Blog Archive

Sunday, July 29, 2007

Greedy MPs...

Vote john "nguruwe" koech out... after all you don't want greedy pigs like him back in parliament again!!!
(Apologies to the real pigs...)

EAST Africa Cooperation minister, John Koech yesterday defended the controversial gratuity perks for legislators, saying the lawmakers, like other civil servants, deserve gratuity after expiry of their contract, adding that this is similar all over the world.

The MP cited Tanzania as one of the countries where parliamentarians were awarded token handshake after expiry of their term in office and said Kenya should follow suit.

Koech said it was sad to note that former legislators who contributed immensely to the development of this country were leading miserable lives after exit from the august house.

Said Koech: “Let’s not see MPs package in the negative light and those politicking the issue should stop.

It is shameful to see some former lawmakers soliciting for handouts despite their contributions.”

Speaking in Kericho, Koech defended the current emoluments of MPs, saying the pay was okay.

Esther Passaris to stand for Mayoral elections!

Yes... I say... yes...

Unfortunately, the mayor is elected by his fellow (corrupt) councilors... otherwise she would have an awesome chance if Nairobians were allowed direct elections...


Friday, July 27, 2007

Indian exporters (like Kenyan exporters) faces challenges from a stong currency

Rise Of The Rupee

Tech companies and exporters are losing profits as the currency continues to rise

On July 20, a group of Indian businessmen gathered in Mumbai to listen to a presentation entitled "How to Deal with the New, Improved Rupee." Yet for this crowd—mostly smallish exporters of textiles and commodities—the rupee's 10% appreciation against the dollar this year feels more like a punishment than an improvement. Jamal Mecklai, the risk-management consultant giving the talk, explained that the currency's unprecedented show of strength is a sign of India's increasing importance in the global economy. "India has grown up," he said.

And it has done so in a hurry. A key manifestation of globalization has been a rebalancing of the world's currencies, as the dollar has fallen to new lows and the euro has hit all-time highs. Few developments, though, have been as unexpected as the strength of the rupee, which since March seems to have turned from a perennial weakling into a surging up-and-comer.

Blame it on India's red-hot economy. After decades of puttering along at about 3.5% a year, the country is averaging growth of 9% or better annually, powered by a vibrant info-tech services sector and exploding consumer demand. What's more, India is awash in foreign money: $25.2 billion poured in during the fiscal year that ended in March, up 25% from 2005, attracted by deregulation of sectors such as retail and real estate and a roaring stock market.

Although the currency was decoupled from the dollar and made partially free in 1993, the central bank has since operated a "managed float," intervening in the market to smooth out volatility but not to hold down the rupee's value. However, the Reserve Bank of India has been largely overwhelmed by the foreign funds rushing in—money it can't mop up completely without provoking inflation. So it unteathered the rupee. "It was hard to fight the tide," says Chetan Ahya, chief economist for India at Morgan Stanley (MS).

Indians don't quite know what to make of the rupee's levitating act. Some say it puts the country's hard-won export gains in jeopardy: Exports now make up 13% of gross domestic product, up from 9% a decade ago (although still far from China's 38%). A particular worry is that India could be ceding ground to Asian economies that manage their currencies more actively—notably China, which has refused to float the yuan. "We are losing our competitiveness to China, Korea, Taiwan, and Singapore...and the Reserve Bank is allowing the rupee to appreciate?" growls New Delhi economist Surjit Bhalla.

No sector is more exposed to the effects of a strong rupee than the dynamic IT services industry, which brought in about $35 billion in export revenues last year. The top four IT companies—Tata Consultancy Services, Infosys Technologies (INFY), Wipro (WIT), and Satyam Computer Services (SAY)—are all complaining that the currency's strength is crimping margins. Profitability across the sector fell by 8% in the most recent quarter. "The rupee pressure is a concern," says Azim H. Premji, chairman of Wipro. "We have to squeeze efficiencies in cost, operations, supply chain, and processes." Still, with margins of 25% to 30%, "the big boys are in a position to take a hit for a while," says Kiran Karnik, president of the powerful Indian software association Nasscom.

The pressure, though, won't let up on the IT players. Wages have risen by more than 15% in the past year, and the effect is amplified by a strong rupee, since most of the companies' sales are in dollars. The strength of the rupee is "an additional reason to convince customers they have to help us," says Ramalinga Raju, chairman of Satyam, which boosted prices by an average of 2% in the first quarter.

India's manufacturers have taken it on the chin, too. "The appreciation was so sudden that we were unprepared, and it has beaten all of us in the short term," says Baba Kalyani, chairman of Bharat Forge, an auto-parts maker that gets 70% of its export revenues from the U.S. The giants, though, are in a much better position to withstand the pain than are low-margin businesses in textiles and apparel. A further rise in the rupee, says Suresh Ramrakhiani, economist at the Cotton Textile Export Promotion Council in Mumbai, could lead to job losses for up to 200,000 people. Really small exporters—spice merchants, producers of brassware, and the like—are hurting the most. And these small and midsize enterprises contribute 60% of India's export earnings, according to the Associated Chambers of Commerce & Industry in India.

There's one upside to the strength of the rupee: It makes purchases abroad cheaper. India's biggest companies have been on a buying spree lately. In January, Tata Steel took over Corus Group PLC, an Anglo-Dutch company five times it size, for $11.3 billion, the biggest of its 11 foreign acquisitions in the past year. A strong rupee will only serve to make such deals more attractive.

No one knows whether this is a passing trend or a lasting phenomenon. Some say the rupee hasn't found its true level yet and predict that in coming months it will settle at around 38 to the dollar, compared with about 40 today. And many would argue that such discomfort is simply a part of making the transition to a fully convertible currency regime, which India aims to do by 2011. "India used to be a large country with a small economy," says Ajit Ranade, chief economist at Aditya Birla Group, a Mumbai conglomerate with operations in textiles, metals, chemicals, and more. "Now we are a big economy, and we should act like one."

With Steve Hamm in New York.

From Businessweek 26 July 2007

Injustice in Kenya... Truth is stranger than fiction

I have linked to for this article... sad... real sad...

Is this what our country is coming to?
What was the point of "independence"?

Thursday, July 26, 2007

Where is the (Kenyan) Guy Fawkes?

So the MPs who earn 120 times Kenya's Per Capita Income... want more money! I can't say I am surprised... just disappointed...

So the KRA taxes the poor mwanachi who makes 80,000/-... these bastards (the MPs) wants an additional 6.3 million !

Perhaps we will be saved by a Kenyan Guy Fawkes who will blow up the current parliamentarians... (Sorry about the violent thoughts but the recent proposal goes against the rules of justice & is immoral)

Perhaps, I should stop my whining & try to join the gravy train! So good people... please vote :

COLDTUSKER for MP (constituency to be decided later)

Wednesday, July 25, 2007

One-Term President... a solution to Kenya's political crisis?

We should limit Kenyan Presidential terms to ONE TERM... yes... perhaps the term might be a little longer...

Proposal: A 7-year term that enables the incumbent to concentrate on Kenya & Kenyans. Not on his/her re-election bid & political power games!

  • Fairly good presidents can get sucked into bad political schemes that tarnish even otherwise decent presidents e.g. Kibz, who seems to have done a fairly decent economic job, has re-appointed most of the ministers tainted by anglo-fleecing!!! Perhaps this is a result of the desire to bring in votes from various tribes... fronted by these politicians?
  • Politicking by incumbents wastes time & money e.g. Most of 2007 has/will be spent politicking by kibz especially if he wants to stand for re-election.
  • Limiting the term to 7 years will encourage presidents to leave (good) legacies. They could remain out of the pig-sty since, well, they are already at the top of the dog-pile!!!
  • A one-term president has greater immunity (or a thicker skin) to political kingmakers & manipulators.
Fears or Concerns:
  • There is the fear that some presidents will rig the elections to elect their proteges but this is no different from the current suituation e.g. Nigeria's Obasanjo favouring Yar'Adua.
  • No fear of not being (re)elected provides a sense of hubris but the parliament retains the power to impeach.
  • If the president dies or resigns without completing his term, they can be replaced by the Vice-President pending new elections &/or some mechanism of succession. We can use the USA model where the VP becomes the prez for the remainder of the term. An alternate is to have pre-set limits depending on when the transfer of power takes place.
  • We might lose a competent president who we want to run again but there are many smart competent Kenyans. We need new blood, new ideas & accountability.
  • Too many presidents on our payroll! But this is mitigated by fewer presidents serving a mere one term lasting 5 years! Hopefully, some of these presidents will take up international roles e.g. UN appointments, etc. Kenya should lobby for these positions on condition the presidents so appointed/elected to these bodies "give" up their GOK salaries/pensions for the term of employment with the UN, etc.
I hope we enact a one-term model that enables "better" presidencies. As the saying goes...
Politicians are like nappies, they need to be changed often or they start stinking.

Seems like a speech Kenyans need...

I was reading on India's new president... a woman names Pratibha Patil... anyway, so I clicked through onto Wikipedia about the former president... APJ Abdul Kalam... A Muslim president in a pre-dominantly Hindu country... Granted it is primarily a ceremonial post but India has had:
  • A Muslim president (APJA Kalam, Zakhir Hussain, Fakhruddin Ali Ahmed)
  • A woman prime minister (Indira Gandhi)
  • A woman president (Pratibha Patil)
So... back to APJAK's speech... very interesting... and applies to Kenyans as well. We change our clothes when we are abroad. Well, almost... Just replace "India" with "Kenya"... there is a stark resemblance...

APJAK was not a politician. We need someone like him, a non-politician as the next president of Kenya. Someone who serves for one term... but a dedicated one-term... Note that India's president has limited powers but remains a check on the Prime Minister's powers. India does have a technocrat PM - Manmohan Singh - who did wonders liberalising India's economy when he was Finance Minister. Of course, he is doing a great job as PM. India has a growth rate of almost 8% or higher for the past few years!

I have copied the speech below but here is the link...

"I have three visions for India. In 3000 years of our history, people from all over the world have come and invaded us, captured our lands, conquered our minds. From Alexander onwards, The Greeks, the Turks, the Moguls, the Portuguese, the British, the French, the Dutch, all of them came and looted us, took over what was ours. Yet we have not done this to any other nation. We have not conquered anyone. We have not grabbed their land, their culture, their history and Tried to enforce our way of life on them. Why? Because we respect the freedom of others.

That is why my first vision is that of FREEDOM. I believe that India got its first vision of this in 1857, when we started the war of Independence. It is this freedom that we must protect and nurture and build on. If we are not free, no one will respect us.

My second vision for India's DEVELOPMENT, For fifty years we have been A developing nation. It is time we see ourselves as a developed nation. We are among top 5 nations of the world in terms of GDP. We have 10 percent growth rate in most areas. Our poverty levels are falling. Our achievements are being globally recognized today. Yet we lack the self-confidence to see ourselves as a developed nation, self-reliant and self-assured. Isn't this incorrect?

I have a THIRD vision. India must stand up to the world. Because I believe that, unless India stands up to the world, no one will respect us. Only strength respects strength. We must be strong not only as a military power but also as an economic power. Both must go hand-in-hand. My good fortune was to have worked with three great minds. Dr. Vikram Sarabhai of the Dept. of space, Professor Satish Dhawan, who succeeded him and Dr.Brahm Prakash, father of nuclear material. I was lucky to have worked with all three of them closely and consider this the great opportunity of my life.I see four milestones in my career:

Twenty years I spent in ISRO. I was given the opportunity to be the project director for India's first satellite launch vehicle, SLV3. The one that launched Rohini. These years played a very important role in my life of Scientist. After my ISRO years, I joined DRDO and got a chance to be the part of India's guided missile program. It was my second bliss when Agni met its mission requirements in 1994.

The Dept. of Atomic Energy and DRDO had this tremendous partnership in the recent nuclear tests, on May 11 and 13. This was the third bliss. The joy of participating with my team in these nuclear tests and proving to the world that India can make it, that we are no longer a developing nation but one of them. It made me feel very proud as an Indian. The fact that we have now developed for Agni a re-entry structure, for which we have developed this new material. A Very light material called carbon-carbon.

One day an orthopedic surgeon from Nizam Institute of Medical Sciences visited my laboratory. He lifted the material and found it so light that he took me to his hospital and showed me his patients. There were these little girls and boys with heavy metallic calipers weighing over three Kg. each, dragging their feet around.

He said to me: Please remove the pain of my patients. In three weeks, we made these Floor reaction Orthosis 300-gram calipers and took them to the orthopedic center. The children didn't believe their eyes. From dragging around a three kg. load on their legs, they could now move around! Their parents had tears in their eyes. That was my fourth bliss!

Why is the media here so negative? Why are we in India so embarrassed to recognize our own strengths, our achievements? We are such a great nation. We have so many amazing success stories but we refuse to acknowledge them. Why?

We are the first in milk production.
We are number one in Remote sensing satellites.
We are the second largest producer of wheat.
We are the second largest producer of rice.
Look at Dr. Sudarshan, he has transferred the tribal village into a self-sustaining, self driving unit.
There are millions of such achievements but our media is only obsessed in the bad news and failures and disasters.

I was in Tel Aviv once and I was reading the Israeli newspaper. It was the day after a lot of attacks and bombardments and deaths had taken place. The Hamas had struck. But the front page of the newspaper had the picture of a Jewish gentleman who in five years had transformed his desert land into an orchid and a granary.

It was this inspiring picture that everyone woke up to. The gory details of killings, bombardments, deaths, were inside in the newspaper, buried among other news. In India we only read about death, sickness, terrorism, crime. Why are we so NEGATIVE?

Another question: Why are we, as a nation so obsessed with foreign things? We want foreign TVs, we want foreign shirts. We want foreign technology. Why this obsession with everything imported. Do we not realize that self-respect comes with self-reliance? I was in Hyderabad giving this lecture, when a 14 year old girl asked me for my autograph. I asked her what her goal in life is. She replied: I want to live in a developed India. For her, you and I will have to build this developed India. You must proclaim. India is not an under-developed nation; it is a highly developed nation.

Do you have 10 minutes? Allow me to come back with a vengeance. Got 10 minutes for your country? If yes, then read; otherwise, choice is yours.

YOU say that our government is inefficient.
YOU say that our laws are too old.
YOU say that the municipality does not pick up the garbage.
YOU say that the phones don't work, the railways are a joke, the airline is the worst in the world, mails never reach their destination.
YOU say that our country has been fed to the dogs and is the absolute pits.
YOU say, say and say.

What do YOU do about it? Take a person on his way to Singapore. Give him a name - YOURS.

Give him a face - YOURS. YOU walk out of the airport and you are at your International best.

In Singapore you don't throw cigarette butts on the roads or eat in the stores. YOU are as proud of their Underground Links as they are. You pay $5(approx. Rs.60) to drive through Orchard Road (equivalent of Mahim Causeway or Pedder Road) between 5 PM and 8 PM. YOU come back to the parking lot to punch your parking ticket if you have over stayed in a restaurant or a shopping mall irrespective of your status identity. In Singapore you don't say anything, DO YOU? YOU wouldn't dare to eat in public during Ramadan, in Dubai. YOU would not dare to go out without your head covered in Jeddah. YOU would not dare to buy an employee of the telephone exchange in London at 10 pounds (Rs.650) a month to, "see to it that my STD and ISD calls are billed to someone else."

YOU would not dare to speed beyond 55 mph (88 km/h) in Washington and then tell the traffic cop, "Jaanta hai sala main kaun hoon (Do you know who I am?). I am so and so's son. Take your two bucks and get lost." YOU wouldn't chuck an empty coconut shell anywhere other than the garbage pail on the beaches in Australia and New Zealand. Why don't YOU spit Paan on the streets of Tokyo? Why don't YOU use examination jockeys or buy fake certificates in Boston? We are still talking of the same YOU. YOU who can respect and conform to a foreign system in other countries but cannot in your own. You who will throw papers and cigarettes on the road the moment you touch Indian ground. If you can be an involved and appreciative citizen in an alien country, why cannot you be the same here in India?

Once in an interview, the famous Ex-municipal commissioner of Bombay, Mr. Tinaikar, had a point to make. "Rich people's dogs are walked on the streets to leave their affluent droppings all over the place," he said." And then the same people turn around to criticize and blame the authorities for inefficiency and dirty pavements. What do they expect the officers to do? Go down with broom every time their dog feels the pressure in his bowels? In America every dog owner has to clean up after his pet has done the job. Same in Japan. Will the Indian citizen do that here?" He's right. We go to the polls to choose a government and after that forfeit all responsibility. We sit back wanting to be pampered and expect the government to do everything for us whilst our contribution is totally negative. We expect the government to clean up but we are not going to stop chucking garbage all over the place nor are we going to stop to pick up a stray piece of paper and throw it in the bin. We expect the railways to provide clean bathrooms but we are not going to learn the proper use of bathrooms.

We want Indian Airlines and Air India to provide the best of food and toiletries but we are not going to stop pilfering at the least opportunity. This applies even to the staff who is known not to pass on the service to the public. When it comes to burning social issues like those related to women, dowry, girl child and others, we make loud drawing room protestations and continue to do the reverse at home. Our excuse? 'It's the whole system which has to change, how will it matter if I alone forego my sons' rights to a dowry.'

So who's going to change the system? What does a system consist of? Very conveniently for us it consists of our neighbors, other households, other cities, other communities and the government. But definitely not me and YOU. When it comes to us actually making a positive contribution to the system we lock ourselves along with our families into a safe cocoon and look into the distance at countries far away and wait for a Mr. Clean to come along & work miracles for us with a majestic sweep of his hand or we leave the country and run away. Like lazy cowards hounded by our fears we run to America to bask in their glory and praise their system. When New York becomes insecure we run to England. When England experiences unemployment, we take the next flight out to the Gulf. When the Gulf is war struck, we demand to be rescued and brought home by the Indian government.

Everybody is out to abuse and rape the country. Nobody thinks of feeding the system. Our conscience is mortgaged to money.

Dear Indians,

The article is highly thought inductive, calls for a great deal of introspection and pricks one's conscience too....

I am echoing J. F. Kennedy's words to his fellow Americans to relate to Indians.....


Lets do what India needs from us.

Thank you
Abdul Kalaam

[Dr. APJ Abdul Kalaam was the President of India]

Why are Kenyans offended by the TRUTH?

My comments in RED... blog entry courtesy of a friend who asked the rhetorical question... From the editorial of the East African Standard... Online edition...

‘The Economist’ fell into old trap on Africa

Foreign correspondents based in Africa should endeavour to report accurately on political and economic developments on the continent.

What about our journalists? Jeff Koinange certainly seems to have set a "bad" example... if the allegation against him are true...

Many African leaders have complained about their reports for decades. True, some dictators do not tell the truth, and the world has learnt to ignore their lamentations over negative media reports.

These 'leaders' were mostly crooks & buffoons... moi, idi amin, kenyatta,mobutu, mugabe, bongo, etc... Only president who was a leader in the true sense of the word... Nelson Mandela... I understand the Botswana presidents are also pretty good... Have I missed any others? So who are these leaders who speak the truth?

Still, many foreign reporters and commentators go overboard. They are obsessed with negative stories and ignore positive developments. Kenya feels wounded, and rightly so, by a negative report in The Economist of London. Anger over criticism in the international magazine led to the cancellation of the inaugural Business Roundtable meeting last week.

Billed as a first in East Africa, the conference was to give business leaders an opportunity to engage with a high-powered Government team led by President Kibaki. The meeting, organised by Economist Conferences — a division of Economist Group — was to run from July 17 to 18 at Nairobi’s Intercontinental Hotel.

Things were going on well until someone who claims to "have returned to Kenya after 40 years" decided to write a three-page article claiming that no development had taken place.

The Economist Group announced the postponement in a statement a few days to the conference, but did not give details. However, Finance minister Mr Amos Kimunya confirmed that the conference was cancelled because of the offending article

Several companies had pledged to sponsor the conference, with Barclays Bank offering Sh5 million. The article, which appeared in the June 9 issue, is titled Kenya: Going up or Down? It stated that the general state of disrepair in the country is striking.

The article alleges that Kibaki is "ailing", adding that it is time for the elderly ruling class of "hippos" to give way to "cheetahs" (young reformers). Would The Economist use such language to describe European leaders?

Apart from the "Hippos" who were offended, calling someone a Cheetah (young reformer) is complimentary! BTW, apologies to the hardworking real (animal) Hippos who bring us valuable foreign exchange! And it is TRUE. We need the old geezers who are senile (mugabe comes to mind...) to give way to the young, brainy generation!

BTW, the reference to Hippos & Cheetahs was not the Economist's original thinking but it was from a speech by George Ayittey, a blogger, journalist, entrepreneur and much more.... Here is more on that...

The story says Nairobi does not operate at night because of insecurity. It adds that tens of billions of dollars of aid have been spent yet the country’s infrastructure is worse than it was 40 years ago.

Hmmm... so last time I checked... many folks get their heads chopped off... Now what would you call this if not insecurity? Of course, Nairobi is relatively unsafe... esp some of the seedier areas... so its is true... erm, Nairobbery is not called Nairobbery without a reason!

The writer says in the early 1970s, it was possible to drive from Nairobi to Mombasa in four hours. But now, because of potholes, diversions and hold-ups, it could "take eight hours".

So we have a lousy Nbi-Msa highway... It is true... It takes over 8 hours (I think the Economist was being generous) for one to travel from Nairobi's CBD to Mombasa's CBD... So you are offended by the truth?

I can attest to the poor condition of the road, the potholes (Mariakani/Miritini), the diversions, the hold-ups because of accidents & lousy drivers... So what was the counter-point to the truth the Economist said?

The article says the mess is a result of misguided economic policies, mismanagement, poor maintenance, sloppiness, tribalism and corruption.

Oh, yes where should we start?

  • The lousy economic policies of moi's government?

  • Mismanagement of most resources e.g. Telkom monopoly that led to Kenya missing out on IT/BPO opportunities?

  • Poor (if any) maintenance of the vital Nbi-Msa highway or the Railway system?
  • Sloppiness - the poorly drawn up contracts for Anglo-fleecing among other scandals like Goldenberg?
  • Tribalism - what about the Likoni clashes, Burnt Forest & now Elgon clashes?
  • What about the dominance of illiterate kalenjins in the govt during moi's days?
  • Corruption - does Goldenberg, Anglo-fleecing, All-Africa Games scandal, etc ring a bell?

Economist Conferences have over the years built their reputation on the ability to deliver the highest quality events with government leaders. The conference would have brought together the President, key ministers, the Central Bank Governor and Nairobi Stock Exchange chairman, among others.

Granted, Kenya, like many other African countries, has had its fair share of mediocrity, decay and backwardness. But any analyst who fails to recognise efforts of recent years is unfair.

Recent UN and World Bank reports have not failed to notice a silver lining in the cloud. Is it that foreign media are still stuck to the old template of Africa? In this report, like many others, one does not fail to see and feel the tinge of the ‘heart of darkness’, the failed continent.

The Economist is a respected magazine and should not publish articles which do not reflect Kenya’s situation. The meeting would have brought foreign and local investors to exchange ideas. We hope that opportunity has not been lost for good.

BUT its does reflect Kenya's situation... we might have blackouts due to power shortages, Railways has/had almost collapsed, the KPC's capacity is woefully inadequate, we have no undersea fibre optic cable connection thus relying on expensive & less reliable satellites... So what is not true?

Or kimunya thinks mungiki is an urban myth?

Thursday, July 19, 2007

NBK 1H 2007 Results

So what does all this mean?
Is NBK out of the woods?

The net interest income has significantly dropped in 2H 2007. As Marambii opined earlier during the AGM that the GOK was being charged interest at 15% which was a great rate by all means! But will now receive a lower rate. This will be a drag on earnings.

The largest gain is from the reduction of Loan Loss Provisions... Hmmm... what it means is that NBK with the "assent" of the CBK did not fully provide for these dud loans!

NBK claims it has enough securities to cover the "open" bad loans i.e. loans not provided for thus they do not see that as a problem. Of course, in Kenya, it means a lengthy court process to get much out of defaulters.

Nevertheless, NBK can start growing by pursuing new lending. The challenge will be how to deploy the Billions that the GOK will repay NBK. Who to lend to? At what rate? At what risk level?

The GOK & NSSF hold preference shares & I expect they will demand Preferred dividend payments if NBK pays Ordinary dividends.

The options to mitigate this are:
  • Negotiate a conversion from Preferred Shares to Ordinary Shares which would dilute the current shareholders' stake.
  • Pay off the GOK by exchanging the T-Bonds for the Preference shares but this will result in reduced income.
Well, it has been a long, hard road for NBK. I think the shares are over-valued but there is potential for strong profit growth with the reduction in Loan Loss Provisions. If the Balance Sheet is restructured there is a possibility of a takeover.

Stanbic remains a suitor but 2 years down the line since CFC-Stanbic caters to the middle market but does not give Stanbic the heft it wants across all sectors of the economy. NBK's reach among the masses is probably #3 behind Equity & KCB.

There is a distinct possibility of a Nigerian bank taking a stake in NBK as they expand across Africa.

Kudos to National Bank of Kenya

I am impressed with the listed "smaller" banks outside of BBK SCBK & KCB who provide much more information to their shareholders on a timely basis!!!

NBK & Equity have well designed websites that provide up-to-date information for investors. That is a contrast to Barclays & StanChart.

Anyway to NBK's release of their 1H 2007 results... which were released on 19 July 2007... this is amazing... when most other banks will release their results after at least 30 days. If not for the statutory requirement for them to release results in 60 days, they would do so even later!

Equity & NBK have been pushing technology & this appeals to the masses since it lowers the costs of transactions.

Keep it up!

What is the relationship between Nakumatt & Tuskys?

I read that Nakumatt & Tuskys (formerly Tusker Mattresses) are sister companies.

Does anyone have an idea of their exact relationship?

Who are the directors of Tuskys?

Does that make Nakumatt the undisputed leader in Kenya's retail scene?

Wednesday, July 18, 2007

Pity the honest Kenyan businessman....

Sigh... I feel for the honest Kenyan businessperson... Here is an example of how they get screwed on a regular basis!

Shouldn't there be a legal "Supreme Body" that can sort out such administrative matters? Why should the poor taxpayer get caught up with the antics of such idiots?

I have written before on how the Government of Kenya (GOK) screws (I want to use another 5-letter word but I want to kee the blog G-rated) the Kenyan consumer. Unfortunately, the (dumb) consumer blames the wrong party coz the GOK puts a populist spin to it...

GOK direct taxes constitute almost 35% of the cost of petrol at the pump. After adding other local & national taxes (payroll, land rates, unrecoverable VAT, etc) the amount is closer to 50%...

So when you curse the Oil Companies for charging 80/- per litre for petrol, the GOK (& local municipalities) have their 40/- hidden right in there. Using the 40/-, the Oil Marketers have to import the Oil/Oil products, transport it to the stations, pay its staff, pay interest before making any profit.

Did you know that Petrol Stations in Kenya are NOT allowed to breakdown their charges to you i.e. they can't show what part of that 80/- is paid as direct taxes even though this is an easy feat/calculation using today's technology.

Why you ask?

Because the GOK wants to HIDE their thievery! They expect citizens to resist/protest these taxes IF the citizens knew about them. Instead they let the Oil Marketers be the "bad" guys while some idiot called the Energy Minister lambasts Oil marketers for rising fuel prices while the GOK doesn't even refund (or pay interest on) VAT & Duties to the Oil Marketers...!

And most of us (the almost dumb) citizens can't see beyond our noses...
(Erm, except me & some others)

So I want to bring this to your attention... please, please, please provide me with additional hard data that I can post here. Few of the Oil Marketers are willing to go on record about this issue since they fear a backlash.

Shell(K) experienced this when they played hardball in 2006... they paid for it when the issue of BP's takeover came into play in 2007. Shell had to sell some stations to NOCK (a GOK entity) at a discount for standing up to the GOK's excesses.

KPC & KPRL's poor management has led to substantial loss of business for Kenyan Oil Marketers who export to other African markets. What a pity... since Kenyan jobs are at stake...

Can you smell a rat? (Kenya Re OFS)

It is a foregone conclusion (unless something drastic happens) that the KenRe OFS (not IPO folks... even if the Business Daily calls it that but Business Journalism in Kenya is a whole new animal...) will be successful...

Nevertheless, the deception by the GOK is not a good sign of things to come... The GOK knew that Mumias 1H 2006-7 was relatively poor but they hid that crucial information until AFTER the OFS was over. The share price plunged to around 25/- in the aftermath.

So there is a forensic report that is being "hidden" from the public... WHY?

Kimunya claims that a copy was given to the Transaction Advisers but we are buying the shares. Shouldn't we know about the shenanigans?

From the Business Daily 19 July 2007: Mr Kimunya, however, maintained that the report had been given to all transaction advisors who had used its insights to structure the deal. “I am assured that necessary accounting provisions and adjustments have been made in the Reporting Accountants’ Report,” said the minister.

Why haven't the criminal suits against the crooks (ex-CEO & CFO) been fast-tracked since this is important to the confidence in the firm?

My advice is to wait till the last moment before purchasing shares in the OFS.

KenRe - No prospectus, online????

I already have a bad feeling about this OFS... the financial scandals involving the ex-CEO & CFO. Then the lawsuit at the last minute...

I still think it will be over-subscribed... massively over-subscribed coz of the price & very few shares on offer... but that is not what I am talking about...

It is an "Offer For Sale" not an "Initial Public Offering"...

Where is the (online) Prospectus? It should have been uploaded & available at 12.01am on 18 July 2007.

Saturday, July 14, 2007

How to fix our economy... from my readers

Yes, I am (almost) back to regular blogging... and I am already encouraged by the responses/comments!

Credit for this post/ideas/comments goes to various readers & other bloggers:

Immediate Needs - which I reluctantly called "Short-term Fixes"

  • Rebuild Nbi-Msa Highway. It has been "almost competed" for almost 2 years! I fear the road will disintegrate after the major ("long") rains in 2008-9. Furthermore, we need 4 lanes not 2!
  • Create alternate routes around Nairobi/CBD to ease pressure off Uhuru Highway. Ultimately, what we need are Over-passes & By-passes through, over & outside the CBD.
  • We need a heavy presence of armed & undercover policemen in all major CBDs to encourage a 24-hour economy. Since CBDs are the "engines" thus let's start from there. We need to work in at least 2 shifts that run from 5am-9pm. This will encourage better utilisation of resources & infrastructure.
  • Use the death penalty, liberally. Many will disagree but robberies with violence should be dealt with severely. There is some "good" by eliminating pathological violent criminals from our society. Furthermore, there is an element of "deterrence".

Long-term Needs - But these need to be implemented soon

  • An expanded railway which includes new or ugraded tracks & additional destinations. I hope RVR is up to the task. So far their performance does not show much improvement but they inherited an almost "dead" firm. A huge plus is that the GOK actually received payments/concession fees from what was previously a sinkhole! Nevertheless, there seems to be some progress. It will take them 2 years to blossom into what was expected of them.
  • Move manufacturing from Nairobi further out towards Machakos & Ruiru/Thika. This needs the building of highways & rail lines that allow for easier movement of goods from these areas to & from Nairobi. Nairobi is too congested to remain an efficient manufacturing center. It is better suited as a distribution center.
  • Encourage industrial production in other towns closer to agricultural areas e.g. Eldoret, Kisumu, etc. This will ease the pressure on Nairobi/Central while opening newer markets while spreading the "wealth" to other regions.
  • Security needs to be beefed up & local registered merchant organisations should be supported in providing security. This creates safe zones for shoppers & businesses. Ultimately, these can be expanded to all parts of the country. Robberies with violence should be dealt with severely. The death penalty should be used liberally.
  • Nairobi can become the Financial Capital of East & Central Africa. Dubai has Mid-east covered while Joburg has southern Africa covered. The gap in the middle clearly "belongs" to Kenya. Rwanda is poised to fill this role if we dither.

None of the above will be easy but it needs to be done by the Private Sector who need to be given the freedom to do so. The government should play a supporting role but not act as a roadblock to these initiatives. Therein lies the rub!

Most of our current politicians are NOT up to the task! We need new leadership that is driven by economic interests not by dithering crooks & fools.

Sometimes...well, more often than sometimes... I think we should outsource our government to Singapore!!!

Friday, July 13, 2007

Hang 'em I say...

If Kenya were to adopt China's tough anti-corruption measures... 99% of the civil service would be, erm, hung...
At least we produce our own sisal... so finding enough rope would not be a problem! Plus it would boost a local industry & is (relatively) environmentally friendly... Of course, the ropes are reusable!

LOL... I can dream...

OK, the Chinese are playing politics but I like the Japanese honour system of commiting hara-kiri... Pity, Kenyan politicians don't do that!

Kenya's Exporters Hurting - What to do?

The Kenya Shilling has appreciated considerably against the US$ (among other currencies). I shall focus on the US$:KShs since this is the functional currency for most exporters. The US$ has depreciated against other major currencies as well.

Furthermore, we need to "expand" what we consider our universe of exporters to include non-traditional exporters. We all know that Tea, Flowers & Coffee are exported. There are other sources including Labour i.e. Kenyan diaspora.

KQ is a net exporter - 90% of KQ's earnings are generated in forex. Visit any travel agent in Kenya & they will quote most KQ flights (except intra-Kenya flights) in US$... $299+tax, $499+tax... etc!

Kenol & Total (listed firms) are exporters - They have, well used to have, a significant business in re-exporting goods (petroleum products) to other countries e.g. Uganda & Rwanda. The strong KShs has hurt them but as I will show there are worse problems for them caused not by the strong KShs but incompetent & often corrupt bureaucrats.

Tourism - A well known source of forex. Booming but I think they can increase prices easily without hurting their business. This is the time for Kenya to shift towards more profitable tourism by lowering the number of tourists by skewing towards higher-priced tourism. The strong KShs just helps this cause.

Subsidies for Exporters?

No... No... No...

Exporters should not be subsidised like India plans to do... This would increase the avenues for corruption. The Goldenberg scandal started off as an "Export Compensation Scheme". This should be warning enough.

Government programs that involve forms, rules, regulations, procedured & "people" are bound to fail. Corruption is a hydra-like monster... It seeks out new ways to "eat".


The BEST "intervention" is to improve conditions for Kenyan export-oriented industries by improving/aiding their LONG-TERM competitiveness. Then let market forces prevail.

I believe the "secret" is in significantly improving the infrastructure while letting the best survive.


India has embarked on building their "Golden Quadrilateral" that connects major cities in all four corners of India. This will allow for faster movement of people & goods. Part of the impetus is to encourage exports to compete with China, which has created an impressive network of roads in the past decade, to facilitate exports.

Whereas the Yuan is artificially "fixed" to the US$, this will hurt them immensely in the future, China has built superb infrastructure & created an environment that helps their industries export goods all over world using special highways that lead to their ports.

This enabling environment works far better than any "devaluation" or "currency pegging" China performs.

Examples relevant to Kenya

Better (larger, fewer potholes & safer) roads from Naivasha to Nairobi's JKIA will decrease transport costs for Horticultural products thus increase profits despite a strong KShs. Lower transport cost will make Kenyan goods more competitive.

Better roads to & from the airports & ports will encourage tourism as well as movement of goods & people.

Folks dread going to & from the airport. CBD to JKIA should take 30 mins takes 90 mins! The roads leading from Mariakani & Miritini (industrial areas) to Mombasa Port are horrible!


KQ has been asking for a larger (Nairobi) airport for over 4 years. They could have consolidated their hold on the African market during this time frame creating a tough market for other to enter into. The delay in upgrading JKIA has cost them market share esp to N.American market. Now competition & barriers to entry abound from Ethiopian, Virgin & BA.

KQ needs a 2nd runway so an accident does not "close" the airport! For some inane reason the KAA is not building a 2nd runway! Currently domestic & international flights use the same runway! Nairobi is KQ's hub & closure of JKIA for even a few hours is very expensive.

KQ is a major mode for transporting perishable exports. Better roads & services to JKIA will lower costs for KQ who can pass on savings to exporters.

I say privatise the airports. BAA runs the UK airports. Why do we have a government agency running the airport? Leave immigration & customs in government hands if it is a matter of "national security" but the airport's functions need to be in private hands.


Apparently Kenya has among the highest rates in Africa. Whereas Kenya does not have sufficient sources of "cheap" power, there are resources e.g. geothermal sources that can be exploited further. Olkaria can potentially supply 50% of Kenya's current needs.

A major reason for the obscene rates/costs is the corruption that has plagued various projects e.g. Turkwell Gorge. We need public review of these projects & a watchdog that is not beholden to politicians.

Further reductions in cost can be gained by improving the delivery/transmission. The transmission is plagued by crooks stealing wires, cables, transformers & oil. Kenya needs to introduce severe penalties & enforcement. The Chinese take drastic measures. I say so should we. Shoot on sight!

Lower electricity costs will help exporters become more competitive across the board despite a stronger KShs.

Lower taxes, fees & licensing costs will flow to the bottomline of these exporters despite a strong KShs. Lower taxes & bureaucracy encourages more export-led growth. Sure it will increase forex flows but from sustainable growth.

Pay refunds in a timely manner. These are refunds! The government screws exporters by keeping this money interest-free! What a travesty! The idiots aka MPs & ministers draw interest-free loans while sucking it out of firms that are trying to create jobs!

Kenya re-exports oil products e.g. petrol, lubricants, etc but both Kenol & Total have indicated that they have substantially reduced their export business in 2006-7. The strong KShs hurts their profits but the interest cost hurt even worse! So it was not the strong KShs but the delay in refunds that led to reduced exports which in turn led to loss of Kenyan jobs!

Local Consumption (or lack of...)
We need to have a sustained campaign to encourage the consumption of local products that are exported. This includes coffee, tea, flowers & tourism. Why do we drink sodas instead of tea? Creating local demand brings stability to some sectors.

It pains me to see butter from New Zealand & Ireland while we have KCC. KCC is forced to find export markets! Increased consumption of local production reduces the need to export "at all costs".

International Barriers & Tariffs
Kenya needs to stand up to the EU, Japan & USA (esp the EU) in matter of fair trade. Fight the "subsidies" that EU provides its farmers. This will allow Kenyan exporters get a better price for their produce. Better price realisation will decrease/mitigate the pain from a stronger KShs. These EU subsidies lower the "cost" of their products that are exported to Kenya! Our farmers lose benefits from economies of scale since they can't compete against EU subsidies.

Imports of Industrial Goods
This is the time for GOK to encourage local construction firms & industrialists to import "Capital Goods". Kenya should not be encouraging imports of consumables like butter, biscuits & sugar!

We need heavy machinery to build new roads & we need to build local capacity by providing incentives e.g. lower import duties/taxes on such machinery. Kenya does not manufacture heavy goods/machinery but needs these to boost its infrastructure. This will benefit us by reducing the quantity of forex in Kenya while allowing us to jump-start economic growth.

Tea, Coffee & Horticulture
There is excess tea in the world marketplace. Let's reduce new tea plantings for now. Instead we need to focus on higher quality & "origin" branding. Since the tea industry was privatised there has been considerable progress. I watch with disdain & horror as the idiots called MPs want to put KTDA back into government hands... Sigh...

Coffee can be far more profitable if Kenya cuts a deal like Ethiopia did with Starbucks. In fact we can produce more coffee & achieve higher realisations! So a strong KShs notwithstanding, we make more money in US$, Euros & KShs!

The Horticulture Industry needs reforms. We need to target the higher end of the market by value addition. Let's produce less but get the same or increased income.

The environmental impact is huge esp in the riparian areas of L. Naivasha & L. Nakuru. We might be getting negative returns from our horticulture ventures after factoring in environmental degradation.

A strong currency is not necessarily a bad thing. I have not addressed other issues like GOK borrowing, massive corruption, etc. There are many other ways to strengthen the economy whose benefits will flow to all Kenyans.

We need to improve Kenyan institutions & think long-term NOT fix a short-term problem by sacrificing long-term growth.

Under a strong KShs, jobs will be lost in some industries/sectors but substantial gains will be made if we start an infrastructure construction-led boom. The lowered costs of economic activities will rein in inflation & reduce the hurt felt by a stronger KShs.