Blog Archive

Tuesday, February 24, 2009

ColdTusker applies for the Greatest Job in the World

Job opening - the Greatest Job in Kenya

Would you like to lead the beautiful country of Kenya, where your followers will all be tribal voters, your friends are sycophants, your team an army of highly effective corrupt and evil criminals (all trained at the school of Mwalimu Moi). You will preside over the collapse of an economy and oversee a transformation of a once proud people to a state of beggars.

We are a bankrupt country looking for a suitable candidate to rule the nation of some 39 million poor Africans. The ideal candidate should have no scruples, no guilt complexes, and a willingness to break the law (he or she will never be investigated). The candidate should be willing to protect corruption, impunity, illegal forces, and police brutality, willing to turn a blind eye to extrajudicial killings, famine, disease and extreme poverty. He or she should have a crazy spouse whose antics can be used as a diversion or smokescreen when necessary. He or she will accept and protect all wrong doers. He or she may need to devise crafty fund raising schemes to liquidate state assets for purposes of buying elections or lining ones own and friends or relatives, pockets. He or she is required to befriend and work with wanted criminals. He or she must be deaf, blind and mute in order to effectively ignore the rapid decline in state. He can use police force to quell any dissent from the population. He is not expected to know the people, indeed the less he knows the better.

Presidency – the job of the president is to amass personal wealth and to protect criminal politicians, family and friends. This job will be starting January 2012.

Job description –ignoring state policies and regulations in order to protect corrupt and criminal politicians and amass wealth.

Performance standards: This is a challenging position and a successful president will be measured by his ability to rig successive elections. He will also exceed the crimes of the previous president past five years within his first term.

Minimum Qualifications – a previous criminal record, ability to steal with impunity, ability to creatively protect corrupt friends. Excellent acting skills especially feigning sickness and ignorance. A network of the worlds most wanted criminals. Colourful wives and friends an advantage. Only blind, deaf mute candidates need apply, alcoholics or other drug dependency preferred.

Special duties – attend state parties, cutting ribbons, drinking at golf competitions, extensive travel to Dubai, China and other shopping havens.

Work schedule and station– one hour per year, timing flexible.

Budget - none, the country is bankrupt

Remuneration – the president can take whatever he desires for himself, family and friends, including cash and properties which can be grabbed as required

Perks – astronomical allowances, access to any land or assets required, Great family benefits, contracts for children. You will never be investigated,

Accountability – none.

Contract terms renewable every 4 years (you can change this and declare presidency for life).

Your team

Prime Minister – Your closest asset. Responsible for for maintaining a state of fear, coordinating mass killings, rape and looting. In charge of overseeing a parallel corruption system, ensures protection of criminals, and undermining your government. Responsible for keeping quiet.

Vice president – protects your back and helps orchestrate the illegal acquisition of funds for your next election. The Vice president is responsible for maintaining silence on national scandals.

Cabinet Ministers – People you select for their contribution to your election kitty. Responsible for vomiting on the shoes of donors. These people will serve you faithfully in degazetting forests, stealing grain, stealing pensions etc etc.

Official Spokesperson – Responsible for ensuring you don’t have to appear in person to respond to any uncomfortable scandals like raids on media houses, missing grain, Armenian brothers, police brutality, extrajudicial killings, or arms to Sudan. Responsible for carrying your cross.

First Lady – Your court jester. Fashion oblivious, extreme temper, slap happy. Responsible for national entertainment and creating a diversion when journalists get too close to scandals.

Other wives, mistresses and sycophants – Your silent loyal army from the mountains that does most of your work. Responsible for setting fashion standards, organizing deals, being proxies on fishy contracts, representing you incognito, and are the real center of power in the country.

Members of parliament – a bunch of bickering elected folk who need to pay off their votes. Responsible for setting their own salaries and perks.

Apply now to Applications@ThegreatestjobinKenya.con

Full credit to

Kenya Airways - Oversold?

I was reviewing share prices vs reported book values & my own 'projections' of profits. So what follows are my own views/opinions.

I will discuss the prospects of various listed firms as businesses with a discussion of the share prices as well. As many of you know I am a huge Warren Buffet fan so I hope I do him justice.

Pick # 1 (BTW, WB does not believe in investing in airlines... I know, I know...)

Kenya Airways (KQ) - Price on 24-02-2009 is 20/-

KQ has faced a tough 3 years with the plane crash in May 2007 - this was at the peak for KQ - and then the hits started;
- elections in late 2007
- post-election violence in 2008
- record high oil/fuel prices
- global financial turmoil in late 2008 & continuing

So the question is whither KQ as a business?

Let's do a SWOT Analysis (I will update it as I get comments)

  1. KQ is among Africa's largest & strongest airlines. Dominant in E & C Africa.
  2. Strong Balance Sheet (Sep 30 2008) shows Kes 10bn in cash/liquid assets. Approx 20/- per share.
  3. National airline thus an advantage in getting airport slots in bilateral agreements.
  4. Privatized for over a decade. GoK owns 23%. KLM 26%. Better management vs government controlled firms.
  5. KQ can survive 2 years of losses while smaller airlines will collapse.
  6. Majority of the revenue is in US$, GBP & Euros.
  7. Aircraft have high fixed costs but deployment is flexible.
  1. Single hub (JKIA) thus exposure to local politics - see effect on KQ during Nov 08-Mar 09 election period.
  2. Inefficient hub (JKIA is controlled by the GoK) leading to inefficiencies.
  3. Reliance on government controlled entities for Jet A1 fuel. KQ faces problems sourcing fuel in various countries including Kenya, Ghana, DRC, Zambia, etc.
  4. Over-reliance on Europe for tourists. Credit crunch in Europe will hurt KQ.
  5. Inflexible (high fixed-cost) aircraft. Only 3 Embraers (E-190). The rest are Boeing jets.
  6. Higher cost airline with large(r), unionized & inflexible contingent of staff.

  1. Africa, especially Sub-Saharan Africa (SSA), has the lowest airline penetration.
  2. Ineffecient government owned/controlled carriers (e.g. Air Tanzania, Air Zimbabwe, SAA) benefits KQ.
  3. Increasing African trade with the Mid-East, Far East, China & India will increase passenger & cargo numbers.
  4. Huge potential in tourism from the increasingly wealthier Chinese, Indians & Middle Easterners.
  5. KQ has become the 'local' or 'regional' airline for many SSA countries e.g. Lusaka-Lilongwe, Lagos-Abidjan-Monrovia, Accra-Freetown, etc.
  6. Global Financial Crisis will enable 787 deliveries to be made sooner than expected.
  1. Ethiopian Airlines has a stronger pan-African presence & better global reach vs KQ. And it keeps growing.
  2. Airlines privatizing - or recently privatized - all over Africa including Air Tanzania, Air Uganda, Air Malawi, etc.
  3. New & expanding Low-Cost Airlines (Jetlink, Fly540)
  4. Low purchasing power in SSA means air travel is a luxury for 99% of the population thus limited growth in the next 5 years.
  5. High & volatile oil (fuel) prices.
  6. Low barriers to entry. Anyone can buy a plane (see Fly540, Air Uganda). Both in Kenya & in SSA.

Financial Discussion

  • KQ has almost 20/- (per Sep 30 2008 balance sheet) in cash or near-cash. The 1H 2008-9 period was barely profitable BUT most other airlines made losses.
  • Oil prices were at their peak in 1H 2008-9 but they have dropped by 65% though KQ entered into unfavourable hedges which will continue into 2009. KQ will see benefits of lower prices in 2009-10.
  • KQ has been aggressively expanding in 2008. KQ will continue expanding into Africa & globally in 2009:
  1. Dhaka (Bangladesh)
  2. Kisangani (DRC)
  3. Libreville
  4. Blantyre (Malawi)
  5. Malabo (Equatorial Guinea)
The good news for KQ is that they can easily discontinue loss-making routes while open new routes rapidly provided they have agreements in place.

So the business is OK. Sustainable. And growing 50% over the next 3-5 years.

Earnings: KQ barely managed 1.59 for 1H 2008-9. I expect a better 2H thus at least 3.50 for FY 2008-9 which leads me to say BUY.

PE = 6x which is great. Cash flow will be lower as KQ spends to expand.
PB = 0.5 (Kes depreciation has boosted value of aircraft/assets but note an offset for US$ loans/liabilities)

Monday, February 23, 2009

Buy Kenyan, Build Kenya

Kenyans need to make good choices. Now. To save themselves.

Buy Kenyan

It is as simple as that.

Let me state from the outset. Kenyan manufacturers need to be price & quality competitive. This is not a choice for them. They need to give Kenyans value.

For those who cry 'protectionism', I am NOT advocating tariff barriers or quotas or subsidies. I do encourage additional (non-monetary i.e. subsidies) incentives for Kenyan firms like better roads/infrastructure, staff training, lower tax rates, etc.

Your local Nakumatt (or Tusky or Uchumi or grocer) stocks too many foreign goods esp foods. Kenya is an agricultural country. We need to become a major agro-processor as well.

Baked Beans (I like Baked Beans on Toast)

Kenylon (Kabazi Canners of Kenya) manufactures baked beans but it seems Heinz (imported from the UK via Dubai) seems to has a larger display. There are other local brands BUT the imported brands dominate.

So why does Kenya need to import baked beans?

If Nakumatt sells 100,000 cans of Heinz beans (89/-) per month, that would 'save' Kenya $1,200,000 (Kes 100,000,000) annually. 'Save' above means reduce the need for forex to fund imports. I am assuming retail margins of 10%

KShs 100 mn paid to Kabazi means a good portion goes to local farmers, factory workers, other local manufacturers & transporters. And this gets recycled into the local economy as these 'beneficiaries' buy other local goods.

Butter & Cheese

Why does Kenya import butter from New Zealand via Dubai?

KCC, Brookside, Daima, etc has great milk products. We export to the middle east, so why do we import these? We used to import milk products from China. Why?

Kenyan farmers will increase production IF we reduce imports thus boosting local demand.

Snacks/Chocolates/Prepared Foods

I am amazed that Kenya imports crisps, chocolates, biscuits, cereals, chevda (among other Indian snacks), etc

Kenyans produce great products so why the need to import???

Crisps - Krackles, Tropical Heat, etc
Chocolates - Cadburys, Out of Africa (though most ingredients are imported)
Biscuits - House of Manji (the best Digestives), Brittania
Cereals - Weetabix (local), Procter & Allan, etc
Indian snacks - Tropical Heat, Deeps, etc

Kenyan products in this category are generally cheaper than the imports yet we blow away forex & the creation of local jobs.

Why do Kenyans buy 'prepared foods' when we can hire or buy freshly prepared foods locally. As for convenience, there are local firms & SMEs in the market.

Juices/Squashes (fruit drink mixes)

Why don't Kenyans buy more locally produced juice or juice blends or even fruit drink mixes.

There are many local players in this market including:

Del Monte (locally grown pineapples)
Quencher (mainly fruit drink mixes)

And even when we import juices, why not just concentrates that can be re-constituted & packed in Kenya.

And why not drink FRESHLY SQUEEZED juices. Creates jobs for maids, hotel/restaurant workers, etc. Kenyan 'fruit juice' businesses need to lower prices for freshly squeezed juices. I miss the fresh fruit carts in Nairobi's CBD. I could get a juicy slice of pineapple for a mere 10/-.


I know Kenyan spirts leave little to the imagination but there is hope. Let's by more EABL, Keroche & London Distiller products.

There are few local wines (Mara is imported from S.Africa). Locally produced wines should attract lower taxes. There are other fruit wines that can be produced from locally grown fruits including:

- Passion fruits (I recall passiflora but too dry for my tastes)
- Oranges
- Mango (Has anyone tried?)
- Pineapples (I used to brew a weak version)
- Sugarcane (Rum)

I buy the local Kenya Gold (instead of the imported Baileys) & the local Smirnoff (vs imported vodkas).

And the above is a small sample of the imports. We could 'save' at least $100,000,000 in forex annually if we looked inwards. Add the jobs Kenya could create & the Global Financial Crisis would look less daunting.

Friday, February 20, 2009

Family firms out-perform 'public' firms

Very interesting article from the ECONOMIST.

Also brings to mind Chandaria Industries (Comcraft Group) of Kenya. The 3rd generation is at work. And it remains private.

NSSF (Kenya) vs Temasek (Singapore)

I admire Lee Kuan Yew (the former PM of Singapore) for the discipline he installed in Singapore.

As has been many times before, economically Kenya & Singapore were at 'similar' levels in 1963 except Kenya has much more 'potential'.

Singapore had LKY. Kenya had crooked wa ngengi (aka jomo 'land grabbing' kenyatta) & then dan 'uber-thief' moi.

Singapore has a Sovereign Wealth Fund called Temasek. Acknowledging deficiencies in managing the SWF, Singapore has hired heavy hitters who happen to be expats.

Kenya has NSSF. The same corrupt board is 're-hired' even after losing billions in scandals.


Fertilizer Imports have started - Scams come next

The Fertilizer scam to start soon as government imports trickle in...

kibaki said - I paraphrase - 'Do not look for others to blame for the scams'. Shouldn't he have said 'The buck stops with me'?

Anyway, as I predicted in my earlier blogpost, it is a matter of time.

Thursday, February 19, 2009

Sameer Africa posts better results - Not really

Year End 31 Dec.

Sales down 13% yoy.
Gross Profit down 6% yoy.

Other Operating Profit up 197% yoy. Ahhh... no details on what this is. Sale of assets?

PAT up by 26% yoy BUT see "Other Operating Profit".

Sameer Africa was affected by the PEV in 2008 & the subsequent knock-on effect on sales later in the year. Anyway, that is history.

How will 2009 be?

IMHO, it will be much tougher. Why?

- Costs of production in Kenya remains high including interest costs, electricity & transport costs.
- The depreciation of the KShs vs US$ will hurt import input costs. Imported might be pricier if imported from non-US$ countries e.g. India
- Competition from multiple brands e.g. Pirelli, Michelin, Apollo, etc

Firestone used to be the first choice for Kenyans but I think there has been a major shift since it became Yana. Nakumatt sells 5+ brands & this shows a change in preferences. Yana tyres are NOT the cheapest in the market. Yana needs to sell the 'quality' of their brand to succeed.

2010 - The business park should be reaady but I do not trust naushad merali. I wonder how much SA will benefit from the business park vs merali. I think merali will suck the majority of the profits/gains from the business park.

Anyway, let's wait for the Annual Report.

Tuesday, February 17, 2009

Coming soon to Kenya - The Grand Fertilizer Scam

I, Coldtusker, GUARANTEE that the decision by the government of Kenya to import, subsidise & distribute fertilizer will be beset by multiple scams involving one or more of the following:

A - The 'wrong' (type, grades, mixes, combinations) fertilizer will be imported/distributed to the areas.

B - Politically connected firms & individuals (e.g. jackson kibor & maize) will buy the subsidised fertilizer & sell it at higher prices.

C - In many cases the fertilizer will reach the farmers AFTER the planting season is over. Or reach them when it is not as effective/ideal.

D - Gov't will ultimately deliver fertilizer at prices higher than what private firms can. If not for subsidies, the price of government fertilizer will be higher than private firms!

E - In some cases, the fertilizer will be left to 'spoil' & will be disposed off as 'junk' or 'obsolete' or 'ineffective'.

PLEASE quote me if any if the above does not happen IF the government goes ahead with the foolhardy idea of importing & distributing fertilizer through the NCPB.

Tidbits - just for you!

Japan's Finance Minister resigns coz he appeared to be drunk at a conference. He claims it was a combination of jet lag & cold medicine.

Kenya's current FM, uhuru kenyatta, looks drunk. All the time. Just joking. I hope he does better than most of the jokers Kenya has had in the past especially the george 'goldenberg' saitoti.
We all know Kenya's former FM (guess who???) is a former drunk. Kudos to him on kicking the habit but not the lethargy.

Now for the serious part: Kenyan ministers NEVER resign for any sort of foible or corruption. Starting with paul ngei to william ruto. And so many in between!!!

African legislators are crooks. No matter where.

KPC in more trouble. Again!!! Kenol-Kobil plays tough with KPC.

BBK's group results PBT up 13% but PAT up 12.5% (EPS of 4.10), BBK is trading at a historic P/E of 10.

Rwanda - The New Hope of Africa Part 2

Unlike Kenya, Rwanda (under Paul Kagame) is taking a serious stand against corruption.

When I spoke to folks doing business in Rwanda, they say corruption tends to be low-level but structures are in place to deal with serious corruption.

Paul Kagame wants to make Rwanda the Singapore of Africa. Paul is a 'benevolent dictator' on a similar plane as Lee Kuan Yew & he is reportedly as clean as it gets.

Paul - unlike most African rulers (thieves) gave up his ancestral land since he did not need it!!!
In Kenya, jomo kenyatta & dan moi were unabashed kleptocrats!

Sunday, February 15, 2009

Kenya Airport Authority - Corrupt & Inept

The idiots at Kenya Airport Authority are it again!

The corrupt & inept (yep, both) could not 'control' the electricity outage situation at the Mombasa 'International' Airport.

Shouldn't MIA have an emergency electricity generator that powers basic functions so the airport can continue running albeit at a 'slower' pace?

What about a contingency plan to provide chairs, shade or water to passengers stuck at the airport?

I have railed against the corrupt & inept idiots running KAA & how they sabotage Kenya's tourism industry.

This a mere sample... there are dozens of horror stories of KAA's ineptness!
July 2007 - Landing lights out
Oct 2008 - No generators at the airport

I feel sorry for the passengers, tourists, KQ & other airlines operating in Kenya.

Wednesday, February 04, 2009

I want me a BarackBerry

It turns out that Obama does not use a BlackBerry but a BarackBerry...

The BlackBerry can't hold a candle to the Sectera Edge - not your father's Palm Treo - that BHO uses!

I wonder if one of the games on the Sectera is 'Nuke'em Iran?

Anyway, I want one... am I asking too much?

BTW, the Business Daily Africa claims BHO uses a BlackBerry but we know better!

Is South Africa really part of Sub-Saharan Africa?

Gautrain is a world-class train system being built in S.Africa. Amazing.

In the meantime, the Kenyan government is hosting a 'Kenya We Want' conference. What bullshit. A little common sense would be much cheaper!

My Solutions:

kibaki should fire ALL his corrupt & inept ministers (incl saitoti, kimunya, etc) & a huge chunk of our problems would be solved.

kibaki should reveal WHY the libyans (among other groups) are being favoured. And STOP the favouritism & nepotism.

Kenyans want to know if the libyans contributed funds towards kibaki's re-election campaign in exchange for sweetheart deals. No more sweetheart deals.

If the GoK privatised KPC among other government institutions, then we would not need silly conferences.

Raila should drop his opposition to PRIVATE investments. This is not the communist Soviet republic. We need COMPETITION.

All MPs & ministers should pay taxes on their entire salaries & perks! And their pay should be linked to performance!

Common sense is not so common. Or is the conference simply another way to siphon government funds & provide PR?

Monday, February 02, 2009

roocy kibaki blames saitoti for molo deaths

roocy kibaki blames george saitoti for the Molo deaths!

If this was not tragic, this is a dark comedy.

roocy's hubby, the Kenyan prez (if you believe sam 'cant count' kivuitu) has been in the government since 1963 as Finance Minister, VP or Prez. And Kenyans have been raped by the politicians since 1963.

Land-grabbing by kenyatta's regime. All sorts of other scandals during moi's regime. Anglo-fleecing, KPC-Triton & maize scams during his regime.

She says that MPs should use their humongous salaries to pay for starving constituents. Well, what about her horrendous large salary & office expenses for doing jackshit? And her hubby who gets paid more than MOST presidents or prime ministers in DEVELOPED countries!

How does she blame saitoti (I hold no torch that thief & incompetent either) for not providing 'civic' education?
Don't schools teach - or common sense - that petrol is FLAMMABLE & dangerous?

So is Saitoti on the way out?

News Break: One day after the Molo Fuel Fire, a railcar derailed near Naivasha with 100,000 litres of UNPROCESSED COOKING OIL. And the thieves were at it again. Oblivious of the danger. Using this oil as 'food' can kill due to impurities. All I can say is expect a few more sick people. Or a few more dead.

KQ announces profit warning

I screwed up - in my defense, I tried my darnedest to find the ACTUAL announcement but was stymied by lack of information from KQ or the NSE.

Anyway, DN posted this article that claimed KQ's profits made a HUGE jump. I was unable to confirm the real story until much later... and it turned out that the story was not as rosy! In fact, it was not rosy at all!

KQ's 3Q 2008-9 ASKs were up 7% but DN claimed it was their PBT that was up 7% over 3Q 2007-8.

I have voiced my intense displeasure at the poor business reporting by Kenya's media houses BUT unless companies provide this information directly to us through posting it on their websites, how will we ever know or compare or verify?

To my readers, sorry for the faux pas. To KQ (among other listed firms), please post this information on your websites simulatneouly with the release to the media or NSE.