Bankelele

Patient Capital: Ecobank’s Long Game for Shareholders

2026-05-31T09:24:35.561+03:00

For shareholders of Ecobank Transnational Incorporated (ETI), the parent of the Ecobank Group, which has the largest banking footprint on the African continent, the journey has been interesting.

The Bank has grown substantially since going public in 2006, in its twentieth year. The shares issued then were 454 million; by the end of 2025, these had risen to 24.7 billion with shareholders' equity of $2.9 billion, up from $1.8 billion at the beginning of the year, largely due to higher profits and appreciation of currencies, including the Ghana Cedi, CFA, and Nigerian Naira.

ETI shareholders have built their stakes in different ways over many years: The shares were listed on three West African stock exchanges through a private placement, followed a few years later by a public offer and rights issue. After buying a majority stake in a Kenyan bank, ETI held its 2010 shareholders' AGM in Nairobi as it recapitalised and rebranded it as Ecobank Kenya. In 2011, more shareholders and equity were added through the acquisition of Oceanic Bank of Nigeria, supported by Nedbank. In 2012, the Public Investment Corporation of South Africa became a shareholder of the fast-growing ETI.

In 2025, Nedbank divested its 21.22% shareholding, which was then acquired by Bosquet Investments, an Africa-focused investment firm. Shareholders alongside Bosquet, ETI’s largest shareholder, include Qatar National Bank, the Arise investment fund, Nigeria's Government Employees Pension Fund, Ghana's Social Security and National Insurance Trust, and some Nigerian state governments.

Through the years, Ecobank staff and management have also exercised share options and capitalized bonuses, and there have been other share splits, rights issues, conversion of preference shares and loans. ETI now has 639,000 shareholders, of whom 615,000 hold fewer than 10,000 shares.

Ecobank launched its Growth, Transformation and Returns (GTR) strategy in November 2023, designed to ensure long-term growth. The 'Returns' part of the GTR aims to grow shareholder value by increasing return on equity, increasing subsidiary dividends to the Group, and increasing dividend payments to ETI shareholders.

Growing strength is visible in subsidiary dividends. In 2020, 14 subsidiaries paid dividends totaling $91 million and this has since steadily increased to 23 subsidiaries, which paid $303 million in 2025. Transforming Nigeria, its largest subsidiary, is one of Ecobank's strategic priorities for 2026, and the bank has initiated a targeted sell-down and recovery, which is expected to result in a stronger balance sheet.

Through a dedicated Investor Relations Unit, ETI’s Board actively engages with shareholders and recognized that many of them hold small stakes and that dividends are an important part of returns on investment. At ETI’s 38th AGM in June 2026, the Board intends to reward shareholders for their patience with a proposed dividend of $40 million, equivalent to 0.16 US cents per share. The last dividend paid was $28 million after the 2022 results, as ETI has prioritized capital preservation and reinvestment over dividends in other years.

ETI shares are listed on the Ghana Stock Exchange, the Nigerian Stock Exchange and the BRVI in Côte d'Ivoire. Shares are fully fungible and trade at parity across the three markets, and over the last two years, the share price has appreciated by over 300%, further boosting shareholder returns. In 2025, ETI shareholders traded 846 million ordinary shares on these exchanges, showing an active opportunity for value realization.

ETI’s Management has an optimistic outlook for 2026 as it seeks banking opportunities for Ecobank in high-growth African markets. Alongside scaling the Central, Eastern and Southern Africa (CESA), Ecobank’s fastest-growing region, they aim to grow the Corporate & Investment Banking (CIB) and Consumer and Commercial Banking (CCB) businesses through greater internal synergies and collaboration. These will be done while remaining aware of potential adverse effects of events in the Middle East, and one of the strategic initiatives is to revive a China advisory office to target trade corridors in renminbi.

For patient long-term shareholders who have watched this institution grow from a vision to connect traders in West Africa into a $34.5 billion asset bank spanning 34 African countries, the best may be yet to come.

Del Monte Celebrates 60 Years in Kenya

2026-05-07T11:02:00.000+03:00

Del Monte Kenya exports over $80 million worth of products annually, one of the most important sources of foreign exchange in the agricultural sector. Since 2004, it has contributed Kshs 100 billion, equivalent to 0.16% of GDP, while purchasing Kshs 850 million from SMEs annually. It also supports three Saccos with assets of Kshs 2.53 billion and manages Kshs 2.75 billion in pension assets for its permanent staff and casual workers.

These are some of the findings in a new publication on Del Monte Kenya’s 60-Year Impact Report done by Lotus Consulting. While most of the writing covers the last two decades of available data (2004-2024), it also goes into its history of sustainable agribusiness practices and impacts as the company navigated through changes in export markets, ownership, governments, and community needs, human rights challenges, and land uses.

The California Packing Corporation (known as Calpak) took over Kenya Canners, whose plant could process 15,000 tons per year but which by 1963 had ceased pineapple exports. This was the first major investment by an American corporation in Kenya's agriculture sector and the agreement was signed by Finance Minister James Gichuru, Planning & Development Minister Tom Mboya and the Agriculture Minister, Bruce McKenzie, for the Government of Kenya.

Calpak undertook to furnish Kenya Canners with financial, technical research and marketing assistance to expand from 20,000 tons of pineapple per annum to 35,000 tons within 3 years from 1965, offer export outlets under Del Monte trademarks to a worldwide market and to train other Kenyan farmers (outgrowers) to grow pineapple. The Kenya Government undertook to purchase 20,000 acres of arable agricultural land and to lease it to Calpak for 49 years from 1965, renewable for another 49 years. Soon after Calpak became Del Monte Corporation to reflect the prominence of its leading brand.

In 1968, Del Monte exercised an option in the original agreement and bought a majority shareholding in Kenya Canners. It then embarked on a major pineapple expansion program comprising the construction of a new factory complex along with acquisition of more suitable pineapple-growing land, and Kenya Canners became Del Monte's second largest exporter of canned pineapple.

Meanwhile, its parent Del Monte was purchased by tobacco manufacturer R. J. Reynolds Industries in 1979, which later, after another deal, became RJR Nabisco. Its two main food firms were Nabisco Biscuits and Del Monte, which together accounted for 60% of its sales, but its management felt that the tobacco business weighed down its share price, which would have been buoyed by its food brands.

After Kohlberg Kravis Roberts & Co. (KKR) acquired RJR Nabisco in a 1989 leveraged buyout (LBO), the food companies were sold for $5 billion to pay down the debt. Del Monte was split into three divisions that were sold separately. Over the next decade, ownership of the international operations, which included Del Monte in Kenya, was traded between the UK (Polly Peck, 1989), South Africa (Royal Foods, 1992), and Italy (Cirio, 2002). Elsewhere, Fresh Del Monte was acquired in 1996 by the IAT Group. In 2004, Fresh Del Monte bought the Del Monte Foods units of Cirio for $340 million after the latter was declared insolvent. These include operations in Europe, Africa, and the Middle East.

Then in 2026, Fresh Del Monte acquired the assets of the Del Monte Corporation from bankruptcy court, reuniting the legendary food label under a single group for the first time in four decades. With that, Fresh Del Monte has moved to rename itself the Del Monte Corporation and change its NYSE-ticker listing from "FDP" to "DEL".

What do the next few decades look like for Del Monte Kenya, a wholly owned subsidiary of Fresh Del Monte Produce, and which was hailed by President William Ruto in 2023 as the largest private sector employer in Kenya?

While it runs one of the world's biggest commercial plantations, able to produce 200,000 tons of fresh pineapple every year, it will be one of its diversified products. Alongside pineapple, which is sold as juices and exported as fresh, canned, or frozen, it has started growing mangoes and avocados to develop high-quality products for local markets and for export. Also, canned beverages and energy drinks will be added as consumer tastes are changing. They will revive an outgrower model in a modern scheme to source from independent farmers, unlike the one that did not work in past decades (1948-1965), but now with new knowledge. And of course, the future includes adding on drones and AI to improve production efficiencies.

Ecobank Group’s 2025 in Review

2026-05-01T12:08:00.001+03:00

As it celebrated its 40th year since incorporation, Ecobank, the banking group with the largest financial footprint in Africa, with a presence in 34 countries, recorded an increase in deposits of 24% to $25.3 billion, while net loans to customers went up by 19% to $11.8 billion. It ended 2025 with assets of $34.5 billion, up 23%, and a profit before tax of $801 million, a 21% increase from $657 million the previous year.

Revenue was up 17% to $2.45 billion, and the growth was well balanced: Central, Eastern and Southern Africa, which was the best performing region, accounted for 26% of assets and 37% of profits, while Anglophone West Africa did 23% and 28%, and Francophone West Africa had 37% and 35% of the same. Nigeria, which accounts for 10% of group assets, was the only region that did not record a profit, mainly due to a fourfold increase in provisions to settle legacy bad debts, as management sought to finally address asset quality and capital issues there.

Continued implementation of Ecobank's Growth, Transformation and Returns (GTR) strategy, through technology platform investments and partnerships, led to a cost-to-income ratio of 48.3% in 2025, compared to 52.8% the previous year, as revenue went up by 17% compared to a 6% increase in costs. Revenue was more balanced, with 52% from the Corporate & Investment Banking (CIB) side and 48% from the Consumer & Commercial Banking business. CIB achieved revenues of more than $1 billion for the first time, and Ecobank's trade finance loan book increased to $2.3 billion, as it supported more African businesses to grow their trade across borders.

Ecobank processed digital transactions worth $133 billion, a 30% increase. Payment revenue went up to $305 million, representing 12% of group revenue. This was led by fund disbursements of $145 million, while customer usage of the 8.6 million cards issued resulted in card-related income of $101 million.

To address a gender financing gap on the continent, Ellevate by Ecobank provides support to women-led businesses, and in 2025, it lent over $515 million to women, increasing its portfolio by 194%. The Ellevate program will also benefit from a risk-sharing partnership with the Africa Guarantee Fund to extend financing coverage of 50% to women-owned and SME enterprises in 27 countries.

Finally, the board of Ecobank has decided to resume a dividend and have the 600,000+ shareholders share a $40 million payment. The shares trade on three African stock exchanges of Abidjan, Accra, and Lagos. The Board has balanced dividends against the need to maintain reserves against exchange rate fluctuations across its markets. The Group's capital adequacy ratio (CAR) rose to 16.7% in 2025, from 15.8% in 2024.

With its strong revenue growth, leaner costs and capital priorities balanced, the Ecobank Group enters its fifth decade as an institution well positioned to deepen financial inclusion and support trade across the African continent.

The Base Titanium Legacy in Kenya

2026-04-15T13:47:00.000+03:00

A flagship mining project ends as interest in the sector takes off.

After twelve years of operations, Base Titanium’s Kwale Mineral Sands operation has quietly closed, marking the end of Kenya’s largest mining project to date. What began in 2013 and later became a Kenya Vision 2030 mining flagship, concluded in February 2025 with a final bulk shipment, leaving behind important lessons about responsible mining, community relations, and the challenges of developing Kenya’s mineral sector.

Base Resources invested Kshs 26 billion in the project, with 9 billion spent on local procurement. Over twelve years, they extracted 5.2 million tons of minerals while paying approximately Kshs 11 billion in royalties, substantial revenue for a sector Kenya is still learning to develop. Between 2019 and 2022, Base Titanium accounted for 85% of Kenya’s mineral sector revenue, contributing 28.2 billion shillings of the total 35.2 billion in 2022. This dominance highlighted both the operation’s success and the underdevelopment of Kenya’s broader mining sector.

The company maintained unusual transparency, publishing detailed payment tallies on its website of payments to the Kenyan government, including value-added tax, utilities, and royalties. The company documented not only what it paid to the government but also the expected allocations to be advanced to the county government and local communities, maintaining transparency even as lawsuits emerged regarding the distribution of these funds. This openness set a standard other extractive companies should follow.

The challenges it faced over the decade included disputes over royalty rates that took years to resolve, dozens of court cases that overlapped, delayed VAT refunds, and a three-year exploration moratorium from November 2019 that prevented finding new deposits, even in adjacent counties, to extend operations. Also, major value-addition side investments did not sprout from the project.

With its exit, it leaves behind infrastructure and the company has handed over the 8.4 million cubic meter Mukurumudzi Dam to serve Kwale and the Coast area, power substations and a 16-kilometre transmission line, an 8-kilometre tarmac road, and buildings that can now be used as training centres. It built a ship-loading facility at the Likoni dock on land leased from Kenya Ferry Services, which is now part of the Kenya Ports Authority. The company had development agreements with Likoni, Msambweni, and Mrima Bwiti communities and funded projects in livelihoods, agriculture, education, and health. The company employed local workers and used local suppliers to send 50 trucks daily between the factory in Msambweni and the Likoni dock.

The rehabilitation work is ongoing to transform 2,500 hectares of brown dunes back to green vegetation, by pouring back topsoil, tree planting, grass cover, and compacting. It is hoped to restore the land to be fit for agricultural or forest or other uses. Interestingly, eucalyptus trees, normally dreaded in Kenya for their groundwater-absorbing ability, have been deliberately replanted in parts of the site precisely for that purpose - to help absorb water and stabilize the reclaimed land. A Post-Mining Land Use Committee with government, county, NEMA, and community representatives ensures accountability in the restoration process. While the land needs years to be fully usable, this careful rehabilitation sets a precedent for future mining operations.

Base Titanium proved that mining companies can operate profitably in Kenya while respecting communities and environmental standards. The operation wasn’t perfect; royalty rates could have been higher, and communities are still saying they have not received royalties or are seeking compensation for the use of their land that the government leased to the company.

But compared to other extractive operations, its payments transparency, infrastructure contributions, and environmental restoration represent genuine progress. As Kenya develops its mineral sector, this operation provides a foundation to build on that future mining ventures can learn from, not just lessons about what to avoid. The lessons include leasing rather than buying land, engaging local communities, and employing local people rather than relying primarily on expatriate managers.

Also, when capital-intensive mining ventures are approached with promises of billions or trillions without realistic planning and genuine partnership, they are doomed to fail. This approach proved particularly important in remote areas where development has been limited and where NGOs sometimes politicize projects, creating obstacles for investors.

In January 2025, American firm Energy Fuels bought Base Resources for Kshs 31.8 billion, closing the chapter on Kenya’s largest mining project. They hope to recreate the Base investment experience in Madagascar, where they plan to mine heavy mineral sands in a project called Vara Mada for 38 years.

The Kenya government still needs the Base story to attract new investors, and it features members of the Energy team on summit panels that target international mining and investments.

In March 2026, Kenya invited mining firms with the necessary financing and experience to tender and undertake the exploration of copper in Tharaka Nithi, manganese in Tana River, coltan in Embu, chromite in Samburu, and niobium and other rare earths in Kwale. On to a new chapter of mining.

Blog Migrated

2016-05-25T14:18:00.001+03:00

Note that new content is now at Bankelele.co.ke.

Reach me on twitter and instagram at @bankelele.

Email at bankelele_at_hotmail_dot_com

Interswitch in Kenya

2015-11-23T14:42:00.000+03:00

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.

Equity Bank 3.0: Agency Banking & Equitel

2015-11-16T16:46:00.001+03:00

A few days after Equity Bank released their Q3 results, the bank had another media briefing. CEO James Mwangi explained the stuff he had said earlier about the shareholding change, agency banking, superiority as a Telco and expansion plans for Africa.

Notes from the Live stream

Shareholding Change:

Helios have exited from the bank ahead of the end of the seven year life of the fund. It was a closed fund.
Equity listed in 2006 to discover the price of the shares and on listing it was Kshs 50 per share more than they had been offered
They chose Helios over 5 other investors. Helios had patient investors (CDC, IFC, Soros)
-Helios is an example of what private equity can do and the bank transformed from Kshs 2 billion to 65 billion in shareholder funds without having to do a rights issues, or issue shares and went from 20 billion to 400 billion of assets
Helios exit was not a buy back, but a sale to third parties including Norfund, Genesis, Investec, NSSF Kenya, NSSF Uganda and Blackrock - some of who paid a premium of 10% above the market in order to secure large blocks of shares
The sale has allowed local shareholders to take up more shares in the bank and reduce the foreign ownership from 49% to 42%
Helios netted about $500 million from the sale of there stake in Equity
Investors who missed out include China Construction Bank, China Development Bank, Temasek (singapore) and PIC (South Africa)

Agency Banking:

is one of their most misunderstood and underrated products in which they outsource services /costs to third parties for a fee, and share prosperity with their customers (who become suppliers of Equity services)

Top agents are doing 300-400 transactions per day (one in Kitale is doing 500) and top agents earn Kshs 750,000 to 1 million per month
Going to add insurance, stockbroking - and transform 20,000 businesses. They want them to be profitable, so won't register a flood of new agents (e.g. 100,000 who will reduce the pie)
In August, agents transacted Kshs 29 billion (2/3 is deposit, 1/3 is withdrawal) - agents have too much liquidity - that's why Equity/Equitel money transfer is free as it sweeps up excess cash at the agents
Hope to use agents to bring down their cost income ratio down to 32%

Equitel / Phone Banking:

Equity is not a telco - it is a channel for banking service with value add for telco - so customers don't have to carry two phones
Average sending amount is 2,000 - 3,000
Mwangi asked Kenyans to furiously take up this product as it solves two problems - that of too much cash at the Equity agents and customers solve their problem of exhobitant money transfer costs. Equitel did 8 million transactions in August double the numbers down by agents
Using USSD, customers used to do 2 transactions per month. That is now to 19 transactions per month with Equitel, and they hope to go 120 per month when they add payments.
Kshs 4 billion has been disburse via Equitel . 1 million people have got these loans and the average is 4,000 or 5,000. They are going to increase the loan duration to 3 months, then 6, and will do loans of 3-5 years eventually.
Used to process 3,500 loans a day, but that's now 12,000 loans per day via mobile. loans starts at 1 a.m. peak and are disburse by 5 a.m. before the branches open.
Credit applications takes 2 minutes to check with the credit reference, the national identity bureau and also come up with a score analysis.
You can send money to any telco, any bank account, any debit/credit card in the world
Next is bill presentation; you give your bank a list of recurring payments, and they will check the bill for you and ask you to confirm payment for electricity, water, dust etc.
Cardless banking - no need to carry an ATM card.
Other products are virtualization of chamas (software that keeps meeting minutes, chama balances, contributions, reminders, and disburses member loans by phone ( requests done by secretary, approved by chairman, paid by treasurer etc. all by mobile phone)
Harambees (fund raisers are also virtualized: You can see how much has been raised, who has donated a goat etc.
Everyone in Kenya can be an airtime reseller and earn a10% commission
Equity Life will have medial advice, agricultural advice (trying to map all soils in the country to better advise farmers on fertilizer), education (they have put curriculum from standard 4 to form 4 for kids to revise and do daily homework), financial literacy etc
It has free insurance for anyone who spends Kshs 250 per month

John Staley, the Director of Finance & Innovation, said Equitel was a free channel that enables them to do secure transactions that were not possible by USSD before and they will soon be rolling out a secure mobile app.

James Mwangi confirmed that a move by Safaricom to hike up the costs of Equitel to bank transfers had been shot down and such regulatory approval decisions will be made by third parties of payment companies and banks (including Equity).

Africa:

Finally Equity are about conclude their purchase of ProCredit Bank in DRC with most regulatory approvals received and others that they have applied for (agency, mobile) pending - and one of their big take on's will be to process payroll of all civil servants in the DRC.

An Idiot's Guide to Getting a Tax Compliance Certificate (TCC)

2015-11-13T12:28:00.000+03:00

A guest post by Muendo

Taxes, are the dues that we pay for the privileges of membership in an organized society. Franklin D. Roosevelt

One thing, as sure as death is, you will pay taxes. As to how it is used, it is the prerogative of the government of the day as well as the citizens to keep the government in check to see how the paid taxes are being used to better the welfare of the citizens. I posted a Tweet, after getting my Tax Compliance Certificate and I got a few people including Mr. Banks, asking how I went round the process. So here is my story. I hope it will educate some of y’all on this long process.

On company registration, after you have received that blue/white document from the State Law Office saying that you are a legal entity recognized by the Government of Kenya, you have to go to the next step, which is getting a Personal Identification Number (PIN) for the company. In this new regime, unlike others, you can’t do any business with the biggest spender of our taxes, the government and its agencies, without a PIN. In fact for you to open and a bank account, for you to buy assets in your company’s name, for you to transact with any organization in .KE, you will be required to produce a PIN Number. It is a mandatory requirement. (I suspect soon the government will abolish ID numbers and use your PIN to locate every single thing about an individual. Instead of ID numbers, your PIN will serve as the ID number), (those are just my thoughts). How do you get your PIN in our modern society? KRA went the tech way to get you plugged in to the system. They have a robust system called iTax. Any new employee above the age of 18, and any registered organization, has to register with iTax to get their PIN.

Take that a notch higher, for you to increase the chances of you getting awarded a Tender, as everything in this country is tendered, you need another document called a Tax Compliance Certificate (TCC). The Tax man aka Kenya Revenue Authority (KRA), certifies that you have submitted your returns and paid all your liabilities before it issues you with that piece of paper stipulating that you are cleared to conduct business for the next 6 – 12 months.

Normally, for start-ups, the first years certificate is quick to get as your business is new and there is nothing much for them to look in to. (Though, rumour has that they (KRA) are also slowly going to the route of issuing TCC to directors of the companies and will slowly keep an eye on them as well. How true that is I am yet to find out) Now since KRA introduced iTax to the Kenyan system, it killed a few birds with one stone.

Previously, people never cared much about paying taxes. Now, if you are doing business you have to have an Electronic Tax Register (ETR) machine that captures the Value Added Tax (VAT) that you charge to your customers. Unless, you are selling zero rated commodities, it is assumed that every enterprise (Start-up, SMEs, Blue Chip, Multinationals etc.) has a PIN number and an ETR machine. Every transaction is/will be captured there and therefore a customer is issued with an ETR receipt. A normal ETR receipt has your PIN number and the amount you are charging the customer plus VAT and a breakdown of what the VAT is.

Again, previously, the Tax man used to assume that all Kenyans are upright and outstanding citizens who will pay their VAT after balancing their accounts (There is a way that you need to do, briefly explained as, (1) there is what you are charged by your suppliers and then (2) there is what you charge your customers, (3) the difference is what you remit to the KRA, hence the term 'doing your returns'). Anyways, not many Kenyans including the ones in authority, seemed to fit that tag. They would find tax loopholes, using their accountants and tax lawyers, and exploit them. And the government would lose revenue. So, the Tax man, aka Njiraini, decided to tighten the belt to curb that habit. So every time you supply the government ~~with~~ ~~substandard goods with over inflated prices, because people have to eat~~, then the said agency ~~snitches~~/alerts Njiraini and company, that company X has supplied us with goods/services/consultancy, and here is 6% of the tax they are going supposed to pay. Ask them where the other 10% is. And once the 6% is held, the agency, in return sends you an electronic withholding tax certificate.

As an upright citizen, who wants to be in the good books of the Tax man, you are given up to the 20^th of every month to file returns of the previous month. Now, KRA will check up on its database and see how many organisations have submitted 6% with your company name in there and compare it with the returns you have submitted. Occasionally, you will find scenarios, where the Tax man needs to refund you some money. Problem with KRA is, once that is the case, it can take up to 2 years even more before they ~~decide/remember~~ ~~they need to~~ do tax refunds.

That aside, once you have filled your returns, whether nil or you have a liability (This is where you owe KRA money) or a Tax refund is required, you comply with the law of the land. Failure to file returns attracts a hefty fine of Kshs. 10,000 (~$100) per month for the months you haven’t filed your returns plus a percentage interest determined by a tax officer that you need to pay per month till you finish you with your liability. This is not a joke, especially, now that the government is tightening its laws on taxes and widening its tax base.

Here is a weird thing that KRA does. It waits for say 3-4 years of a company existing. And then, it is expected you have to have audited accounts say for the past two years (That is assuming you are done with your tax amnesty of 18 months – not sure whether this exists anymore,) and you have gotten a few good tenders here and there, and then they knock on your door, to find out how you are carrying out your business and how you have been performing in doing tax returns.) Assuming you are an upright citizen means, you have 4 years of an annual Tax Compliance Certificate issued and you have about 3 years audited accounts. They will request for all, and I mean all, documents to support your claim of existence. And by all I mean, from receipts, to P&L Accounts, to Audited accounts, to bank statements. Who the heck remembers stuff that they did 4 years ago? The Tax man will flip through records and see whether you have dodged taxes or you have acquired your TCC in a fraudulent manner. If you are a citizen of no morals, they will subject you to a fine of a percentage of your gross turnover and give you a time period to pay, failure to which, all assets you own will be liquidated and the money is recovered. I know that a bit to well, as a relative was being auctioned for tax non-compliance.

Also, KRA is now working overtime to ensure that all companies are registered on iTax. There is a budgeted Kshs 8 billion to be spent in catching up with you if you are not iTax compliant.

So, finally;

Here's an idiot’s guide to getting a TCC

1. Register at the iTax platform and get your PIN.

2. Submit your returns every 20th of the month. You had better submit a Nil return than be late to submit the returns. Be prompt in doing your accounts reconciliation every month. Now, there are times you can’t afford an in-house accountant do your books, There are some great fellas, who I have worked with that can help you with that. Talk to Plus People Ltd. They are the people behind this great platform called Uhasibu. They have really assisted me in getting my books in order and ensuring that I use the Uhasibu system to run my small company. Also get an Auditor or a certified tax accountant to help you decipher and navigate the Kenyan tax laws and the levies that you need to pay as well as how to bring down your tax liability.

3. Make sure you get the Withholding Tax certificate, each time, whatever agency you deal with submits that 6%. As much as the system is automated, follow through is important. I am talking from experience. I have a government agency I am chasing since February 2015, to give me my withholding tax certificate.

4. Use the iTax system to submit your returns before the 20th. This is now an easier way, than to go queue at times towers to make your returns.

5. It takes approximately, two (2) weeks between the expiry of your TCC and receiving a new TCC. Plan appropriately. During those 2 weeks, I do loads of client visits and queue up business for the next “financial” year. In those 2 weeks, Njiraini and Co, will be looking through your accounts and performance before giving you a clean bill of health. I know we people at .KE have this thing, I know a guy who can shorten that process, if you do well and good. But that’s the average time if you don’t know a guy.

6. Make sure you do annual audited accounts, just in case KRA guys show up and want to see what you have been up to. Also, a great rule of accounts, it moves, have evidence of what happened (Receipts, Invoices, Petty Cash vouchers etc).

7. In case things go wrong, occasionally they do, have your auditor in place, when this KRA officers check up on you. They kind of know how to navigate those murky waters while you sort things out with the Tax man.

Kenya Airways: Still in The Red

2015-11-12T13:38:00.001+03:00

This morning Kenya Airways (KQ) released their half-year results. Some highlights from the investor briefing.

• Half year Kenya Airways revenue was Kshs 56.7 billion same as last year. 90% is from passenger traffic, and 60% of their business is in Africa.

• Kenya's largest increase in tourists was in 2011, and the numbers dropped in 2012 & 13 with the largest decrease was in 2014, just as KQ added great capacity. JKIA passenger numbers have been flat for the last three years and for the last three months, they have had to adjust their schedule from 24 to 18 hours as the runway is being repaired.

• Half of airline industry profit is in North America, where strong capacity, consolidation, combined with ancillary revenue and lower fuel costs has had a major impact. The Middle East has low yield compared to investment, and Africa has 3% of global demand.

• Shareholder equity has gone from Kshs -6 billion last September, to Kshs -33 billion this year and KQ is talking to the CMA on how to reverse this.

• KQ has a turnaround plan, developed with Mckinsey, with 24 initiatives worth a potential $200M, that starts this month.

• Despite fuel cost coming down from Kshs 21 billion to Kshs, 13 billion, the half year loss went from Kshs 10.5 billion to 11.9 billion

Some other numbers

• Revenue per available seat decreased from 6.2 to 6.14

• Cabin factor was up from 64% to 68%

• Carried 2.14 million passengersm up from 2.10 million

• Cargo tons were 35,405 down from 37,255

• On time performance was 75% (down from 77%)

• Finance cost was 3.4 billion, up from 1.5 billion

The new chairman of the Kenya Airways board, Dennis Awori, thanked the government, financiers, and suppliers for their support for the airline. CEO Mbuvi Ngunze said that the senate enquiry is ongoing and on Monday, senators will, for the first time, visit the airline.

How 30% Kenyan Shareholding of Foreign Companies was Conceived

2015-11-11T02:35:00.002+03:00

For the last few weeks there's been talk about the 30% rule. Yesterday the CS for Industrialization said it was a mistake, and the team at Anjarwalla & Khanna said they heard that it had been introduced late in the process and that they flagged it and written immediately to the Attorney General on it.

Anjawalla & Khanna briefing

But how did it come about? The talk was that it was introduced late in the third reading of amendments to the Companies Bill which was a voluminous bill - almost 800 pages and with 1,000 clauses - that was discussed in parliamentary sessions over a period of 5 days.

The Hansard of one session (from Mzalendo) shows that the clause that specified that foreign companies should demonstrates that at least thirty per cent of the company’s shareholding is held by Kenyan citizens by birth may have been introduced by Wesley Korir, the MP for Cherangany - and this led to a long debate late in the evening for parliament (the sitting time had been extended).

It was supported by some MP's and opposed by others including:

For the amendment

Nicholas Gumbo: If you go to some neighbouring countries in East Africa, you cannot be allowed to register a company unless you give 50% to locals. Why should we be apologetic about this?
James Nyikal: The reason is that as Kenya is growing richer, the majority of Kenyans are getting poorer.. The reason is basically that a lot of the wealth we have is actually owned by foreigners and a few people who pretend to be businessmen but are basically agents for principals who are abroad. In South Africa, immediately after their independence, there was serious effort and companies had even to give shares to local people, so that ownership became local. So, 30% is acceptable and we should support it for the sake of Kenyans.
Sammy Mwaita: I support because I remember when we were discussing the Public Procurement and Disposal Bill in this House, we pegged the local content at 40% , so that citizens may benefit from business. This is timely. We should initiate it from the time of registration. This is a very good move.
Robert Pukose: I support this amendment of 30%. This is because when you compare us with our neighbouring countries--- In Tanzania and Ethiopia it is 50%. Ethiopia makes it very positive because companies are not allowed to employ a foreigner who has qualifications which local people have. So, we should accept this 30%.

Against the Amendment

Hansard page from Mzalendo

(Senator) Gideon Moi: ..Number two is the fact that imposing 30% local shareholding on any foreign company is very extreme. People who want to put their money in a venture are going to be extremely wary of just picking on any shareholder. If I were to support the Member, the local shareholding would be less than 30% or none at all.
James Oyoo: When Kenya attained Independence, it was a prerequisite for any company to give shares to local Kenyans. The immense greed of Kenyans made us reduce it to 10% (when it) started going to individuals’ pockets. It is a good idea but it is ill conceived.
Aden Duale: The history of Mobitelea and Safaricom is very clear. Some brokers would sit somewhere and this meant we would increase brokers on the streets.. We will make Kenyans who are brokers in the village to say that if you cannot give them 30%, you will not do business. That is not what happens in most--- President Obama says, “Take Kenya where South Korea has reached.” That law does not exist in South Korea and Malaysia...You must allow engineers to have companies but you will have people who have not gone to school.
Samuel Chepkonga: .. I was a regulator at the Communications Commission of Kenya (CCK). We provided a policy in which we said that for you to invest in the telecommunication sector you had to have a Kenyan partner with 30%..They kept amending the policy in the telecommunication sector to where it is now; there is 0% requirement for a Kenyan to invest in the telecommunication sector..Let me tell you Members, foreign direct investment comes in huge amounts such as US$500 million. Which Kenyan will produce US$150 million? Let us be serious. Secondly, we are a very poor country. We are seeking to attract foreign direct investment. You are now telling those companies which are seeking to invest in Kenya that this is not an attractive destination. This law is seeking to encourage and make Kenya a friendly investment country. If you are going to bring things such as these, you are going to chase direct foreign investment out of this country.

Dividend Payments across East Africa - Redux

2015-11-10T09:01:00.004+03:00

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.

Kenya Companies Act 2015

2015-11-09T13:37:00.004+03:00

This morning, a session was held by the law firm of Anjarwalla & Khanna in Nairobi to advise stakeholders abount the new Companies Act and Insolvency Act that are now law.

The Cabinet Secretary for Industrialisation, Adan Mohamed, said that the day when President Uhuru Kenyatta signed 4 bills into law - the companies act, insolvency act, special economic zones act and business registration act - was his proudest day in two years in the Cabinet.

Partners at the law firm explained various sections of the new companies act including:

It makes businesses easy to register and operate - and one person can form a company.
Memo (can be one page long) & articles are simpler
Role of the company secretary has been clarified. Corporate governance has been clarified with penalties for directors and management including for conflict of interest.
30% local shareholding in a foreign company. Adan said this was a mistake that the government would rectify. The team from Anjarwalla & Khanna said that while the 30% rule is probably constitutional it's impractical, and the AG & government agree. They also explained that it is for new branches only - and does not apply to existing branches, or to any subsidiaries of foreign companies
It gives minority shareholders court powers if main shareholder/management are prejudicial or make bad decisions / transactions on behalf of the company
New company is able to do anything including borrow unless if it restricted
PE Investor oversight: Investors can attend board meetings as observers and without being directors or legally bound by decisions
A company must have at least one natural person as a director (all companies have 6 months to rectify this)
Companies can buy back shares from other shareholders
Kshs. 6.75 million (~$67,500) is the minimum paid-up share capital for a public company (this will affect some land owning companies and large property developers)
Public companies need to know who beneficially owns their shares (the true owners behind proxies)
Companies are required to have websites and to publish financial statements online
Share buy backs are now allowed.
All shareholders have rights to preemption when companies create new shares - (and this can only be from profits, not new money)
MBO and LBO:'s banks could not finance acquisitions, but now they can. e.g. Management can to a bank and use the assets of the company secure financing to buy it or pay off foreign outgoing shareholders - (this opens another exit opportunity for investors)

Adan also said that the insolvency law, which previously was aimed on recoveries for secured creditors, is now focused on bringing insolvent companies back to life.

FastJet Finally Get Kenya License

2015-11-08T22:58:00.001+03:00

The three year journey to get low-cost airline FastJet into Nairobi now seems to be nearer to it's goal following the licensing of FastJet Kenya to operate domestic air services between Nairobi and Mombasa, Kisumu, Eldoret, and Wajir.

However they were not granted other rights they had applied for to fly from Nairobi to international destinations including Lusaka Harare Lilongwe and Entebbe that they serve from their current bas in Dar es Salaam, Tanzania.

Still it's a start. In the three years since they were established JamboJet (one by Kenya Airways) has established itself as a reliable true low cost carrier in the country, while one of the main local airlines Jetlink has since gone out of business, leaving Fly540/Fly-SAX as the only other domestic airline with regular services to the main airports around the county. JamboJet also have designs on flying to neighboring countries, but an approval discussion was deferred in their case.

M&A Moment: BritAm, Centum, other East Africa deals

2014-08-02T16:17:00.001+03:00

Britam and Centum have had a busy few weeks.

BritAmEA (i) Had an oversubscribed bond at the NSE that saw them raise Kshs 6 billion (ii) Completed the acquisition of 99% Real Insurance - giving them access to Mozambique, Malawi and Tanzania (the Competition Authority approved this deal with a caveat that they retain at least 85 of the 105 employees of Real) (iii) Established an office in Rwanda (IV) Britam will also pay about Kshs 2 billion for Equity's 25% in Housing Finance.

Centum (i) Are proposing to acquire an additional 66% shares in K-Rep Bank (ii) Are seeking shareholder approval to create a Mauritius company, set up Kings Beverage, Bakki, Shefa subsidiaries, and also ratify the acquisition of 73% of Genesis & 30% of Broll (real estate) (iii) Ceded 42% of Two Rivers venture to investors at Kshs 6 billion, (iv) Are still in the running for Rea Vipingo offering Kshs 75 per share, over the Rea bid of Kshs 70 per share to other shareholders (v) Key Centum shareholder, Chris Kirubi said he wants to be a dollar billionaire.

Other recent deals include

Airlines

Kenya Airways to give Tanzania's Precision Air a $10 million bailout.
Waiting to see who will officially be FastJet’s partner will be for their renewed push to enter the Kenyan aviation market.
Hong Kong listed Frontier Services Group completed acquisition of 49% of Phoenix Aviation for $14 million (Kshs.1.2 billion).

Autos

Al Futtaim Auto to compulsorily acquire the remaining 8.4% of CMC shares from minority shareholders

Banking & Finance

Actis to acquire Compuscan, the largest independent credit bureau in Africa & run it as Credit Service Holdings with Michael Jordaan as chair.
Diamond Trust has an ongoing rights issue to raise Kshs 3.2B ($42 million) from shareholders at Kshs 165 per share.
Ecobank got investment bank approval in Kenya following their buyout of Iroko buyout and will target oil & gas, infrastructure & commodity deals.
KCB is now holding company, and is said to be interested in buying an insurance entity
(edit) Kenyan Women Holdings will sell 25% of the shareholding of Kenya Women's Finance Trust to their 600,000 members between September and October 2014.
NIC Bank to have a corporate bond and rights issue during 2014
Atlas Mara to buy 77% of Development Bank of Rwanda
National Bank shareholders to vote on if money from their upcoming rights issue can go to pay off preference shareholders
Western Kenya politicians have support the creation of a new Mulembe Investment MFI bank, that will be part-funded by counties to serve 5 million people.

Building & Cement

Holcim is set to acquire effective control of Kenya's Bamburi Cement as part of the planned merger between Holcim and Lafarge. "The parties do not wish to see any change to the status of Bamburi as one of Kenya's leading industrial companies listed on the NSE."

Food & Beverage

Danone bought 40%of Kenya’s dairy processing company Brookside which had revenue of Kshs15.4 billion (€130 million) i in 2013. It was previously 90% owned by the Kenyatta family with Abraaj owning 10%. Brookside collects milk from 140,000 farmers and has 3,000 employees.

Distell of Stellenbosch South Africa got privatization approval from the Kenya government to acquire of 26% of KWA Holdings E.A. that was previously owned by ICDC for Kshs 860 million (about $10 million)

Kenya Wines will also their Kshs126 millionUchumi Supermarket stake.

See Centum (above)

South African food company, Tiger Brands has dropped plans to acquire Kenya firms Rafiki Millers for $25m.

Health & Beauty

Procter & Gamble merged India, the Middle East and Africa into one IMEA region to improve execution

Hotels & Tourism

The Kenya Competition Authority approved the acquisition of 100% of Fairview Hotel by City Lodge Hotels.
Kempinski Hotels, Europe's oldest luxury hotel group has officially taken over Hôtel Des Milles Collines in Rwanda.

Insurance

See Britam above
CIC had dropped plans for a rights issue in favour of a corporate bond
Liberty Kenya proposed to pay a Kshs 1/= scrip dividend, but shareholders can opt for cash.
UAP had an oversubscribed bond that raised Kshs 3.1 billion against a target of 2B.
Africa Report magazine listed insurance companies as the top performers at the NSE in 2014 (see table).

Legal

Kenyan firms Hamilton Harrison & Matthews (HHM) and Oraro & Company have announced they are to merge pending regulatory approvals.

Media & Communications

#RIPCareyEaton

The $35 billion Publicis-Omnicom merger fell apart. The deal to combine the world’s largest advertising company was foiled by myriad difficulties, including who would run the new firm. The collapse of the deal is a win for WPP CEO Martin Sorrell, who campaigned aggressively against the merger of two of his biggest rivals.
A few months after his big deal with One Africa Media consolidating operations in Kenya, Uganda and South Africa, co-founder, Carey Eaton, was killed in Nairobi. See some tributes to Carey Eaton. The Economist also ranked the largest internet companies in Africa and One Africa Media topped this at $80 million, followed by Mobile Planet ($15 million) and Kopo Kopo ($10 million)
passed away - some tributes
Scangroup agreed to acquire a majority stake in a pan-African firm - the Experiential Marketing Group (EXP)
The Safaricom and Airtel buy out of (and split of) Yu appears to have stalled.

Oil & Mining

In the last year, Tullow Oil and Base Resources have paid the Kenya government $22 million and $16 million respectively .
Tullow received a judgment in its favour over capital gains tax payments that Tullow had made onHeritage’s behalf to the Uganda Revenue Authority. In August 2013, Tullow received $345.8 million from Heritage in satisfaction of this High Court judgment.
Swala Oil & Gas completed their Tanzania IPO which was oversubscribed and will now proceed to list on the Dar es Salaam Stock Exchange (“DSE”). The placement of 13.3 million shares with 1,869 new and existing shareholders also allowed Swala to keep excess funds from Dar IPO.

Transportation & Utilities

Transcentury sold their 34% in Rift Valley Railways to Citadel Capital for $43.7M recovering their cash, but below fair value..they cited the delayed turnaround of the railway consortium as reason for the sale
Actis confirmed sale of its stake in Umeme for $85.5 million to 20 institutional investors including Investec and Uganda’s NSSF
Kone Kenya acquired the business of Marryat & Scott, an elevator installation company.

Other Peoples Money

The Australian Navy seized heroin worth $296 million from a wooden boat off the Kenyan coast.
The Karen Blixen house was put up for sale for $9.5 million
Kenya's NSSF had $600 million (Kshs 51 billion) in quoted securities as at June 2013 topped by Bamburi EABL and KCB.
The Competition Authority fined Tusker Mattresses (Tuskys) and Ukwala supermarkets Kshs 5.3 million while allowing them to continue pursuing a supermarket consolidation deal.

Nairobi Securities Exchange IPO

2014-07-31T18:42:00.002+03:00

The Nairobi Securities Exchange (NSE) launched its IPO on July 23. It runs up to August 12, 2014 and they are selling 66 million shares at Kshs 9.50 per share (with a minimum investment of 500 shares costing Kshs 4,750) and the NSE plans to raise Kshs. 627 million (~$7.3 million).

Excerpts from the prospectus and other sources.

The NSE borrowed Kshs 300 million from Kenya Commercial Bank to part finance the purchase of the Westlands building that now houses the exchange. (The interest rate is minus 2 the bank’s base rate). Part of the funds raised from the IPO will be used to repay the Exchange's mortgage debt.
The Dar es Salaam Securities Exchange has completely divested from the NSE and CDSC.
The NSE has about Kshs 1 billion assets and an EPS of 10.70. They had earnings of 622 million and a profit of Kshs 262 million in 2013. The NSE owns Kshs 20 million worth of Safaricom bonds and Kshs 15 million of Housing Finance ones
The IPO is budgeted to cost Kshs 40.8M
Ahead of the IPO in which 194 million (M) shares are being listed, the Kenya Government and the Investor Compensation Fund each own 6.56 million shares and 22 stockbrokers each own 4.08M shares - for a total of 128.6M shares. 2.5 million shares are reserved for employees of the exchange (The NSE has 38 employees and 5 senior managers).
KRA assessed and charged them Kshs 19m for 4 years of back taxes, of which Kshs 15m has been paid
One of the options the Exchange is contemplating is to establish regional exchanges in Somalia, the Democratic Republic of Congo (DRC), South Sudan and Burundi
The NSE expects to introduce the REITs and ETFs, and there are also plans to introduce the a Derivatives Market this year. The NSE also plans to upgrade of the Automated Trading System (ATS) and the Bonds Trade Reporting System with some of the proceeds from the IPO.

YALI 2014

2014-07-29T20:56:00.001+03:00

The Young African Leaders Initiative 2014 - #YALI2014 kicked off this week in Washington DC. Speaking at a meeting with 500 of the first class of YALI fellows, President Obama said that it will be renamed the Mandela Washington Fellowship (& doubled to have 1,000 fellows by 2016) and that four regional leadership centers would set up in Africa.

The regional leadership centers will be established in Senegal, Ghana, South Africa and Kenya and will offer courses on leadership, support for entrepreneurs through mentoring and access to capital and a networking forum.

The Center in Kenya will have a robust training curriculum with direction from a partnership that brings together Deloitte’s global management and strategy skills, the established curriculum and capacity of Kenyatta University, the public administration training of the Kenya School of Government, and Africa Nazarene University’s youth engagement and outreach.

USAID is investing $38 million in the new YALI centers with support from the MasterCard Foundation ($10 million), Microsoft ($12.5 million), Intel ($5million) and Dow Chemical ($4 million). Others are McKinsey, IBM, General Electric, Procter&Gamble and the Mara Foundation. (More at the YALI site).

In a Q&A session, Obama also spoke about AGOA and the on-going for renewal of the the trade partnership between the US & Africa; He said, they have learnt lessons from the previous phase of the partnership and will work to lower other export barriers (such as transport & trade finance), and, starting with Uganda, Kenya and Tanzania, take steps to see how AGOA can work with effective trading bloc for intra-Africa trade.

The YALI Summit events will lead up to the the first US-Africa Leaders Summit, which, with over 50 presidents & prime ministers expected, is the largest gathering of African Leaders ever hosted by a US president.

Kenya's President Kenyatta is to participate in two events next week - a doing business in East Africa session and a presidential dinner, both organized by the Corporate Council on Africa (CCA) who have events for several other African leaders and nations like Ethiopia, South Africa, Ghana Liberia Congo Mozambique and Tanzania among others.

New Credit Cards from NIC and Equity banks

2014-07-24T17:00:00.002+03:00

This week, NIC Bank launched a platinum credit card and Equity Bank formally announced their expanded their impressive card portfolio that now includes American Express.

The NIC Bank Visa Platinum credit will be offered to a select few clients like professionals, senior government employees, business leaders, and entrepreneurs. The card comes with a variety of privileges in terms of shopping discounts, priority pass access to 600 VIP airport lounges in 100 countries (with complimentary snacks, free internet at many, and card holders can bring in companions), a portfolio relationship manager, and purchase protection for 90 days.

For frequent travelers around the world, it also provides useful facilitation in emergencies like payment of hospital deposits of up to $2500, and arranges for emergency evacuation, legal advice, transport of companions or children.

The annual fee is Kshs 6,000 (~$70) and there is no joining fee. NIC will also have a rights issue and a bond issue that shareholders will kick-off next week at an EGM.

Equity Bank is signing up merchants to accept American Express cards - for which they are the exclusive card issuer in Kenya. They have already signed on Nakumatt, ArtCaffé, Heritage Hotels, Best Westernm Laico Regency, Leopard Beach, Boma and some other hotels.

Speaking when he confirmed the development, Equity Bank Managing Director, James Mwangi, said the bank is now a partner for American Express, Visa, MasterCard, PayPal, Google, China Union Pay, SWIFT, JCB, VFX (Equity Direct) and Diners Club.

As per Central Bank stats, Kenya had about 162,000 locally issued credit cards as at February 2014, compared to 114,000, three years ago.

Lady Lori & FastJet?

2014-07-16T09:20:00.001+03:00

The latest round of airline license applications has a curious addition with Lady Lori previously known as a successful helicopter charter company applying for a variation of their current license.

Lady Lori are seeking to introduce domestic flights between Nairobi and Mombasa as well as to obtain rights for international routes from Nairobi to Dar es Salaam, Juba, Kigali, Entebbe, Maputo and Lusaka.

Across the border is successful FastJet who have not been shy about their ambitions for Kenya. But their license to operate which they intended to obtain via an investment in Kenya's Fly540 airline has been stuck somewhere in the government red tape while their Tanzania business has thrived and they are now the leading airline there. Recently, FastJet came to a settlement with Fly540 ending their acrimonious relationship.

Could Fastjet now be starting afresh with an established and licensed operator? Lady Lori is applying for the above routes with the intention to fly Airbus A320 aircraft - which happen to be the only aircraft flown by FastJet.

FastJet, as a low cost operator has made the A320 the only airline in it's fleet and one that made a few people wondered how Fly540 with a mix of ATRs and Bombardiers would integrate. Lady Lori offers a fresh start in this regard.

Fin4Ag14

2014-07-15T08:48:00.003+03:00

All this week, Nairobi plays host to a conference called Fin4Aag14 which has the theme of Revolutionising Finance for Agri-Value Chains.

It started with plug & play session in which 18 companies got to introduce their platforms linking agriculture to finance across Africa. This is the second edition of the session that was introduced at the conference in Kigali last year and proved to be quite popular.

The 18 companies were:

Tangaza Pesa: automates the value chain by doing KYC on farmers with bio data, crops produced, and GPS to build credit records
Ensibuuko (Uganda) helps (via web & mobile) to manage rural SACCO’s that can reach many of the rural unbanked farmers
FarmDrive (University of Nairobi) enables small farmers to keep basic record by mobile phone and build a credit score
Farmers Record Management System (FARMIS) aggregates farmers with financial institutions to access finance and ensure loans are properly utilized
Zoona's eVoucher platform: enables agri-business supply chain payments and insurance
Credit Information Sharing: enables information sharing by credit bureaus for lenders to make decisions
Umati Capital: paperless solution that aims to shorten dairy farmer payment periods from 6 weeks to 24 hours
Agrilife - enables farmers to access markets inputs, savings, and asset finance
Musoni System: a core banking for SACCO’s and micro-banks, loans, and savings that can also integrate with m-pesa and tablet apps
Farmforce (Sygenta) enables traceability of farm produce for quality and for farmers to access small loans
e-Krishok: Online & mobile infer for Bangladesh farmers to access information, traders and finance
Creditinfo’s Credit Bureau Solution - enables credit bureaus can collect info on farmers so they can access loans without need for collateral
Craft Silicon have a platform can link to MFI’s, bank, SACCO’s (Elma?)
aWhere Platform: with over 1 billion data points collected, enable farmers to be aware of field risks to make smarter decisions. this includes weather data for all of Africa since 1999 and others they pull from mobile services
AgroCentral - uses ICT to buy produce from farmers
RiMFin (Ghana): enables rural famers to receive mobile payments and save them in their phones
finFinancials (Fintech) core banking platform that can integrate with others for digital or mobile payments

They will be there all week presenting their platforms and engaging the attendees who are from across Africa, Caribbean and Asia and who include development specialists, financiers, policy makers and top bankers who hope to get youth interested in agriculture.

There was a brief session on warehousing that detailed both the challenges and the opportunities for warehousing. Commodity warehousing types include private, public and community. Examples were cited from Tanzania (community food stored in individual houses but linked to MFI’s ), Ivory Coast (large presence in Cocoa Rubber Cashew sectors), Madagascar (communities totaling 80,000 rice farmers in villages part guaranteed by DFI’s cover 2% of the national production but provide price stability), and Nigeria (massive 1.3 million ton silo capacity against large formal sector demand of 1.9M tons), Burkina Faso and Uganda (2 successful warehouse companies).

Challenges facing warehousing include high costs (leaving some empty of commodities) fraud, long value chains, and contract defaults (by both small farmers and larger organizations like WFP).

Fin4Ag14 is organized by the Technical Center for Agricultural and Rural Cooperation (CTA), Central Bank of Kenya and African Rural and the Agricultural Credit Association (AFRACA), and is supported by the FAO, the Rockefeller Foundation and Afreximbank.

Countdown to REIT’s in Kenya

2014-07-12T00:22:00.004+03:00

This week CFCLIfe and Stanlib managers held a media briefing on Real Estate Investment Trusts (REIT's) in Kenya and their possible impact on the local property scene. REIT’s are common around the world, South Africa, Ghana, Nigeria have had legislation for them, and finally, there's a Kenya law on REIT's in place (July 2013) after many years of formulation and review.

Stanlib Kenya plan to launch REIT's in Kenya in September 2014 - and the law allows for two kinds - Income REIT’s and Develoment REIT’s. Some unique features about REIT's (which will cost between Kshs 100 - 300 million to set up with a minimum of 7 promoters) include they must distribute about 80% of profits to investors, and investors can sign on to I-REIT's for as low as Kshs 5,000.

The speakers noted that many large landlords in Kenya are quite comfortable earning incomes of less than 5% on their assets, when they could be earning quite a bit more (10% - 20%) by signing up with REIT’s - which are tax exempt and offer diversification (can invest in strong properties prisons, hospitals, malls) with more liquidity for all investors who participate in the REIT. While there's saturation as the high end of the property market, and expensive land prices are still climbing, there are still great opportunities at the mid- and lower- residential and commercial income segments. Also the Kenya UN classification was upgraded which means that from a previous 45, over 180 countries will now have officials accredited to the UN living in Nairobi.

Also licensed as REIT managers alongside Stanlib in April, were CIC Assets and Fusion Investments.

Answers to @ColdTusker's questions:

The minimum amount of initial assets for an D-Reit is 100M and for a D-Reit is Kshs 300M
D-REIT in the act is defined as "a development and construction real estate investment trust" is for sophisticated investors e.g for property developers to put up properties. They have shorter lifespans - and YES they can convert to I-Reit's which are for income from established properties. D-Reit’s can borrow up to 50% of assets, and i-Reit’s only 35%, also i-Reit’s must have 75% of portfolio in properties, and D-Reits have to have sunk 30% of their funds into property within year 1
Centum 2 Rivers was mentioned as the planned largest mall in Eastern Africa - with Carrefour as an anchor along with other foreign shops as main tenants (not the usual local supermarket and shops in the stores)..interesting as Carrefour seems to be withdrawing from emerging markets - http://qz.com/231405/carrefours-india-exit-has-little-to-do-with-the-governments-reservations-on-retail/

BRCK Launches in Nairobi

2014-07-11T23:16:00.003+03:00

This week saw the formal launch of the BRCK with a first batch of 800 devices to be shipped to buyers in 45 countries from July 17. It also saw a funding announcement of $1.2 million by Invested Development toward production of the BRCK.

The BRCK is now able to provide affordable, reliable, and seamless internet and power in different, changing, or challenging working conditions such as connectivity at the 2014 Rhino Charge with the ability to provide stable internet and charge other devices and share internet with them for up to 8 hours.

@whiteafrican traced the two year journey of the BRCK in this blog post as a solution that addresses many challenges of internet and electrical power around thw world - through a putting together a team supported by Ushahidi, gauging the interest via a Kickstarter initiative that raised $175,000 and fine tuning the design and field testing the BRCK in conditions such as on a very tough journey chasing the Turkana Eclipse in November 2013.

BRCK devices can be ordered online at a cost $199, but the final price will depend on the global delivery method chosen.From the site, one can also manage their BRCK and do tasks like top up credit, change Wi-Fi settings, and enter country APN's (if they don't pull automatically).

1% Equals 20% and Other Bank Tales

2014-07-09T14:34:00.000+03:00

The Central Bank of Kenya's Monetary Policy Committee has launched a KBRR a.k.a. the Kenya Bank Reference Rate and set it at 9.13%. All commercial banks and mortgage institutions are expected to price all their loan products around this. e.g Lend finance to customers at a rate of KBRR (+) or (-) "X" e.g. a loan rate of 15% will be known as KBRR +5.87%. This first rate of the KBRR set at 9.13%, will run from July 2014 to January 2015.

The KBRR will help end the confusion that customers face with all manner of loans and rates at myriad banks. Different loans are pegged on interest rates that may be flat, fixed, variable, reducing balance etc and are marketed as the same without customers knowing what these measures mean. Yet a fixed loan rate of 1% per month (which some asset finance loans are marketed as) can be equivalent to a loan of 20% that is calculated using the reducing balance method.

The next step on the cards will be for Kenyan banks to adopt an APR (an annual percentage rate calculation) that not only includes the lending rate, but also factors in bank charges like commitment fees, facility fees, and third-party costs like legal charges, mortgage insurance, as well as a standard loan repayment schedule format for all loans.

Diamond Trust: Fourth Rights

2014-07-07T22:25:00.002+03:00

Diamond Trust Bank is back for a fourth rights issues in recent years from its 11,136 shareholders at a rate of (Kshs 165) $1.95 per share, with each of shareholder entitled to buy 1 share for every 10 held. This follows others done in 2006, 2007, 2012 and now this one.

Contrasting the four issues

Year - Nov-06 ; Nov-07 ; Jul-12 : Jul-14

Target (Kshs M) – 735 ; 1,600 ; 1,809 : 3,631

New shares (M) - 15.5 ; 23.3 ; 24.4 : 22.0

Price (Kshs) - 50 ; 70 ; 74 ; 165

Ratio - 1:8 ; 1;6 ; 1;8 : 1:10

Budget (Kshs M) 41.6 ; 54.7 ; 57.6: 100.1

The IFC remains as a principal funder and shareholder for the bank.
Diversification has paid off with the bank having 30% of assets and 19% of profits from outside Kenya. While 77% of Diamond Trust's $61 million after-tax profit is from Kenya, the Tanzania and Uganda operations contributed about $7 million each of profit with Burundi trailing at ~$150,000
They have extended traditional banking services in the mobile and card age by having M-Pesa at all their ATM machines. They also issues prepaid cards for NationHela, NakumattGlobal and MiCard and handle remittances/money transfer for WesternUnion, MoneyGram and XpressMoney
Others institutions that may need to have rights issues or raise capital this year include ABC, Commercial Bank of Africa, Consolidated and Equatorial banks.

E-Government Moment: Part II

2014-06-30T21:26:00.000+03:00

Stuff happening on the e-government sidelines

July 1 is the deadline for Matatu's and other Public Service Vehicles (PSV's) to switch to cashless payments of accepting fares, in lieu of hard currency. PSV's are meant to have signed on to services like Google & Equity's - BebaPay or be in breach of the law. It's not expected to be smooth sailing considering the slow uptake of cashless systems among smaller matatus within Nairobi, and it's possible that after taxes, the minimum fare will be more than Kshs 30.
June 30, (today) is also the deadline for Kenyans to file their tax returns. This had been a largely academic exercise of submitting paper forms that the revenue authority (KRA) was unlikely to ever go through, and had even been discarded. But in rejecting a bill, parliament re-opened this tiresome exercise. This year, KRA has advertised its website, as the only way for Kenyans to file their taxes - but the site and service still has many challenges, including inaccessibility.
While the schools laptop project seems to have stalled at the procurement stage, some $200 million has been allocated in the 2014/15 budget to procure some laptops. More visible in terms of making the government digital, has been the procurement by by county governments and parliament of iPad's and other devices for leaders to use.
In the banking sector, June was a turning point for the migration to debit and credit cards to Chip-and-PIN enabled cards. While the benefits to consumers appear negligible (less fraud identity than swipe cards) and there is a cost of about $1.80 to 3.20, there has now been a liability shift, and going forward, costs associated with fraud involving non-EMV compliant cards will be borne by the issuing bank (currently they are borne by the acquirer/merchant).
In terms of digital television, there's one year left for the analogue to digital migration in Africa. However, most countries are unlikely to make this deadline. Read more.

EDIT

The Kenya Government has automated registration of companies by launching a one-day registration of companies system to improve efficiency at the state law office.

Centonomy: Making Smart Sense of your Finances

2014-06-21T16:21:00.002+03:00

Some days ago, Waceke Nduati, founder of Centonomy, a personal finance series that helps people get a grip of their finances and deal with money problems (that are often self-inflicted), gave a brief talk ahead of the new Centomy class period.

Centomy's eleven week course has just resumed with classes (total 3 hours a week) repeated on Tuesday,Wednesday,Thursday and Saturday from June to August. This is useful as some people may be busy on some days in a week, but can catch a repeat on any of the other days, and they are both in Westlands and downtown Nairobi.

These include sessions on personal money management (setting goals, monitoring plans), living abundantly, investment planning (choosing an advisor, stock exchanges, valuing private companies), psychology of spending, money & relationships, time value of money, good vs. bad debt, managing cash reserves and irregular incomes, property investing, taxes, and estate planning (wills, family companies, succession).

Some tips she cited:

If you want to grow wealth, don’t hang with people who just sit around and complain about things like government. Instead read, learn, and be with uplifting voices.
Use your free time. Do free lance stuff like writing on Saturday morning or drive around to check up on opportunities. e.g new houses
If you buy a Range Rover for attention, you may be doing it at the wrong time in your life. Also you'll have to keep upgrading that car to keep impressing the same people.
The skills you have are assets; improve them, instead of buying the latest phone (the world will never run out of things to spend money on)
Realise that half your income in a year goes to taxes and rent. Also we earn money 5 days a week but spend 7 days a week.
When you retire, whatever your built will have to go back to paying your lifestyle
Hidden savings - cutting back on your Kshs 300 per day lunch may equal Kshs 108,000 in December - enough for a land down payment, school fees or a (well deserved) holiday.
It's a myth that you can only save/invest when you earn a lot. Start with whatever you have, and saving Kshs 200 a day at 10 % can be Kshs 1.2 million in 10 years.