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!
Friday, July 13, 2007
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, $499+tax... etc!
Kenol & Total (listed firms) are exporters - They have, well used to have, a significant business in re-exporting goods (petroleum products) to other countries e.g. Uganda & Rwanda. The strong KShs has hurt them but as I will show there are worse problems for them caused not by the strong KShs but incompetent & often corrupt bureaucrats.
Tourism - A well known source of forex. Booming but I think they can increase prices easily without hurting their business. This is the time for Kenya to shift towards more profitable tourism by lowering the number of tourists by skewing towards higher-priced tourism. The strong KShs just helps this cause.
Subsidies for Exporters?
No... No... No...
Exporters should not be subsidised like India plans to do... This would increase the avenues for corruption. The Goldenberg scandal started off as an "Export Compensation Scheme". This should be warning enough.
Government programs that involve forms, rules, regulations, procedured & "people" are bound to fail. Corruption is a hydra-like monster... It seeks out new ways to "eat".
Solutions?
The BEST "intervention" is to improve conditions for Kenyan export-oriented industries by improving/aiding their LONG-TERM competitiveness. Then let market forces prevail.
I believe the "secret" is in significantly improving the infrastructure while letting the best survive.
Roads
India has embarked on building their "Golden Quadrilateral" that connects major cities in all four corners of India. This will allow for faster movement of people & goods. Part of the impetus is to encourage exports to compete with China, which has created an impressive network of roads in the past decade, to facilitate exports.
Whereas the Yuan is artificially "fixed" to the US$, 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!
Airports
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.
Electricity
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.
Taxes
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$, Euros & KShs!
The Horticulture Industry needs reforms. We need to target the higher end of the market by value addition. Let's produce less but get the same or increased income.
The environmental impact is huge esp in the riparian areas of L. Naivasha & L. Nakuru. We might be getting negative returns from our horticulture ventures after factoring in environmental degradation.
Conclusion/Summary
A strong currency is not necessarily a bad thing. I have not addressed other issues like GOK borrowing, massive corruption, etc. There are many other ways to strengthen the economy whose benefits will flow to all Kenyans.
We need to improve Kenyan institutions & think long-term NOT fix a short-term problem by sacrificing long-term growth.
Under a strong KShs, jobs will be lost in some industries/sectors but substantial gains will be made if we start an infrastructure construction-led boom. The lowered costs of economic activities will rein in inflation & reduce the hurt felt by a stronger KShs.
Furthermore, we need to "expand" what we consider our universe of exporters to include non-traditional exporters. We all know that Tea, Flowers & Coffee are exported. There are other sources including Labour i.e. Kenyan diaspora.
KQ is a net exporter - 90% of KQ's earnings are generated in forex. Visit any travel agent in Kenya & they will quote most KQ flights (except intra-Kenya flights) in US$... $299+tax, $499+tax... etc!
Kenol & Total (listed firms) are exporters - They have, well used to have, a significant business in re-exporting goods (petroleum products) to other countries e.g. Uganda & Rwanda. The strong KShs has hurt them but as I will show there are worse problems for them caused not by the strong KShs but incompetent & often corrupt bureaucrats.
Tourism - A well known source of forex. Booming but I think they can increase prices easily without hurting their business. This is the time for Kenya to shift towards more profitable tourism by lowering the number of tourists by skewing towards higher-priced tourism. The strong KShs just helps this cause.
Subsidies for Exporters?
No... No... No...
Exporters should not be subsidised like India plans to do... This would increase the avenues for corruption. The Goldenberg scandal started off as an "Export Compensation Scheme". This should be warning enough.
Government programs that involve forms, rules, regulations, procedured & "people" are bound to fail. Corruption is a hydra-like monster... It seeks out new ways to "eat".
Solutions?
The BEST "intervention" is to improve conditions for Kenyan export-oriented industries by improving/aiding their LONG-TERM competitiveness. Then let market forces prevail.
I believe the "secret" is in significantly improving the infrastructure while letting the best survive.
Roads
India has embarked on building their "Golden Quadrilateral" that connects major cities in all four corners of India. This will allow for faster movement of people & goods. Part of the impetus is to encourage exports to compete with China, which has created an impressive network of roads in the past decade, to facilitate exports.
Whereas the Yuan is artificially "fixed" to the US$, 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!
Airports
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.
Electricity
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.
Taxes
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.
Conclusion/Summary
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.
Thursday, June 28, 2007
Kenya Re IPO announcement
So.. finally...
The KenRe IPO (really an OFS coz the govt is selling its shares & no funds raised will go to benefit KenRe) will be off & running on July 18...
GOK will sell 40% of KenRe (240mn shares at 9.50) with a minimum application for 2,000 shares.
More details to follow!
The KenRe IPO (really an OFS coz the govt is selling its shares & no funds raised will go to benefit KenRe) will be off & running on July 18...
GOK will sell 40% of KenRe (240mn shares at 9.50) with a minimum application for 2,000 shares.
More details to follow!
Wednesday, June 27, 2007
Olympia Capital Holdings Ltd Announces Rights Issue
Adding to my previous blog entries on Olympia...
To clarify for those unfamiliar with OCHL... OCHL is the Holding Company that owns manufacturing & trading assets in Kenya, Botswana & S.Africa.
15 June 2007: OCHL shareholders approved the increase in un-issued shares by 30,000,000 at the AGM. The new Year-end is Feb 28 thus 2007-8 will have 14 months of results.
26 June 26 2007: OCHL publishes a notice that the Board has approved the issuance of 3:1 Rights i.e. 3 Rights (“Right but not obligation to purchase additional shares) for every 1 share held. Weighted Avg Price rises to 20/-.
OCHL has 10,000,000 issued shares. If the full Rights are taken up then there will be 40,000,000 issued shares.
The indication provided was that OCHL plans to raise KShs 300mn thus the expected price is 10/- per Rights Share. This would a substantial discount to the current market price of 20/-. There may be substantial interest in the Rights under the circumstances.
During the AGM, the CEO indicated that OCHL plans to pay a dividend equal to at least 20% of the PAT for the 2007-8 year. Furthermore, there is the possibility of an extra dividend payout that was “declared but not paid” 5 years ago.
If the results of the SA subsidiary are consolidated then the turnover is expected to jump significantly to KShs 1.4bn (2006: 396mn).
Just like other “smaller” IPOs & Rights which followed “larger” IPOs, the Rights Period for OCHL is expected to be after KenRe’s refunds are, well, refunded!
Nevertheless, the KenRe Offer seems to be in trouble after the allegations that the CEO & CFO had been upto no good. Some reports indicate the CMA is studying the PWC report before it OKs the IPO.
CFC Financial Services had an ad about KenRe’s Offer thus it seems the IPO may open in early-mid July 2007. OCHL should close the Rights Issue AFTER the refunds for KenRe have been paid out. This may be tricky for OCHL to pull off since the KenRe Offer dates will be decided by GOK while the CMA might be reviewing OCHL’s Rights application thus OCHL “misses” the window.
As a rule, the GOK offers shares at a “discount” to NAV or “Market Value” during IPOs. Please note that Mumias Offer in 2007 was an OFS thus it was discounted from the then market price of 55/-.
The KenRe IPO/OFS will be hyped since the:
· GOK wants/needs the funds. Also mentioned in the budget
· “low” price will encourage retial investors
· GOK wants to garner goodwill prior to elections
Most stockbrokers & analysts expect a Ken-Re over-subscription regardless of the economics/financials of the Offer. This will lead to the inevitable refunds, which may flow, into NIC’s Rights Issue (expected to be KShs 1bn) or OCHL’s Rights Issue.
Most firms whose year-ends are on 31 Dec will have paid dividends by August thus providing additional liquidity for investors.
To clarify for those unfamiliar with OCHL... OCHL is the Holding Company that owns manufacturing & trading assets in Kenya, Botswana & S.Africa.
15 June 2007: OCHL shareholders approved the increase in un-issued shares by 30,000,000 at the AGM. The new Year-end is Feb 28 thus 2007-8 will have 14 months of results.
26 June 26 2007: OCHL publishes a notice that the Board has approved the issuance of 3:1 Rights i.e. 3 Rights (“Right but not obligation to purchase additional shares) for every 1 share held. Weighted Avg Price rises to 20/-.
OCHL has 10,000,000 issued shares. If the full Rights are taken up then there will be 40,000,000 issued shares.
The indication provided was that OCHL plans to raise KShs 300mn thus the expected price is 10/- per Rights Share. This would a substantial discount to the current market price of 20/-. There may be substantial interest in the Rights under the circumstances.
During the AGM, the CEO indicated that OCHL plans to pay a dividend equal to at least 20% of the PAT for the 2007-8 year. Furthermore, there is the possibility of an extra dividend payout that was “declared but not paid” 5 years ago.
If the results of the SA subsidiary are consolidated then the turnover is expected to jump significantly to KShs 1.4bn (2006: 396mn).
Just like other “smaller” IPOs & Rights which followed “larger” IPOs, the Rights Period for OCHL is expected to be after KenRe’s refunds are, well, refunded!
Nevertheless, the KenRe Offer seems to be in trouble after the allegations that the CEO & CFO had been upto no good. Some reports indicate the CMA is studying the PWC report before it OKs the IPO.
CFC Financial Services had an ad about KenRe’s Offer thus it seems the IPO may open in early-mid July 2007. OCHL should close the Rights Issue AFTER the refunds for KenRe have been paid out. This may be tricky for OCHL to pull off since the KenRe Offer dates will be decided by GOK while the CMA might be reviewing OCHL’s Rights application thus OCHL “misses” the window.
As a rule, the GOK offers shares at a “discount” to NAV or “Market Value” during IPOs. Please note that Mumias Offer in 2007 was an OFS thus it was discounted from the then market price of 55/-.
The KenRe IPO/OFS will be hyped since the:
· GOK wants/needs the funds. Also mentioned in the budget
· “low” price will encourage retial investors
· GOK wants to garner goodwill prior to elections
Most stockbrokers & analysts expect a Ken-Re over-subscription regardless of the economics/financials of the Offer. This will lead to the inevitable refunds, which may flow, into NIC’s Rights Issue (expected to be KShs 1bn) or OCHL’s Rights Issue.
Most firms whose year-ends are on 31 Dec will have paid dividends by August thus providing additional liquidity for investors.
Monday, June 18, 2007
New tricks...
I am learning how to blog in an environment that doesn't allow for "always on" access compounded by slow speeds... when speeds over 32K is considered "broadband"... it take a lot of getting used to after using T1 connections (1M or higher!)
Anyway, thanks to all for your support. There is much to blog about and I shall try to do some blogging even with my slower connections.
Since internet time is at a premium, I am learning alternate ways of blogging which though new to me... are not new to many!
I find it easier to "write" then save the file/document on my flash drive after which I can copy & paste. There may be some problems with editing & fonts but it beats losing work coz the internet connection "died"...
Research is more difficult since the searches take time. (Almost) forget pictures!
Anyway, let's see what I can do!
Anyway, thanks to all for your support. There is much to blog about and I shall try to do some blogging even with my slower connections.
Since internet time is at a premium, I am learning alternate ways of blogging which though new to me... are not new to many!
I find it easier to "write" then save the file/document on my flash drive after which I can copy & paste. There may be some problems with editing & fonts but it beats losing work coz the internet connection "died"...
Research is more difficult since the searches take time. (Almost) forget pictures!
Anyway, let's see what I can do!
Saturday, June 16, 2007
Sorry... No new blogs entries...
Dear readers,
I apologise for the lack of blog entries. My access to decent/reliable & "cheap" internet access has been severely curtailed.
I promise more once I get back to "better" internet connections!!!
Regards,
Coldtusker
I apologise for the lack of blog entries. My access to decent/reliable & "cheap" internet access has been severely curtailed.
I promise more once I get back to "better" internet connections!!!
Regards,
Coldtusker
Monday, April 30, 2007
AccessKenya IPO/OFS - Last Day
Raging debates on www.stockskenya.com... Unlike prior discussions, there is more of substance being discussed...
I will not discuss the specifics since the fundamentals are based on POTENTIAL not the assets or current financial state of the firm.
(My) Bottomline:
I will not discuss the specifics since the fundamentals are based on POTENTIAL not the assets or current financial state of the firm.
(My) Bottomline:
- Not cheap on a NAV or PE basis.
- Growth will continue for next 3 years.
- Cash out by Somens not a good indicator (OFS of 35mn shares).
- Growth will be at lower net margins.
- Expansion is a strong possibility into the region by acquisitions
- Corporate market prefers RELIABILITY over (cheapest) price. As long as Access Kenya delivers RELIABILITY there is great potential among the MNCs & SMEs.
- Cheaper bandwidth (TEAMS, Eassy) will boost usage.
- Increased use by government organisations will boost usage & sales.
- No debt plus IPO cash (KShs 426mn)to be used to boost service, sales & customer service.
- Somens want to increase the "value" of their shares so expect their dedication coz I think there will be a merger &/or sale of the AK (as we know it) to someone else!
Wednesday, April 18, 2007
Updates on the Service Industry...
The "medical spa" industry in Kenya can get a huge boost by marketing Kenya as a "haven"... We can & need to move up the food chain from primarily "wildlife" tourism to more...
Why doesn't Kenya Airways (or some other airline) target Japan as a source for high-spending tourists! In spite of recent weaknesses in Japan's economy, the Japanese remain avid high-spending travelers! If this route is considered "unprofitable" the Kenya government should try to provide "benefits" for this sector. I do not support subsidies but surely how about a discount on landing fees, fuel tax breaks & offering Japanese language courses in Kenyan universities?
Back to reality... All we have on our front pages is violence at the Coastal areas... violence in the Mt. Elgon area! Tourists from some countries e.g. Japan tend to prefer "safe" locations. Though these clashes do not affect most touristy areas, the "exposure" can be scary!
If we do not clamp down hard on insecurity & land rights... we can't project an image of safety for tourism. Violence can happen anywhere, anytime e.g. the Virginia Tech shooting but violence should not be a constant as seems the case in Kenya!
There have been killings & arson aplenty in the Banana Hill area...
While all this is going on, the Kenya Police spend valuable resources questioning The Standard about some story on the artur brothers while Kenyans are murdered in cold blood...
Sigh...
On a lighter note... I am surprised that Kenya doesn't have a condom factory... esp with Kenyans professing to be (very) sexually active... or that's what one would think listening to the guys at any drinking joint in Kenya... I wonder what flavours... My favourite is Passion... yes, pun intended...
Why doesn't Kenya Airways (or some other airline) target Japan as a source for high-spending tourists! In spite of recent weaknesses in Japan's economy, the Japanese remain avid high-spending travelers! If this route is considered "unprofitable" the Kenya government should try to provide "benefits" for this sector. I do not support subsidies but surely how about a discount on landing fees, fuel tax breaks & offering Japanese language courses in Kenyan universities?
Back to reality... All we have on our front pages is violence at the Coastal areas... violence in the Mt. Elgon area! Tourists from some countries e.g. Japan tend to prefer "safe" locations. Though these clashes do not affect most touristy areas, the "exposure" can be scary!
If we do not clamp down hard on insecurity & land rights... we can't project an image of safety for tourism. Violence can happen anywhere, anytime e.g. the Virginia Tech shooting but violence should not be a constant as seems the case in Kenya!
There have been killings & arson aplenty in the Banana Hill area...
While all this is going on, the Kenya Police spend valuable resources questioning The Standard about some story on the artur brothers while Kenyans are murdered in cold blood...
Sigh...
On a lighter note... I am surprised that Kenya doesn't have a condom factory... esp with Kenyans professing to be (very) sexually active... or that's what one would think listening to the guys at any drinking joint in Kenya... I wonder what flavours... My favourite is Passion... yes, pun intended...
Saturday, April 14, 2007
Kenya 2030 - Service Economy Superstar?
Kenya has the potential (yes, that word again...) to become the African Superstar of the service industry.
After reading Kenyan Entrepreneur's blog entry on "niches" & "creativity" I think Kenya needs to find a niche... that niche is providing services to primarily Africa(ns) and beyond.
University Education & Research
Problems & Challenges for the Service Economy
Insecurity
Kenya needs to work on the high levels of insecurity prevalent today.
After reading Kenyan Entrepreneur's blog entry on "niches" & "creativity" I think Kenya needs to find a niche... that niche is providing services to primarily Africa(ns) and beyond.
University Education & Research
- We don't need to send KShs "Billions" to Australia, USA, Malaysia or the UK for tertiary education when we can/should set up WORLD-CLASS universities in collaboration with top-notch universities, departments or research centers around the world. Singapore & Dubai have done it. So can we.
- The cost of living in Nairobi is much lower than S.Africa, Dubai or the UK. In addition, it is cheaper for African students to fly to/fro from Nairobi than many of the other cities.
- We can attract students from Africa while providing Kenyans with jobs (lecturers, clerks, janitors, etc). These students become ambassadors for Kenyan universities. This has bee proven time & again by American universities' African alumni.
- We can attract African talent to these universities & think tanks to provide African solutions to Africa's problems. They understand Kenya's problems as we understand theirs. This allows for collaboration of peers.
- Networking opportunities arise from the interaction of African professionals that allow the expansion of inter-African commerce. It is a fact that "connections" spurs investments. The connotation is not about "corruption" but "connections" between classmates.
- Kenyans spend KShs "Billions" on treatments abroad. Our so-called "leaders" lead the way to more waste of funds... kibz went to UK, dan moi recently went to Germany. All the "heart" operations that are done abroad since we lack the facilities. The less well-heeled go to S.Africa & India.
- Medical facilities will encourage research that can boost Kenya's stature beyond the HIV & Malaria programs.
- Kenya has 2 medical schools & can expand its facilities to ensure we produce more doctors. We can then keep them in Kenya instead of "exporting" them to UK, USA or Australia!
- Kenya "exports" nurses to UK. We can keep them in Kenya by offering them better opportunities within Kenya!
- India has taken up the concept of "Medical Tourism" with gusto & it is a major growth industry for them. The benefits of Medical Tourism then flow to the rest of the population as the latest technology is used & personnel trained.
- Nairobi has become the premier airline hub for the East, Central & West Africa region - multiple carriers e.g. KQ - with the necessary connections to Nairobi. Kenya can effectively compete against S.Africa to become the preferred choice for medical treatment.
- The medical per capita "spend" is much higher than regular tourism! Of course, the patients' guests/visitors might tour other "touristy" locations e.g. Game Parks.
- The knock-on benefits for Kenya's construction sector, industrial (e.g. BOC Gases), education sector (nurses, doctors, technicians), agriculture (food, flowers) & tourism (relatives, friends visiting parks) are tremendous.
- We can capture some of the growing BPO market from India or complement India.
- There is need for BPO services for many African countries as these countries' economies expand.
- The fiber-optic broadband systems (planned) could substantially reduce the cost of telecommunications between African countries.
- Kenya needs to expand language classes in German, Italian & French since these countries may not be effectively served by India.
Problems & Challenges for the Service Economy
Insecurity
Kenya needs to work on the high levels of insecurity prevalent today.
- Being "poor" is no excuse for being a thief. And being a violent thief is worse!
- I support brutal suppression of the "violent" elements. Yes, it will not be popular with the "human rights" folks but I would rather a thief is killed than my near & dear hurt. That's my opinion... What about my Rights to enjoy my hard-earned cash & life?
- My "little finger" is more important to me than the life of a violent thief! I would rather the police kill the thug/crook/thief before a single hair on my head is harmed.
- We need a 24-hour "economy" especially if we want to serve the BPO market in the USA.
- JKIA's utilization can increase substantially if insecurity is not an issue since the travelers may start their journeys much earlier & fly in much later.
- The transport industry - using lorries - can be boosted if these carriers move goods at night without fear. This means that the roads are "clear" for passenger & tourist traffic during the day!
- Despite advances in telecommunications, the cost of phone calls remain much higher than necessary. We need more competitors as well as increased "openness" for them then operate effectively.
- Data costs too much to access. Hopefully, the government will get its act together or allow private firms to lay fiber-optic cables all over the country (without onerous conditions/permits/fees) as well as international connections.
- Progress has been made with EaSSy & TEAMS but the there have been too many delays.
- Political & ethnic conflicts (esp violent clashes) e.g. Mt. Elgon clashes in 2007 need to be stopped asap. Even if it requires a military response. Nevertheless, the cause roots need to be examined.
- Property rights should be supreme. Kenya should not succumb to a "tribal" or "nationalistic" tendency that tramples on Human Rights that will dissuade further investments & aggravate poverty e.g. mugabe's antics in Zimbabwe.
- Politics seem to be a 24/7 obssession with Kenyans. No wonder we remain poor since "talking politics' takes precedence over "work productivity".
- Kenyans spend less time working, even at their jobs, than discussing politics!
Wednesday, April 11, 2007
Safaricom to list offshore... What are they thinking?
Disregarding the valuations placed on Safaricom... but let's say 25% is worth KShs 30 Billion...
Please note the proposal is NOT about an IPO but an OFS (Offer For Sale) where the shares sold are already issued thus none of the funds goes/benefits the firm being listed.
Scangroup was primarily an OFS with a small component as an IPO. Eveready was an OFS. Kengen was an OFS as was the second tranche of Mumias.
This is an amount that can & will be easily absorbed by Kenyans. Approx KShs 27 Billion was collected during KenGen's OFS. Most of it was refunded.
Safaricom's profits are primarily from Kenyan subscribers (who have been ripped off for ages!) thus:
Mutual Funds, Unit Trusts & Pensions can & will support the broader market as they snap up "cheap" shares that retail investors sell to buy Safaricom!
Foreign investors should buy Safaricom on the secondary market... that means Kenyans can make more money!
At the end of the day, market forces will prevail... so let them be!
Please note the proposal is NOT about an IPO but an OFS (Offer For Sale) where the shares sold are already issued thus none of the funds goes/benefits the firm being listed.
Scangroup was primarily an OFS with a small component as an IPO. Eveready was an OFS. Kengen was an OFS as was the second tranche of Mumias.
This is an amount that can & will be easily absorbed by Kenyans. Approx KShs 27 Billion was collected during KenGen's OFS. Most of it was refunded.
Safaricom's profits are primarily from Kenyan subscribers (who have been ripped off for ages!) thus:
- Kenyans should have the first RIGHT to buy shares
- If Kenyans can't buy them then offer to foreigners
- Multiple receiving banks e.g. all corporate applications handled by Barclays, QII (pensions, etc) handled by KCB and all individual applications handled by Equity
- The receiving bank opens an account with CBK for funds from the applications. These funds are used to lend funds to the "depleted" banks at the 30-day or 90-day T-Bill rate instead of the higher CBR (10%)
- Most banks have excess funds in T-Bills substantially above the required liquidity ratios. The CBK can allow for repos at favourable rates during this period.
Mutual Funds, Unit Trusts & Pensions can & will support the broader market as they snap up "cheap" shares that retail investors sell to buy Safaricom!
Foreign investors should buy Safaricom on the secondary market... that means Kenyans can make more money!
At the end of the day, market forces will prevail... so let them be!
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