Interswitch in Kenya

Interswitch is a Nigeria-based, transaction switching and electronic payments processing company, with operations in several African countries. The company, founded in 2002, provides payment solutions for individuals and organizations, mainly around financial services to several private sector companies, as well as in the public sector (government revenue, health care etc.) 

Interswitch was majority acquired by Helios Investment Partners for $96 million in 2011. Helios are best known in Kenya for their large investments in Equity Bank, Wananchi Online, and soon, at  Telkom Kenya, where they are in the process of buying out France's Orange Telecom.

Interswitch itself entered Kenya by buying 85% of Paynet Holdings in 2014, which was best known for it's Pesa Point network of ATM's, which was launched in 2005,  and which grew to serve customers of over 100 institutions including several of the large and mid-size banks. At the time of the  Interswitch purchase in 2014, Paynet Services had 2013 revenue of Kshs. 320 million (~$3.7 million) and powered of 1,200 ATM's and 1,300 bank agent locations in Kenya. 

Interswitch also owns Verve International which is the largest card brand in Nigeria with almost 30 million customers. Interswitch launched the Verve card brand in Kenya last month, in a partnership with KCB, East Africa's largest bank.  

Dividend Payments across East Africa - Redux

It’s been four years since this post and the signs are still not encouraging for cross-border dividend payments across East Africa.

Good - Safaricom: I get my dividends by M-Pesa - in fact one came last week, right on the 15th anniversary of the company. At Safaricom, M-Pesa is the preferred method of paying dividends which are below Kshs 70,000 to shareholders - and this would work for almost 99% of their individual shareholders who all own less than 100,000 shares each.

But for Ugandan shareholders of Safaricom, to receive the share of the largest dividend in Kenya’s history ($256 million), they get a cheque in the mailbox  that takes 4 days to clear. The next thing for M-Pesa dividends is to have them automatically reinvested into buying other shares; but for now you can instantly lock the funds away in an interest earning M-Pesa fixed deposit.

No change - Stanbic Uganda: Shareholders in Kenya get a cheque in the mail which takes one month to clear and costs $8-10 per cheque. No improvement, and not likely to change. 

Bad:  (a surprising step back this year is) Bralirwa: At last review, Bralirwa (the Rwanda brewery) dividend cheques were issued KCB Rwanda, and KCB Kenya was encasing cheques at their branches in Kenya provided Kenyan shareholders presented their cheques, and proved their identity - they could receive equivalent cash payments up to RWF50K (~$67). 

This year that option is not there as KCB Kenya is not encashing cheques! A shareholder has to deposit the dividend cheque into KCB or any other Kenyan bank to get they payment.  I tried that at my Barclays branch and they refused as they simply don't have Rwanda francs in their bank system. 

Idea Exchange: Bank, Literature, Journalism, Opportunities, and Win a Free Phone

The Africa AgriBusiness Challenge from Enactus Kenya and Syngenta seeks out youth to generate creative business ideas to improve the agricultural productivity of certain crop value chains. Deadline is June 10.

The 2014 Africa Awards for Entrepreneurship will have five awards to celebrate entrepreneurs at different stages of the entrepreneurial life cycle; lifetime achievement, transformational business, outstanding mature business, outstanding growing business and outstanding social entrepreneur.

The Africa Prize for Engineering Innovation. Details here .. via @calestous.

@AfriCOG Investigative Journalism Fellowship Programme 2014. Deadline is 30 May. 

Anthemis Fellowship seeks out entrepreneurs, executives and thought leaders who are passionate about building an improved financial services industry fit for the digital age. The Anthemis Fellowship program includes 4 months at the Anthemis London office, 4 months with one of their portfolio companies and 4 months with a major financial services firm. It also comes with a monthly stipend of EUR2000 and an invitation to attend the Anthemis #HackingFinance Retreat from July 10-13, 2014 in Meribel, France. Deadline is June 1. 

@APO_Source has had a scholarship for an African journalist to to attend the 2014 annual meetings of the African Development Bank.

Bloomberg Africa ‏@BBGAfrica - seeks Swaziland, Eritrea, Djibouti, G.Bissau, Cape Verde, Eq. Guinea, Sao Tome stringers - Please e-mail asguazzin@bloomberg.net

Citi Africa Management Associate Programme Citi in Africa is  looking for ambitious graduates with strong academic backgrounds, maximum of two years’ work experience, leadership, teamwork, and excellent communication skills.

The 2014 CNN/MultiChoice African Journalist Awards will recognise excellence in culture, economics & business (NEW), energy & infrastructure (NEW), environment, health & medical, news impact (NEW), photography, press freedom, sports, language general news, Francophone news and also Portuguese news. Details here and the deadline is 30 May.

EABL Foundation scholarships for needy students who have gained admission to Kenya public universities. Deadline is June 6. 

Etisalat Prize 2014 for African literature is now open with a top prize of £15,000 and a fellowship at the University of East Anglia, while winner and shortlisted writers also receive a sponsored two city tour promoting their books. Details here and the deadline is 8 August.

The Golden Baobab Prizes for Literature include awards for a picture Book (targeting readers aged 6 – 8 years), early chapter (targeting readers aged 9 -11) and rising writers (for a young African author under the age of 18 who demonstrates the talent and drive to become the next great African author for children). Details here and the deadline is June 29.

Jalada / @KwaniTrust seek 3 best Afrofuture submissions for a second anthology. Deadline is D/L 15

Japan Government scholarships  in research, teacher training, technology, and specialized training .. via @njathika

Want to be a Jameson brand ambassador? Here's how to apply (via @uqweli ) oops - deadline also passed.

KCB: The region's largest bank has ongoing internships, management trainee and management exchange programs. Sourced from @RookieKE blog.

 

Kenya Revenue Authority -  KRA graduate trainee program 2014

The Kenya StartUp Cup is open to all Kenyan youth entrepreneurs who can apply to win Kshs 1 million (~$11,500). Details from the @prepaid_africa blog and the deadline is May 20.

KenyaTop100 seeks successful companies with turnover of Kshs 70 million to Kshs 1 billion (~$12,000)  with 3 years audited accounts to compete and be among @kenyastop100 

Kijabe Forest Trust @KijabeForest  is seeking a new logo design.

Kuona Trust has internship opportunities for students at their offices in Hurlingham, Nairobi. 

The Kwani Trust 2014 fiction workshop seeks to develop new contemporary fiction writers between the ages of 18 and 24 and from outside of Nairobi. To apply, check the website, and send email to submissions_at_kwani.org by May 26.

Orange  has launched the 4th edition of the Orange African Social Venture Prize which will award prizes to four projects; three with grants of 10,000 EUR, 15,000 EUR and 25,000 EUR, and a new special prize of 10,000 EUR. It's open to all entrepreneurs or legal entities that has been in existence for fewer than three years at the time of the competition and the deadline is 19 September.

Power Africa Off Grid Energy Challenge from @USADF and @GeneralElectric Africa offers up to $100,000 to 100% African owned and African managed firms that seek to power up under-served parts of rural Kenya. Deadline is June 20.  

School of Data: Become a School of Data Fellow as they are currently broadening their efforts to spread data skills around the world, and are seeking people who are data savvy, understand the role of NGO's, are interested or experienced in working with journalism and/or civil society, or enjoy community-building.  Deadline is 1 June.

Standard Chartered Bank Fast Track Program: The bank is looking for young graduates to join their management trainee program in several African countries, including Kenya, Ghana, Nigeria, Tanzania, Zimbabwe, Uganda, and several international locations. Sourced from @RookieKE blog

 
The Stanford University Africa MBA Fellowship Program pays for tuition and associated fees (approximately US $145,000) for citizens of African countries with financial need who wish to obtain an MBA at Stanford GSB. Stanford will award up to eight Stanford Africa MBA Fellowships annually. Details here and the deadline is 13 June.

Strathmore University @StrathU scholarships from @imbankke for 10 needy students pursuing various Finance related degree programmes.

Swedish Institute Management Programme‏ The Swedish Institute is launching a new leadership programme for progressive leaders from Kenya,Tanzania, Rwanda, Ethiopia and Zambia - offering a combination of theory and practice in the area of responsible leadership and sustainable business.  Details here and the deadline is June 6.

Total Kenya Graduate Management Trainee Program. The company was is looking for young dynamic graduates.  Also sourced from @RookieKE blog but the deadline was 7 May  

The Wall Street Journal @WSJ looking for entrepreneurial reporter to cover the most entrepreneurial of Africa beats--business, from Nairobi. Apply to @pwonacott

Submit your wikimedia proposals to be included at Wiki Indaba 2014 in Johannesburg. Details here and the deadline is 15 May.

The World Bank Young Professionals Program 2014 seeks highly qualified and motivated individuals skilled in areas relevant to the World Bank’s operations such as, economics, finance, education, public health, social sciences, engineering, urban planning, and natural resource management. Details here and the deadline is 30 June.

 
Win a Nokia Lumia 1320: There are very few comments on the blog here despite the number of daily readers, and many of the comments are from spammers promoting products from far off countries. To stimulate comments, I’m giving away a brand new Nokia Lumia 1320 phone (worth about $400/Kshs 35,000) to the person who engages the most on the site. The phone was an excellent, but unexpected, prize awarded to the winner of the best business blog at the recent 2014 Kenya Blog Awards ceremony. During the month of May, readers to the blog and it's archives, can make as many comments as they want, and I'll respond on some. 

Rules 
1. There are no rules about winning.
2. It's about serious comments, not volume - and blog comments only, not tweets/tags

3. This is personal, and the promo has nothing to do with Nokia  or Nokia East Africa.

4. @Coldtusker is excluded :(
5. An announcement will be made on June 14, and there may not be a winner  if no one is deemed to be worthy.

Kenya Bank Rankings 2013 Part I

Ranked by assets (and placing in 2012)
                   

1 (1) KCB [Assets of Kshs 323 billion ($3.80 billion), and profits of Kshs 17.74  billion ($208 million)]
2 (2) Equity
3 (3) Cooperative
4 (4) Standard Chartered
5 (5) Barclays
6 (6) CFC Stanbic
7 (8) Commercial Bank of Africa
8 (9) Diamond Trust
9 (7) NIC
10 (10) Investment & Mortgages [Assets of Kshs. 110.3 billion ($1.3 billion), and profits of Kshs 6.05 billion ($71 million)]
11 (12) National
12 (13) Chase
13 (11) Citibank
14 (14) Bank of Africa
15 (15) Baroda
16 (16) Prime
17 (17) Housing Finance
18 (20) Family
19 (18) Imperial
20 (19) Ecobank
21 India
22 Guaranty Trust (formerly Fina)
23 ABC
24 Consolidated
25 Gulf African
26 Development Bank of Kenya
27 Equatorial
28 Victoria
29 Giro
30 K-Rep
31 Guardian
32 Fidelity
33 First Community
34 Habib AG Zurich
35 Transnational
36 Habib
37 Paramount
38 Credit
39 Jamii Bora
40 Oriental
41 Middle East
42 UBA
43 Dubai [Assets of 2.92 billion ($34.4 million)]

Mobile & Card Payments across East Africa

A new unsecured card solution was launched by afb last week that will allows customers to instantly spread the cost of their purchase at participating shops into affordable 6 month repayments. afb have signed up 52 merchants like Baus Optical, Cambridge Opticians, Fabguru Shoes, Kitengela Glass, and local supermarkets (Tumaini, Home Depot, Homemade) and are also signing up other merchant shops where consumers will be able to apply for cards and get them approved & issued in the stores ahead of making a purchase.  afb settles the transaction amounts directly into the retailers bank account, and the the customer makes repayments via M-Pesa. afb next hope to venture into loans and insurance in Kenya.

How large is the card market? A Central Bank of Kenya reports showed that there were 9 million debit cards and 140, 000 credit cards in use in Kenya in 2012.

In terms of mobile money, CBK data showed that 21 million Kenyans moved Kshs. 141 billion ($1.65 billion) via 53 million mobile money transactions during February 2013.

CBK has also come up with new mobile money rules that target money laundering. They require that operators link different accounts opened by a user with a single ID card, flag accounts that move more than Kshs. 100,000 (~$1,175) per day or 300,000 (~$3,530) per week, have audit trails, institute systems to handle customer complaints and retain transaction data for 7 years. 

KCB and Western Union who have an account-based money transfer service (ABMT) in Kenya will extend it across East Africa this week, enabling KCB customers to receive money from Western Union directly into their accounts.

Kenya Airways has a 1.5% fee on all credit card transactions (owing to high processing bank charges).

Following a spate of fraud incidents last December, the Kenya Bankers Association (KBA) has launched an ATM safety campaign dubbed “Be Alert” or “Kaa Chonjo” which include tips such as cover the PIN with hand, and sharing PIN number with anyone (including spouses) 

KBA also  announced the shift by Kenyan banks to the new Europay, MasterCard and Visa (EMV) technology to ensure better security of cards.

90% of KenyaPower pre-paid electricity tokens are now purchased using #Mpesa - according to an Safaricom Business ad.

Diners can now pay restaurant bills via M-Pesa under a new partnership between Kopo Kopo, Eat Out and Safaricom. Restaurants accept payments at 1.5% per transaction.

 

MasterCard and Equity Bank introduced PayPass enabled debit cards in 5 African markets which will enable merchants to receive payments via low cost add-ons linked to applications on their mobile devices (such as a smart phone or tablet) 

Mastercard and I&M Bank launched a multi-currency (Dollars, Pounds, Euros) prepaid card which enables users to load up  to $10,000 and make foreign currency purchases without incurring exchange rate or other charges.

MasterCard also released a study called the MasterCard African Cities Growth Index that showed that Accra, Lusaka and Luanda offer the highest growth potential in Sub-Saharan Africa. Other ranked cities included Dar es Salaam (4), Addis Ababa (5), Nairobi (6), Kampala (7), Johannesburg  (8), Cape Town (11), Mombasa (12), Lagos (13),  and Khartoum (19).

Credit reference bureaus like CRB Africa and Metropol are expanding across East Africa.

The inaugural Mobile Money Africa Awards will be held in Johannesburg next month, to award the best mobile money app, mobile banking service, and mobile money platform for Africa, among others.  

Nation Hela launched last year has 8,000 active cards in use.

With PesaPal, Kenyans in the Diaspora can send school fees payment directly to 12,000 schools in Kenya using their credit cards (no need for money transfer service). 

Shell Kenya have a visa card promotion to encourage motorists to swipe their cards and pay for fuel The platform is powered by Equity Bank POS at all Shell stations, and station owners are not charged commissions for card sales (Shell pays all commissions).

Tangaza321 is said to be the second largest mover of mobile money behind M-Pesa. The Tangaza system uses biometric data (fingerprints) as many customers don't possess national ID cards and allows them to send money across all networks, even to people who don’t have mobile phones.

A team with the University of Nairobi’s University Students Community Organization (Uniscoo)  has developed a prepaid card for university students. Uniscoo which has 25,000 students seeks to encourage good money management among students through the use of the prepaid card powered by MasterCard.

Kenya Bank Rankings 2012 Part I

Ranked by assets (Placing in 2011)                   

1 (1) KCB [assets of Kshs 304.1 billion ($3.58 billion), profits of Kshs 15.75  billion ($185 million)]

2 (2) Equity 

3 (3) Cooperative 

4 (5) Standard Chartered    

5 (4) Barclays  

6 (6) CFC Stanbic 

7 (11) NIC     

8 (7) Commercial Bank of Africa

9 (8) Diamond Trust     

10 (9) I&M [assets of Kshs. 91.5 billion ($1.07 billion), profits of  Kshs 4.72 billion ($55.5 million)]

11 (10) Citibank 

12 (12) National Bank

13 (15) Chase    

14 (13) Bank of Africa    

15 (14) Baroda   

16 (16) Prime    

17 (17) Housing Finance    

18 (19) Imperial    

19 (18) Ecobank     

20 (21) Family Bank  

21 (20) India   

22 ABC    

23 Consolidated Bank     

24 Fina   

25 Equatorial   

26 Gulf African    

27 Development Bank   

28 Giro    

29 Fidelity   

30 Guardian     

31 Victoria    

32 First Community     

33 K-Rep    

34 Habib AG Zurich  

35 Transnational     

36 Paramount     

27 Habib Bank     

38 Credit Bank     

39 Oriental     

40 Middle East     

41 Jamii Bora    

42 UBA     

43 Dubai [assets of Kshs 2.58 billion ($30.4 million)]

2011 Kenya Bank Rankings Final Word

Local banks rules, but KCB holds off Equity

The top local Kenyan banks as at December 2011, ranked by assets are:

6 (6 last year) CFC Stanbic Bank: Steady assets of Kshs 140 billion ($1.7 billion) and profit of Kshs 3.1 billion ($38 million)

5 (4) Standard Chartered: Assets up 15% to Kshs 164 billion , and profits went up 8% to Kshs 8.25 billion. Deposits grew 22%, and loans went up 48% as they halved their government securities to Kshs24 billion. (Barclays & KCB also reduced their government securities positions compared to December 2010)

4 (2) Barclays: Drop from 4 to 2, but still have the best return on assets at 7.18% on a slightly smaller asset base of Kshs 167 billion. Profits went up 11% to Kshs 12.01 billion, and loans went up 14%, but there was no change in deposits.

3 (3) Cooperative: Was leap-frogged by Equity Bank, but gained a place thanks to shrinking Barclays. Steady but slow growth as assets grew by 9% to Kshs 167 billion, deposits grew by 15% and profits by 11% to Kshs. 6.16 billion as the bank still seeks to move beyond the cooperative sector.

2 (5) Equity Bank: Leap from No. 5 to 2 after reporting assets of Kshs. 177 billion and profits of Kshs. 12.1 billion, signifying growth of about 32%. for each. The years of annual 100% growth are over but as John Staley the Director of Mobile Banking and Payment Innovations, told attendees at HP leadership event dubbed Staying Ahead of the Pack, the bank has grown ten-fold every five years leveraging on technology and always with the mission to provide affordable financial services which they now plan to take beyond Uganda and Sudan.

No.1 (last year No. 1) KCB assets of 282 billion ($3.45 billion) and profit of Kshs. 14 billion ($172 million) KCB remains at number and matched Equity, growing deposits by 29%, loans 31%, and profits by 22%.

Top Kenyan banking stories of 2011

Agency Banking took banking to your neighbourhood as kiosks became a bank - pioneered by Equity Bank, and followed by KCB (Mtaani) and Co-Op (Jirani) - mainly enabling cash deposits and withdrawals. Read more.

Cheque Truncation promised so much in new, more secure cheques, that would take a 1-2 days to clear compared to the current one week (four working days). However the launch was put off by a delay in printing of new cheques at several banks, and when the program rolled out a few months later, cheques resembled the old ones, and still cleared at the same old pace.

Fraud: There was increasing fraud reported as a result of faster, easier, banking through real time gross settlements and mobile banking, and there were more tales of thieves being arrested with dozen’s of skimmed ATM cards -
- so watch your statements every month

Mobile Partnerships: Banks surrendered on making customers use their own platforms for mobile banking, and instead opted to partner with Safaricom's M-pesa. In 2011, there were 8 banks that account holders could move money from their bank accounts to M-pesa and back - and these included large banks like Barclays, Co-Op, Equity and KCB. Also electronic banking is now dead as a premium products, and many of the same banks now have these as a free addition to their customers, saving them from the expense of having to print and mail statements to customers.

Super Profits: Did banks profit from the Central Bank's mismanagement of rates leading to weaker exchange rates? The Central Bank Governor said five banks did, but then refused to say who they were. Parliament continued to push and came up with a list, but could not prove the claims that the banks made super profits at the expense of the shilling.

Executive Suites: Management changes at KCB resulted in top managers leaving the bank - and moving to rivals like Family Bank and Jamii Bora where they cut equity based compensation deals based on performance (modeled after the Co-Op one of a few years ago).

Interest Rate Hike: Late in the year, there was an about turn in the monetary policy - to rescue the Kenya shilling that, and this came in the form of cut back in liquidity. From that, banks drastically raised their loan rates e.g. Mortgages at Equity bank went from 14% to 25% and many banks offered new loans at +30%. To stave off defaults, some banks held their existing loan rates steady, but with extensions of loan maturity periods. The Kenya Banker's Association then proposed other measures (PDF) such as limiting repayment rate hikes, not penalizing early payers and (unlikely) asking banks to absorb costs!

2011 Kenya Bank Rankings

Comparing to last year with the 2010 top banks

11. NIC and National Bank (No. 7 last year) both with Kshs. 70.2 billion ($790 million) in assets and profits of about Kshs. 2 billion as at September 2011. National Bank falls from No. 7 as it has been passed by some fast growing banks on the list. Quiet year, NBK has grown it's loan book by 52% compared to a year ago, but had less profit than last year which is odd for most banks. NIC is about 28% larger than a year ago in asset and will have about 3.75 billion in profit for 2011

10. Citibank Kenya (9. last year) September assets of Kshs. 71.6 billion and profits of 3.25 billion in another quiet year for the bank.

9 Diamond Trust (10) September assets of Kshs. 74.6 billion and profits of 2.4 billion deposits up 35% and loans up 45% from a year ago but with expenses growing at a slightly faster pace than income .

8. Commercial Bank of Africa (8) with September asset of Kshs. 75.7 billion and profits of 2.04 billion. Corporate bank made new came under political rad on the banking side, opened new branches in new malls in Nairobi like Junction, Galleria and then has re-branded in October with new logo. as excepted a rights issue is planned to right a capital adequacy position

7. Investment & Mortgages (last year 11) September assets of Kshs. 79.5 billion and profits of 3.2 billion in a quite year for the bank except for its' rapid growth and entry into mortgage finance.

6 CFC Stanbic (6) September assets of Kshs. 145.2 billion and profits of Kshs. 2.38 billion. The bank just announced a rights issue. Earlier in the year, has some board changes with new Chairman, and this is the first year of separation of the assets of the insurance from the banking

5. Standard Chartered (4) September assets of Kshs. 165.7 billion and profits of Kshs. 5.49 billion. This is one of the few banks to have a lower profit than a year ago (Kshs 6.1 billion). Opened new headquarters, but it's automation of customers service has led to some customer frustration - retail and corporate

4. Cooperative (3) September assets of Kshs. 167 billion and profits of Kshs. 5.45 billion. East African Newspaper this week announced that they will withhold divided to finance capital growth and postponed a planned rights issue to 2013 - and it was awarded best bank in Kenya by the Financial Times of London

3. Equity (5) September assets of Kshs. 172.6 billion and profits of Kshs. 8.25 billion. Another award winning year for the bank who pioneered agency banking model which has been followed by KCB and Co-Op. In the news doe accolades for their CEO, a deal to collect park fees for the Narok Council in the Masai Mara, becoming the latest Kenyan bank to diversify to Rwanda, but also for an about turn with the rest of the banking sector when they raised their lending rates from 15% to 25%

2. Barclays (2) September asset of Kshs. 180.9 billion and profits of Kshs 8.9 billion. A quiet year of modest growth for the bank in danger of being overhauled by Equity

1. KCB (1) September asset of Kshs 273.9 billion and profits of Kshs. 8.6 billion. Increased it's gap from Barclays, and matches Equity’s reduced growth rate. Emphasized connectivity across East Africa, had a management shake up - and with i's regional presents, it has assets of Kshs. 322 billion ($3.6 billon) and profits of Kshs. 9.1 billion ($103 million)

Dividends Payments across East Africa

Having bought shares in recent East African IPO's (Uganda: Stanbic Bank and Rwanda: Bralirwa Brewers), there appears to be some progress in addressing one of long standing problems of buying such shares - and this is the bank charges associated with receiving and having to process dividend cheques that are paid in currencies that are fractionally weaker than the Kenya shilling

With Stanbic, the Kenyan arm of the African bank has shown little interest in facilitating this even though a significant number of Stanbic Uganda’s 25,000 shareholders are Kenyan. In fact, the staff pension funds of Kenya Airways and Central Bank are listed among the top 10 shareholders of the bank.

At Bralirwa, the dividends are issued by KCB Rwanda and via a late message, KCB Kenya state they are paying/cashing the cheques up to RWF50K (~Kshs 8,000) across the counter. ( If higher the cheques will be sent for to Rwanda).

While the next step should be for East Africans to receive cross-border dividend payments by mobile money such as mpesa dividends this is only available to Kenyan shareholders. For now, the facilitation of affordable across-the-counter dividends, and other cross border trade & investment payment options is something that banks, not just KCB, with a regional footprint like Equity, Stanbic, Diamond Trust, and NIC should also take up.


EDIT: New communications from the banks show new options for Kenyans who have invested shares across East Africa as follows:

Bralirwa: Any cheques of less than RWF 50,000 (~Kshs 7,750) can be cashed at the counter of any KCB Kenya branch at a fee of RWF 200 (Kshs 31) on production of an ID or a passport

Stanbic Uganda: no certificates will be issued for the 1:1 bonus, and no physical annual reports will be mailed. But shareholders can now elect to receive dividends by electronic funds transfer, or mobile money (airtel money or m-pesa) after confirming their details at Comprite (Uganda) Registrars whose Nairobi office is at Marakwet House, Elgeyo Marakwet Road.

The Future of the Post Office?

I’ve had many recent trips to the post office, tracing lost dusty packages, new keys, dividend cheques and other mail which 85% of which are bills & statements, and 10% are marketing materials & junk. Very rarely do you get a personal letter in the mail, and that's usually around Christmas.

The post offices are run by teams of (mostly) older workers, who are well trained, dedicated, and honest in their work. However they work in a rigid bureaucratic environment and that means that almost every process has to be cross-checked & triple check, with signatures to be obtained by several people seated a few feet apart.

When Equity Bank released their half year results last week, their CEO James Mwangi spoke about the bank having reached the maximum productivity that could be attained from physical bank branches. They were now shifting to a whole-hearted embrace of agency banking model, which they had initiated in Kenya and sold to the Central Bank.

With agency banking, Equity has been converting small kiosks, cyber cafes (which are dying), pharmacies, garages into mini banks (open you own bank). Equity envisions having 5,000 agents (2,300 are now operational) and also have them sell insurance, airline tickets, and other services.

For Equity they only pay commissions per transactions that agents complete as opposed to the fixed cost of operating their branches with. And for agents, the current agency rules means that they can't be mutually exclusive (like phone dealers and m-pesa agents tied to Safaricom). This means a pharmacy can offer agent banking services for KCB, Equity, even smaller physical reach banks like DBK and Giro.

Mailboxes at Nairobi Post Office

While these new agents have to overcome weaknesses of customer service, training, security (physical & cyber), the post office already has many of these attributes taken care of, plus they have steady foot traffic for letters, and parcels in their well known & guarded premises, and with ample space to expand.

The local post office currently acts as (non banking) agents for the among others; the Kenya Revenue Authority (parcel are opened and tax is assessed has to be paid before release), Old Mutual (mutual fund), Safaricom (airtime), Airtel Money (mobile money transfer, pensions (posta), salaries (for school teachers), and several utilities - DSTV (satellite TV), Nairobi Water, Kenya Power, Kenya Charity sweepstakes (Lotto) etc.

A new addition is acting as bank agents for KCB customers who are depositing or withdrawing cash. And that could be the future of the post office - as a financial supermarket for several banks, financial and utility firms.

Your Bank, Your Neighbour

Agency banking came of age today with launches of agency banking by both KCB (‘KCB Mtaani’ - translation KCB in your neighbourhood) and Co-Op ('Co-op Kwa Jirani' -translation Co-Op in your neighbourhood) which are the largest and third largest banks by assets respectively. They follow in the steps of Equity Bank who have had agency banking for several months

Why Agency Banking? If 3 of the country’s 5 largest banks with the largest branch footprints chose to go agency banking. Agency banking expands the reach of the bank about 100-200 branches to anywhere from 1,000 to 20,000 outlets through the agent model Speaking at an investor briefing last year, Equity Bank CEO James Mwangi spoke of the extra reach would bring for them and which signaled an end to the rapid branch and staff expansion that the bank had been known for.

Equity initially looked like they would partner with Safaricom’s strong M-pesa agent network (22,000 agents) for their banking extension, but that partnership seems to have hit a brick wall) and now the field is open to dukas, bookshops, and grocery stores, kiosks, hardware & phone sales shops, and others established shops especially in remote villages where banks are unlikely to open branches.

The shops must fit the criteria set by Central Bank of Kenya (CBK) for bank agents (more here) - including that they cannot be mutually exclusive. (Not being tied to one bank can be an opportunity for established village business owners to act as agents for several banks)

What can agents do for bank customers?
Co-Op: Cash deposits, cash withdrawals, school fees payments, utility payments, balance enquiry, issuance of mini-statements.
KCB: Deposit taking and withdrawals. In future, balance enquiries, loan repayments and requests for chequebooks & account statements.
Equity Bank: Deposit taking, cash withdrawals, as well as origination of account opening & loan applications.

Kenya Bank Rankings 2010: Final Word

From the earlier estimates now there’s a complete list of the published accounts for all commercial banks as at December 31 2010.

1 (1) KCB: Assets of Kshs 223024 ($2.69 billion) [pre-tax profit of Kshs. 11.53 billion ($139 million)]
2 (2) Barclays
3 (4) Cooperative
4 (3) Standard Chartered
5 (6) Equity
6 (5) CFC Stanbic
7 (7) Commercial Bank of Africa needs to raise capital?
8 (14) Investment & Mortgages overhauls Citibank, National Bank, Diamond Trust and NIC
9 (9) Citibank
10 (8) National Bank of Kenya
11 (10) Diamond Trust
12 (11) NIC
13 (13) Prime Bank
14 (14) Baroda
15 (15) Housing Finance
16 (19) Ecobank
17 (16) Bank of Africa
18 (21) Chase
19 (20) Family Bank
20 (17) India
21 (18) Imperial
22 (--) Kenya Women Finance Trust (DTM) new deposit taking micro-financed [assets of Kshs 18.9 billion and pre tax profit of Kshs 464 million ]
23 (22) Fina Bank
24(24) Development Bank of Kenya
25 (29) Consolidated
26 (34) Equatorial (acquired Southern Credit)
27 (23) ABC
28 (28) Giro
29 (25) Gulf African (Kenya's first Sharia bank breaks even in third year)
30 (31) Fidelity
31 (26) Habib AG Zurich
32 (30) Guardian
33 (27) K-Rep
34 (34) First Community Bank
35 (32) Victoria
36 (33) Habib Bank
37 (38) Transnational
38 (41) Oriental (boosted by other income)
39 (37) Credit
40 (40) Paramount
41 (36) Faulu Kenya: (new deposit taking micro-finance institution) [assets of 4.3.9 billion and pre tax loss of Kshs 164 million ]
42 (39) Middle East
43(43) UBA: slow start in Kenya, but finally started lending
44 (42) Dubai Bank
45 (44) Jamii Bora: formerly city finance bank, and was acquired by microfinance company Jamii)

Real Estate Moment

Homes Expo: There was also another real estate expo at Sarit Centre last week - and some of the price ranges observed included

- Two bedroom apartments in kahawa are Kshs 5 - 6M
- 3 bedroom in kileleshwa/kilimani Kshs 16 - 17M ($200,000)
- 3 br Athi River are Kshs 5 – 7 million ($70,000 - $90,000)

Other property prices of interest seen there, and also away from the expo include
- Tatu City and other ongoing developments like Migaa and Thika Greens which are modern estate communities that encompass shopping malls, schools, community centres, club house, sporting facilities/golf course, medical centres etc.
- From Regent - twelve (12) units of 2-br flats in Umoja for Kshs 16 million ($200,000)
- New office space in the Nairobi area ranges from Kshs 10,000 to 15,000 per square foot - and at Morningside it's 12,000 per sq foot ($150/sq.ft)
- In the newspapers was a 9-storey building for sale, which is located in the central business district of Nairobi with 99 year lease, is fully leased, and brings in annual income of Kshs 20 million ($250,000)
- From Kenya Valuers are some of the priciest real estate prices seen including; an acre of land in Kilimani for sale at Kshs 180M ($2.25 million) and another at Kshs 225M ($2.8 million), a 4=br house in Muthaiga for Kshs 150M, a 6-Br in Windsor for Kshs 180M, and a 5-br in Runda that rents for $7k/month.

Mortgage report: Was released by the World bank and Kenya's Central Bank - and it showed that KCB and Housing Finance are the leading banks in the sector with about 4,000 mortgages worth Kshs. 17 billion ($212 million) each . Barclays have 742, CBA 238, Prime 651 and First Community with 157 – which presumably offers only sharia complaint products. Mortgages rates average at 14% up from 12.5% in 2006 - and there were 6,000 new mortgages in 2009 up from 1200 in 2006.

Developers Club: KCB Kenya’s largest bank and leading mortgage company has a developers club for local developers and held a session this week in Nairobi.

Some Highlights
- Mumo Musuva, an architect with Planning Systems talked about this being a very exciting time for Nairobi, currently ranked No. 102 in the large cities of the world with a population of 4 million and which is projected to become No. 73 with a population of 8 million - and with 60% of the country population below the age of 30.
- He’s also lead developer with Tatu City and they are going to use digital management & GIS, detect when someone leaves a tap open, cut off the utilities of tenant who don’t pay, collect rates and deploy that to infrastructure etc.
- He lamented the low quality of most real estate buildings & projects in Nairobi as developers have been chasing quick returns (ROI) – these will change to world standards including environmental designs as the requirements of working with large tenants are evolving.
- The definition of real estate is changing from owing a house or building to it being seen as a commodity - and this is evidenced with the current investment for speculative purposes and eventual roll-out of REIT’s.
- There are massive opportunities for developers in Rwanda, Uganda, south Sudan which KCB can finance.
- They also launched a new KCB property guide will feature developers. The bank also expanded its mortgage offerings (available at their 168 branches), to loans for Kenyans in the Diaspora at 7% in foreign currency as well plot & purchase construction loan - unlike with previous arrangement where one had to pay off a plot loan before commencing construction
- The developers forum which has 300 arranges fact finding trips abroad to China, and possibly South Africa, & Brazil - and Joe Mungai of Tamarind Properties advised any developers to take such trips before embarking on any large projects to learn concepts like construction for low end housing, waste treatment & gated communities.

REIT’s: The Capital Market's Authority (CMA) is undertaking a review of the Real Estate Investment Trust (REIT regulations ) & rules that formulated they in 2009. They will get feedback from developers and real estate institutions on product demand, tax rules. D/L is March 25 2011