Big Governments & Corruption - Bedfellows

Millers who approach the NCPB are told there is no maize. Even official complaints are swatted aside. BUT the NCPB sells maize to 'brokers' who sell to the millers at 26% markup. So...

- Who are these brokers?
- Why is the government competing with the private sector in procuring maize?

Regulation is one thing but the involvement of government in (direct) commerce is the road to ruin. And consumers have to pay the price.

Shouldn't the government spend money on improving the roads in the North Rift rather than buying maize from farmers? It's a rhetorical question because the latter allows for quick & easy corruption!

- Underweight bags of maize are purchased by NPCB
- Low quality maize is purchased by NPCB
- Maize is sold at a loss to 'favored' entities & persons by NPCB

Private millers would go out of business if they did the above!

Then the demolitions along Thika Road. Why were the officials in the Nairobi Crooked Council & Ministry of Landlessness not arrested & thrown in jail for allocating & allowing construction on road reserves?

Kenyan 'business' reporting - Pathetic or Worse?

Kenyan newspapers need to hire reporters who have a better understanding of ECONOMICS, FINANCE & BUSINESS.

An article by Wshington Gikunju titled "Foreign currency reserves slip below minimum" makes little sense!

I quote "The worsening of import cover position means that Kenya, a net importer, may face commodity shortages as importers struggle to obtain dollars to clear outstanding import bills."

There is no 'struggle' to obtain dollars. It's simply a question of paying for KShs for the US$. Furthermore, Kenya also imports from other countries e.g. Japan, Korea & the UK which can be paid in their own currencies & may have depreciated vs the US$.

Kenya has been importing foodstuffs among other non-essentials. These imports will be pricier thus benefiting local producers. Why do we import cereal (Weetabix is pretty good), eggs (crazy!), milk products like butter & cheese?

Fewer bags of grapes, apples & lychees isn't going to cause Kenyans much harm!

Fewer bottles of imported liquor, wine and beer will be good for KWAL, EABL & Keroche.

I quote "CBK could also be forced to limit its supply of dollars to the priority sectors of the economy such as oil, food and medicine importers. "

Huh? Did the guy say food? Except for wheat... there are few 'essential' foods that Kenya needs to import! Anyway, we should be encouraging production of sorghum & millet. Yes, these are much better 'foods' than wheat or maize.

Furthermore, in the long-term Kenyan importers will only import what Kenyans can afford. After all... they are businessmen...

As much as I shake my head at the silliness of importing cereals & eggs... at some point these will be too expensive to import & Kenyans will turn to local products.

I think Nation needs to hire someone with some sense of economics to review what these 'journalists' put out... Some of these comments/opinions create a sense of panic even though there is no need to be overly concerned!

BTW... in typical Kenyan style... when someone becomes 'powerful' the sycophancy starts! So Kogelo, a back water village will soon have electricity, piped water & adequate security!

Obama Day? Stupid or merely Silly?

I don't get it & neither do many Kenyans.

Yes, Kenyans are proud that Barack Obama won the elections BUT he is an AMERICAN. Through & through. As for the vaunted Kenyan connection... it turns out his Kenyan father had little to do with raising Barack Obama. Kudos to his BO's Mother & maternal grandparents.

Obama the father abandoned Obama the son when BO was 1 month old... So Barack was NEVER a "Kenyan" in any sense of the word. He was not born in Kenya, not raised in Kenya, not a Kenyan resident nor a Kenyan citizen.

Congrats to Obama for the victory BUT why has kibz declared a holiday to celebrate Obama's win?
What of the loss of productivity for the typical mwananchi without a cushy government job?
kibz & roocy get paid whether they work or not. Not most Kenyans.

Election day in the USA was a working day for most Americans. There are no official holidays for any of the post-election days. So if the USA marks the historic occasion with a 'working day' why do Kenyans have a 'holiday'?

Who will pay the 1,000s of casual workers who only get paid if & when they work?
Who will pay for the loss of interest income for those whose cheques take 1 business day longer to clear?
Who will pay for the lost business deals/opportunities?
Who will compensate the farmer who delivers his produce but finds the markets are closed?
Who will compensate the businesses that rely on workers patronage e.g. food sellers in the CBD?

We have kenyatta day, moi day & now Obama day? As is, we do not need a krooked wa ngengi day nor a dan 'stealing galore' moi day!

Let Kenyans celebrate Obama's victory BUT not at the expense of their livelihood!

Other views:
Startups in Kenya
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Return of Big Government?

I am wary of National Oil Corporation of Kenya.

1) Does it receive subsidies from GoK? If yes, how much?
2) Does it receive favourable treatment from KRA?
3) How are its activities funded?

The problem is that any government 'support' costs taxpayers even more.

• Subsidies means higher taxes on those who pay taxes (MPs excluded).
• Favored tax status means the other taxpayers are disadvantaged.
• Capital put into NOCK means other areas are starved OR the funds are borrowed from the money markets.

The government should encourage competition NOT get into the business. NOCK should be sold off to the public & let it compete with Total, Kenol & the rest!

Strenghten regulation and quality controls. Which firm imported the low-quality LPG?

Various taxes on petroleum products should be reduced or eliminated. Or encourage public transport by offering 'free market' incentives e.g. lower taxes on buses & mini-vans.

Government 'support' will encourage cronyism, corruption & inefficiencies!

** Good news: Political clout on the decline. KCB sold off a farm that kenyatta had stolen. They had borrowed money using the farm as collateral & KCB foreclosed on it. Considering (not yet) uhuru is Deputy PM, this is great since other politicians will be running scared!

Nairobi City Council - Bouquets & Barbs

Bouquet - Increased burial fees. We need fewer burials & more cremations. Of course, murders can't be solved if the bodies are cremated BUT that only happens on CSI. In Kenya, 'investigations' are a joke. What was the idiot's name who claimed Robert Ouko 'killed' himself then set himself on fire?

Barb - Why would you raise the fees for LOADING BAYS from 60,000/- to 100,000/- in Nairobi?
Many world-class cities want businesses to open/remain in their downtowns e.g. New York, London, Chicago, etc... the idiots at the Nairobi City Council want to drive these businesses out! These businesses keep residents downtown longer & create vibrancy.
Higher costs of the various licenses will either push these businesses out by encouraging hawkers who pay no fees or charges! Violent & armed robberies are on the rise & the police as usual consider these as 'normal'.

Barb - Why doesn't the NCC get rid of the death traps - 14-seater Nissan matatus? I would post photos but I don't want my phone or camera being snatched!

Kenya - No rule of Law

What a waste!

The Nakumatt store among other buildings were bulldozed by the 'government'. I know there were cases pending but the impunity is horrendous.

Nakumatt had the property on lease - they do not own property - but seemed unaware of the operation. At the minimum, they would have emptied the store. The landlords say they never received the summons. Anyway, expect a lot of lawsuits back & forth. Or was this a case of the law gone amok?

(The demolishers may be right but the waste of food when Kenyans are starving. The sheer waste of equipment/utensils/beds, etc when Kenyan hospitals go without... It just galls me!)

How on earth did they get to build these structures on road reserves?

The Kenol petrol station had 26,000 litres of petrol. Yes, a spark and kaboom. Well, if I were the owner & you screwed with me, I would have probably lit a match and walked away... and helped lots of looters on their journey... upwards...

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Real Estate in Africa - Very Risky

Dead cat bounce at NSE?

The volumes are modest but there is lack of supply thus higher prices expected on Monday.

Some counters were over-sold thus a significant discount on many shares to 'true' value.

Equity Bank released exceptional results leading to a huge increase in price.

HFCK released results that reflect growth. Add the effect of Equity Bank as the largest shareholder. Takeover in the books?

ARM & Carbacid had decent results given the poor economy post-election.

KQ has profitable 1H 2008-9

It has been a tough year for KQ since their busiest & most profitable quarter (1 April - 30 Jun) was severely affected by the post-election clashes as tourists & businessfolk canceled their flights to/from Kenya.

Hats off that KQ managed to pull together a profitable (though subdued) 1H 2008-9. The prospects for 2H seem encouraging with a weaker KES (90% revenues are in forex) & lower fuel prices. Unfortunately for KQ, the fuel hedges they entered into will reduce the benefits of lower fuel prices.

2008 has seen the demise of many airlines though mostly in USA which is a very competitive market. KQ on the other hand saw increased competition in 2008 from Fly540, Virgin & Air Uganda.

*** There was a major glitch at the NSE. Trading was supposed to start at 12.30pm

Where is the Co-op Bank IPO prospectus?

I can't find the Co-op Bank IPO prospectus online even though the IPO opens today.

And when will they release the 3Q 2008 earnings?

NSE going to the dogs?

Wow... what carnage!

(All said and done I think many shares are a steal if you have a backbone of steel)

KCB at 16.85 which is a 2x PB and less than 8 PER.

Equity Bank has not seen 114/- for almost 2 years. The price is even LOWER than it was at the height of the violence in 1Q 2008.

Warren Buffett would have a blast in the market & buy up a lot of stuff. I think it might sense for some firms to go private at this point!!!

There is little LBO cash but the possibility of buying out minorities... and then taking the firm private is so tempting. Hey, Unilever Tea (Brooke Bond) did just that!

Look at KQ (29/-) which is trading at a substantial discount to NAV. If they were allowed to buy-back shares, they had KES 12,000,000,000 in cash (2Q 2008 - 31 March 2008), and could buy back 200,000,000 shares at 30/- (KES 6,000,000,000). Suddenly, you have eliminated 40% of the shares thus allowing the remaining shareholders to earn substantially more on their investments!

KCB is at 16.85 & can generate over 13% on the shares based on current earnings. A buy-back would allow an increase in ROE without the need to take on additional risk. Just raise Tier 2 capital when the capital markets improve.

And the list goes on. Finally, ABSA could make a bid for Barclays Kenya. It was too pricey earlier but at 43/-, the price is rather attractive.

If I were Vodafone, I would buy 11% of the shares that gives me effective control of Safaricom so I can consolidate their results. And I can buy them at a rock-bottom price of Kes 3.50!

Equity Bank is in a position to make a takeover bid for HFCK. Offer 20/- & the minority shareholders of HFCK will make a beeline to sell the shares!

Safaricom should make a all-cash (20/-) bid for Access Kenya & in one swoop could own Kenya's largest ISP for corporates as well as the most extensive wi-max network in Kenya. I expect almost everyone except the Somens might be running to sell their shares! Heck, maybe even the Somens!

The cash rich firms e.g. KQ, Safaricom, Equity Bank can do wonders if they deployed the cash they have!

EABL is also cash rich but who would they buy that is complementary to their existing business?

CFC-Stanbic should look at buying out NIC Bank. Or perhaps even NBK now that NBK bad debts are manageable.

How about Equity Bank swooping in for HFCK as mentioned above. Or KCB buying out HFCK in its entirety & roll-up S&L into it?

I do not know if Centum is cash-rich after the recent happenings... but it could buy out 1 or 2 listed firms... if they have the cash!

Of course, we have Williamson Tea & Kapchorua... why do they list as different firms? A combination would be ideal at this stage!