Village Analyst

Number Portability; Game Changer?

2011-03-23T16:27:00.001+03:00

The much anticipated number portability is just but a few days away.
To many, it ought to be the much anticipated game changer in Kenya’s telephony wars; others are not so sure.

Why? For starters it seems limited to the cellular players and may not include fixed line telephone numbers. That in itself may not be particularly profound as the current number of active fixed lines pales in comparison to the active cellular lines. However, the users tend to be businesses which provide for high ARPU’s – quite a catch!

Fixed line numbers aside, a rather high portability charge of KES 200 (approx USD 2.4) will apply (compared to a new number & sim cost of KES 20-50 (approx USD 0.25 - 0.6)).

In addition to the steep portability charge, portability will not apply to other value addition services which will continue to be network dependant most notably of which are the popular cellular money transfer services.

The benefits of portability aside, many consumers already have multiple lines which allow them access to carrier- specific value services; a fact certain to mute the perceived benefits of number portability to many.

Comparing the portability effect in other relatively similar countries doesn’t eager particularly well for game changing. In India where Bharti and Vodafone both operate, the portability popularity has been less than 1% of the total customer base in the 5months portability has been operational.

All in all, it’s the customers that gain with number portability and its game changing possibility is a real boon to newer market entrants and quality service providers.

Fixed Income - PIGS get slaughtered!!

2011-01-14T20:24:00.005+03:00

As the effects of Europe’s sovereign debt crisis continue, contagion fears linger.

The widened spreads in the PIGS, Portugal, Ireland, Greece and Spain (Belgium as well) have players in the fixed income markets getting back to the performance of the real economies of various markets.

Government structural deficits, their causes and management (or lack there off) coupled with currency swings and rising commodity prices all against the backdrop of the turnaround in the global economy all play significant roles in convoluting the perplexity of the ‘new normal’ in which the Debt-to-GDP ratio is key.

Looking at the debt levels, Kenya’s debt level (pardon my home-bias) seems to be at rather high levels particularly when the public debt is compared to the countries GDP.

As an investor, one has to ask about the sustainability of the government’s move to lower interest rates against the backdrop of the European debt crisis given the similarity in debt levels.

Since debt is not necessarily evil, its use dictates its suitability and therein lies the answer to the question of how disastrous to the economy (Kenyan) higher rates may become.

The development of infrastructure has been a key area in which the (Kenyan) government’s spending has been channeled towards. The belief is that a good infrastructure enables and supports economic development and will hopefully avoid the pitfalls the PIGS have found themselves in.

Nobel 2010 - Economics and Unemployment

2010-10-12T20:29:00.001+03:00

With the Nobel Prize in economics 2010 (its actually the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) being awarded jointly to Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their analysis of markets with search frictions", I can’t help but recall the aspects of unemployment I came across in some economics class.

Frictional, structural and cyclical unemployment were the forms/types of unemployment I recall and in retrospect have experienced over the past couple of years. With the ‘global financial crises’ cyclical unemployment hit the finance industry hard! Lay-offs did the rounds and firms resisted hiring. Those of us fresh from school were hit hard as re-entry to the job market was nothing but going against the grain.

With the recession having been declared to be a thing of the past (at least in the US) and financial markets recording commendable returns, hiring is back in the cards for many and frictional unemployment is all the rage; the unemployed and those seeking to fill positions have incomplete information about each other hence many ideal matches are not immediately matched with each other.

With structural unemployment, the structural characteristics of the economy make it difficult for job seekers to find employment and for employers to hire workers mainly due to technological changes.

The economics of unemployment aside, my real surprise was the general time lag between various works and the time when a Nobel Prize is awarded. Then again, as Nicholas Taleb put it in The Black Swan, Nobel Prizes should just be ignored!!

Celebrity Endorsement

2010-01-02T23:17:00.002+03:00

Finally local celeb endorsement seems to be the big thing on marketing scene in Kenya.

From Equity bank to EABL to Optica, the use of local celebrities seems to be the big marketing play. Its nothing new though, i remember some old drinking chocolate ad that had Masaku of Vitimbi fame in it (remember him?) enjoying the beverage hot or cold. Decades later, the Vitimbi cast now endorses Optica eye wear in the jionee tofauti promo. -- While I'm certainly not the target market, its a clever campaign.

I'm more of the Equity Bank and EABL target market. They'v tried to get out hip promos which somehow makes me question if celebrity endorsement really works. The recent fiasco plaguing Tiger Woods actually brought the entire celeb-endorsement dilemma to the limelight. more on that in a sec.

Sussan Owiyo's a great artiste n boy does she know how to get the crowd on its feet and all. Nameless is pretty good. The question I have is if the use of these guys in promos really makes one want to automatically use the associated product. Perhaps it puts many off; resulting in a low return on marketing spend than would otherwise be the case.

INMO celebrity endorsement should very cleverly build both brands. The celeb's brand should be built in return for the associated product's image association. It should not be a one way street and the mutual benefit should be easily recognizable to the customers of both brands.

Take the EABL responsible drinking campaign. EABL benefits multiple-fold, its viewed as a responsible corporation on numerous levels while importantly telling Nameless fans (or those that at least recognise the Nameless brand) that they are that much more valued. On the other hand, the Nameless brand grows particularly in the aspect of market reach - in this case through prime time TV ads. Financial remuneration aside, seems to me that the benefits of association for one brand are much more dominant than they are for the other in this case. Perhaps my score board would be more neutral if Nameless had a new album out or if the campaign in this case were not focused over a two week period.

All said and done, for brands, it is the subliminal association cues that really propel their growth. Hence why any semblance of controversial issues leads to the dropping of associations (case in point; Tiger Woods).

Uses of Poverty

2009-07-30T10:29:00.002+03:00

Charles Onyango-Obbo had an interesting article in today's Daily Nation where he makes reference to an article by Herbert J Gans; The Uses of Poverty.

What a read!

Telecoms Regulatory Risk

2009-07-21T20:37:00.002+03:00

The announcement that Kenya's cell phone service providers are required to register their users before year end may provide the much needed catalyst for a more competitive environment.

Why it required presidential intervention and has taken so long is beyond me. It really underplays CCK's regulatory capacity.

The anticipated user database is a first step towards number portability, an issue that has been successfully fought off by the leading cellular service provider so far.

I don't think number portability will be put off much longer. In having a user database, the regulator is surely under increased pressure to allow for number portability.

Where does this put Kenya's leading and only listed cellular service provider?? Not at a very favourable spot I'd say!

42nd Centum AGM

2009-07-17T19:49:00.001+03:00

Centum this afternoon held the Co’s 42nd AGM at Safari Park Hotel, off Thika Rd. Nbi. Unlike last year’s outdoor event, the 42nd AGM was an indoor affair which allowed a better ambiance for the proceedings IMHO. Screens were visible, the high-table was not imposing, and the facility’s capacity was well utilized – with an adjacent room to cater for any overspill of s/holders. On the downside, air-con may have been an issue depending on one’s location.

The Co. chairman provided an overview of the Co’s strategy. Highlights:
• Increase Assets Under Management (AUM) five-fold in 5-10yrs
• Proactive brand development
• Strengthen internal processes & capacity
• Expand to the rest of Africa

I found the brand development issue interesting. Coke was cited as an example of a Co. whose brand value is many multiples over the real assets; that of course is last decade news. I wondered if the same can be extended to a financial Co. whose underlying assets are exchange-traded? Why? Theoretically, if the brand value of such a Co. exceeds the value of the underlying assets, investors would simply reconstitute the underlying portfolio forcing the Co. to be fairly valued, thus no/little brand value. I concluded that that may be so if all the AUM were listed, in this case, the portfolio is almost evenly split between listed and non-listed securities so investors would be willing to actually pay a premium for the non-listed portion; hence, a strong brand would help in the quest to increase S/holder value.

The Chairperson clarified that a favorable brand would help the Co. acquire deals more easily and attract investment partners, blah, blah, blah….

The CEO gave a good walk through of the Co and its portfolio underscoring the Co. core business; Its an Investment Channel.

Portfolio Split:
• Banking & Insurance: 44%
• Publishing: 4%
• Automotive: 16%
• Beverages: 24%
• Services: 4%
• Others: 4%
*Excluding Carbacid stake (now 5% of portfolio)

Going forward, the Co intends to raise debt capital and plough back internally generated funds. I understand that the company has no immediate plans to obtain a debt rating. Why? The market doesn’t really need it. Besides, skeptics will argue that sub-prime debt easily made AAA so is it any good?

The CEO also recapped the more recent Carbacid acquisition. Essentially, the synergies that result from it being in the Centum stable are huge! About 50% of the company’s carbon dioxide production is taken up by bottlers Centum has a stake in. Though the cost was not explicitly stated, a ballpark figure of Ksh. 400-500 million was murmured. The impact on the company revenues going forward remains everyone’s guess.

Q&A
Kirubi questions & allegations never miss. Needless to say that the guy was again absent for the AGM. RVR was again an issue; apparently the Co. recognized the impairment of the investment. In my books, it was actually a tranche payment due to a party that incurred operation issues so it was possible to reassess these financial commitments. The 2007/8 annual report disclosed the projected liquidity risk contributions in relation to RVR (USD): 2008 (620,567), 2009 (943,262), 2010 (211,089). One shouldn’t be too surprised to see another less significant RVR related expense in this year’s financials; it all depends on how the arrangement was restructured. The scanty info on this is a red-flag.

Many were irked by the absence of a dividend payout. I actually think that dividend reinvestment is long overdue. Why should my withholding tax to a gov’t whose cabinet members say that they do not see the reason to pay tax to a central gov’t???

Auditor musical chairs; Deloitte the current auditors are to be changed in FY 2010/11. I expect the current Internal Auditors KPMG to take over.

Voting: Centum carries out all its voting by ballot. Shouldn’t all other companies follow suit?

Goodies: Umbrella, Centum branded Biro pen (of course Bics!). Lunch was served @ the Nyama-choma ranch. That was enough of a dividend for me!

Green Issues

2009-07-15T21:07:00.003+03:00

In a move to cut costs, Zain has moved to embrace IT and go green by launching an E-Bill service. Its hardly anything new, but its a much welcomed move.

In this part of the world, environmental concerns are taken as an elitist Wangari Maathai thing. In fact, going green and environmental issues; forests aside, can be regarded as an alien concept.

The cost-cutting aspects for E-bills, virtual top-up cards and the like are fairly obvious but in many other cases, the environmentally friendly aspects are much less evident.

Last time I checked, not even the self-proclaimed green company, Safaricom, really pays close attention to the environment. Why? Top-up cards are probably the most notorious pollutants around. Surprisingly, not even a simple "bin" icon to promote proper disposal is present on the all popular scratch cards.

NEMA should really have a massive campaign for promoting other environmental issues outside the wetlands and reafforestation issues. The campaign behind the KEBS quality mark provides a favourable starting point.

Investment Tourism

2009-07-13T12:06:00.005+03:00

World over, tourism is recognized as a key source of revenue for local economies.

On the grand scale of things every tourism destination competes against others so a unique offering and well planned sustained conservation efforts really ought to be put together to prolong and maintain the long term viability of any tourism destination.

That aside, if development of the local economies is the focal point, then shouldn't all efforts be geared towards the achievement of this goal? I doubt that Kenya's and indeed East Africa's efforts to obtain more foreign beach and bush tourists will act as the much needed catalyst for the region's development efforts.

Instead of a beach and bush positioning, a business development (investment) approach should be followed; fine, promote beach and bush tourism if thats what will bring in the euros, dollars and yuan, but, highlight the business opportunities that exist in the region. I feel that tourists in E.A are not 'milked' enough. Their spend on carvings and other memorabilia are indeed commendable but we do not adequately tap their business prowess.

In promoting investment tourism, the notion of the destination and region as some backward wilderness area is re-thought as the local investment opportunities are brought to the fore.

From this approach, the potential of local economies may be more easily recognized and tapped not only by the foreigners but also by the local individuals.

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Ethical Investing

2009-07-03T20:44:00.000+03:00

Nigeria’s Lotus Capital has upped the game in sub-Saharan Africa regard to fund management by listing the Lotus Capital Halal fund.

The Lotus Capital Halal fund has its investment universe as securities of companies quoted on the Nigeria Stock Exchange (or other securities exchange), excluding those prohibited by Islamic law.

Judging by the religious structure of Nigeria’s population, one is left rather surprised that the Lotus fund is the first listed Halal fund on the NSE. Its surprising in that the NSE is Africa’s third largest exchange and the country is reported to be predominantly Islamic yet the first Halal fund has just been authorised. Then again, stocks and funds themselves are a relatively new concept to most leave alone ethically based funds.

Financial products tailored particularly to meet the needs of Islamic law have historically provided considerably competitive returns as have Catholic value based funds. Religious leanings aside, the ethically aware investor ought to closely scrutinise the merits of ethical investing.

2-3 yrs ago I carried out some research on US ethical investment funds vs. the S&P 500; primarily KLD Indexes vs the S&P 500. Surprisingly the KLD Indexes performed rather well when compared to the S&P 500, the predominant US benchmark. ....But that was before I flipped the idea on its head and looked at ‘sin-funds’ i.e those that invest primarily in alcohol, tobacco, weapons, naughties and the like – basically stuff that grandma would frown upon.

It turned out that ‘sin-funds’ massively outperformed the S&P 500...at least for the review period. Boy would I like to see the effects of the financial crisis on the ethical funds! ...It would also be pretty interesting to see the results of a similar study in other parts of the world.

For the East African market, an ethical fund would have quite an impact on the investment universe; no EABL, no Kenya Re, no Centum, no BAT ...that probably leaves an investment manager with less than ten investable listed companies.

S.A's Great Ponzi

2009-06-11T19:23:00.004+03:00

SA just discovered their largest Ponzi yet. Catch up on it here, here and here too.

It would seem as though Ponzi's are "All the Rage'. Bankelele recently aired some views on E.A pyramid schemes and Uhuru (Kenya's finance minister) in reading this year's budget just proposed for all pyramid schemes including (non-product) multi-level marketing schemes to be outlawed.

The assets under contention in Kenya's ponzi schemes pale in comparison to the S.A one which is said to have had up to $1.2 billion according to reuters.

Seems like higher-end "sophisticated" investors are just as gullible as the rest of us! Then again, these things are made to sound so sweet that its only after things go haywire does the whole thing become clear.

Like I'd said in an earlier post; "...downturns make it more difficult to conceal financial trickery..." especially where cash flow is critical.

Ps: Bear with & disregard the technical differences between pyramids and Ponzi's.

UP! UP! AND AWAY!!

2009-06-03T13:17:00.003+03:00

The rising equity markets have lots of investors smiling.

20% here, 30% there. I'm really looking forward to bankelele's quarterly performance review come month-end. I'm sure I'm not the only one. I think I'l keep my portfolio holdings to myself for now though.

The question on many-a-mind is how soon the indices will top some psychological marks; The Dow is about 250 points short of the 9,000 mark and locally, the NSE is 150 points from the 3,000 level.

Confidence may be up but the NSE woes are still alive and well; essentially eroding the investing public's belief in the system. With renewed confidence I only hope the 'NSE Dons' won't toss out the needed reforms saying, "don fix it if it ain't broke".

By the way, who's for a capital gains tax on the NSE?

Property Play

2009-03-22T19:14:00.003+03:00

The real estate market has had a great run over the past five years. speculation is rife that the Kenyan real estate market is now a bubble about to go pop!

VOA speculates that Nairobi's property market benefits from piracy proceeds which easily find their way into the country given the country's absence of Anti-money laundering regulation. I must add that if indeed such proceeds are finding their way into the country then their impact on the Kenyan economy is profound and is certainly not limited to any particular sector.

The discussion on stockskenya considers varied views but the jury is still out. K24 has also recently run an investigative piece on the matter which raised more questions than anyone is able to answer at the moment.

The Bubble question becomes a notch harder to answer when one considers the changes that have been witnessed in property regulations and in the general consumer preferences. For one, the regulatory change allowing of multi-owner parcels has really changed the scene i.e possibility of actually owning the second floor in a block of flats is recent (circa 2003). That alone has had profound impact on property ownership and development.

Is it all a pure market play of willing buyers and sellers? I think there's more to it than that.

The beauty of it all, its money in the real economy. That's the way to go!

Regional Rush

2009-03-06T09:28:00.002+03:00

There is an ongoing belated rush for Kenyan businesses (especially financial) to go regional by setting up operations in South Sudan, Uganda, Tanzania and to a lesser extent Rwanda. Burundi and Ethiopia so far seem to have been excluded in this regional expansion phase.

Equity, KCB, Commercial Bank of Africa, Fina, Diamond Trust Bank and Co-op Bank are some of those that have their eyes set on the regional front. Why??

IMHO its a case of belated realization. Ecobank, Bank PHB, Standard Bank and others all caught the E.Africans sitting pretty in their home market comfort zones; seemingly unaware of globalization or even of economic Pan-Africanism. So, in the West, North and Southern African players came, set up shop (in East Africa) and destabilized the home markets of the E.A players.

Belated realization aside, Kenya's 2007 chaos helped us step down from the hubris. The importance of geographical diversification became blatantly obvious for all when the safety zone of Kenya crumbled and few businesses had a foreign operations buffer.

I'm thrilled that regional play is the day's bandwagon. For a while regional operation has been a key issue in my stock picking. As you might imagine it's a criteria that left me with only a handful of stocks to pick from - not even the much acclaimed Safaricom passed this screen. ---Ok I did put up some cash in it but I got out in the first week of listing.

The more important lesson here is that we're not a unique heaven. Too often I hear of how unique the market here is and of its "peculiar habits". The seasoned traveler will tell you of the numerous similarities that exist especially with other developing nations.

The Regional Rush brings numerous things into question, will it work? Is it being done right? Is consolidation of the asset base (M&A) a necessary integral part of the process? Are our organizational cultures supportive or will they inhibit the expansion drive?

The regional move is a step in the right direction but our management practices must also step up. Innovation and not reaction to market-place events is key once outside the home market.

Developing Agribusiness

2009-02-21T14:28:00.007+03:00

Despite much publicized alleged scandals in Kenya's agricultural sector and with the current global economic woes being attributed largely to U.S. mortgage based instruments. I'll take the risk of seeming off-sync with events.

The situation in many emerging markets is that agricultural players are not able to concentrate on their core business of farming due to a host of challenges. How to get their produce to the markets, how to secure markets and prices for their products, etc etc. Basically agricultural players need mechanisms that will enable them to manage their business operations more effectively. There is a need for the corporate world to embrace the field of agriculture by being actively engaged in agricultural activities. Enter derivatives.

Derivatives are essentially financial instruments that obtain their value from the value of other items. Forwards, futures, swaps and options are the main types of derivatives.

Derivatives would result in financial institutions taking a closer look at the business that is agriculture with a view to aiding streamline the operations. As is true in many developing countries, financial institutions seem to have neglected the business of agriculture, only courting only big well run institutions such as Del Monte for their banking deposits. However, the pie could be made much greater than that.

With derivatives, financial institutions would be able to trade and make commissions on the derivatives products while empowering the locals through the development of the real economy.

In the case of forwards, participants (farmers) would easily be in a position to gauge potential returns before they plant the season's crop and as such take informed decisions by possibly locking in some of the potential returns. What a difference that would make to the current state of events of plant now, the returns will be market dictated much after your commitment.

The argument for derivatives is just but one of the numerous avenues for development and growth in agribusiness, however, the point is that, increased business involvement in agricultural activities is critical if food stability is to be achieved; GM foods are unlikely to be the answer if their farming and marketing is done in the very same way as that of the indigenous breeds. In many areas the land is so fertile that the crop is left to rot on the farm due to the poor distribution and poor market access.

Derivatives have their issues, but they might be the much needed catalyst we need.

NSE, CMA and downturns

2009-02-20T12:22:00.003+03:00

The capital markets world over are facing rough times. The question however is, it it a cyclical effect or are the markets facing a structural change? The heard mentality and our more globally connected state of affairs doesn't make things any easier.

Amid public scrutiny, the CMA and NSE are finally having to face a much needed restructure. That's the beauty of market downturns! They force the big tymers to re-look at the operations, go back to the drawing board and in this case (hopefully) make the system more transparent by necessitating necessary changes. -by the way, as part of his 2007 campaign promises, the PM pledged to look into the rot at the NSE and to ensure that more brokers are licensed; but I digress...

In the absence of short-sellers bull markets don't provide enough incentive to ensure that the systems work; if we're all making money, why spoil the party?? ...My personal experience on the floor of the NSE, was that the CEO would show up when several counters would hit the (lower) 10% limit on daily trades. The question he'd ask was, what's happening to our market? When the bulls had their day; no questions were asked, everyone was making money!

So why is it that there'r lots of alleged fraudulent schemes now being identified globally? Madoff, Stanford, Santyam and the countless pyramid schemes?? INMHO, downturns make it more difficult to conceal financial shenanigans and their trickery since more often than not, their goal is to falsify profitability which is rather difficult once the bear hangs around for some time.

I hope the Kenyan market regulators get their affairs in order sooner rather than later. But then again, who really cares about the general public? The trend since the dot com crush has been to move towards private equity where there'r less questions asked and (increasingly) more money to be made. So, why streamline the systems for the masses to profit possibly at your expense? Would a real capitalist do that?

SA Budget: Notes from EA

2009-02-11T19:17:00.007+03:00

SA's Minister of finance Trevor Manuel earlier today read SA's 2009 Budget Speech perhaps Africa's first for the calender year 2009 which has seen the financial markets continue the downturn after a year-end 'festivities' break.

A few surprises came my way. To begin with, it was a totally SA affair, no mention whatsoever of SADC. In this part of the continent, the national budgets are now read concurrently and feature EA region integration issues to a fair extent, hence my surprise. I guess with a globally integrated economy like SA's, the regional platform can be somewhat overlooked.

With the recent fire disasters in Kenya, I was pleased to note that Trevor availed additional funds for not only water and youth programs but for fire programs as well. I bet Uhuru's (Kenya's Finance Minister) budget speech will cater for the disaster preparedness program- but look out for a scandal involving the funds in a years time.

Education spending also happens to be SA's single largest investment. The minister read a tip received form a contributor who reckoned that funds availed to Public libraries in previous budgets are going a long way in aiding community development. - After seeing the one on Mandela Square, I have always thought that a public library would be the best 'white elephant' project our dear prezzo can get into given that he has reneged on many of his 2003 inauguration pledges why not the one on naming buildings after him? I see it already "M. wa K. Presidential Library" ...Not only would it enhance his education commitment, it would actually do some good.

I remembered Lucky Dube's hit track when Mr Manuel noted that in efforts to deter crime, funding has been provided for the construction of new prisons amongst other things. Now that's another issue altogether in Kenya; our congested prisons are none other than the Prezzo's own undoing! Why? The CEO happens not to have performed his constitutional duty of signing off some documents to decongest our prisons. The Economist recently listed the countries with the largest number of death row inmates. Kenya featured in the top 3!!!

The shift to digital broadcasts and the need for set-top boxes is causing holes in Treasuries world over and Trevors wasn't an exception. I can only hope that this will not be a goldmine for our MPs when our time comes.

I loved the part about different tax thresholds for senior citizens. Surely we too should give our senior citizens some reprieve.

An increase in international air passenger departure tax means that we'll have to dig a little deeper for the World cup in 2010 unless a drive or sea travel sounds exciting. That certainly didn't go down well with me.

The Tips for Trevor campaign sounds great. I have no idea how easy it is to contribute to the Budget proposals.

SA's 2009 budget certainly gives a number of pointers for our EA Ministers. I hope they're paying some attention.

C-SPAN Africa

2009-02-10T16:03:00.005+03:00

I happen to have had some spare time this afternoon and found myself surfing the tube for a few minutes. Interestingly, four channels (KBC, KTN, NTV and Citizen) were all beaming the parliamentary proceedings live!!!! Quite a disaster if you happen to be rather intolerant or impartial to the politics of the day.

In my disgust, it occurred to me that perhaps we need our own C-SPAN (Cable-Satellite Public Affairs Network) or even C-SPAN Africa or something of the like. I wonder what ever became of the idea that parliamentary broadcast channel is needed. What's C-SPAN? Wikipedia says its "an American cable television network dedicated to airing non-stop coverage of government proceedings and public affairs programming. C-SPAN does not accept advertising from external entities, and the only commercials are for its own shows or videos for sale from their website."

C-SPAN Africa appeals to me; perhaps because CNBC-Africa was the only free-to-air channel streaming its normal program line-up. My idea of a C-SPAN Africa would give us insight on Rwanda's high-tech parliament, Tanzania's Swahili debates, a thing or two on Nigeria's and certainly SA's parliaments or their equivalents. Of course the idea wouldn't be complete without (kissing ass) airing Britain's PMQs - I'm not sure how good Gordon Brown is on debates but I admired how Blair could dance around the issues and some how appear to always get out of tight situations.

So who'd finance it given that co's are rather sensitive on political affiliations (Orange aside)? Gov't for one - no MP will pass an opportunity for audience given that the key business of the channel would be to air politics; their life-blood. I'm sure several NGO's would run infomercials and such as would political parties to name a few.

With this idea whose time has surely come, we'll have a better understanding of our own politics as well as pan-African politics and other issues of governance. With it, we'll be better placed to understand the necessity of African integration and play a part in it. ... more importantly, I'll have some entertainment next time I've got some time and turn to the tube for something else other than my beloved nintendo.

Fiber ready???

2009-02-02T17:26:00.002+03:00

Q2 of 2009 should see the landing of the much anticipated seacom fiber-optic cable. The first of at least 5 similar cables expected to land on the E.A coast. Much is expected from the fiber-optic connectivity but my take is that much more preparation is required in order to benefit from it right from day 1.

For starters, a minimal amount of local content is available thus far perhaps with the exception of blogs currently doing the rounds and of course facebook status updates and chats which are quite popular. That aside, only a handful of fully functional corporate websites currently exist.

The argument though is that, the absence of fully functional/interactive local content online stems from the low band-with so a broadband connectivity will sort that all out.

Errrr, not quite!

The broadband will solve the speed issue but far much more is required if e-commerce initiatives are to truly take-off. Other wise, we’ll youtube and download free stuff till kingdom come and only consume without really contributing to and enhancing our economic well being.

One of the critical components is the role of financial intermediaries in e-commerce. As it stands, credit/debits cards have a very low penetration so we’ve got to figure out how to conduct online trades. So far, the banks are not playing ball. Of course some guys (e.g. nakumatt) have taken things into their own hands and issued their own visa cards perhaps in anticipation of what’s to come.
The other option for plugging the medium of exchange void is a paypal – like format. i.e. we just agree that we’ll use platform ‘x’ as our online money medium.

This is why zap, m-pesa n everyone wants in! The banks are dead asleep, the fiber is here and a solution/platform for e-commerce is needed and needed fast.

The financial platform may have an easier solution than others. Logistics may be a trickier mine field. Here’s why, our postal system like RVR is really another museum piece enjoying little-if any public faith. In-fact, many are beginning to request for their bills to be emailed instead of hard copies delivered - just think how much paper we can save!

However, we don’t have to use the traditional mailing/delivery system. A network of pick up locations may do the job just fine so you may buy your stuff online and have it sent to your local depot and voila!

For foreign sourced products, things may be just a little trickier. KRA, customs, e-bay crooks etc.

Are we really ready for this??? well, lets get it first, hiyo ingine itajitatua! (the rest will sort itself out)

SaneBull World Market Watchgreat free widgetsWidgetbox

ABSA bails them out

2009-01-31T11:51:00.005+03:00

ABSA has had to acquire large stakes in 4 firms after Absa Capital clients defaulted on payments related to single stock futures totaling R1.44bn ($145mn. Ksh 11.5bn).

Of note is a 16% stake acquired in Blue Financial Services (Blue) a micro-finance institution operating in 12 African countries. Blue, currently dual listed on the ALTX of the JSE and on the Botswana Stock Exchange, has plans to further list in Kenya, Namibia and Zambia.

Since Absa is yet to fully consolidate its operations after the acquisition of Barclay’s Sub-Saharan businesses into the Absa brand, the newly acquired stake in Blue provides an important consideration on the strategic course Absa will adopt. Adan Mohammed (the Barclays Kenya CEO) is on record having noted the necessity for BBK to change its strategic course perhaps by shedding its high-street image. I think the Blue buy-in provides an important inflection point for the Absa/Barclays African strategy.

With Barclays Plc having earlier sought capital injections from the middle-East and the stocks recent woes amidst the continuing crisis, is it likely that capital will be transferred to the parent co. from its subsidiaries in emerging markets ie. through extraordinary dividend repatriations leaving the subsidiaries in more precarious balance sheet positions?

Of course that may be a shortsighted move but drastic times call for drastic measures.

Besides, who’s bothered about Basel treaties in frontier markets when the big boys/girls in the West are worried about avoiding government capital injections?

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Infrastructure Bond

2009-01-30T14:59:00.005+03:00

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The launch of the (Kenyan) infrastructure bond is indeed a laudable move by the government in its efforts to augment its previous methods of financing infrastructure.

On the launch, the CBK reiterated the importance of infrastructure development as a priority area for economic development and its crucial role in ~~Illusion 3020~~ Vision 2030. Visions aside, the 12yr bond intends to raise Ksh 18.5bn ($ 232mn), is to have a coupon of 12.5% and will be listed on the NSE. A 3 phase redemption structure will apply. The bulk of the funds raised (43%) are to be channeled to energy projects, 35% to roads and 22% to water, sewage and irrigation.

Hopefully in future there will be more sector specific bonds. I’d like to see a 10bn bond channeled towards roads 3 months down the line. Otherwise, 2030 will be here before the bypasses promised by the right Hon. are up and running. I’d love to see an 8bn bond municipal bond every other month – otherwise the ‘kajo’ might just have to impose a sales tax to raise funds if real development is to be fast tracked; that’s a story for another day though.

What I’d really love to see with this bond is a website that lets interested parties know the status of the funds and how far along the projects are on a quarterly basis. That might be a bit much to ask but otherwise how are we to know that the funds are not funding some political party’s propaganda?

All in all, it’s a start.

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