Raila - The New Government Spokesperson

alfie 'goebbels' mutua used to be the purveyor of idiotic statements. Of course, his derision the then "mere junior senator from Illinois" aka Barack Obama... the now "President of the USA".

Anyway, raila has started defending every scam in town. Or so it seems. Why is he being the whipping boy?

KAA + OneJetOne + muhoho + Afro-Asian Investments (some fake Qatari firm): I have no faith in georgie muhoho whose only claim to fame is his familial connections with uhuru kenyatta. Of course, KQ is upset at the KAA giving away Embakasi airport while KQ has no space to park its planes!

KPC + Triton: I am not sure but a good source told me that raila implied that no money was lost to Triton. And there seems to be pressure on KCB to give KPC-Triton a pass... And then there is this article making the rounds.

Mau Forest: What happened? RAO has backed off calls for kicking the squatters out. Kenya needs to rain & water that the Mau complex provides.

"Lesser Corruption" defence: What is RAO smoking? Grand corruption is alive & kicking... and all he could say was that the current corruption is 'less' than prior years? Whereas I can forgive him for 'forgiving' small time corruption but NOT the mega-scams in the billions e.g. KPC-Triton...

alfie 'goebbels' mutua must be smirking at RAO's gaffes!

Kenya's Public University Students - Idiots?

I have never understood the need for violence & destruction. I never damaged university property (well... not knowingly) even when I felt the administration was wrong. And in dan 'illiterate' moi's heydays, the administration was often wrong...

How does burning university buildings - and looting computers - help the kenyatta (or any other) university students? They only hurt themselves & not the administration or lecturers...

When raila allowed University of Nairobi students to 'protest' in the streets... they messed up by destroying the goods & premises of various businesses...

And university 'graduates' wonder why many businessfolk refuse to hire the Univ grads... Coz the 'grads' are plain Idiots!

(I am all for PEACEFUL demonstrations or those that do not destroy what is 'mine')

Kenyan Restaurants are (sometimes) their worst enemies

Kenya is hurting. Kenyan consumers are hurting. Kenyan exporters are hurting. Kenyan businesses are hurting.

I do not understand Kenyan businesses... they refuse to cater to the consumer.

Whereas inflation (higher wages, higher fuel costs, higher taxes) is a problem for businesses, Kenyan consumers' discretionary spending power is down - substantially - but the businesses keep on raising prices... and that will continue reducing consumption OR drives consumers to substitutes.

I have been a regular at various mid-priced restaurants & food courts around Nairobi... and everything I usually order was up in price since late 2008.

Fresh Juices: From 120 to 150 (25%) - I substitute juices for sodas but...
Sugarcane Juice: 60 to 70 (17%)
Chips: 120 to 150 (25%) - since I am cutting down on greasy foods this doesn't hurt me much
Bhajias: 120 to 150 (25%) - since I am cutting down on greasy foods this doesn't hurt me much
Sodas: 40 to 50 (25%) - On the way out for me
Ice-cream: 90 to 110 (22%)
Beer: 100/120 to 120/150 (20-25%) - At this rate I will be a teetotaler
Smallish samosas: 6 for 100/- (a plate) to 3 for 100/- (50%)

Perhaps... it is time for Kenyans (Nairobians) to stop frequenting these restaurants!

I would rather meet up with friends at an outdoor spot OR at someone's house (with a nice garden), buy beer & sodas from Nakumatt (or have a keg delivered), cook/bbq at home!!! Buy juices in bulk or packs from a supermarket. Even hire a cook or self-cook and since cleaning up is a chore... so hire a maid/servant for a day or evening... and the overall cost is 50% of the restaurant bill. If not less.

I know a group/chama that has built a banda at one of the member's 'backyard' and they meet every so often. They share the cost (& can each invite one other family) by 'charging' an annual fee as well as costs per get-together. Granted the banda is free but it is not fancy... a few chairs, tables & sofas... they even hire extra security on the day. And the cooking is self-cooking though they hire a few folks to clean, cut & dice the 'raw' food...

They have all the fun at 1/2 the cost...

Coldtusker = MP = 2012

MPs want to be paid Kes 1,500,000 a month. That is 18,000,000/- per year!!!

And they do jackshit. Some of the constituencies have a GDP less than Kes 100,000,000/-...

Bastards... but not if I get elected as an MP in 2012... and make Kes 1,500,000/- per month...

KQ protests allocation of Embakasi airport

KQ protests the corruption & ineptness of KAA (& muhoho-ho-ho) in the matter of the allocation of the Embakasi airport to OnejetOne.

I highlighted the corruption & ineptness of the KAA earlier.

Naikuni of KQ told NTV that the 'expansion' at the airport is 4 years behind schedule. KQ's aircraft are parked all over since JKIA's parking aprons are not ready for use.

Poor KQ. They have been trying to get KAA to expand JKIA since 2002 when they expected a huge jump in passenger numbers!

According to NTV, KQ spends almost KShs 100,000,000 a month at the Panari Hotel - the only hotel that by-passes the traffic prone Uhuru Highway - to accommodate passengers whose flights have been cancelled or delayed.

BTW... I have a gut feeling that muhoho-ho-ho (& family/cronies) either took a cash bribe or an ownership/profit stake from the developers of the hotel-retail complex being developed at JKIA.

Sameer Africa goofs!

I was flipping thru the 2008 Annual Report for Sameer Africa...

The notice on pg 6 says the AGM will be held on Friday 3rd April 2009 at 11am.

The proxy form says the AGM will be held on 2nd April 2009 at 11am.

They produce one Annual Report a year... they have one AGM... can't they get the date right?

Investing in Property in Kenya is foolish

Another reason why I do NOT believe investing in property in Kenya. I also blogged on why I don't invest in property in Kenya... Here is the link to that.

AFTER planning approvals, AFTER construction permits, AFTER construction, AFTER occupancy permits, AFTER... AFTER... the government wakes up and condemns the Westgate and Ukay malls.

I do not have the full details on the matter... nor who is right or wrong...

The concept of property rights simply does not exist in Kenya.

Examples:

- Land-grabbing by the political elite (jomo 'crooked wa ngengi' kenyatta & cronies) in the 60s & 70s.

- Land purchased from the 'White Farmers' redistributed to the politically connected. Real landless lose to the already landed in the 60s.

- Expropriation of property & businesses of Kenyan-Asians in the 1960s & 1970s.

- Forcible removal/eviction of 'up-country' folk during the Likoni clashes in the 1990s.

- dan moi would sign away government land as a reward for his cronies.

- Forcible removal (through violence) of Kikuyus from many sections of the Rift Valley in 2008. 

- Fake Title Deeds and 'missing' files at the Lands Office.
- Adverts in the newspaper on a regular basis about caveats on land for sale (or not for sale).
- Signboards all over Nairobi proclaiming "This Land Is Not For Sale".

I believe in investing in Africa (incl Kenya) but not in land or property. For residents/citizens,I recommend at most a modest (or affordable within their portfolio) house but not much more than that!

Now... I am thinking how much exposure Kenyan banks have to 'condemned' land or buildings. I am worried...

Of course, while pretending to care about the environment... the government is on a tear condemning fragile eco-systems like the Tana Delta & Masai Mara.

Taxes to go up - Kenya

Whereas uhuru kenyatta claims that the government will not increase local or foreign debt to bridge the deficit. Also he claims no increase in taxes.

Yeah, right.

Taxes were raised on alcoholic drinks in late 2008. Add extra fees that the municipalities keep on dreaming up. Add interest payments on the sale of government bills & bonds...

And all this adds up as a tax. Indirect but a tax!

How can uhuru keep a straight face when MPs & ministers pay (almost) zero taxes on their income?

uhuru defended the grand coalition government as something 'we' chose. Who is we? I am NOT included in that 'we'. A bunch of thieving & greedy bastards chose to create 42 member cabinet is NOT 'we'.

And GoK ministers get at least 2 high-end gas guzzler (including uhuru) as well as 'chase cars'. And they drive at high speeds which is fuel inefficient!!!

The official car of the PM of Japan (MUCH, MUCH larger economy) is a regular Toyota Century or Lexus LS600hl.

I wonder what the Finance Minister of India ( 1.1bn people & MUCH larger economy) get as his official car... I betcha it is not even close to uhuru's gas-guzzling cars!

Singapore's prez has a 2001 Lexus LS430 & 1999 Mercedes Benz s320L. Dare I even compare Singapore's Per Capita Income with Kenya's?

And the PM of Singapore usually travels in a MB S280. No gas-guzzling Hummer!!!

African Banks - Internationalisation?

African banks are rather small (assets or capitalisation) compared to their international peers. 

The only countries with banks of 'decent' size are either S.African (S.Africa proper), N.African (Egypt, Morocco) or W.African (Ecobank & Nigerian banks).

But as we have seen... size does not matter. After all Bank of America & Citibank are among the largest banks in the USA. And we have Lloyds & HBOS in the UK. All are in trouble.

I expect the large 'international' US banks e.g. Citigroup & BofA will shrink or sell their foreign operations over the next few years to raise cash to pay off debts.

West European 'international' banks are also feeling the hurt including Barclays & UBS.  Many French, German & Swiss banks are also hurting.

HSBC & Standard Chartered may survive the current problems but in my view they are really Asian (Chinese & Hong Kong) banks.

Now... I think that most African banks will weather the storm. And grow from strength to strength.

Whereas all do not (& cannot) have ambitions to become '' international" banks... I think a few will do so over the next 5 years. And become much stronger. Standard Bank of S. Africa (Stanbic) is moving into other markets by buying out small to mid-sized banks.

I remain a sceptic of Nigerian banks. They have tried to expand but I do NOT trust their balance sheets.

A major factor that will push internationalization of African banks is the return of diasporans with the relevant expertise.

All said and done... I do hope that African banks can reach all parts of Africa. And provide a product to all Africans - whatever their socio-economic status.

Mobile Payment Systems & Mobile Funds Transfer systems have already penetrated huge swathes of the cash transfer market.

Kenya Airports Authority - Another Scam! - Again!

It seems the nincompoops (or merely the corrupt) at KAA are at it again.

KAA's CEO is a george muhoho-ho-ho (whose nephew, uhuru kenyatta,  is Kenya's Finance Minister & a Deputy Prime Minister) who has extensive political connections. Of course, GM got the job not on merit but thanks to his golfing buddy mwai kibaki (Kenya's current president).

For those unfamilar with uhuru's background... His father was Kenya's first president & an internationally infamous land-grabber. jomo kenyatta (real name kamau aka 'crooked' wa ngengi) never saw a piece of land he didn't like. For free or at a huge discount to market value!

Anyway, so GM heads KAA which runs jomo kenyatta int'l airport (crooked loved naming public projects after himself) in Nairobi. JKIA was built in the 1970s & has seen little improvement since. It is a small, stuffy, congested & lousy airport for a city the size/status of Nairobi.

It is amazing that Kenya Airways has managed to grow despite JKIA being its hub. I find using JKIA to be torture.

So... it seems that a 'politically connected' airline (OneJetOne) will be allocated the old Embakasi Airport in exchange for (fill in the blank). 

As an FYI, OneJetOne's parent (AirSouthAsia) does not have permission to fly out of it's home base in Sri Lanka.

Whereas JKIA faces immense challenges especially as regards congestion, there have been half-hearted attempts to increase the size of the airport. Nothing major has been done so far. A prior plan was rife with problems & rejected by the airlines. It seems that some officials in KAA had more than a passing fiduciary interest.

It seems OneJetOne was given preferential treatment in this deal. Instead of advertising to all & sundry about the possibilities of using the old airport, there was a hush-hush element to the newspaper advert & subsequent lease deal.

Using the past as history, I would not be surprised to learn that georgie muhohohoho & cronies were getting a slice of the action!

And to make matters even worse, one of the directors of OneJetOne is a former PS (gerrishon ikiara) in charge of airlines & airports. And by dint of his government position, he was on Kenya Airways' board of directors & privy to KQ's future plans!

And on a smaller scale, there is the endemic corruption regarding parking at JKIA.  KAA does not properly maintain parking markings at JKIA which means police officers wait to pounce on innocent motorists!

The Short-Term Parking at JKIA is inadequate & Long-Term Parking is woefully inadequate. The LTP is dark & deserted... you could be killed & no-one would find your body for day!

KQ - An Update

I spoke too soon...

My blogpost on 24 Feb 2009

KQ's share price has tumbled further since I posted the above. At 12.38 pm on 6 Mar 2009 KQ is trading at Kes 17.25 (though the trading is very thin)...

Did I miss anything on my blog post that accounts for the additional decline?

At this point I think KQ should close up shop... to protect the shareholders!

- Sell the planes while there is a market. Emirates & Ethiopian are still buying planes. Perhaps they would be interested in immediate delivery of the newer planes?

- Cancel or transfer leases of the leased planes.

- Sell the older planes to myriad African 'matatu' airlines.

- Sell the routes (if there is value to be gained) &/or landing slots to Emirates, BA, Virgin, KLM or Air Uganda.

- Cancel (or sell/transfer) all plane orders to get back the cash from down-payments/deposits.

- Use the above proceeds to pay off all debtors.

- Close offices & but sell the 'marketing machine' to another airline.

- Take the remaining cash & distribute to shareholders.

I think the above will yield enough cash to pay each shareholder more than 45/- which is far better than the current price realisation!

OR just sell the entire airline to Emirates or Qatar or AF-KLM who will get the enviable & profitable routes as well trained staff & ready to fly planes in one fell swoop at a far lower cost than a de novo set-up.

Kenya Pipeline Company - Bankrupt?

KPC has (or will) have lawsuits amounting to a minimum of Kes 7,000,000,000 filed against them in the next 3 months and all related to the triton case. And this does not include Kenol-Kobil's Kes 3,000,000,000 claim against KPC. Indications are that Kenol (very smart folks) will probably win at least Kes 1,000,000,000 against KPC as KPC's inefficiencies & goofs are revealed in the first group of cases.

All said and done, the Government of Kenya will have to either bail out KPC by:

• Providing payment guarantees to the banks & other financiers (taxpayers' cost if funds not recovered from Triton/Devani/Cronies).
  
• Special bonds to KCB (& other firms) similar to bonds given to NBK.
• Sale of KPC & proceeds used to pay-off the financiers.
  
• Sale of shares in KPC to the Libyans or Chinese or Iranians.
  

Solution

Mine is simple & elegant (IMHO) based Information as I understand it.

1) Negotiate an out-of-court settlement as to who owes who what. KPC - under the Collateral Management Agreement - is liable to the financiers & Oil Marketers to store, safeguard & deliver the fuel products. A negotiated settlement is cheaper & faster than a protracted court case. It is also less distracting for KCB & KPC so they can concentrate on the business not lawsuits. This settlement shows good faith to foreign financiers as to the will to sort out the problem.

IMMEDIATE ACTION: Sack all 'decision-makers' at KPC & Ministry of Energy (yes, including kiraitu murungi). Then arrest them, assemble evidence & take them to court. (This is under the ideal situation but corruption runs rife in the Kenyan government & unlikely to happen).

IMMEDIATE ACTION: KCB (& GoK) should go after yagnesh devani & his cohorts. All of triton's (& devani's) assets in Kenya should be sold asap (TRANSPARENTLY) to recover as much as possible. Of course, if GoK pays KCB as shown above then the stations/properties belong to GoK.

2a) KPC should be fairly valued without the Triton liabilities.

2b) KCB's Kes 2bn loan should be converted into a long-term loan to KPC secured by KPC's assets.

2c) KCB should undertake to pay off the other financiers but get KPC shares in exchange for the undertaking. A Repurchase Agreement (repo agreement) would allow GoK to buy the shares back. This would be an asset (unlisted shares) for KCB. GoK may remain a shareholder depending on the extent of the assets/liabilities & intrinsic value of KPC.

2d) CBK might be involved since the above actions will require a few 'exception' for KCB considering asset ownership & lending to a single entity. These are trying times & require out of the box solutions.

2e) KCB can either pay off the other financiers - of course, this would be negotiated - or negotiate the payables as a 'loan from other finance institutions'. It is a liability for KCB but 'safer' for the financiers.

2f) KCB & the other financers would drop the lawsuits against KPC.

3) KCB should be allowed to package & sell the income+assets from KPC to other banks or investors but under the repo agreement. Essentially, it is a syndicated loan.

4a) KCB would hire competent managers to run KPC as a private firm.

4b) In the meantime, GoK (in conjunction with KCB) should 'prep' KPC for eventual privatisation. This means clean out the rot. Fire inefficient or unqualified staff. Enact better policies, regulations & laws. Complete the expansion plans. Complete the pipeline capacity enhancement.

5) Once KPC is stabilised, GoK should arrange for the sale of shares KCB 'owns' in KPC (at least 75%) to the Kenyan public through the NSE, to enable KCB recover its cash. After KCB has been repaid all its dues (under the repo agreement) by GoK, the balance of shares, if any, would revert to GoK.

6a) I think Kenol has a good case against KPC. Therefore, KPC/GoK should settle with Kenol to prevent any disruption in the oil market as well as provide confidence to foreign financiers.

6b) Sell triton's assets (TRANSPARENTLY) to pay off Kenol. Any outstanding balance owned to Kenol above & beyond that should be provided as 'tax credits' i.e. Kenol can use the tax credit to offset duties/taxes owed to GoK.

6c) Other firms that will accept tax credits include KCB, Total Oil & Shell Kenya. Of course, this all means lower (net) tax receipts for the GoK in the short-run but creates certainty to drive more business activity.