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!

This time around: Kenya Stockbroker collapse, Report leaks, Credit Reference Live

Time for another this time around post which looks at stories that recur in the business environment

Mars Group Kenya: The an anti-corruption watchdog group is the wikileaks for Kenya, re-publishing hitherto top-secret government reports at their website.

Mars Group research and produce their own reports, but their archives contain a growing list of reports of corruption in Kenya that is worth checking out. This week they have reports done by PricewaterhouseCoopers for the government of Kenya on the collapse of Triton Oil Company and on the misuse of funds for Maize famine relief in 2008. Last month they also released the report on the sale of the Grand Regency hotel. The Triton report shows that:
- At Kenya pipeline company (KPC) the oil collateral agreement was poorly drafted and ambiguous. Also managers had great discretion, procedures were lax /there was inter-departmental conflict (oil was released without verification) and documentation was poor (since documents would get lost at KPC, financers would exchange documents then present them all to KPC at once)
- Triton was aggressive with financing and would arrange for shipment before they got financing. They were stuck at some point and KCB entered into a finance agreement for goods when the ship was already in Kenya
- Bad banking Ecobank have no claim against KPC, while the Fortis claim against Triton is suspect. Also Glencore had stopped financing Triton in June 2008 as they were suspicious about KPC fuel stock claims
- KCB and other financiers did not cooperate with the PWC investigators
- The debt owed to KCB may be substantially lower than KCB claims and they have provided little information to assist in verification of the Triton debt.
- Kenya anti-corruption commission should investigate further staff named in the report

GoK Bond The Government of Kenya is going to raise Kshs 14.5 billion for infrastructure via a third infrastructure bond. How does that compare to a similar bond a year ago?
2009: Kshs 18 billion ($240 million), interest rate 12.5%, minimum bid Kshs 100,000 (~$1,250), maturity 8 years, principal repaid in 2015, 2017, 2021. Funds used for road, geothermal, water projects
2010: Kshs 14.5 billion ($188 million), interest rate 9.75% tax exempt, minimum Kshs 100,000, maturity 8 years, principal repaid in 2016, 2018. Funds used for water, sewer, irrigation, road, and geothermal projects
The 2009 bond was over-subscribed and the only notable difference in 2010 is the lower interest rate offered. The CBK has decided the high cost of loans offered by commercial banks and perhaps by offering the same banks a lower return on government bonds; they will offer more competitive borrowing rates to the public

Credit Reference: February has also seen the licensing of Kenya’s first credit reference bureau – CRB Africa by the bank regulator, the Central Bank of Kenya. Following this, commercial banks have apparently commenced sharing information with the agency. Some of the rules governing sharing of data were highlighted when the credit reference rules were gazetted almost two years ago. These include
- 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) and 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
So what information will they compile?
- For individuals: Name Citizenship ID / PIN Postal/ Telephone Credit history (as reported) Court judgments (as reported) Referees
- For companies: Company registration details postal/physical/telephone Credit history (as reported), Court judgments (as reported), Guarantees
Shareholdings/directorships

Stockbroker collapse: This month saw the placing of another stockbroker under statutory management – this time its Ngenye Kariuki Stockbrokers [Last year in March it was Discount stockbrokers that was placed under statutory management]

Despite strong defense from the Kenya Association of Stockbrokers & Investments Banks - KASIB who say the brokers problems were manageable and did not warrant the intervention of the authorities the broker was in a weak financial position.
A summary by Faida Investment Bank, based on the published un-audited results of Ngenye Kariuki showed this
Half year June 2008 versus 2009
June 08 income 35m, expenses, 21 million, pre-tax profit of 10 million
June 09 income 3 million, expenses 10, pre-tax loss of 11 million
Share capital of 50 million, capital reserves of 251 million (which many brokers draw from the sale price in 2006 of Francis Thuo stockbrokers) [and the same amount appears as an intangible asset) at June 2009, the broker had an overdraft position of 63 million and receivable of 127 million which KASIB is laying at the feet of Citibank for withholding funds from the 2008 Safaricom IPO that are owed to several stockbrokers.

Uchumi 2010 AGM

On 29th January 2010 shareholders of Uchumi Supermarkets [in receivership] held a meeting at the Kenyatta international conference centre KICC). It was not t really an annual general meeting as the Specialist receiver manger (SRM) Jonathan Ciano noted in his opening remarks. It was a meeting of shareholders, and he was a guest (angling to be CEO though). There is no board, but the reorganization task force sat at the high table as the board and the meeting chairman was the Kenya Government Solicitor General Wanjuki Muchemi. It was part company meeting, savings & credit/investment club and religious meet that one felt a sense of revival or resurrection [of Uchumi] whose receivership period may end early in February 2010 – after almost 4 years!

Investor Relations: Uchumi has been run like a company in all aspects during the receivership. Most important has been the way the SRM has communicated with shareholders, dealt with suppliers (given them as much preference as banks), and produced and published periodic financial accounts (both un-audited and audited) – a normal receiver manager only has to produce an abstract of receipts and payments to be filed with the government and the banks. At the meeting entrance all shareholders were handed a CD with audited accounts for the years 2006 2007 2008 2009 a/c [however, so far I’m unable to read mine – which is unreadable / corrupted]

The earlier published agenda for the day was
- Adopt auditors report for 07 08 and 09
- Elect Albert ruturi and peter kabuga as directors
- Re-confirm, Ernst & young as auditors
- Lift receivership on February 1 2010 by (i) convert suppliers debt into equity (ii) restructure government loan into long term debt (iii) Restructure KCB and PTA bank debt

‘Directors’ introduced included SG Wanjuki Muchemi, the permanent secretary in the ministry of trade, representative of Kenya wine agencies limited (KWAL), industrial & commercial development corporation (ICDC), Ernst & Young audit firm, and Kimani Rugendo (long term uchumi supplier and has spearheaded their negotiations during receivership) and others
SRM Ciano outlined the recovery steps turning round the company from 2006 [lost 750 million on sales of 3.5 billion] and 2007 [sales of 4.5 billion an a loss of 256 million], to 2008 [sales of 6.8 billion an profit of 95 million], and 2009 [sales of 8.2 billion an profit of 420 million]. At the time beginning of receivership uchumi owed 957 million to banks, 900 to suppliers, and 125 million to ex-staff, while today it owed 130 millions banks and 192 million to current suppliers while it has paid off all ex-staff. Also during the 7 months were closed in 2006, losses of ~150m were incurred
The Trade PS Mr. Ali also spoke, and then it was the turn of the SG. Solicitor General (SG) Muchemi said nothing was fundamentally wrong with uchumi when it collapsed, just bad governance. President Mwai Kibaki and government were determined that this icon of Kenyan business would not be allowed to die and he was asked to lead a task force to revive company (along with investment secretary Esther koimett and then-Trade PS David Nalo). He led the team re-negotiated all loans and leases and appointed SRM. He noted what US President Obama did to bail out US banks is exactly what Kibaki has done to revive Uchumi and that it was don’t in a unique was because traditionally in Kenya, companies that go into receivership, usually die (are liquidated, not revived)
The E&Y auditor read out their, and noted with an emphasis of matter that still the liabilities of the company exceeded the assets the 180 million. At the time they were appointed, the accounts had not been audited and they have now been able to audit accounts for the last three years for presentation to shareholders.
Shareholder Q&A
- Explain tax in profit. Yes its true, that Uchumi got a non-cash tax credit Kshs. 250 million that boosted their 2009 profit to 420 million. C
- Re-claim the Uchumi flag-ship store city square CRM said that matter was in court [where former directors of Uchumi have been charge in court with illegally selling the store] and being pursued by the attorney general and CID
- Is it the right time to exit receivership? All the things are in place proven record, and the banks (KCB and PTA) have approved lifting of the receivership if certain conditions were met.
- Negative balance sheet position Ciano said that’s 180 million down from 1.2 billion in 2006. He added that if shareholders approved the debenture conversion, government loan restructuring, and combined with Uchumi’s profits for 2010 (based on the six month numbers), the balance sheet position is currently a positive 594 million
- CSR activities of the company SRM explained that they are very active in this and spearheaded famine relief donations with several local stations among others

Other
I left early [after adoption of audited accounts and confirmation of Ernst & young as auditor] but it seems all resolutions were passed
- Shareholders approved the conversion of Kshs 211 million of shareholders debentures into equity , along with another 266 million from suppliers
- Shareholders approved restructure of government loan into long-term debt. SRM has applied to government to restructure their 850 million debt into 350 million of equity and 450 million to a loan which will be paid off in 4 years
- Uchumi will pay the remaining 130 million to KCB and PTA banks by end of the year
- Not sure who were appointed as directors
- Seems Trans-century are still interested in uchumi: The Transcentury Ltd group, which is chaired by James Gachui and whose directors include several men close to President Mwai Kibaki, is trying again with the executives of Uchumi Supermarkets Ltd. (...via africa intelligence)

SWAG: small calendar, account on CD, and plenty of water to drink. It was a duel of local barons between former director Chris Kirubi (Dasani from Nairobi bottlers) and Kimani Rugendo (Mt. Kenyan brand water) and there was so much ~4 per shareholder seat

Who Got Court?

When you spend the day the Commercial Court in Milimani it’s not a fun day. It’s a dreary and boring rotation of procedures and observations of roles played by (mostly) young lawyers, who learn to master the art of speaking.

When a case is called, lawyer stands up and states their name, "I am Odinga for the plaintiff" or "Kibaki for the defendant", and wait......... for about a minute while the judge scribbles out these details. The sequence is repeated for about another ten minutes, as a lawyer speaks for about ½ a minute at most, and the judge writes out the details. Only one lawyer speaks at a time, while standing up, and only at a glance, or reminder, from the Judge to continue or speak up

As with all Courts in Kenya you bow as you walk in or out when court is in session and please don’t have your phone rings in the presence of a mischievous judge.

The Judge is like a teacher who takes homework from in a particular case. Who filed their affidavit? Who has not filed their reply? Who is not ready to proceed and why? This is often the outcome in each case as one or more parties is not ready to proceed and asks their lawyer asks the judge to indulge them with an adjournment – another two weeks to reply, get evidence, issue summons etc.

The court is low key, no guards, bailiff, handcuffs, cells, and metal detectors etc. that are found in criminal court houses. You are unlikely to spot a famous defendant, and there is rarely the colorful testimony as you would find a criminal court where the theft of a chicken is before the court.

It is a back and forth of civil, not criminal, disputes between two parties or companies over money, mediated by their lawyers and governed by documents, evidence, contracts etc. The cases are often open and shut, but one party is too stubborn to honour a contract, and gets a lawyer who goes through the charade of filing a case or a defense - Bank vs. debtor, debtor vs. bank, company vs. supplier, etc. The lawyers know this, and know each other even as they refrain from throwing barbs at each others clients. Parties to a dispute are often encouraged to settle out of court, or come to this conclusion after many months of legal bills and mountains of evidence.

There are few smoking guns or surprise Perry Mason like moments that overturn the course of a case, these sometimes happens – and a lawyer friend of mine has won shocking cases on technicalities such as with this example.

That’s a day at the Milimani Courts.

the famous question/phrase who got court? is attributed to the Late ODB of the Wu Tang Clan who uttered the phrase when he discovered, in the middle of a press conference, that he had another court hearing due. Listen below to the clip from the Howard Stern radio show on You tube – Part II has the phrase, Part I is the funnier one to be listened to first

White elephants never go extinct

stairway to heaven

The last few years has seen white elephants disappear from the scene, as seen in defunct projects that have stalled, and died and are condemned to ridicule. They dot the landscape in towns and rural areas, and are seen as monuments to changing global trends, poor planning, bad management, government pork, largesse, populism, toxic corruption etc.

Properties lie dormant for years, idle, and then every few years, someone comes along and picks up a white elephant carcass and revive, breathes life back into it; sometimes its the government and sometimes its the private sector, foreigners, other entrepreneurs who come along and say; that "it was a good idea, but it was executed wrongly ((e.g. the Numerical Machnining Complex is something every industrialist talks about but is forever condemned because it was associated with the nyayo car.), this time we'll do it correctly" - and they throw in some cash, put a coat of paint, sometimes tear down white elephant carcass, re-open a factory or hotel, put on a new coat of paint, add a production line, change the public image etc. And things change for a few years in the revived area.

But it's a cycle of up’s and down's - and when one year something is revived, somewhere else something is going bust. This week as there are plans to revive Panpaper, down goes the Kenya planters coffee union (KPCU) and numerous dams built for water conservation at apparently inflated prices.

So white elephants will never die; as long as you have dreamers, entrepreneurs, go-getters, leaders with bad intentions, crooks who default - but mostly people who say it can be done! Sometimes they are right and we applaud and revel in their success, but sometime they are wrong - and more white elephants are born.

recent pics of a few

Twitter Week: KQ Strike and Equity Profit Dips

Twitter is a micro-blogging tool that is relly nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter:

- @coldtusker @kenentrepreneur the tea board of Kenya wishes to remind you that hawking of green tea leaf is
- Signed up too many usgov twitters to keep with #hilaryafrica. Will edit after her trip
- This is a good time for generator and diesel sale companies. I think there was a tax break for generator sales mentioned in uhuru's June budget speech. No power last night, or this afternoon: will ignore the power ration schedule as a work of fiction KPLC. As bad as Nairobians complain about #KPLC the water crisis is of more concern
- R/T @shiroh the Stanchart diva trip is such a deal. $1,000 for 5 (shopping) days in South Africa for Ladies (incl, flights, hotels)
- Ethiopian Airlines net profit was $118 million, revenue up 33% with new airbus & Boeing orders pending. R/T @Jellyfish78 Kenya Airways vs. Ethiopian Air on Youtube is an informative but nasty spat http://bit.ly/13N34f and http://bit.ly/CM7Np. Also Ethiopian Air to fly Addis-Mombasa (via Kilimanjaro) http://bit.ly/OHsGq
- Diasporans giving up on Kenya http://bit.ly/K78g7
- Tahidi High tackles the mystery of paraffin in high school food
- On CitizenTV Delamere family shot live video in court and in jail. How? Still it’s a good spot light on the archaic judiciary. Delamere’s say Kenyatta family owns their dairy now while neighbours want to grab their 56 000 acre farm. Tom delamere testimony live - shot two dogs with two shots and denies he shot the man who died. How did 'top lawyer' tom ojiambo allow this?
- R/T @milonare Impunity starts with you, remember that when you cut in traffic and feel nothing. We reflect our leaders #fractals #Kenya
- Barclays Kenya raising credit card rates to 3.0% (up from 2.5%) from next month
- r/t @mainat Banks have reduced lending not because of interest rates but poor prospects of recovering loans in an economy that has stalled
- @rookieKE if you bank with consolidated, you can transfer cash from A/C to Mpesa using your phone
- You can get to the top of KICC Nairobi for $2 http://www.mamamikes.com/bl... (Though I believe Times Tower is higher)
- r/t @highwayafrica09 Call for Nominations - SABC-Highway Africa New Media Awards. See http://highwayafrica.com
- R/T @LarryMadowo FYI Equity Bank H1 PBT down 15% on one-off transaction last yr related 2 Safaricom IPO, Q2 profits up 25%
- Blog job: write about blogging, social networking & social media from Asia, MidEast and African countries http://tinyurl.com/ljxmcp
- R/T @kachwanya TEAMs shareholders seem to be the confused - there is no onward connectivity between Europe and Dubai, where TEAMS ends!
- Kenya stockbrokers association (KASIB) launched investor education handbook today http://www.kasib.co.ke/
- So @kachwanya @kainvestor, Nairobi City Council earns 14sh ($0.2) for every flyer tossed out of a car window?
- R/T @alykhansatchu #Kenya new 234 item price basket will track mobile-#cellular and computers charges & #camel meat #inflation
- So many aviation colleges in Nairobi with unemployed graduates, these (striking)@kenyaairways workers should know this
- Spent 15min at Nakumatt queue while some afro-diplomats paid for groceries with us $. Their exchange rate is KES72 =$
- COTU's Francis Atwoli is going to brag about ending the #KQ strike, and coming through for workers.

Something to Do

1. Donate

Through Mama Mikes and a bloggers for Kenya initiative.



There are also other other initiatives - like Save-A-Life, Kiss FM's Jaza Lorry, the Nairobi Women’s Hospital, but beware of a revival of some NGO’s and unusual causes

2. Report Violence
Ushaidi.com is a tool for people who witness acts of violence in Kenya in these post-election times. You can report the incident that you have seen, and it will appear on a map-based view for others to see.



(3) Become a better tipper
Or, better yet, start tipping - because in Nairobi, tipping is something that we have left to tourists only.

Kenyans are woefully underpaid especially out security forces (some of whom had not been paid salaries even as they were asked to quell post-election violence) and yet they also guard our houses, million shillings cars, look after our families, serve us meals they can never afford, and never ask for more.

Many of them live in the very areas that relief initiatives are being formulated for - but just because they are not visibly suffering does not mean they don't need our help. And while many of us are at the mercy of people whose ability to take our money we can’t say NO to (taxman, church, landlord, relatives), we need to spare a moment for those less fortunate who we interact with everyday, who also have lives and families, and are more at risk after working a full day. Yet we dismiss them so quickly, if they ask or dare to look like they are about to ask for help while at work.

So even if it means paying less tax or tithe, or having one less beer in order to spread some wealth around, get to know these people better and tip them well; waiters, maids, taxi drivers, bank clerks, and especially policemen – though how this can be done without being seen as bribing them – is a delicate task to accomplish.

Banking briefs

- Kenya’s leading bank, Barclays, is the first to acknowledge a distressed loans problem resulting from the post-election violence and standoff.

- From IHI blog; tired of bank charges? Consider a shariah account since they won’t incur frivolous charges that build bank profits.

Paper banks : Is the Nigerian banking model, which Kenya is going to emulate with increased share capital and consolidations, built on sand and bilking shareholders?

Other observations
- China speaks on the Kenyan political crisis blaming the west for imposing democracy on Africa.
– Mobile phone wars continue with Celtel shockingly low rates, while market leader Safaricom won't compromise and keeps making money
– Hawkers who expected to be evicted from downtown Nairobi, on December 28, now enjoying continuing business with the political uncertainty in the air
– It’s not quite as staggering as Marion Jones or BALCO scandals, but from this month on a whole bunch of expensive, long hitting, golf equipment, widely used in Kenya,(including some Callaway, Titleist and TaylorMade), are now illegal. If caught using them you will be disqualified from a tournament or match event.
– Rapidly growing and expanding Fly540 airline taking a dig at Kenya Airways – with an advertisement that their propeller powered aircraft (ATR72) are more environment friendly than KQ's jets
– Advertisers taking down the politician billboards that littered the city
– As fuel prices pass the 90 shillings a litre, will some petrol pumps in the country be able to process the sale prices over 100 per litre (3-digits) which are around the corner?
– Where’s the prophetic prophetic Mutahi Ngunyi gone to?

Opportunities

- Kenya Airways: Head Of Marketing & Corporate Communications, In-flight Performance Manager, Load Control Officer, Head Of Is Development (IS) , Systems Administrator, Training Officer – Fares & Ticketing, Qualified Pilots, Multilingual In-Flight Attendant, Customer Service Agent
- Sales positions at KCB. download form here.
- Director of research at the Mo Ibrahim Foundation. D/L is 31/1

Uchumi Anniversary

One year ago today, Uchumi closed down. The management resigned, and the government later stepped in with a rescue package, receiver manager, and arrangement with the company’s' banks.

AGM season; Yesterday Uchumi held a meeting for shareholders. Watching KTN, it appears the media were kept out (as had been at past shareholder meetings). I was not able to attend (as a shareholder) and I am requesting any reader who attended to comment with a synopsis or key issues mentioned at the Uchumi meeting or any other AGM at KICC yesterday. Anonymous comments are given less weight, so do sign your comment with a name/profile please. (Media reports here and here)

This is AGM season and there are too many events to cover. I have tried to avoid going back to the same companies, but when you have two or three on a given day, in addition to other duties – yesterday company AGM's included Nation Media Group, Standard chartered and Uchumi, one can't be everywhere.

Uchumi Receivership: Media reports indicate that Uchumi (under receivership) may have improved performance by 50% over their best recent year. The audited results have not been released do they public, nor do they when a company is under receivership.

A receiver / manager (RM) (or bank hangman) is appointed by debenture holders (usually bank or financial institution) when they see a company is going to crash. His/her job is to salvage what they can for the banks to recover their money (usualy by sale of assets), not other shareholders or suppliers. By that measure, the Uchumi team (led My Mr. Ciano) has gone an extra mile in engaging & informing suppliers and shareholders in the recovery plan. Shareholders because Uchumi needs their goods on the shelves and shareholders to raise money.

RM's usually are unable to revive companies. This is because, by the time they are appointed, the company is beyond salvation. The owners/management will have run it down, hidden information from banks on the poor performance of the company, withheld payments to banks, staff and unfortunately to the tax man and city council, among other fatal decisions.

Some RM's have gotten very rich in this country, selling the assets of the company to themselves – at throwaway prices, employing their relatives, and enjoying the power to manager giant companies that they would not have risen to manage even if they had worked for 50 years. For others it has become a permanent way of life, as the company (under their management) remains profitable and they see it as a long term job – see the Naiorbi Grand Regency Hotel - that has been run by different RM's for over 10 years now). RM's also have to contend with lengthy court battles with the previous owners who also meddle in the company's affairs through proxies.

But occasionally, and if appointed early enough, an RM can actually save a company. He/she can make some harsh decisions to trim fat e.g. shut down an unprofitable unit that was consuming too much money, terminate bad contracts, and fire excess/expensive employees. They are able to make decisions that a sentimental management were unable to. It has happened before (rarely) and sometimes the now greatful previous owners will acknowledge the work of the RM to turn around the company and will now come back and pay the bank and takeover their now lean & profitable company.

History Repeats

It is now acknowledged that commercial banks have put the ghost of bad debts behind them and have moved on to new clean lending books. However a lot of the decline in non-performing assets can be attributed to an increase in the overall loan book (not really a decline)

Also, the future may not be without a repeat if you fast forward two years from now when a fraction of the unsecured loans being hawked at anyone with a pay slip now will likely have gone bad. With the passage of the in duplum rule banks have to cut their losses and begin collection efforts as soon as they realise a loan is in trouble.

But the courts are clogged and it is difficult to collect from unsecured loans as there are no assets to recover and where the amounts being pursued are not worth the legal cost in money and time.

Other recent happenings

- Diamond Trust (Kenya) to participate in rights issue of Diamond Trust Tanzanian where it owns 33%
- Equity bank growth getting super heated?
- Family Bank is Kenya’s newest bank
- Housing finance new product for first time homeowners
- Kenya Commercial Bank gets a new CEO
- Perennial loss maker Oriental bank (formerly Delphis) is on track for a profit this year following a restructuring deal at Miwani Sugar.

Giant in pothole

Mugoya Construction Company has been placed under receivership by their principal bankers KCB.

- Earlier post.
- How a receivership happens.

Bank eX Files

I remember watching the X-files when it was the show to watch. The agents would enter a dark warehouse or factory. They would whip out their flashlights and find their way through an abandoned building, tearing down huge cobwebs, wiping away dust, and peering under covers in search of a deformed skeleton or alien foetus.

That’s one the last unpleasant tasks of a bank hangman which is what I was doing today - minus the gun, courage, cute co-worker, and aliens of course.

Today we did the same thing, starting with opening many padlocks at the entrance, covering our noses with handkerchiefs, removing any light-colored clothes and stuffing our socks into our trousers before we entered this warehouse. My handy Nokia phone comes with a torch which proved to be useful as the place is dark inside even at noon.

We have heard gallant tales and applaud the efforts to revive companies like Kenya Meat Commission. But this is how the revival all starts - with bank workers breaking down locks they had put up years before as we take yet another round of prospective buyers to visit/inspect the abandoned property before they submit any bids.

The skeleton these agents are looking for is not hidden. Even as we move through the dusty place with torches and noses covered to keep out the dust we are looking at the skeleton of someone’s dreams - the building which they put up, the new machines they imported from South Africa & India (state of the art then, outdated scrap today), the managers suite they decorated, faded door signs around the well laid out premises marking rooms like productions, manager, bathroom, sales office where people would busily work towards realizing the full potential of the owner's dream.

Today it’s just a skeleton. But if the buyer likes the skeleton enough to put some money down, someone else's dream & vision will rise again over the skeleton of someone else's.

Mlolongo: As we drove past mlolongo yesterday there was a bulldozer knocking down a controversial petrol station built on the road reserve. Further down the road other buildings marked for demolition were beehives of activity with work men doing more demolition work. The owners' of these building have heeded the government’s directive and are removing their buildings at their own cost, and with a chance to salvage their stone and material.

But many are not abandoning their dream projects; – they are instead only shaving off about 10 ft of each building that they deem to have encroached on the road reserve, and hoping the rest of the structures will stand on their own. I hope they will be proved right in their assessment because when the bulldozers are done, there won't be any ex-file's for the bank to revive.

December 1 opportunities

Telkom dealership: resellers for Telkom’s 3G wireless service (fax, voice, internet) in Mombasa, Kisumu, Eldoret, Nyeri, Nakuru, Meru, Muranga, Kakamega, Voi, Kisii, Kericho, Thika, Embu, Malindi, Nanyuki, Garissa and Machakos. D/L is 5/12.

Water distributors for Ha Ha drinking water, nationwide.

housing: Satellite City - a low cost hosing estate compositing 265 units will be built in mlolongo athi river

Jobs

Various jobs at abbott site

Chief executive (& secretary to the board) of the Association of Micro Finance Institutions (AMFI) . Apply to info.amfikenya@africaonline.co.ke by 8/12

Legal officer at Del Monte. Apply to nanasi@delmonte.co.ke 13/12


Public affairs officer at the Canadian high commission. Apply to nairobi-competions-concours@international.gc.ca by 8/12

energy company involved in hydropower and geothermal development: petroleum geologist petroleum drilling engineer, exploration geophysicist, financial analyst, financial auditor. Apply thru PWC at ess.ke@ke.pwc.com by 15/12

I&M Bank: apply online for cashier & teller positions.

Brand & communications manager at java. Apply to hr@nairobijavahouse.com by 13/12

Kenya Wine Agencies Ltd: trade marketing representatives, information & communications technology manager. D/L is 13/12

Ministry of State for Youth Affairs
- Section officer II (500 posts)
- Technical instructors (61 posts)
Apply to the PS P O Box 34303 Nairobi by 8/12

Postbank: senior manager marketing & business development, database administrator, legal officer, internal auditor, inspectorate officer. D/L is 18/12

Safaricom: retail centre manager (Nairobi), retail centre agent (Nakuru, Eldoret, Mombasa, and Kisumu). Apply to hr@safaricom.co.ke by 8/12

Senior economist at the World Bank - Sudan. D/L is 11/12

Credit Reference Kenya

The Finance Bill expected to be passed early in 2007 will require banks to share information on non-performing loans and bad debts through credit reference bureaus. Previously.

Bank Hangman Part 1

Get into an anonymous taxi car and quietly drive towards a company’s office on Mombasa Road. You are all quiet in the car as you contemplate the mission you’ve been assigned this morning. Your weapon is contained in a new brown envelope that occupies the middle back seat of the car. It would be disastrous to loose this weapon - blown away or picked through the open window by a street thief, or to have it damaged by coffee stains or tears.

Finally you get there and sit for a minute to calm down the nerves. No need to go over your game plan again as you have discussed it several times over for days.

Doors open and team A calmly steps out, leaving reserve team B in the car. Team C and Team D are also on standby.

You stroll in to the company just before lunch time and tell the bored secretary you’re her to see Mr. Pape Badeta. And she casually waves us in to his glass office.

Pape rises to greet us; “Hi, it’s been a long time. Normally you call before you come here, you want to see the new product samples?”
“Yes, we’re fine”
On to business
“We'd like you to accept this on behalf of the company”
Pape opens the sealed envelope, and read the letter
"Oh dear"
Silence
“You’re recalling the loan?”
“Yes, can you pay the full 10 million shillings today?”
“I can’t believe it”
“I’m sorry”
“I talked to your MD last week about the company’s problems and he never said anything about this”
“Sorry, management has decided”
Silence
“Can you pay the 10 million today?”
“No! From where? you know my financial situation!”
“Ok thanks, we’ll leave now, sorry again”
Exit Building
Return shortly with team B from the car outside.
“Mr Badeta?”
“Yes” (Still in shock looking at letter on his desk)
“My name is Shilling Sing. The bank has recalled its’ loan and since you are unable to pay, they have also decided to put the company under receivership and appointed me as receiver manager. Here is my instruction letter; you are relieved of your duties. Please hand over the office keys and leave. I am in charge from now.”

Credit reference & bad debt collection in Kenya

In the East African this week, Credit Reference Bureau (CRB) Kenya Country Manager Wachira Ndege, expects more bank’s to use expert evaluation before making lending decisions especially when advancing (unsecured) personal loans. He reveals that Barclays, NIC, Stanbic, KCB card, Fina, and Southern Credit use CRB services.

Also a CRB subsidiary, Collection Africa, is bidding alongside Transunion and Metropol to purchase the bad loan portfolio of National Bank of Kenya at a discount’s of 60%o. Collection Africa has been contracted by collect bad debts by Stanbic Kenya, Stanchart Tanzania and Barclays (in Kenya, Uganda, Tanzania, Botswana, Zamia and Ghana)