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.