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

Old Mutual, Credit Reference, Insular TZ

Old mutual loosens up: Old Mutual , the pioneer of unit trusts in Kenya has made some radical changes to it contractual savings plans to cope with a changing market place with many unit trust choices from a competitive fund and insurance industry. Changes include;
- Plans will no longer lapse if premium payments are stopped. E.g. when people get retrenched
- Savings (in a lapsed plan) will remain invested until maturity or can be paid out early
- If your saving plan was terminated without a payout, consider it reinstated!

Credit reference rules: Former finance minister Amos Kimunya was able to gazette the rules for operations of credit reference bureaus in Kenya before he left office. Provisions include;
- Bureaus will be licensed by the central bank
- Signup costs are 100,000 shillings ($1,500), a bank guarantee for 1 million and another fee of 100,000 per year
- Bureaus may share info only with a customers’ permission (which happens when you sign for a loan)
- They may only share information for business decision making (evaluate credit prospects)
- Bureaus must keep track of all information they share
- Customers are entitled to one free report a year, and within 30 days of a negative referral
- if a customer complains, and bureau not able to complete an investigation of disputed information within a month, information will be deleted as request by customer

Undugu at work: More Tanzanian IPO news with the upcoming sale of 21% of the Tanzanian Government shares of the National Microfinance Bank (NMB) to raise 63 billion shillings ($54 million) and later to be listed on the Dar es Salaam Stock Exchange. But the offer is open to to individual Tanzanians and companies that are whole owned by Tanzanians - unlike Stanbic (Ug) and Safaricom (Ke) (which Tanzanians were also barred from subscribing to)

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

Are unit trusts for you?

There was a story in the story in the Standard about unit trusts this week.

At the beginning of the year, I considered stepping away from the NSE, cashing in my gains and putting the money in a unit trust. But a conversation with a custody manager put me off this path. He said that with the management fees at unit trusts were too high for individuals, implying that individual investors not see significant gains unless the trust had exceptional returns.

Certainly any investor familiar with the myriad Kenyan and African investment blogs and sites such as Cold Tusker, First Global Select, Kenya Capital Investments, Mwasjad, Nairobist, Outfoxed, Pesa Tu, Riba Capital, Stockskenya, Odeglenyang, Investing In Africa, Kenyan Entrepreneur, Hisagal, Gathinga – could be more informed as any unit trust investor.

Unit trusts

Approved Collective Investment Schemes in Kenya are:

1. African Alliance Kenya Unit Trust Scheme: Kenya Shilling Fund, Kenya Fixed Income Fund, Kenya Managed Fund
2. Old Mutual Unit Trust Scheme : Equity Fund, Money Market Fund, Balanced Fund
3. British American Unit Trust Scheme : Money Market Fund, Income Fund, Balanced Fund, Managed Retirement Fund, Equity Fund
4. Stanbic Unit Trust Scheme: Money Market Fund, Flexible Income Fund, Managed Prudential Fund
5. Commercial Bank of Africa Unit Trust Scheme: Money Market Fund, Equity Fund