Award Season: Legatum, Pivot25

Legatum 2011 Awards: The 2011 series of the Africa Awards for Entrepreneurship was launched today in Nairobi. Kenya has produced more finalists and winners (including Virtual City, Colour Creations, Craft Silicon, AAR Health, Bio Deal Labs) in the short history of the awards, which have grown from 454 entries in 2007 to 2,700 in 2010.

For 2011, entries are open to companies in all African countries and are expecting over 5,000 entries from companies either directly at their AfricaAwards web site, or via nominations and awareness resulting from a press campaign across Africa (including ads on CNN).

The overall winner will get US$100,000 and five others will get $50,000 and to be eligible companies should have turnover of $1 - 15 million, a profitable track record of 2 years, at least 10 employees, not be subsidiaries of other companies, among other rules.

A committee will short-list these down 15 semi-finalists who will be visited and interviewed. 10 finalists will then be selected, and invited to Nairobi to make presentations make presentations as well as participate in a 1-day conference on entrepreneurship called Convergence Africa. The winners will then be announced at a gala dinner in Nairobi on December 8 2011.

Past (runner-up) winner John Waibochi of Virtual City spoke about the impact that the award had on his company. It gave them a reality check and a chance to audit themselves and their position in a competitive market, appreciate the skills and weakness they had as a company, and most important forced them to define their scope and package their story in a 7- minute pitch that has paid dividends in their subsequent participation with in the Africa Enterprise Challenge Fund and Nokia's Growth Economy Venture Challenge where they won $1 million. He added that participation in these awards had been an immeasurable marketing and PR coup for the company and given them access to $2-3 million of very affordable funds to grow.

The AfricaAwards prize is unique in that funds are not given to the company, but instead go out to pay (supplier) for what the winners set out to achieve in their pitches. The funds enabled VirtualCity to invest in non-operational expenditure areas, such as performance management systems, financial systems, and training, that they would not have done out of their cash flow.

The Legatum Institute, the Omidyar Network, Kenya Airways (official airline) and Google are partners for the 2011 Awards which are now open and run till the submission deadline of August 24.

Pivot 25: It’s about two weeks to the Pivot25 event, which still has a few tickets remaining for attendees. They will see twenty five companies competing for five prizes, with the winner in each of the five categories getting a cash prize of US$5,000. Here are the short-listed finalists in the categories of (i) Entertainment, Gaming & Utilities (ii) Business and Enterprise (iii) Government, Agriculture & Education (iv) Health (v) Mobile Payments & Commerce.

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The Kenya Government's National Council of Science & Technology has;

(i) (20) Competitive Research Grants in the fields of geothermal, solar, wind, bio-energy, hydrogen, or fuel cells. Grants will be of Kshs. 15 million (~$175,000) over three years

(ii) 20 Science, Technology, and Innovation grants. These will be for Kshs. 1 million over 1 year for commercialization of prototypes.

(iii) (15) Post-Doctorate Research Grants in Pure & Applied Science, Mathematics, Engineering, and Technology. These will also be for Kshs. 1 million over 2 years.

The deadline is June 28 and application forms will be available at both the
NCST and ministry websites.

Ernst & Young: (E&Y) Entrepreneur Of The Year is open to applicants from Ethiopia, Kenya, Rwanda, Tanzania, Uganda in two categories (i) Master Entrepreneur category(companies that are 5 - 10 years old and have turnover of at least $50 million) and (ii) Emerging Entrepreneur category (companies that are 2 - 3 years old and have annual turnover of at least $5 million). D/L is 15 June 2011.

Google: Android Developer Challenge accepting applications in three categories (i) Entertainment / Media / Games (ii) Social Networking / Communication (iii) Productivity / Tools / Local / Geo. D/L is July 1.

Internews : Innovation Grants for New Media projects that range from $5,000 to $30,000 and open to local NGOs, software companies and/or mobile phone operators, local media outlets and individuals from various regions. D/L 30 June.

Tanzania: Entrepreneur of the Year. D/L is 30 July.

Standard Chartered: consumer banking graduate program for both graduate (those with masters degree) and fast track program (those with undergraduate degree)

FitzGerald prize for young African journalists. Details here . D/L July 31

Nestle Prize is still open till June 30. Last time, Kenya had the second highest number of entries after USA

Medical Investments in East Africa - Part II

Rising Prices: In November last year, AAR Health sent a casual letter announcing some new medical insurance services they would be offering such as extending the membership age to 80 years, free basic health checks on appointment, out of country cover extended to 90 days, psychiatric benefit increase, a 24 hour help line, and ATM (forced) robbery compensation.

Ambulance in Lamu (picture courtesy of @azthedance)

Their CEO also noted that in the last three years there has been a consistent increase in costs of drugs, medical equipment, hospital charges, and doctor’s fees that after an actuarial review they would marginally adjust the premiums
on an age-band basis is.

However the sticker shock came, this month with a renewal notice letter that was 67% more than last year - shocking given that there were no claims. It has not been clear what caused this and various from AAR include, doctors fees have gone up, the enhanced payments will go towards the new services, the company was hit by several claims last year, they have to pay for their own clinics & ambulances unlike other insurers etc.

But a rival CEO on twitter wrote that increases should not be more than 25% a year, and this is borne out by Government and other insurers statistics that indicate changes & inflation in the sector are about 20% per year.

Money going in to healthcare: A previous post touched on the finances and the Nairobi Hospital surplus and how their financial picture is much healthier some of than its patients.

The medical sector has also attracted a some recent investments including:

- A few days prior to the AAR November letter, a Dutch company - Investment Fund for Health in Africa (IFHA) took up a 20% stake in AAR at a cost of Kshs. 750 million (then about $10 million). From media reports on the deal, IFHA will over the next two years increase its stake to 60% and exit by way of an IPO at the Nairobi Stock Exchange in about 5 years

- TBL Mirror Fund has an investment in Meridian Medical Centres

- In January this year, Resolution Health which had 2010 revenue of Kshs 1.12 billion and income of Kshs. 208 million sold a 25% stake in the company to a German private equity fund Africa Development Corporation (ADC), for KES184m. Resolution, which has 42,000 members, is also eying a stock exchange listing.

- In this week’s East African is a story of a new Aureos Health Fund that is being set up.

Guide to Addis Ababa

A guest post by @Kahenya who made a recent visit to Addis Ababa, the capital city of Ethiopia on a philanthropic mission. He also says that this blog is blocked from Ethiopia and that 1 birr is equivalent to about 5 Kenya shillings.

Getting There: When I arrived in Ethiopia, it took me about 30 minutes to clear at the airport, and here Kenyan citizens don't need a visa. However a Yellow fever certificates is mandatory and they will quarantine you for not having one.

Getting Around: Normal prices for a taxi can be anything between 100 Birr to 250, but the guesthouse I was staying in sent their shuttle to the airport (to pick me). Most locals use either a matatu (big taxi) or small taxis which act as a matatu, and sometimes they even contract taxis.

I use the matatu (big taxi) and contract taxis as do many locals, and I also hired a car with a driver to take out on the , since it worked out cheaper than a contract taxi and the guy waited on me.

I have never felt unsafe in Addis - whether it's day or night. It's out in the desert where things tend to go wrong. My advice, is don't travel at night outside the city, especially into the desert, as that's time territory.

Language: With English and like about 2 words of Amharic, I am always able to find my way around. There is no local English newspaper but my favourite English magazine there is Whats'out Addis.

Communications: I have an Addis line, and I just plonked in the SIM-card and it worked. Mobile internet works, quite well now, unlike last year where I was barred from it. There are many Wi-fi hotspots, especially in the guest houses, hotels, and coffee shops, and they are usually free. I did not pay for internet this time round, but I believe it varies from .50c to 1 Birr per minute. Making local calls is easy, as are international calls, but I did not check the cost.

Hotel: I stayed in a guest house [La Source Guest House, located on Gabon Street In Meskel Square behind Adot-Tina Hotel] where usually I get a double room for about 400 birr, but this time round, I stayed in the penthouse and it was 600 birr a night. I have been staying in this guesthouse since the day they opened, in the early 2000's, so I get very preferential rates. I am still confused by this place almost 10 years later because though the place is quite clean, and located in a nice place, the price remains very affordable. It has always thrown me off, but as they say, take it with a smile. You can also make booking online, and while I only confirmed my booking 3 hours before takeoff, I found everything ready & in order when I arrived.

Food & Bars: The local dish was injera (which I do not really like) but I had a lot of tibbs, bread, pizza, and (strangely) sandwiches.

St George Beer (my favourite there) was 35 bob (due to price caps) which made it very difficult to find - in fact, finding beer was a mission! I did not quite interact with strangers this time round, but mostly we talked about May Bread, African politics, Gaddafi some bullshit, girl talk etc.

Shopping & Sight-Seeing: I always go to Merkato, as do many tourists. The leather stuff in Addis is always a plus and as are the imported original Italian Suits (which I don't wear) that are priced that much better than in Nairobi. Most tourists buy local wear, artifacts etc.

Also go to Langano and Awassa to enjoy some lake side action, and Gondar & Lalibella for history. But, ironically, I've never been to any of these places, but my opportunity will come one day.

Business & Infrastructure: - Electricity is not very reliable. There are major blackouts during the day and a lot of people have backup generators if they can afford it. The guest house I stayed at had a generator, so we were not in the dark for more than two minutes which was nice.

Opportunities?: Addis is ripe for construction and infrastructure development. If you can get in on that, or even technology work, then you are in a good place. Local product development that can be exported (I hear) is also a big hit, with the government helping with fulfillment.

Shocker: - Last year, (the economy) was good, and there was a lot of activity, but now it seems to have slowed down. With the price cuts, and shortage of food items, like sugar, cereals, and cooking oil, the economy seemed to have reverted back to the old days.

– But the construction boom is insane, and property prices I noted are quite high. In short, property prices don't match up to the economy.

Cutting the Big Deals

A guest post by Shiroh.

Many people ask me how to make money especially because I work in an institution that helps people make money. I don’t know the answer, as I have little wealth myself, but I can give a few tips that I have learnt from those who do.

1. Read widely: Most people get information when it is no longer useful. Information is power, so the adage goes. Get information when it is hot. Don’t buy a share when the owners have already issued a good dividend - instead monitor the activities of that particular company for a period of time. Read the financial statements and its notes. The likelihood of making money when the dividend is announced is almost zero. Instead, read about the acquisitions/mergers the company is making. For example, what is the impact of Kenya Airways buying new planes? What is the effect of the international debt that Kengen and Safaricom keep taking periodically, on the company’s future profits? In short, do your research, and stay extremely informed.

Also read personal finance books and blogs. If there is one book I thank the heavens for, it is Rich Dad, Poor Dad. This is the book that introduced me to personal finance. These books are available everywhere, and have a look at them as ignorance is not bliss.

2. Have the money ready: If you are like any other Nairobian, you live from one pay slip to another, or you are on the verge of taking a credit card because the money is no longer enough to last a whole month. When deals come, it is your ability to pay for it, mostly in cash that counts. If you’re considering taking a loan, interest rates are quite high, so the returns will be wiped out.

You have put money away so that when an opportunity strikes, you will be in a position to take advantage of it, so Save! Save! Save! . If you cannot save Kshs. 2,000 ($24) per month, then you are unlikely to be able to Kshs. 20,000. Also consider:

- Joining a SACCO (Savings & Credit Society) if you don’t have the discipline to save.
- Have standing orders with your bank that automatically place money in savings accounts (which are not easily accessible).
- Resist the urge to spend on things you don’t immediately need.

3. Diversify your income: There is always something you can do outside of your job that could give you the extra money. You can read more on this here.

4. Use Professional advice: Many people think they can do everything without professional advice. Get a good lawyer, accountant, and financial advisor to before embarking on major steps. Just like you go to a doctor when you are sick, or a lawyer when you are making deals, also visit a financial advisor if you need to know how to invest.

5. Network: The big deals are made in small smoky bars. This means that you need to align yourself with the right people who know where the deals are. If this means joining your local rotary so that you can get the right introductions, do it. If it means doing more social work, do it. In short, the world is unfair to those who don’t know the rules of the game.

Guide to Asmara

A guest post on a visit to Asmara, the capital of Eritrea, which turns 20 today. [See Wikipedia Eritrea]

Getting There: From Nairobi, NAS Air flies direct once a week to Asmara. There are alternative, but longer routes such as KQ via Khartoum (connecting with Sudan Air) or through Egypt. NAS Air flies in on Saturday morning and returns in the afternoon, with a round-trip ticket costing ~$700. Also, a visa is required of Kenyans prior to travel.
- Upon arrival in Eritrea, officials will record details of items in your possession such as computers, phones & electronic devices in a declaration form, which will be cross-checked when you fly out.

Money: The local currency is called the Nakfa, which exchanges at about 15 to the US dollar. Though it is illegal for Eritreans to possess forex, there is a black market where the dollar exchanges for about 40 Nakfa.

Getting Around : Asmara is a small town, and people walk around, or take bicycles or buses. They also they use horse drawn carriage for goods. For visitors, taxis are available for and are clearly painted in yellow.
- It is possible to get around speaking English (which is more better understood than in Ethiopia). This is because, while the local languages (e.g. Tigrinya, Tigre) are taught in elementary school years, they switch to English for the latter years. Other languages spoken are Arabic and Italian.
- It is ok to walk around, and while there are no armed police but army is visible.
- For communications, hotels have phones and internet, and there are many cybercafés, though it appears Facebook is blocked. You can also hire a prepaid phone/SIM that costs ~ 1500 Nakfa per week .

Food & Bars: Restaurants have good plentiful meals that are based on Italian cuisine - Spaghetti, pasta, lasagna etc. Meals may be so large, that you may end up eating only once a day, and these cost 200 - 400 Nakfa.
- They drink lots of carbonated water, or Cola. There are local beers, wines, and spirits like Asmara cognac (125 Nakfa) and Asmara champagne (180).
- Coffee is common, though their pot differs from Ethiopian one in that it has no spout. It is sold in 7 different flavours, depending on the number of times it is brewed, and the seventh flavour (brewed 7X) is the lightest /weakest blend.
- They smoke a lot in bars and restaurants, so you may prefer to sit on the outside.
- There is great love for football in the country. Kids kick balls in the streets, and English premier league matches are shown. There is a strong affinity for Arsenal football team because of the high number of African players [regardless that some of them are French] compared to Manchester United, [considered racist for the opposite reason]

Business & Infrastructure: - It is an agricultural economy and they have three planting seasons, cultivating hardy crops like barley and millet, as water scarcity is a big issue in the country. The Government and the UN have built lots of water tanks for harvesting rainwater.
- A Canadian company is mining gold which was recently discovered.
- Roads are broad, but with low traffic levels.
- All land is owned by the state, lease it to improve and no foreigners allowed to own any.
- They hold Eritreans in the Diaspora in high regard, and celebrate their arrival back in the country.
- Potential investment opportunities are in leather and wool.

Sight-seeing: - Asmara, which is hilly and cool, is popular with Sudanese (North) as it is not as hot as Khartoum.
- Sight seeing is on the Eastern escarpment, which has some rocky terrain. Also there is a a steam train, and buses/taxi's to the Red Sea, port of Massawa.
- Weddings are done over a weekend; On Saturday, they dress in traditional outfits and attend the church ceremony, then on Sunday, they dress in western clothes for the reception portion, which are often held at hotels.

Oddities: - The big-brother factor in the country; you can’t take pictures or stand near government buildings, [but you don’t know what is a government building?]. Also you are warned not to talk politics or talk idly to waiters, taxi drivers etc., as they will report to the government!
- There is a distrust of the outside world and hate for Ethiopia, largely as a result of the war fought for independence during which they feel the Ethiopian side committed acts that destroyed family life for a generation. [It is not unusual to find older couples who married recently, or couples in their sixties with very young children]
- Also, other plane passengers ask to you to help carry the load on the aircraft, but decline this...
The above picture and many more, are from this site about Asmara

Kenyan Guide to Accra

Adapted as a guest post with input from Coldtusker
(Pic via airliners.net)
Getting There: Accra's Kotoka airport is small & dated [but efficient] airport but the corridors can be a challenge o navigate if you have lots of luggage. An interesting feature of the NBO-ACC flights are the traders [mostly women] with HUGE bags/packages [from shopping trips in Dubai or China] who you can't even see while they push their carts. It's like a moving wall of goods! These 'packages' are held together by well-sewn polypropylene [plastic gunias] material. Emirates flies A340, with larger cargo bays while Kenya Airways (KQ) lies much smaller 737-300s. Other planes on the tarmac include Delta & British Airways both which have daily flights.

No visa is needed for Kenyans, but the flights are costly such as Kenya Airways (KQ) which is $1,000 - Ouch!

Getting Around: A taxi trip from Kotoka to town costs about $5-7 but some hotels will provide transport if you let them know in time. The traffic from Kotoka to town even at the worst of times is much better than Peak hours in Nairobi. Taxis are the most common (for visitors) way to get around; they are easy to catch in most places, and unlike Nairobi, these guys drive around 'looking' for customers. The are 'painted' with AMA (Accra Metropolitan Area) zones & numbers and are easy to spot. Plus they honk at you if they think you need a ride. Fares are not fixed but negotiable. So negotiate! The 'quality' of these taxis varies from ramshackle taxis to new ones. Some have windows that don't open while others have AC. Always ask since Accra can get hot & humid. Think Mombasa. Boda bodas are available, as are matatus or buses. It is quite safe to walk around in many areas during the day, but at night, always use taxis.

Money: Cedis [GHc] & Pesewas. US$ = GHc1.5 but some still quote the 'old' Cedi which is 10,000x the 'new' Cedi. You can change money in many places with few restrictions. Always confirm what you will get NET after all fees. There are several forex bureaus all over the place especially Osu.

Hotels: Tend to be pricier than Nairobi. A nice 3-star hotel costs $120-170 for a single room! The pricier ones have WiFi, swimming pool, etc. and include a good breakfast. There are others at cheaper rates of ~$60 in 'busier & noisier' neighbourhoods which look/feel better than our River Road ones.

Communications: Local calls are reasonable now that Airtel [lower per minute calls about US$ 0.06 per minute] is in Ghana, slightly more compared to Kenya. MTN is king, and while there are other options including Tigo, Airtel adverts are everywhere. You can use Airtel Kenya to receive calls at no charge, while SMS to Kenya were cost ~Kshs 5-10, which is very convenient. Local SIM cards used to be easy to get (from street vendors) but are now a hassle, as you have to be registered. Some hotels have WiFi, and there are many cybercafés.

Food & Bars: - The local food varies with region but expect Yams, Cassava, Peanut sauce to be part of any 'local' meal & much more enjoyable compared to eating Italian, Indian, Continental [available anywhere in the world]. There are also lots of Lebanese restaurants as there are a significant number of Lebanese live in Accra.
- Instead of bottled water, water is commonly sold by many vendors & firms in plastic pouches (costing Kshs 5/=). You ask for it as 'pure water,' which is useful for washing hands, or face in the heat.
- Beers: depends on where you go but costs between $1-5, and is widely available - though there is a significant Muslim population there so watch out for Ramadan month. Guinness Breweries (Diageo) is #1 followed by Accra Breweries (SABMiller). Multiple brands of beer.
- In bars, politics & business are common topics. Smoking is allowed indoors so you may prefer to sit outside. There are lots of small or regional political parties similar to Kenya, but since Ghana came out of a civil war less than 2 decades ago, they want 'peaceful' elections [but never say never]. Two-term limits apply but old presidents never fade away! Jerry Rawlings remains popular.
- Football: is HUGE, and as in Kenya, Arsenal & Manchester United fans are everywhere, but Arsenal seem to be the overwhelming favorite. Of course, everyone looks up to the Ghanaian footballers in Europe.

Business & Infrastructure: - There are problems with reliable electricity supply but projects are underway [by the Chinese] including thermal production. Just like Kenya, the hydropower plants face challenges with low water [Akasombo Dam]. Major hotels have diesel generators to alleviate this [good - as the weather is like Mombasa].
- Tema Oil Refinery has same (or worse) problems as Kenya’s KPRL. Ghana Oil is listed on GSE, but majority owned by the Government. Total has a strong position in Ghana.
- Nigerian banks seem to dominate the skyline but the largest bank is Ghana Commercial Bank [GCB] (similar to Kenya Commercial Bank). The bank is listed, with the Government as a major shareholder, and GCB is now going through a massive transformation.
- They have had flyover roads for many years, and there is a wonderful cement/concrete road from Accra to Tema that was built during Nkrumah’s days. It’s a cheap toll road (about Kshs. 20/=) for a distance equivalent to Nairobi-Thika. The drainage systems are much better than Nairobi or Mombasa. Tema is their Thika - an industrial town, but it has a port too.
- Newspapers: There are very many [English] papers but they are poorly written & seem rather sensationalist. Not as good as the Kenyan papers in terms of analysis, etc.
- Business Opportunities? For everyone & everything... if they can compete with China, India, France, UK, etc!

Sight-seeing & Shopping: Oxford St, in Osu, is very popular and has a vibrant nightlife. Seems relatively safe vs Nairobi's CBD. There are other shopping areas but not much to buy that you can't get in Kenya. Shopping in Accra tends to be very pricey since almost everything is imported but buy real [unsweetened] Cocoa as it is grown in Ghana. Daily spend is about $50 per day without hotel.

For sightseeing, there is the Nkrumah Circle/Gardens & such. The Presidential Palace is shaped like an Ashanti Stool of the Asantahene [built/donated by the Chinese?] It is visible from the Road & is an imposing structure which includes many government offices.

Shocker: Ghana imports milk! There is no 'fresh' milk but plenty of Italian & French UHT milk. Milo is also very popular, and is sold in small kiosks as well. Other imports include eggs.

Summary: In some ways Ghana is the Kenya of West Africa but the 'socialism' attitude is still strong so businesses need to beware.

Derivatives in East Africa

On Monday May 16, Strathmore University invited Eduardo Schwartz a UCLA Professor and world-renowned lecturer, advisor, expert and author to give a talk on derivatives.

Introducing the talk, Strathmore Director Jim McFie talked of the plan for Strathmore to be at the academic forefront for learning on derivatives in Kenya, which they are doing with the Global Board of Trade (GBOT) – and that for Kenya to compete with Mauritius as a financial centre, derivatives markets will have to be established in Kenya.

McFie also mentioned a tendency for Kenyan parent to push their children into pre-formed careers at an early age, which was wrong, as he noted that Prof. Schwartz trained and started working as an engineer, before he branched into financial markets.

Prof. Schwartz was giving his first talk in Africa on the subject and chose to give a Derivatives 101 talk, even as he knew there were investment bankers, and officials from the Treasury and Nairobi Stock Exchange present. He observed that it would be difficult to set up such markets given the economic challenges here, but that ultimately, development of efficient market necessary for economic development

He noted:
- You can have derivative on any variable that can be measured without discussion between the parties - e.g. rainfall, presidential elections, sports.
- Popularity? Interest rate contracts are the biggest (390 trillion) followed by credit default swaps (which had rapid growth from 2006 ), then foreign exchange contracts, commodities and finally equity-linked contracts, in that order.
- In any Wall Street Journal, you get a quick reading of all the major forwards e.g. quotes for the UK pound - 1, 3, and 6 months forward, and futures prices of metal & petroleum (gold, silver), agriculture (wheat corn orange juice, pork bellies, rice) interest rates.
- Some arguments in favor for hedging: Companies can focus on main business and take steps to minimize market risks such as interest rates, by hedging, which also minimizes the probability for financial distress.
- Arguments against /dangers of hedging? Shareholders are well diversified and can make their own decisions, it may increase risk to hedge when competitors do not (Southwest Air), and it is possible to take large positions with very little money (traders can change from hedgers to speculators)
- You can get more reading of alocal perspective on derivatives here

While he was said he was shocked that there no forward market in foreign exchange, in Kenya, there are forward markets for currencies, and for some commodities like flowers and fuel, which are done in private arrangements with partners, buyers, and customers, but mainly through large banks. They are not exchangeable, and there is no capital markets mechanism now for this.

(via airliners.net)

The most memorable one was Kenya Airways fuel hedging which they have employed for a number of years during rising fuel prices, but which resulted in a loss of Kshs 5.6 billion (~72 million) in 2009 (more)

With time there could be a few more to deal with gaps such as the current situation where farmers are hoarding maize harvests to draw the government out into paying more for the crop.

Shares Portfolio May 2011

Enjoying the fruits of some good 2010 performance in an uncertain 2011

Comparing share performance to three months and a year ago.

The Stable
Barclays Bank
Bralirwa Breweries (Rwanda) ↑
Diamond Trust Bank ↑
East African Breweries (EABL) ↑
Kenya Airways ↓
Kenya Commercial Bank (KCB) ↑
Kenya Oil Company (Kenol) ↓
Scangroup ↔
Stanbic (Uganda) ↑
Uchumi Supermarkets ↔

Review:
- Best performer: Bralirwa 11% (this Q), then East African Breweries 10%
- Worst performer: Kenol (-4%)
- In: Barclays
- Out: Safaricom
- Increase: Kenya Airways
- Decrease: None
- Performance: The Portfolio is down 1% in the last three months while the NSE 20 Share Index is down 7%
- Uchumi, which is out of receivership, has finally got the green light from the CMA to re-list at the Nairobi Stock Exchange, though the date and conditions of re-listing have not been specified.
- Safaricom’s 2010 results which will be released on May 18, are widely expected to show a drop in revenue and profit owing to the price wars in the mobile sector.
- Kenol resumed its battle the Ministry of Energy after a quiet period as motorists grappled with an unexpected shortage of petrol (This inspired an innovative site called Find Fuel . The Kenol AGM was live streamed and can be found on YouTube.

- Stanbic Uganda had reduced profits owing to bad loans combined with staff & IT expense increases.

Events & Outlook:
Looking forward to
- Dividend payments from Diamond Trust, KCB, Scangroup, Stanbic (Uganda), Kenol
- Bonus shares from Diamond Trust (1:5), Scangroup (1:5), and Stanbic Uganda (1:1)
- New share listings: There's been no word yet from Transcentury and Britak. During the quarter, CFC-Stanbic spun off their insurance arm – CFC Insurance which is now listed on the stock exchange, and will soon to be joined at the NSE by CIC Insurance.

- Why list?: The newspapers, this week had advertisements from the Capital Markets Authority (CMA) highlighting tax and other benefits of listing shares or raising capital in Kenya. These include;

Newly listed companies will enjoy reduced corporates taxes if;
(i) They list 20% of their shares, they will pay 27% income tax for the next three (3) years on profits (while other corporates pay 30%).
(ii) List 30% and pay 25% tax for next 5 years on profits.
(iii) List 40% and pay 20% tax for next 5 years on profits.

Tax exemptions;
- A tax amnesty on omitted past income
- Dividend taxes paid to venture capital firms
- Income to employee share option programs (ESOP’s)
- Interest income on long term infrastructure bonds

Also all East African nationals are treated as ‘locals’, not foreign investors in allocation of IPO shares and get (lower) withholding tax on their dividends. These and other tax deductible expenses including payments for credit-rating, listing & issuance costs, and some exemptions from stamp duty, can be found at the CMA site.

Prepaid Electricity in Kenya

Kenya Power & Lighting Company (KPLC), the national distributor of electricity is converting customers in many parts of the country from post use billing and payment to pre-usage payment.

One KPLC challenge for many years has been revenue collection, but that has changed since signed they signed up banks and supermarkets (some at a cost of ~ Kshs 50 per bill paid) outlets like Uchumi.

Changes

Payment: You can buy electricity tokens from some KPLC offices, but it is easier to pay by mobile money Safaricom's 'M-Pesa' or 'Airtel Money' zap. You load money into M-pesa, send it to KPLC, and in about an hour you get a 20 21-digit number that you punch into the meter for an immediate update of electricity credits.

Orientation: None at all! One day you come home and find workmen in the corridor doing a lot of re-wiring (at first I thought the landlord was installing fibre to the block, but it turned out to be KPLC's sub-contractors) and the next day, you come home and find the watchman with a booklet for you to read and study on the pre-pay system! The booklet has been quite useful, but it omitted a process where you have to call KPLC to link your old meter and new meter numbers – in order to activate the new meter.

Cost: None to the customer, and the brochures say cost of usage should be the same, and so far I’m on par at about Kshs 500 ($6) per week.

The meter also has some commands that you can use to check out your usage at any given time (a fluctuating 80W) and usage since installation – 100Kwh in three weeks. What I miss (for tracking inflation is a breakdown of usage, fuel surcharges and other taxes that form anywhere from 1/3 to 1/2 of every bill, and
- [edit] cost of collection which may vary from Airtel to Safaricom) i.e it cost Kshs 20 to pay by M-pesa
- In order to pay by M-pesa, you have to know your Meter No. (so save it in phone)
- The cost of electricity has gone up by ~45% in a month i.e in mid-April a 'unit' of electricity cost Kshs 9.8 and in mid-May its Kshs 14.2.

Corporate Blogging: from scarcity to abundance

Looking at the evolution of this blog over the last few years, and it has been one of transition from scarcity to abundance of events and subjects.

A few years ago it was rare to find events to write about. I was shareholder of less than half a dozen companies and was attending as many AGM’s as possible, and I was able to reach out to family and friends like @coldtusker for proxies to attend a dozen more AGM’s or investor briefings of companies with small registers.

Requests to company registrars for access to attend briefings were often stone walled and rejected with various answers like ‘what is a blog?’ ‘We only allow media’ i.e. TV radio newspaper. The distinction between blogger and journalists is not new and is not going away.

The scarcity largely changed around 2010 as a new gatekeeper emerged, in the form of branding and PR agencies that handled ‘media’ relations for many listed and unlisted companies. This was common at those with budgets to push out their products from new tariffs, new shares & IPO's, new products, but also to re-brand old or existing products & services. They PR people were about awareness, and creating attention, buzz, and conversation about the brands they oversaw, and recognized that online space - blogs, and lately twitter were ways to reach a diverse audience.

The agency that brands the company, and does PR recognize the online presence of an event or story for what it can do - better search placement, better archiving & retrieval for years to come) – and so the more press the better.

A recent article this week point out to a trend in the US where, to some extent, PR is replacing news as the gatekeepers of corporate world. This also partly happens here where many newspaper stories are actually repackaged press releases, readily disseminated by PR teams and summarized from complex to simple phrases to be instantly re-broadcast in a variety of channels.

The Probulica article lists the positives and negative of the PR vs. journalist trend, but for me, it means more opportunities than I can take up, several press releases, and invitations to events (sometimes 2 or 3 in a day) with the expectation that there will be some reciprocal coverage. I may not use everything, but I try and give feedback to the agency that monitors the brand or to the company itself. With the press releases, it may soon be a good idea to dedicate a blog area for press releases like Ratio magazine has done.

Payoff? Nah: Corporate blogging does not pay the bills in this part of the world, but it does get access that can be vital. In addition, new (online only) platforms have emerged like Rich.co.ke and Ratio Magazine which demonstrate that well structured analytic platforms can attract audiences, advertising, and funding.

Shared Technology Opportunities in Kenya Government

One of the platforms that the Kenya ICT Board is spearheading a shared services platform/master plan for the Government.

They have studied the concept in the US, Australia and at large computer companies. They also appointed a consultant firm, Accenture, to carry out an assessment, and this week Accenture released a report this week on shared services (back office functions) use at various government levels.

The findings were rather harsh and included:
- GoK is not well positioned to support Vision 2030 through its platform, and for all the talk, IT spending is not a priority in government,
- Low level of staff, low ability to execute projects,
- Lack of standard process automation across government arms, few processes are automated - still heavy manual work, and use of outdated technology

- Kenya spends 70% of IT funds on hardware (which can go out of date quite fast), with very little spent on people and software. This is below world standard which Accenture defined as near – 20% spent on hardware, 40% people, 19% software, and 20% outsourcing
- Most IT projects are developed with silos within the different ministries or local authorities even within ministries and even if the current 80 large ongoing tech projects were completed, this would not lead to share services, e.g. because databases cannot talk to each other

Nevertheless Accenture had bright spots & recommendations:

- The low level little process automation presents a lot of opportunity for private sector to work with GoK in shared services
- Best practices can be driven by single entity
-The shared service goals can be achieved not by increasing current IT expenditure, but by refocusing it on items like automation and standardization
- By developing IT career paths, Government can have access to the better people in IT
- Accenture mapped out some current government process like obtaining a birth certificate and getting a passport - to the deal target scenario using shared services approach.
- The cloud can be used to leapfrog other governments – i.e. enable citizens to use mobile phone and access services without visiting a government office
- There are other opportunities for the private sector to develop end user services, applications, architecture, and capabilities.

Other Comments
- Information & Communications PS Bitange Ndemo said they had set out to fulfill presidential target to digitize four processes by this June 2011 – and mentioned the judiciary, land ministry and state law office (also Google Books has digitally archived the Government Bible - with 100 years of the Kenya Gazette now online)
- Office of the President Administrative Secretary Sam Mwale it is government policy to share services, and asked that more services be translated to Kiswahili which is understood by the majority of Kenyans. He also said that for shared services to work, it was important to demonstrate to government staff that the services work, that they are in charge and they have not lost their jobs.
- Catherine Gitau, the Director of E-Government, said government departments will have to share infrastructure, services, and must also share data (Article 35 of the new Kenya Constitution notes that the state shall publish and publicize any important information affecting the nation, and every citizen has the right to information held by the state)