investment as shown in the IPO queues and pyramid schemes. OM now gives them an affordable, professionally managed vehicle for investment beyond the unpredictable buy low, sell high mantra that most investors try and follow.

Toboa will invest in fixed income, equities and off shore. OM, which pioneered unit trusts in Kenya, manages about Kshs. 10 billion, but CIS only control about 2% of the NSE. Other OM trusts have an initial fee of about 3 – 7% and annual fee of 2%, the Toboa will probably be slightly higher than this and will use Posta (post office) outlets to collect payments.

Edit: Interesting discussion on Old Mutual investment plans from the Stockskenya forum