INTERVIEW IDEAS
UHURU KENYATTA; -- ON THE CAPITAL MARKETS
On Friday, Feb 20, the Nairobi Stock Exchange posted its worst intra-week performance, with just two counters rising on the day, and trading activity cut in half, compared to Thursday's levels.
On Thursday, Feb 19, the Finance Minister, Uhuru Kenyatta, announced a sweeping change of the management of the capital markets, with the boards of the Capital Markets Authority, the Nairobi Stock Exchange and the Central Depository and Settlement Corporation, all to be overhauled. Micah Cheseram, a former Central Bank governor, talked tough upon his appointment as the Chairman of the CMA's Board; -- but what's his ace in the hole? What's his game plan?
More importantly though, what exactly does the market's reaction imply for the manner in which the market; -- or the investing public for that matter --; regards Uhuru Kenyatta's move?
Is he a man who knows what he's doing? Does the investing public trust him?
No-one's said anything negative in the public domain [to my knowledge so far], but these numbers hint at something far darker, and more ominous than we'd care to imagine.
UHURU KENYATTA; -- ON GETTING THE ECONOMY BACK ON TRACK
On February, Monday 23; -- the Finance Minister announced that provisional estimates indicated that the Kenyan economy only grew by only between 2.0 and 2.5%.
Here's how Reuters reported it;
Kenya cuts '08 growth estimate again for to 2-2.5 pct
(adds details)
NAIROBI, Feb 23 (Reuters) - Kenya's Finance Minister Uhuru Kenyatta said on Monday provisional estimates showed east Africa's largest economy grew between 2.0 and 2.5 percent in 2008 due to a post-election crisis and the global slowdown.
"Provisional estimates of gross domestic output show that growth may have edged around 2-2.5 percent in 2008," Kenyatta said in a speech in Nairobi.
The government had last year forecast between 4.5-6.0 percent growth as the impact of two months of political violence in January and February became clear, as well as the darkening international scenario.
It then lowered that again in January to 3.5-4.0 percent. [ID:nL6498644]
The new figures from Kenyatta, appointed last month, were in line with most analysts' predictions for 2008, which was a disastrous year for Kenya's economy after robust growth in previous years.
"This good economic story was in 2008 interrupted largely by our own misadventure," Kenyatta said.
"The post-election violence affected hard the agriculture and transport sectors, which in turn impacted adversely on the other sectors of the economy. In addition, other external developments -- drought, exceptionally high oil prices, and the meltdown of the world economy associated with the global financial crisis -- caused even more damage to the economy."
Growth was 7.0 percent in 2007.
A Reuters poll of analysts last month predicted, on average, just over 4 percent growth for Kenya in 2009.
Free version at http://af.reuters.com/article/investingNews/idAFJOE51M08Q20090223
The most instructive line he dropped there comes in the 6th paragraph; -- "This good economic story was in 2008 interrupted largely by our own misadventure."
It’s a candid admission; -- the question however is how do we fix it?
Monday, February 23
Wednesday, August 20
AUGUST 20 PREVIEW
PAPER REVIEW
Retail news make the cut for the headlines story in the Business Daily this morning; -- with the Uchumi CEO, Jonathan Ciano, back-tracking from earlier projections that a strategic investor would be locked in by this month.
“We are waiting for the advisory committee to revert back to us with approvals or recommendations,” said Mr Ciano, adding that it was unclear when that would be done.
Eight bidders had been picked on June 18 for the equity stake, four of them local and the rest international. The list of local contenders includes two supermarkets whose identities have not been revealed. It is, however, emerging that a section of the oversight committee, comprising mainly of government representatives, have asked for more time to consult on Uchumi’s new shareholding structure. “We also want to evaluate the financial and technical strength of the bidders,” a team member said.
Right now; -- there are two main concerns; -- the first is what impact this will have on shareholders, and the other is what means for Uchumi in a retail segment that’s seeing its competitors continue to stake out ever increasing market shares.
More details on that are available here; --
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9484&Itemid=5812
Some investment news of note vis-à-vis the Safaricom IPO refunds has also come through; -- though if you reside in Kenya, they do not apply to you. That’s the only ticklish bit. In this case, persons who invested in the float can authorize their brokers or selling agents to collect the refunds for them, more critically in local currency, so that the weakening shilling does not batter down one’s investment.
More details here; --
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9483&Itemid=5812
Is Barclays’ push into the middle and lower income segments reaping benefits? Well, some brokerage houses certainly think so, and higher dividends, in the region of between 1.75 to 2 shillings per share are expected this year.
More details here;--
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9478&Itemid=5812
However; -- compare and contrast that with this report about Equity Bank, whose Chief Executive reckons that pre-tax profits for the bank can rise by 200% at the close of the year.
http://africa.reuters.com/business/news/usnBAN956202.html
How’s that for a cold blanket?
For the record, the Equity Bank, Chief Executive, James Mwangi, will be giving a talk on innovative banking later today courtesy of the British Council, at the Sarova Stanley at 1800 hrs. By all means, do attend, it’ll cost you something in the region of 500 bob, but I reckon it’s worth it. I on the other hand will not be able to attend it since I’ll be firmly stuck at work.
Can’t wait to get back to the Breakfast shift; -- the schedule has more flexibility in relative terms.
The editorial on the liberalization of the water sector makes for a rather interesting read too. It starts off sounding like another long-winded argument about the failure of the legacy of SAPs [Structural Adjustment Programs], courtesy of the Bretton Woods institutions like the World Bank in the late 80s and early 90s, but it swiftly shifts gears and focuses more on the knife-edge balance which utilities must walk in balancing the need for investment in infrastructure; -- while taking into account the fact sector players are providing what is a common, basic necessity.
A must read; -- more so in light of Tuesday’s earlier headline. Here’s the link.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9463&Itemid=5854
Inflation in Zimbabwe shows no signs of abating just yet; -- especially after is posted yet another zoom climb and cracked the 11 million percent mark.
More details here: --
http://africa.reuters.com/country/ZW/news/usnLJ353370.html
Grossly disappointing stuff really. Politicians over there are pretty much imbued with the same DNA as ours here; -- my needs before those of the people.
Not that I’ll tell you that in words; -- otherwise I lose my ‘credibility’. Plus ca change on dirait.
Education matters make the headlines over at ww.nationmedia.com, with the launch of safety guidelines for schools as the main issue. Especially in the wake of the arson attacks seen in the last two quarters, this makes sense.
One must however question why this is being done now, and not earlier on. In actual fact though; -- the political returns and the returns on image are far higher in the wake of such a crisis; -- it’s a pure ‘white-knight’ move.
http://www.nation.co.ke/News/-/1056/460962/-/tk6yqg/-/index.html
Also making the headlines in both dailies; -- including http://www.eastandard.net/ --; is the story of the National Human Rights Commission presenting a report to the Waki Commission which identifies the alleged perpetrators and funders of the post-poll violence.
Justice Phillip Waki has ruled that the identities of the adversely mentioned should not be revealed until the contents of the report have been verified.
http://www.nation.co.ke/News/-/1056/460886/-/tk6y0v/-/index.html
Seems a touch late though; -- since I already have a personal copy, and so does every other media house. He’s therefore not going to be dealing so much with a leak, as a flood-tide of information.
Here’s the Standard’s take on the story.
http://www.eastandard.net/InsidePage.php?id=1143992996&cid=4&
John Githongo’s return to the country has made the cut too; -- in both papers apparently. I reckon that this coverage will however be far more intense depending on what he says when he speaks later today between 1500 -1800 hrs at the Hilton. He will however be meeting the Prime Minister at 0830 hrs today at his office at the Treasury as well. That only makes the entire gig more appealing for the media. Interesting play by the PM's communication handlers here.
Legal matters; -- pitting the Chief Justice against Lawyers who’re quite ticked off about the manner in which some judges and magistrates are handling themselves; -- and their cases, most notably by skipping work --; also make the cut.
Evans Gicheru has made it perfectly clear that he will not resign, though he added that he’s open to being picked apart by an independent tribunal appointed by the President.
Now, unless the President’s finds his legacy to be important enough to adopt some Mongolian tactics in whipping the judiciary into shape; -- that’s not likely.
By Mongolian tactics, I refer to an ancient practice which Genghis Khan and his sires used in expanding their empire. When approaching their targeted country; -- they’d demand the surrender of the first city along the way.
Normally, that would be refused.
They’d then invade it; -- and slaughter everyone; -- women, men, children, not even the animals would be spared.
They’d then move on to the next city; -- and make the same demand.
Surrender or else.
More often than not; -- kingdoms fell like this, silently, and the Khans had their way.
It applies politically too; -- just read the Prince by Niccolo Machiavelli.
Make the final judgment on possible moves for the Baks after reading those stories here.
http://www.nation.co.ke/News/-/1056/460910/-/tk6yly/-/index.html
http://www.eastandard.net/InsidePage.php?id=1143992992&cid=4&
At the risk of having members of the bench coming after me with their gavels; -- what were the photo editors at the Standard thinking when they put that photograph for the story on the CJ?
At first glance, it’s very tongue in cheek.
BIZ LITE
Fuel issues are my focus this morning; -- and its’ all to do with this story which came to my attention late on Tuesday evening. Here’s the basic gist of it.
An abrupt change in transport prices left scores of passengers stranded in Eldoret earlier on Tuesday; -- with transport sector players attributing the change to what they’re describing as a looming petroleum shortage.
Fares to various destinations from Eldoret rose by at least 50%; -- which translates to anywhere between 50 and 200 shillings for major bus carriers.
Grace Mungei, an accountant with Eldoret Express explained that the firm decided to take a pro-active approach to handling the anticipated fuel shortage.
For me; -- one thing instantly raised suspicion here. Fuel prices tend to be more price inelastic than other energy sources. If, for example, your bill goes up, you can switch to using gas for heating water and cooking instead of electricity.
If on the other hand, fuel prices rise; -- as they have now --; it’s not like you can walk to work, or grab a tram. This country runs on fossil fuels. That’s our basic reality.
As is the case with other short-distance players in the transport sector, high fuel prices have generally eroded the operating margins of bus companies.
At the moment, a liter of diesel retails within the 99-110 shillings per liter range. However; -- even at that price range, demand for diesel has not dropped off yet.
Since diesel powers the bulk carriers; -- the matatu we ride in, the trucks which bring those 52-inch LCD screens we’ve been salivating over, and the trains that haul oil up-country; -- demand remains more or less where it has been, even if you factor in inflation’s effects on demand for goods and services.
But what about the supply side of the argument? Is there a bottleneck at the refinery?
So far, no.
We’re operating at a point where the available capacity is more or less fully taken up by both local and regional demand. To date, the industry’s been meeting that need by importing a larger share of its fuel needs already refined.
Now; -- more than half the 600 000 barrels of crude we buy comes in already refined, and that proportion’s been rising.
With this data in hand; -- it would appear then, that we’re being taken for a ride, or transporters are acting on information we don’t have access to.
My money’s on the former.
Retail news make the cut for the headlines story in the Business Daily this morning; -- with the Uchumi CEO, Jonathan Ciano, back-tracking from earlier projections that a strategic investor would be locked in by this month.
“We are waiting for the advisory committee to revert back to us with approvals or recommendations,” said Mr Ciano, adding that it was unclear when that would be done.
Eight bidders had been picked on June 18 for the equity stake, four of them local and the rest international. The list of local contenders includes two supermarkets whose identities have not been revealed. It is, however, emerging that a section of the oversight committee, comprising mainly of government representatives, have asked for more time to consult on Uchumi’s new shareholding structure. “We also want to evaluate the financial and technical strength of the bidders,” a team member said.
Right now; -- there are two main concerns; -- the first is what impact this will have on shareholders, and the other is what means for Uchumi in a retail segment that’s seeing its competitors continue to stake out ever increasing market shares.
More details on that are available here; --
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9484&Itemid=5812
Some investment news of note vis-à-vis the Safaricom IPO refunds has also come through; -- though if you reside in Kenya, they do not apply to you. That’s the only ticklish bit. In this case, persons who invested in the float can authorize their brokers or selling agents to collect the refunds for them, more critically in local currency, so that the weakening shilling does not batter down one’s investment.
More details here; --
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9483&Itemid=5812
Is Barclays’ push into the middle and lower income segments reaping benefits? Well, some brokerage houses certainly think so, and higher dividends, in the region of between 1.75 to 2 shillings per share are expected this year.
More details here;--
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9478&Itemid=5812
However; -- compare and contrast that with this report about Equity Bank, whose Chief Executive reckons that pre-tax profits for the bank can rise by 200% at the close of the year.
http://africa.reuters.com/business/news/usnBAN956202.html
How’s that for a cold blanket?
For the record, the Equity Bank, Chief Executive, James Mwangi, will be giving a talk on innovative banking later today courtesy of the British Council, at the Sarova Stanley at 1800 hrs. By all means, do attend, it’ll cost you something in the region of 500 bob, but I reckon it’s worth it. I on the other hand will not be able to attend it since I’ll be firmly stuck at work.
Can’t wait to get back to the Breakfast shift; -- the schedule has more flexibility in relative terms.
The editorial on the liberalization of the water sector makes for a rather interesting read too. It starts off sounding like another long-winded argument about the failure of the legacy of SAPs [Structural Adjustment Programs], courtesy of the Bretton Woods institutions like the World Bank in the late 80s and early 90s, but it swiftly shifts gears and focuses more on the knife-edge balance which utilities must walk in balancing the need for investment in infrastructure; -- while taking into account the fact sector players are providing what is a common, basic necessity.
A must read; -- more so in light of Tuesday’s earlier headline. Here’s the link.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9463&Itemid=5854
Inflation in Zimbabwe shows no signs of abating just yet; -- especially after is posted yet another zoom climb and cracked the 11 million percent mark.
More details here: --
http://africa.reuters.com/country/ZW/news/usnLJ353370.html
Grossly disappointing stuff really. Politicians over there are pretty much imbued with the same DNA as ours here; -- my needs before those of the people.
Not that I’ll tell you that in words; -- otherwise I lose my ‘credibility’. Plus ca change on dirait.
Education matters make the headlines over at ww.nationmedia.com, with the launch of safety guidelines for schools as the main issue. Especially in the wake of the arson attacks seen in the last two quarters, this makes sense.
One must however question why this is being done now, and not earlier on. In actual fact though; -- the political returns and the returns on image are far higher in the wake of such a crisis; -- it’s a pure ‘white-knight’ move.
http://www.nation.co.ke/News/-/1056/460962/-/tk6yqg/-/index.html
Also making the headlines in both dailies; -- including http://www.eastandard.net/ --; is the story of the National Human Rights Commission presenting a report to the Waki Commission which identifies the alleged perpetrators and funders of the post-poll violence.
Justice Phillip Waki has ruled that the identities of the adversely mentioned should not be revealed until the contents of the report have been verified.
http://www.nation.co.ke/News/-/1056/460886/-/tk6y0v/-/index.html
Seems a touch late though; -- since I already have a personal copy, and so does every other media house. He’s therefore not going to be dealing so much with a leak, as a flood-tide of information.
Here’s the Standard’s take on the story.
http://www.eastandard.net/InsidePage.php?id=1143992996&cid=4&
John Githongo’s return to the country has made the cut too; -- in both papers apparently. I reckon that this coverage will however be far more intense depending on what he says when he speaks later today between 1500 -1800 hrs at the Hilton. He will however be meeting the Prime Minister at 0830 hrs today at his office at the Treasury as well. That only makes the entire gig more appealing for the media. Interesting play by the PM's communication handlers here.
Legal matters; -- pitting the Chief Justice against Lawyers who’re quite ticked off about the manner in which some judges and magistrates are handling themselves; -- and their cases, most notably by skipping work --; also make the cut.
Evans Gicheru has made it perfectly clear that he will not resign, though he added that he’s open to being picked apart by an independent tribunal appointed by the President.
Now, unless the President’s finds his legacy to be important enough to adopt some Mongolian tactics in whipping the judiciary into shape; -- that’s not likely.
By Mongolian tactics, I refer to an ancient practice which Genghis Khan and his sires used in expanding their empire. When approaching their targeted country; -- they’d demand the surrender of the first city along the way.
Normally, that would be refused.
They’d then invade it; -- and slaughter everyone; -- women, men, children, not even the animals would be spared.
They’d then move on to the next city; -- and make the same demand.
Surrender or else.
More often than not; -- kingdoms fell like this, silently, and the Khans had their way.
It applies politically too; -- just read the Prince by Niccolo Machiavelli.
Make the final judgment on possible moves for the Baks after reading those stories here.
http://www.nation.co.ke/News/-/1056/460910/-/tk6yly/-/index.html
http://www.eastandard.net/InsidePage.php?id=1143992992&cid=4&
At the risk of having members of the bench coming after me with their gavels; -- what were the photo editors at the Standard thinking when they put that photograph for the story on the CJ?
At first glance, it’s very tongue in cheek.
BIZ LITE
Fuel issues are my focus this morning; -- and its’ all to do with this story which came to my attention late on Tuesday evening. Here’s the basic gist of it.
An abrupt change in transport prices left scores of passengers stranded in Eldoret earlier on Tuesday; -- with transport sector players attributing the change to what they’re describing as a looming petroleum shortage.
Fares to various destinations from Eldoret rose by at least 50%; -- which translates to anywhere between 50 and 200 shillings for major bus carriers.
Grace Mungei, an accountant with Eldoret Express explained that the firm decided to take a pro-active approach to handling the anticipated fuel shortage.
For me; -- one thing instantly raised suspicion here. Fuel prices tend to be more price inelastic than other energy sources. If, for example, your bill goes up, you can switch to using gas for heating water and cooking instead of electricity.
If on the other hand, fuel prices rise; -- as they have now --; it’s not like you can walk to work, or grab a tram. This country runs on fossil fuels. That’s our basic reality.
As is the case with other short-distance players in the transport sector, high fuel prices have generally eroded the operating margins of bus companies.
At the moment, a liter of diesel retails within the 99-110 shillings per liter range. However; -- even at that price range, demand for diesel has not dropped off yet.
Since diesel powers the bulk carriers; -- the matatu we ride in, the trucks which bring those 52-inch LCD screens we’ve been salivating over, and the trains that haul oil up-country; -- demand remains more or less where it has been, even if you factor in inflation’s effects on demand for goods and services.
But what about the supply side of the argument? Is there a bottleneck at the refinery?
So far, no.
We’re operating at a point where the available capacity is more or less fully taken up by both local and regional demand. To date, the industry’s been meeting that need by importing a larger share of its fuel needs already refined.
Now; -- more than half the 600 000 barrels of crude we buy comes in already refined, and that proportion’s been rising.
With this data in hand; -- it would appear then, that we’re being taken for a ride, or transporters are acting on information we don’t have access to.
My money’s on the former.
Tuesday, August 19
AUGUST 19 PREVIEW
PAPER REVIEW
There’s a rather wide spread of news on selection this morning.
Starting off with the Business Daily over at www.bdafrica.com; -- the lead article focuses on rising utility costs.
First you had to contend with a rise in power bills; -- and now water utilities are seeking to raise prices by at least 50% for small scale consumers too.
Contrary to the pricing model used by the power sector players though; -- the regulators here are seeking higher prices for industrial players also. not just households. This move is going to cost the Water Minister Charity Ngilu some political capital; -- since she’ll be dealing with the oddity that is the Kenyan consumer.
We want better services; -- but more often than not we’re not willing to pay for it.
Since the water sector was fragmented and private players introduced; -- market forces have a far bigger role to play in it, and the Water Minister argues that prices [which have not been revised since 1999] must be brought up to let players work on creaky infrastructure and improve service delivery.
Higher utility prices; -- a necessary evil? That really is the question here. Make the judgment after reading this.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9449&Itemid=5822
The 24-hr port clearance system is set to go live today, with all the relevant players having sent their senior management figures over to the port to work out the finer details for the plan.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9445&Itemid=5810
Chamas, as investment clubs are more commonly known, have one main problem; -- depositor discipline.
In most cases, it would seem Kenyans avoid the trouble of making standing orders at their banks, for perceived cost reasons.
A range of groups; -- from university students to the Transcentury CE, all offer advice on how to tame this beast here.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9434&Itemid=5812
The RVR saga is getting some neutral, off-the-crosshairs coverage this morning too, with the Business Daily reporting that its shareholders have pledged to inject 10 million dollars [approx…680 million shillings] into the business. If that’s done; -- it should then get the 3.8 billion shillings it has been seeking from international lenders. The 680 million shillings will be raised via a rights issue which the firm’s board approved last week.
More details here.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9448&Itemid=5810
Today; -- the Financial Journal over at www.eastandard.net has a wide spread of equally interesting stories to look over. [http://www.eastandard.net/mag/index.php?id=1143992851&catid=457]
The emerging stand-off between employers and policy makers and unions over a new set of labor laws is the banner headline here.
Other articles of interest focus on energy [High Oil prices and the Road not taken]; -- but there are two you will most certainly have to read.
The bear run at the NSE, to be frank; -- put some many counters out on dirt cheap prices; -- and if you had some cash to spare, the last two months were a pretty good time to position yourself for a medium to short term kill.
Those at least, are my thoughts, after reading this article; -- and poring over mind-numbing volumes of charts from the bourse each day.
http://www.eastandard.net/mag/InsidePage.php?id=1143992863&cid=457&
The cost of borrowing is rising; -- but what’s the fuss about?
That seems to be the one attitude that the Treasury has at the moment, especially with banks raising their base lending rates in the face of rising inflation numbers, and the Central Bank twiddling its thumbs and ‘waiting for direction’ on the next inflationary targets. More details available ‘ere.
http://www.eastandard.net/mag/InsidePage.php?id=1143992880&cid=457&
www.eastandard.net has no political coverage of any importance; -- save for the Prime Minister’s dipping into the amnesty or not debate once again, here; --
http://www.eastandard.net/InsidePage.php?id=1143992909&cid=4&
and the Chairman of the Electoral Commission, Samuel Kivuitu, expressing his lack of approval for the manner in which the President was hurriedly sworn in. Now that tempers are less volatile; -- a more sober, rational approach to the events of December 27- January 3 is emerging.
Key among them is the manner in which he said he saw a bunch of camera equipment before him when he announced who the winner of last year’s elections was, and he therefore thought a wide spread of media houses was represented; -- not just the state broadcaster, KBC.
http://www.eastandard.net/InsidePage.php?id=1143992911&cid=4&
www.nationmedia.com on the other hand also has details on errors in the vote tally, courtesy of the ECK Chairman and his tale of a milliondead voters once again. Is it just a coincidence that in a race as tight as what we saw last December, a million votes could swing the vote either way?
That however is not the lead story there.
Instead; -- the front page is all about the 15 minutes of dramatic running on the track which saw Kenya take its first 2 Gold medals.
I was watching this in the office with the news team at about 1630hrs yesterday; -- and we had to run this story as our lead. We ended up operating so close to our time deadlines, I think we actually exceeded it by about 5 minutes or so. Getting this story out was tight; -- but worth every minute of work Fred Indimuli and I put into it. More details here.
http://www.nation.co.ke/sports/-/1090/460562/-/khqh41z/-/index.html
Not surprisingly, Eldoret was in an absolute uproar after the win.
Here’s a news freebie you can have to read over at the Economist, for those of you with leanings towards international politics.
Musharaff’s resignation slammed into the headlines early on Monday, at around 1100 hrs local time; -- and it has quite a few people rattled.
The debate on it on the BBC’s Have Your Say program was nothing less than heated; -- and here’s the Economist’s take on the matter; -- cynical, terse, and to the point.
http://www.economist.com/world/asia/displayStory.cfm?story_id=11950470&source=features_box1
BIZ LITE
Your morning calendar’s not as packed as you may imagine.
There are two main issues the Industrilization Ministry’s political functionaries will have today.
1. Minister for industrialization Hon. Henry Kosgey will at 1030hrs address a press conference on the application and marking of imported goods with the KEBS standardization mark, the ISM. This will be after a closed door meeting with Captains of Industry in the board room on 18th floor at Telposta Towers, GPO.
2. Assistant Minister for Industrialization Hon. Ndiritu Muriithi will open a stake holder’s consultative forum on the Ministry’s strategic plan at the Kenya School of Monetary Studies at 0900hrs. Participants at the workshop will be required to identify strategies that will lead to the rapid growth and expansion of the industrial sector in line with the Vision 2030 economic blueprint.
I had a chance to look over Access Kenya’s half-year numbers rather briefly last night. The profit growth figures [in excess of 30% for profits before tax] is not uncommon for a company that’s still growing, is fairly young, and is in what one could regards as a Blue Ocean market; -- though that’s one idea that’s wearing off rather thin.
However; -- just by looking at the numbers, the rapid growth seems to be straining the previous efficiency of the firm from a purely sales perspective.
The cost of sales as a percentage of total turnover rose to 49% from 33% at a similar period last year. At the close of the 2007 financial year for AK; -- that figure stood at 48.6%. Ergo; -- the acquisition and expansion drive still needs some tweaking for cost effectiveness.
However; -- the rest of the balance sheet looks fairly solid.
That said; -- I’m putting my money on its wi-max network as its main trump card. Since this has the potential to be scaled up o a 4G network once the relevant details are sorted out; -- they care well positioned to become a dominant network infrastructure player 5-10 years down the line.
You’re wondering what 4G is? Here’s a basic primer.
http://en.wikipedia.org/wiki/4G; -- but get a geek to interpret some of the finer details for you.
After spending time with the one I lean on most often [my elder brother]; -- tripping over wires and being called from masts 20 meters plus above the ground, let’s just say I had to learn a thing or two about that biashara of his. :-)
Finally; -- is the Bull Run at the NSE starting at last?
Well, some certainly think it is.
After last week’s plunge past 5 shillings on the Saf-Com counter; -- it seems some sense was slapped into market players; -- especially the sellers.
Saf-Com’s gained 19% from recent lows, and according to Aly-Khan Satchu, players are now holding their cards pretty close to their chest, holding onto the counter.
After the release of H1 numbers; -- the bank’s counters are also getting plenty of interest from buyers, or rather, the top level bank counters are. Both indices are rising again; -- the NASI closed at 100.162 on August 18, and the 20-share index closed at 4746.80. Look for the 5 000 mark on the latter; -- we’re headed north from ‘ere.
Right; -- another freebie ‘ere from the Economist about crisis management which caught my eye.
http://www.economist.com/displaystory.cfm?source=hptextfeature&story_id=11948676
Some Kenyan politicians and their handlers need to read this; -- especially the bits on how to handle what’s been aptly branded as ‘Acts of God’ [insert evil laughter + grin here].
For now, they’ve had a decent run. Wait until the crap really hits the fan; -- that’s when quality levels really come through.
There’s a rather wide spread of news on selection this morning.
Starting off with the Business Daily over at www.bdafrica.com; -- the lead article focuses on rising utility costs.
First you had to contend with a rise in power bills; -- and now water utilities are seeking to raise prices by at least 50% for small scale consumers too.
Contrary to the pricing model used by the power sector players though; -- the regulators here are seeking higher prices for industrial players also. not just households. This move is going to cost the Water Minister Charity Ngilu some political capital; -- since she’ll be dealing with the oddity that is the Kenyan consumer.
We want better services; -- but more often than not we’re not willing to pay for it.
Since the water sector was fragmented and private players introduced; -- market forces have a far bigger role to play in it, and the Water Minister argues that prices [which have not been revised since 1999] must be brought up to let players work on creaky infrastructure and improve service delivery.
Higher utility prices; -- a necessary evil? That really is the question here. Make the judgment after reading this.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9449&Itemid=5822
The 24-hr port clearance system is set to go live today, with all the relevant players having sent their senior management figures over to the port to work out the finer details for the plan.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9445&Itemid=5810
Chamas, as investment clubs are more commonly known, have one main problem; -- depositor discipline.
In most cases, it would seem Kenyans avoid the trouble of making standing orders at their banks, for perceived cost reasons.
A range of groups; -- from university students to the Transcentury CE, all offer advice on how to tame this beast here.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9434&Itemid=5812
The RVR saga is getting some neutral, off-the-crosshairs coverage this morning too, with the Business Daily reporting that its shareholders have pledged to inject 10 million dollars [approx…680 million shillings] into the business. If that’s done; -- it should then get the 3.8 billion shillings it has been seeking from international lenders. The 680 million shillings will be raised via a rights issue which the firm’s board approved last week.
More details here.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9448&Itemid=5810
Today; -- the Financial Journal over at www.eastandard.net has a wide spread of equally interesting stories to look over. [http://www.eastandard.net/mag/index.php?id=1143992851&catid=457]
The emerging stand-off between employers and policy makers and unions over a new set of labor laws is the banner headline here.
Other articles of interest focus on energy [High Oil prices and the Road not taken]; -- but there are two you will most certainly have to read.
The bear run at the NSE, to be frank; -- put some many counters out on dirt cheap prices; -- and if you had some cash to spare, the last two months were a pretty good time to position yourself for a medium to short term kill.
Those at least, are my thoughts, after reading this article; -- and poring over mind-numbing volumes of charts from the bourse each day.
http://www.eastandard.net/mag/InsidePage.php?id=1143992863&cid=457&
The cost of borrowing is rising; -- but what’s the fuss about?
That seems to be the one attitude that the Treasury has at the moment, especially with banks raising their base lending rates in the face of rising inflation numbers, and the Central Bank twiddling its thumbs and ‘waiting for direction’ on the next inflationary targets. More details available ‘ere.
http://www.eastandard.net/mag/InsidePage.php?id=1143992880&cid=457&
www.eastandard.net has no political coverage of any importance; -- save for the Prime Minister’s dipping into the amnesty or not debate once again, here; --
http://www.eastandard.net/InsidePage.php?id=1143992909&cid=4&
and the Chairman of the Electoral Commission, Samuel Kivuitu, expressing his lack of approval for the manner in which the President was hurriedly sworn in. Now that tempers are less volatile; -- a more sober, rational approach to the events of December 27- January 3 is emerging.
Key among them is the manner in which he said he saw a bunch of camera equipment before him when he announced who the winner of last year’s elections was, and he therefore thought a wide spread of media houses was represented; -- not just the state broadcaster, KBC.
http://www.eastandard.net/InsidePage.php?id=1143992911&cid=4&
www.nationmedia.com on the other hand also has details on errors in the vote tally, courtesy of the ECK Chairman and his tale of a milliondead voters once again. Is it just a coincidence that in a race as tight as what we saw last December, a million votes could swing the vote either way?
That however is not the lead story there.
Instead; -- the front page is all about the 15 minutes of dramatic running on the track which saw Kenya take its first 2 Gold medals.
I was watching this in the office with the news team at about 1630hrs yesterday; -- and we had to run this story as our lead. We ended up operating so close to our time deadlines, I think we actually exceeded it by about 5 minutes or so. Getting this story out was tight; -- but worth every minute of work Fred Indimuli and I put into it. More details here.
http://www.nation.co.ke/sports/-/1090/460562/-/khqh41z/-/index.html
Not surprisingly, Eldoret was in an absolute uproar after the win.
Here’s a news freebie you can have to read over at the Economist, for those of you with leanings towards international politics.
Musharaff’s resignation slammed into the headlines early on Monday, at around 1100 hrs local time; -- and it has quite a few people rattled.
The debate on it on the BBC’s Have Your Say program was nothing less than heated; -- and here’s the Economist’s take on the matter; -- cynical, terse, and to the point.
http://www.economist.com/world/asia/displayStory.cfm?story_id=11950470&source=features_box1
BIZ LITE
Your morning calendar’s not as packed as you may imagine.
There are two main issues the Industrilization Ministry’s political functionaries will have today.
1. Minister for industrialization Hon. Henry Kosgey will at 1030hrs address a press conference on the application and marking of imported goods with the KEBS standardization mark, the ISM. This will be after a closed door meeting with Captains of Industry in the board room on 18th floor at Telposta Towers, GPO.
2. Assistant Minister for Industrialization Hon. Ndiritu Muriithi will open a stake holder’s consultative forum on the Ministry’s strategic plan at the Kenya School of Monetary Studies at 0900hrs. Participants at the workshop will be required to identify strategies that will lead to the rapid growth and expansion of the industrial sector in line with the Vision 2030 economic blueprint.
I had a chance to look over Access Kenya’s half-year numbers rather briefly last night. The profit growth figures [in excess of 30% for profits before tax] is not uncommon for a company that’s still growing, is fairly young, and is in what one could regards as a Blue Ocean market; -- though that’s one idea that’s wearing off rather thin.
However; -- just by looking at the numbers, the rapid growth seems to be straining the previous efficiency of the firm from a purely sales perspective.
The cost of sales as a percentage of total turnover rose to 49% from 33% at a similar period last year. At the close of the 2007 financial year for AK; -- that figure stood at 48.6%. Ergo; -- the acquisition and expansion drive still needs some tweaking for cost effectiveness.
However; -- the rest of the balance sheet looks fairly solid.
That said; -- I’m putting my money on its wi-max network as its main trump card. Since this has the potential to be scaled up o a 4G network once the relevant details are sorted out; -- they care well positioned to become a dominant network infrastructure player 5-10 years down the line.
You’re wondering what 4G is? Here’s a basic primer.
http://en.wikipedia.org/wiki/4G; -- but get a geek to interpret some of the finer details for you.
After spending time with the one I lean on most often [my elder brother]; -- tripping over wires and being called from masts 20 meters plus above the ground, let’s just say I had to learn a thing or two about that biashara of his. :-)
Finally; -- is the Bull Run at the NSE starting at last?
Well, some certainly think it is.
After last week’s plunge past 5 shillings on the Saf-Com counter; -- it seems some sense was slapped into market players; -- especially the sellers.
Saf-Com’s gained 19% from recent lows, and according to Aly-Khan Satchu, players are now holding their cards pretty close to their chest, holding onto the counter.
After the release of H1 numbers; -- the bank’s counters are also getting plenty of interest from buyers, or rather, the top level bank counters are. Both indices are rising again; -- the NASI closed at 100.162 on August 18, and the 20-share index closed at 4746.80. Look for the 5 000 mark on the latter; -- we’re headed north from ‘ere.
Right; -- another freebie ‘ere from the Economist about crisis management which caught my eye.
http://www.economist.com/displaystory.cfm?source=hptextfeature&story_id=11948676
Some Kenyan politicians and their handlers need to read this; -- especially the bits on how to handle what’s been aptly branded as ‘Acts of God’ [insert evil laughter + grin here].
For now, they’ve had a decent run. Wait until the crap really hits the fan; -- that’s when quality levels really come through.
Monday, August 18
AUGUST 18 PREVIEW
PAPER REVIEW
Kibaki’s little publicity stunt at the Mara takes in a lot of coverage this morning over at www.nationmedia.com and www.eastandard.net.
From a purely operational perspective; -- it’s a well done piece of work. Very slick work; -- worthy of a serious PR agency…complete with a 7-figure pay-check at the end of the day. Its implications, along with a few other factors is another issue altogether. You need to have a look at the headline story over at www.nationmedia.com [http://www.nation.co.ke/News/-/1056/457606/-/tjp8kr/-/index.html] and this link [http://aggregationke.blogspot.com/2008/08/information-new-opiate-of-masses.html] for a primer on what’s coming in Biz Lite.
Right; -- aside from checking out the headline at www.nationmedia.com, I would also recommend that you read the article on energy issues as well, especially this bit on how Kenya runs on a shoe-string when it comes to energy reserves.
http://www.nation.co.ke/News/-/1056/457550/-/tjp7wk/-/index.html
www.eastandard.net has its front page saturated with coverage of the President’s visit to the Mara.
Not exactly important stuff; -- until the tourism dollars do a tag team combo with either agriculture or remittances and beat the dollar-shilling rate back in the shilling’s favor.
Showmanship’s all well and good; -- just as long as there’s something solid at the end.
It’s a bit like Jose Mourinho’s approach to being Chelsea’s manager.
Be arrogant. Taking charge of a has-been always helps in this regards since expectations are generally low, and they can be blown out of the water with ease.
Cause some chaos. A few dramatic antics on the sidelines is always useful. Like telling off a referee in a live camera interview for example.
Make a few foes [Sir Alex Ferguson anyone]; -- but by God, deliver the silverware over at Stamford bridge!!!
Which, unfortunately for Manchester United fans [that includes you too Maina]; -- he did do.
See; -- the two can exist; -- Kenyan politicians are yet to master that art however.
www.bdafrica.com on the other hand has a lot of stuff you want to get your hands dirty in.
That includes the regulator’s view on Kenya’s current power supply situation; -- which I plainly disagree with. You cannot rationally call a country that’s ‘just’ meeting its power needs okay; -- it’s like saying it’s okay to operate with no savings.
Sure its fine; -- until the crap hits the fan; -- then you’re really in funk.
Don’t take my word for it though; -- read it here; --
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9418&Itemid=5810
Care to invest in real estate?
You’ll need to look at a character called a speculator; -- and their effect on the market here; -- http://www.bdafrica.com/index.php?option=com_content&task=view&id=9417&Itemid=5810
The Business Life section has something on the work-life balance; -- aimed especially at women. I recommend this. Strongly.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9400&Itemid=5843
Kenya Re’s working with a nasty brand reputation. When an insurer tells you he’s only giving them premiums because the law says he has to…that’s as big a warning sign on confidence as putting up a huge neon “SHOOT ME!!” sign on your chest.
Under Eunice Mbogo though, things are slowly coming round though. Profits have been growing and the firm’s been pulling out of low-return asset classes and piling into those with higher risk-return profiles with some aplomb. Investment income was up 91% at half year.
If its sorted out the confidence issues is another issue altogether though.
But; -- confidence aside, it is looking at spinning off into other new business areas aside from just growing via breaking into new geographical markets. One of the product markets Eunice Mbogo and her team is looking at is Agriculture Re-insurance.
Say for example, you’re a wheat farmer and based on past yields, you know you can make say, 1.2 million this year from your yields. Then assume that the weather decides to really PMS…and your yields are cut down to say 600 k. The insurance company steps in and compensates you for the shortfall.
That’s one concept of how this works; -- albeit a simplistic one. More details on that foray from Kenya Re can be found here.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9410&Itemid=5812
BIZ LITE
Let’s delve into some philosophy for this morning shall we?
Relax, it’s nothing difficult or mind-bending like Plato’s The Republic. Lovely tome that; -- if you can get around the ancient English diction.
Ahem, moving along swiftly then; -- I’m willing to bet that 90% of the people reading this have never heard of a certain South African called Jonathan Rubald Ruel.
I’m also willing to lay money on the notion that if I add Tolkien to the end of that statement; -- the recognition rate will rise by tiny fraction; -- say 10 percentage points.
So it’s more or less safe; -- from the above theory --; to assume [with sound reasons, since Kenya’s hardly a reading nation…as much as it is a drinking nation]; -- that if I use an example of how to use information to ones advantage from the fore-mentioned author of the Lord of the Rings; -- I’d have to toss in a few footnotes.
The publicity stunts from politicians, who provide the bulk of news in this our country; -- very well managed stunts I may add --; are now starting to pile up.
President Kibaki in the Maasai Mara with the family’s a great publicity stunt. Frankly; -- it’s a major turn in public engagement for the man.
The animals should benefit from the added publicity in the long run, since some of us will be thinking of taking our other halves [or weekend clandes for that matter, Kenyan being what it is] out for a little holiday...and we build the industry along the way.
The politicians benefit; -- Kibaki looks like he’s actually working.
Najib Balala conveniently provided a reminder of what Nyayo-era sycophancy was really like with that “Tourist number one’ statement in reference to the Head of State.
That’s one foot-in-mouth faux pas which his handlers need to tell him to avoid.
And at the end of the day; -- well, Kenya looks like a democracy that’s had a bad cold [which cost us something in the region of 1 000 lives and a couple hundred billion shillings], but we’re now getting round to actually working, you know, we’re recovering!!
Oh; -- plus for media hacks like my competitors over at KTN and the Standard; -- you get a scoop, lots of face time to build brands and do things that you can list on your CV with pride. They worked for it though; -- don’t ever discount that --; so they duly deserve the accolades that come with it.
You see, the major irony here is that at the end of the day; -- we’re being bombarded with information from every angle…and how many of us actually are sitting down and taking that information apart, asking what the agenda behind all that data is?
Don’t refer to the media in this argument…it’s about you…not professionals like me.
There’s one rather left-of-field argument about adversity in philosophical arguments; -- the Church needs the devil to have something to do.
Adversity; -- so the argument goes --; is the most, brutal, Darwinian school humanity has. Put people in a pinch and you’d be amazed how fast they learn.
In World War 2 for example; -- computers were used to determine how to lob artillery rounds so that the Brits could hammer as many Germans as they could in the most efficient way possible.
Today; -- I’ve got more processing power in my little monster of a computer at home; -- and I’m using it to play the devil’s advocate on my news sources and professionals like myself.
Information’s something you use to shape opinions and ideas in your favor. You have to feed it in with a plan; -- not just the entire shebang at one go.
Case in point; -- many people would recognize the name Tolkien, and immediately identify it with the Lord of the Rings. But if I identify him with his full set of names, sans his surname…your line of thought is derailed.
That’s feeding in the picture I want you to see; -- the PM and the President in a set of sharply co-ordinated announcements about what needs to be done at the port as a case in point.
But 7 days on; -- what’s really changed at the port? Is cargo moving any faster? Hell, we don’t even have an MD yet!!!
Here’s another case in point; -- leaks; -- supposed or actually orchestrated [look at how ZANU-PF and MDC are using this for leverage in their power-sharing talks], are a significant source for data as far as politics is concerned.
Aside from what politicians would say each time a microphone would pop up in front of them; -- we now have a 3rd dimension to the manner in which data is delivered to the public; -- publicity.
Simple, orchestrated publicity; -- which dovetails neatly into the ultra-aggressive, fiercely competitive world that’s news media.
What all this adds up to is a situation in which the public is being bombarded with data; -- but its only being done from one perspective; -- that of the politician from whence this data comes. More often than not; -- there’s very little digging behind the scenes. Partly to blame are what another profesional in this business calls "Facebook journalists."
The media will mediate, or relay if you prefer, this data to you….but that’s pretty much it.
Professionals in this business are fierce competitors; -- I’ll be the first to admit that I will gladly hand over a story to a fellow professional after I’ve broken it to you…in which case, the battle honors go to me and my team…the ‘fellow professional’ is just getting the left-over bits.
So; -- much as we’re bound by certain rules and moral codes which empower us to snoop around on your behalf, sometimes placing our lives on the line, it’s also my job to tell you that you need to consume the data I give you with moderation, and in this case; -- a lot of thought.
It’s a bit like Mercedes selling you that million-dollar Mercedes-McLaren SLR [with a very bland rear end, but one sexy-sounding engine], and then having its salesman tell you, “By the way, please note, if you have no experience driving at speeds in excess of 200 kmh, you may die in this moving sculpture of carbon fiber and leather so fine it must be a sin to have.”
So read everything political with a pinch of salt, an open mind, and the attitude of the devil's advocate .
Go beyond the glossy headlines and check if there’s a tangible result in your wallet.
Politics is a thankless, high-stakes job with a lot of demands [most of them pointless], in which you end up with a lousy reputation in 99% of the time.
So go on; -- play the devil’s advocate.
Trust me…it’s a lot of fun poking holes into what’s supposedly the truth…and its worth every second.
Kibaki’s little publicity stunt at the Mara takes in a lot of coverage this morning over at www.nationmedia.com and www.eastandard.net.
From a purely operational perspective; -- it’s a well done piece of work. Very slick work; -- worthy of a serious PR agency…complete with a 7-figure pay-check at the end of the day. Its implications, along with a few other factors is another issue altogether. You need to have a look at the headline story over at www.nationmedia.com [http://www.nation.co.ke/News/-/1056/457606/-/tjp8kr/-/index.html] and this link [http://aggregationke.blogspot.com/2008/08/information-new-opiate-of-masses.html] for a primer on what’s coming in Biz Lite.
Right; -- aside from checking out the headline at www.nationmedia.com, I would also recommend that you read the article on energy issues as well, especially this bit on how Kenya runs on a shoe-string when it comes to energy reserves.
http://www.nation.co.ke/News/-/1056/457550/-/tjp7wk/-/index.html
www.eastandard.net has its front page saturated with coverage of the President’s visit to the Mara.
Not exactly important stuff; -- until the tourism dollars do a tag team combo with either agriculture or remittances and beat the dollar-shilling rate back in the shilling’s favor.
Showmanship’s all well and good; -- just as long as there’s something solid at the end.
It’s a bit like Jose Mourinho’s approach to being Chelsea’s manager.
Be arrogant. Taking charge of a has-been always helps in this regards since expectations are generally low, and they can be blown out of the water with ease.
Cause some chaos. A few dramatic antics on the sidelines is always useful. Like telling off a referee in a live camera interview for example.
Make a few foes [Sir Alex Ferguson anyone]; -- but by God, deliver the silverware over at Stamford bridge!!!
Which, unfortunately for Manchester United fans [that includes you too Maina]; -- he did do.
See; -- the two can exist; -- Kenyan politicians are yet to master that art however.
www.bdafrica.com on the other hand has a lot of stuff you want to get your hands dirty in.
That includes the regulator’s view on Kenya’s current power supply situation; -- which I plainly disagree with. You cannot rationally call a country that’s ‘just’ meeting its power needs okay; -- it’s like saying it’s okay to operate with no savings.
Sure its fine; -- until the crap hits the fan; -- then you’re really in funk.
Don’t take my word for it though; -- read it here; --
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9418&Itemid=5810
Care to invest in real estate?
You’ll need to look at a character called a speculator; -- and their effect on the market here; -- http://www.bdafrica.com/index.php?option=com_content&task=view&id=9417&Itemid=5810
The Business Life section has something on the work-life balance; -- aimed especially at women. I recommend this. Strongly.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9400&Itemid=5843
Kenya Re’s working with a nasty brand reputation. When an insurer tells you he’s only giving them premiums because the law says he has to…that’s as big a warning sign on confidence as putting up a huge neon “SHOOT ME!!” sign on your chest.
Under Eunice Mbogo though, things are slowly coming round though. Profits have been growing and the firm’s been pulling out of low-return asset classes and piling into those with higher risk-return profiles with some aplomb. Investment income was up 91% at half year.
If its sorted out the confidence issues is another issue altogether though.
But; -- confidence aside, it is looking at spinning off into other new business areas aside from just growing via breaking into new geographical markets. One of the product markets Eunice Mbogo and her team is looking at is Agriculture Re-insurance.
Say for example, you’re a wheat farmer and based on past yields, you know you can make say, 1.2 million this year from your yields. Then assume that the weather decides to really PMS…and your yields are cut down to say 600 k. The insurance company steps in and compensates you for the shortfall.
That’s one concept of how this works; -- albeit a simplistic one. More details on that foray from Kenya Re can be found here.
http://www.bdafrica.com/index.php?option=com_content&task=view&id=9410&Itemid=5812
BIZ LITE
Let’s delve into some philosophy for this morning shall we?
Relax, it’s nothing difficult or mind-bending like Plato’s The Republic. Lovely tome that; -- if you can get around the ancient English diction.
Ahem, moving along swiftly then; -- I’m willing to bet that 90% of the people reading this have never heard of a certain South African called Jonathan Rubald Ruel.
I’m also willing to lay money on the notion that if I add Tolkien to the end of that statement; -- the recognition rate will rise by tiny fraction; -- say 10 percentage points.
So it’s more or less safe; -- from the above theory --; to assume [with sound reasons, since Kenya’s hardly a reading nation…as much as it is a drinking nation]; -- that if I use an example of how to use information to ones advantage from the fore-mentioned author of the Lord of the Rings; -- I’d have to toss in a few footnotes.
The publicity stunts from politicians, who provide the bulk of news in this our country; -- very well managed stunts I may add --; are now starting to pile up.
President Kibaki in the Maasai Mara with the family’s a great publicity stunt. Frankly; -- it’s a major turn in public engagement for the man.
The animals should benefit from the added publicity in the long run, since some of us will be thinking of taking our other halves [or weekend clandes for that matter, Kenyan being what it is] out for a little holiday...and we build the industry along the way.
The politicians benefit; -- Kibaki looks like he’s actually working.
Najib Balala conveniently provided a reminder of what Nyayo-era sycophancy was really like with that “Tourist number one’ statement in reference to the Head of State.
That’s one foot-in-mouth faux pas which his handlers need to tell him to avoid.
And at the end of the day; -- well, Kenya looks like a democracy that’s had a bad cold [which cost us something in the region of 1 000 lives and a couple hundred billion shillings], but we’re now getting round to actually working, you know, we’re recovering!!
Oh; -- plus for media hacks like my competitors over at KTN and the Standard; -- you get a scoop, lots of face time to build brands and do things that you can list on your CV with pride. They worked for it though; -- don’t ever discount that --; so they duly deserve the accolades that come with it.
You see, the major irony here is that at the end of the day; -- we’re being bombarded with information from every angle…and how many of us actually are sitting down and taking that information apart, asking what the agenda behind all that data is?
Don’t refer to the media in this argument…it’s about you…not professionals like me.
There’s one rather left-of-field argument about adversity in philosophical arguments; -- the Church needs the devil to have something to do.
Adversity; -- so the argument goes --; is the most, brutal, Darwinian school humanity has. Put people in a pinch and you’d be amazed how fast they learn.
In World War 2 for example; -- computers were used to determine how to lob artillery rounds so that the Brits could hammer as many Germans as they could in the most efficient way possible.
Today; -- I’ve got more processing power in my little monster of a computer at home; -- and I’m using it to play the devil’s advocate on my news sources and professionals like myself.
Information’s something you use to shape opinions and ideas in your favor. You have to feed it in with a plan; -- not just the entire shebang at one go.
Case in point; -- many people would recognize the name Tolkien, and immediately identify it with the Lord of the Rings. But if I identify him with his full set of names, sans his surname…your line of thought is derailed.
That’s feeding in the picture I want you to see; -- the PM and the President in a set of sharply co-ordinated announcements about what needs to be done at the port as a case in point.
But 7 days on; -- what’s really changed at the port? Is cargo moving any faster? Hell, we don’t even have an MD yet!!!
Here’s another case in point; -- leaks; -- supposed or actually orchestrated [look at how ZANU-PF and MDC are using this for leverage in their power-sharing talks], are a significant source for data as far as politics is concerned.
Aside from what politicians would say each time a microphone would pop up in front of them; -- we now have a 3rd dimension to the manner in which data is delivered to the public; -- publicity.
Simple, orchestrated publicity; -- which dovetails neatly into the ultra-aggressive, fiercely competitive world that’s news media.
What all this adds up to is a situation in which the public is being bombarded with data; -- but its only being done from one perspective; -- that of the politician from whence this data comes. More often than not; -- there’s very little digging behind the scenes. Partly to blame are what another profesional in this business calls "Facebook journalists."
The media will mediate, or relay if you prefer, this data to you….but that’s pretty much it.
Professionals in this business are fierce competitors; -- I’ll be the first to admit that I will gladly hand over a story to a fellow professional after I’ve broken it to you…in which case, the battle honors go to me and my team…the ‘fellow professional’ is just getting the left-over bits.
So; -- much as we’re bound by certain rules and moral codes which empower us to snoop around on your behalf, sometimes placing our lives on the line, it’s also my job to tell you that you need to consume the data I give you with moderation, and in this case; -- a lot of thought.
It’s a bit like Mercedes selling you that million-dollar Mercedes-McLaren SLR [with a very bland rear end, but one sexy-sounding engine], and then having its salesman tell you, “By the way, please note, if you have no experience driving at speeds in excess of 200 kmh, you may die in this moving sculpture of carbon fiber and leather so fine it must be a sin to have.”
So read everything political with a pinch of salt, an open mind, and the attitude of the devil's advocate .
Go beyond the glossy headlines and check if there’s a tangible result in your wallet.
Politics is a thankless, high-stakes job with a lot of demands [most of them pointless], in which you end up with a lousy reputation in 99% of the time.
So go on; -- play the devil’s advocate.
Trust me…it’s a lot of fun poking holes into what’s supposedly the truth…and its worth every second.
Wednesday, August 13
SAFARICOM’S TALE; -- WHO SAYS MARKETS ARE EFFICIENT?
It’s rare to see jaws dropping in the combined news rooms at Radio Africa.
Aside from Maina Kageni’s early morning antics maybe…but that’s beside the point.
A certain set of numbers have caused that effect though; -- the first is Safaricom’s share price….and the second, is the slump in the 20-share index at the NSE.
In 1994; -- the Nairobi Stock Exchange’s [then only] 20-share index slammed into the 4500 mark…and the IMF branded it as one of the best performing exchanges in the world, purely on the basis of its returns [over 1505 in Dollar terms at the an exchange rate of 45 shillings to the dollar].
In August 2008 we have the 20-share index slipping to those levels; -- and this is one bear run that has everyone in the market spooked.
The most significant aspect of this perhaps; -- and what is the most visible for the largest cross-section of Kenyans --; is the decline in the value of shares in Safaricom. At the time of its listing; -- it had a market capitalization of 50 billion shillings.
Going by the same formula; -- its worth only about 1.5 million more right now.
So; -- how did we get here?
Well, this is one interesting tale; -- and you need some aids to understand this. The first is found at this link; -- http://www.nse.co.ke/newsite/
Click on the market activity chart there; -- it’s on the bottom right corner. Found it?
Good. Here’s where the horror story starts.
[Dim the lights, drum roll please, and insert the evil laughter here]
As the chart reveals; -- the market’s rise in the wake of the post-poll violence peaked on July 10; -- that’s right that's a month to the day after Safaricom hit the market. Now, after that, things simply went south.
Between July 15-17; -- the 20-share index was below 5060 points, and it plunged from then on all the way to July 25 below 4 970 points. There was a 3 day blip in between; -- and from then on; -- the fall continued; -- faster this time --; to the 4600 level we’re at.
Correction; -- WE WERE at that point on Aug 8.
By August 12; -- the market closed at 4 558.27 points.
The frustration was evident in this extract from Aly Khan Satchu’s daily market brief.
“I am dumbfounded and we are in uncharted territory. The Fundamentals remain compelling and we can expect 1st quarter results imminently. Near term, this is now all about stop loss trading. Who said markets were efficient?”
Okay; -- so that’s the more publicly evident side of the equation.
Kenyans piled in ridiculous amounts of cash to buy shares in Safaricom; -- some of it financed from savings, some of it from what are technically called margin loans.
A margin loan is a technical term in the brokerage industry where a broker loans you cash to buy certain securities; -- usually shares --; and it holds the equity as the collateral.
Despite all sorts of advice, from all sorts of sources; -- Kenyans took these loans. Exactly how much is not clear.
Not that Kenyans would care anyway; -- since for one, “I’ve got a loan to pay back!!!” is a fairly common refrain you’ll hear.
Do the math; -- for a loan of say 100 000 shillings, repayable over 2 years, you’d have secured shares worth say…25 000 shillings, right?
We’re going by the allocation data here, since Kenyans got around 25% of what they applied for.
Now, assuming that you did sell off at the peak of 8 shillings per share, you’d have taken off a capital gain of about 15 000 bob.
So, even with 40 000 bob in hand; -- you’d still have another 60 000 shillings in principal to cover; -- and on top of that, we’re looking at an average cost in fees and interest and so on of about another 20 000; -- all of which goes into a bank’s coffers.
Please note, that this is just plain math; -- the actual figure depends on which bank you took the loan from so we’re looking at an error margin of +/-10 percentage points.
So your cash flow statements look pretty bad; -- and you’re not the only one, bank’s are taking a beating too.
I’m tempted to go into what this horror story looks like from the Bank’s side; -- but that’d makes things a touch too long and more complex.
It’s a bit like Harry Potter really; -- once you get past the 3rd book, its not the sort of thing you’d let your 10-year old [sibling or child] read…and book 7 is the darkest of the lot.
Hang on….J.K.Rowling’s still a billionaire ain’t she?
Why? Because we still bought the books for who again; -- our dear rugrats.
Well, like I said; -- markets aren’t perfect.
Aside from Maina Kageni’s early morning antics maybe…but that’s beside the point.
A certain set of numbers have caused that effect though; -- the first is Safaricom’s share price….and the second, is the slump in the 20-share index at the NSE.
In 1994; -- the Nairobi Stock Exchange’s [then only] 20-share index slammed into the 4500 mark…and the IMF branded it as one of the best performing exchanges in the world, purely on the basis of its returns [over 1505 in Dollar terms at the an exchange rate of 45 shillings to the dollar].
In August 2008 we have the 20-share index slipping to those levels; -- and this is one bear run that has everyone in the market spooked.
The most significant aspect of this perhaps; -- and what is the most visible for the largest cross-section of Kenyans --; is the decline in the value of shares in Safaricom. At the time of its listing; -- it had a market capitalization of 50 billion shillings.
Going by the same formula; -- its worth only about 1.5 million more right now.
So; -- how did we get here?
Well, this is one interesting tale; -- and you need some aids to understand this. The first is found at this link; -- http://www.nse.co.ke/newsite/
Click on the market activity chart there; -- it’s on the bottom right corner. Found it?
Good. Here’s where the horror story starts.
[Dim the lights, drum roll please, and insert the evil laughter here]
As the chart reveals; -- the market’s rise in the wake of the post-poll violence peaked on July 10; -- that’s right that's a month to the day after Safaricom hit the market. Now, after that, things simply went south.
Between July 15-17; -- the 20-share index was below 5060 points, and it plunged from then on all the way to July 25 below 4 970 points. There was a 3 day blip in between; -- and from then on; -- the fall continued; -- faster this time --; to the 4600 level we’re at.
Correction; -- WE WERE at that point on Aug 8.
By August 12; -- the market closed at 4 558.27 points.
The frustration was evident in this extract from Aly Khan Satchu’s daily market brief.
“I am dumbfounded and we are in uncharted territory. The Fundamentals remain compelling and we can expect 1st quarter results imminently. Near term, this is now all about stop loss trading. Who said markets were efficient?”
Okay; -- so that’s the more publicly evident side of the equation.
Kenyans piled in ridiculous amounts of cash to buy shares in Safaricom; -- some of it financed from savings, some of it from what are technically called margin loans.
A margin loan is a technical term in the brokerage industry where a broker loans you cash to buy certain securities; -- usually shares --; and it holds the equity as the collateral.
Despite all sorts of advice, from all sorts of sources; -- Kenyans took these loans. Exactly how much is not clear.
Not that Kenyans would care anyway; -- since for one, “I’ve got a loan to pay back!!!” is a fairly common refrain you’ll hear.
Do the math; -- for a loan of say 100 000 shillings, repayable over 2 years, you’d have secured shares worth say…25 000 shillings, right?
We’re going by the allocation data here, since Kenyans got around 25% of what they applied for.
Now, assuming that you did sell off at the peak of 8 shillings per share, you’d have taken off a capital gain of about 15 000 bob.
So, even with 40 000 bob in hand; -- you’d still have another 60 000 shillings in principal to cover; -- and on top of that, we’re looking at an average cost in fees and interest and so on of about another 20 000; -- all of which goes into a bank’s coffers.
Please note, that this is just plain math; -- the actual figure depends on which bank you took the loan from so we’re looking at an error margin of +/-10 percentage points.
So your cash flow statements look pretty bad; -- and you’re not the only one, bank’s are taking a beating too.
I’m tempted to go into what this horror story looks like from the Bank’s side; -- but that’d makes things a touch too long and more complex.
It’s a bit like Harry Potter really; -- once you get past the 3rd book, its not the sort of thing you’d let your 10-year old [sibling or child] read…and book 7 is the darkest of the lot.
Hang on….J.K.Rowling’s still a billionaire ain’t she?
Why? Because we still bought the books for who again; -- our dear rugrats.
Well, like I said; -- markets aren’t perfect.
Tuesday, August 12
SAFARICOM SHARES PLUNGE PAST IPO OFFER LEVELS!!!
Shares in the region’s most profitable firm, Safaricom, have plunged past the level at which the public bought them when they were floated; -- closing Tuesday Aug 12 trading at just 15 cents above the IPO price of 5 shillings.
However; -- the counter changed hands at between 5.50 and 4.95 per share. According to Aly Khan Satchu, an equities trader; -- the fundamentals of the company are still compelling.
Safaricom’s CFO, Les Baille, is on record as saying that even though its market-share’s expected to erode; -- pre-tax profits should keep rising “for the foreseeable future.”
From its June 9 listing; -- Safaricom slammed into a high of 8 shillings per share. Since then however; -- its been a long, slow retreat to its present levels, and those who are taking the biggest beating, are the Kenyans who took loans to buy shares in Safaricom.
On the other hand of the equation; -- if you did not buy during the IPO, and you're looking at something you can haul off in the medium-long run....rub your hands in glee and ready the arsenal to buy.Just remember...no margin loans should be taken this time round.
Monday, August 11
INFORMATION; -- THE NEW OPIATE OF THE MASSES?
Something odd is afoot in the government today; -- information is not being hidden, it’s practically being flung at the 4th estate with a level of vim and vigor not seen before.
Here’s a case in point; -- normally, getting detailed minutes of the meeting of the Central Bank’s Monetary Policy Committee, you know, the ladies and gentlemen who decide what the price of borrowing from the state should be…and by extension…what it should cost you [albeit in a narrow sense]; -- is pretty tough.
I should know, my hands have hit the buttons on my keyboard, and my mobile phone, and my office land-line so hard and so often; -- if I do it any more, I’ll break my thumb.
For the last two weeks though; -- I have been getting information from the Central Bank as soon as it’s out. Everything from indicative exchange rates, to the minutes of the MPC meeting…has been delivered to my virtual inbox without asking.
An Isolated case of a government agency getting its act together, you may argue.
Alright; -- let’s tackle that then. Here’s another regulatory agency that’s also getting its act together; -- the Capital Markets Authority.
Reports and summaries of its meetings and its nominal game plans are far more accessible under Stella Kilonzo than they ever were under Edward Ntalami et al.
That however; -- is the kind of change you’d only notice if you trawl through business news with the sort of fascination kids have for ice cream on a hot day.
A more prominent example of this comes from the least expected sources; -- politicians.
Prime Minister Raila Odinga has a fairly competent media handler in the form of one Salim Lone. Regardless of what you may think of his views; -- the fact remains that he has the basic [and critical] elements of communication at his fingertips; -- and he has managed to position to the PM to a level unseen before this mania for efficient communication took hold.
President Kibaki’s PPS unit has been fairly lethargic by comparison; -- though the Head of State’s resurgent drive to take a more hands-on approach to matters of government is clearly evident.
On August 11 for example; -- he out-flanked a commission he appointed by renewing their mandate, before they expected it to happen. On the same day; --the man also issued a fairly strong policy statement aimed at streamlining operations at the port of Mombasa and other border points leading into our main trade partners in the region; -- especially Uganda.
On the same day; -- the PM is in the coast, touring the port; -- and slamming calls from Coast MPs in which they demanded that the new Managing Director be appointed from the region.
So, on the face of it; -- one half of this political alliance tackles the politics and the other the technical issues. Key phrase; -- “one the face of it.”
The fact still does remain that these are politicians after all; -- playing the public gallery with the least possible cost [i.e. read that as no-action] is still their forte.
So; -- what’s the bottom-line here?
Much as the government’s various agencies seem to have discovered that maneuvering for publicity is important, and it has advantages, there is the risk that the audience may be lulled to sleep through this. Ditto; -- the same applies to those who transmit the messages to that audience.
It is therefore important to more vigilant, more discerning, and more questioning of these moves.
Actions build this country; -- not just well delivered words and exposure measured in column inches and minutes of talk-time on radio or TV.
Here’s a case in point; -- normally, getting detailed minutes of the meeting of the Central Bank’s Monetary Policy Committee, you know, the ladies and gentlemen who decide what the price of borrowing from the state should be…and by extension…what it should cost you [albeit in a narrow sense]; -- is pretty tough.
I should know, my hands have hit the buttons on my keyboard, and my mobile phone, and my office land-line so hard and so often; -- if I do it any more, I’ll break my thumb.
For the last two weeks though; -- I have been getting information from the Central Bank as soon as it’s out. Everything from indicative exchange rates, to the minutes of the MPC meeting…has been delivered to my virtual inbox without asking.
An Isolated case of a government agency getting its act together, you may argue.
Alright; -- let’s tackle that then. Here’s another regulatory agency that’s also getting its act together; -- the Capital Markets Authority.
Reports and summaries of its meetings and its nominal game plans are far more accessible under Stella Kilonzo than they ever were under Edward Ntalami et al.
That however; -- is the kind of change you’d only notice if you trawl through business news with the sort of fascination kids have for ice cream on a hot day.
A more prominent example of this comes from the least expected sources; -- politicians.
Prime Minister Raila Odinga has a fairly competent media handler in the form of one Salim Lone. Regardless of what you may think of his views; -- the fact remains that he has the basic [and critical] elements of communication at his fingertips; -- and he has managed to position to the PM to a level unseen before this mania for efficient communication took hold.
President Kibaki’s PPS unit has been fairly lethargic by comparison; -- though the Head of State’s resurgent drive to take a more hands-on approach to matters of government is clearly evident.
On August 11 for example; -- he out-flanked a commission he appointed by renewing their mandate, before they expected it to happen. On the same day; --the man also issued a fairly strong policy statement aimed at streamlining operations at the port of Mombasa and other border points leading into our main trade partners in the region; -- especially Uganda.
On the same day; -- the PM is in the coast, touring the port; -- and slamming calls from Coast MPs in which they demanded that the new Managing Director be appointed from the region.
So, on the face of it; -- one half of this political alliance tackles the politics and the other the technical issues. Key phrase; -- “one the face of it.”
The fact still does remain that these are politicians after all; -- playing the public gallery with the least possible cost [i.e. read that as no-action] is still their forte.
So; -- what’s the bottom-line here?
Much as the government’s various agencies seem to have discovered that maneuvering for publicity is important, and it has advantages, there is the risk that the audience may be lulled to sleep through this. Ditto; -- the same applies to those who transmit the messages to that audience.
It is therefore important to more vigilant, more discerning, and more questioning of these moves.
Actions build this country; -- not just well delivered words and exposure measured in column inches and minutes of talk-time on radio or TV.
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