Financial Standard,July 27th,2004

Nakumatt to raise Sh500m in debt market
Retailer’s plans for Sh500m notes facing trouble with CMA over profit track record, James Anyanzwa reports

Nakumatt Holdings Limited plans to raise Sh500 million using promissory notes.
A confidential prospectus obtained by The Financial Standard says that Nakumatt needs the cash for working capital mananagement.
"The notes will have tenors of less than a year and will be in denominations of 30, 60, 90, 180, 270 or 360 days, as elected by Nakumatt Holdings and will be for sale to selected investors," the report says.
The notes, which are to be issued in denominations of one million (Sh1 million) face value or such other amounts as preferred by the Nakumatt Holdings, are however unsecured and ranks with all unsecured and insubordinated debt of Nakumatt Holdings Limited.
According to the report, the short term note program will give the retail store an additional short term financing mechanism. The proceeds raised under this issue will be borrowed and used by the company to meet its working capital requirements.
Commercial Bank of Africa (CBA) has been appointed the receiving bank and paying agent for the transaction, which is yet to receive Capital Markets Authority (CMA) approval.
Sources say the regulator is reluctant to give a nod to the deal citing the capacity of Nakumatt to carry and service the debt.
According to the report, the Short term note program would provide more flexibility to Nakumatt in raising the capital than would otherwise be available through the use of commercial bank overdraft facilities alone. It is projected that if the bond program succeeds, Nakumatt’s turnover will increase from Sh3.7 billion in 1998 to Sh10 billion in 2007.
This year, the turnover is projected to increase by 15 per cent largely driven by expansion of existing branches.
"Turnover for the remaining three years of the plan is projected to increase very conservatively year on year," the report says.
To return to a firm footing, the company hopes to expand its network to cover all the major towns in the country and invest heavily in aggressive advertising through the local newspapers.
Nakumatt Holdings was incorporated in 1970 with the first chain of superstores springing up in 1982. The first Nairobi outlet was set up in 1987.
The company currently operates 10 outlets and has a central warehouse and distribution system in Industrial Area that is backed a sophisticated logistics system that ensures comprehensive support to the outlet network.
The economic environment for Kenya’s retail supermarkets has not improved much since the general election in 2002. Consumer spending power is minimal saddled by increased commodity prices.
The liberalisation of the economy has led to entry of a wide range of goods at varying prices posing stiff competition in the marker.
Besides, the consumer has become more sophisticated, demanding quality and variety.

Friday, July 23, 2004

Kenya gets Sh8 billion loan
By Benson Kathuri
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The World Bank’s executive board of directors have approved two international Development Association (IDA) credits totaling US$102 million (Sh8 billion) to expand electricity generation and distribution and help develop the micro, small and medium size enterprise sector in Kenya.

The approval was made in Washington DC last Friday even as bilateral donors threatened the country with an aid freeze citing the failure of President Mwai Kibaki’s Government to tackle new corruption.

The bank, which in 1997 spearheaded a campaign to impose aid embargo on the former Kanu regime over corruption charges, this time round appears to have broken ranks with the other development partners to keep its disbursement programme firmly on course.

The power sector funds are mainly earmarked for revitalization of the Kenya Power Lighting Company (KPLC) and to enhance KenGen’s power production capacity.

"The KPLC project aims to connect about 400,000 new consumers to the national power grid over the next five years and increase the overall access to reliable supply to meet expected increases in power demand," said Makhtar Diop, the World Bank’s resident representative. Speaking in Washington, Diop said the energy sector had been identified as critical to lowering the cost of doing business in Kenya.

But even as he spoke, diplomats mainly drawn from Western Europe were issuing ultimatums to the government – threatening to freeze aid unless the government tackles corruption.

A besieged government seems to have let the approval of the substantial amount of money to pass quietly despite the implication that the Bretton Woods institutions still have confidence in the Kibaki government’s commitment to fighting corruption.

When the Kanu government disagreed with the Bretton Woods institutions in 1997, other donors followed suit leading to an escalation in the level of poverty in the country.

Contrary to expectations, the two multilateral lenders tat are known for their fierce crusade against corruption have distanced themselves from the Anglo Leasing saga.

Though the IMF is yet to release it’s funding for the poverty eradication facility, the restoration of the country to the IMF programme early this year was seen to have been a big boost to the Narc government.

The latest funding raises the total amount received from the bank in the last one month to Sh28 billion. Last month, the Bank approved Sh20 billion towards the Northern Corridor Road project, Nairobi water project and to improve the capacity at the Ministry of Transport.

Financial Standard, July 22,2004

Kenya gets Sh160m grant for trade negotiations
By Benson Kathuri
The European Union has granted Kenya Sh160 million for trade negotiations under the Economic Partnership Agreements (EPAs), revealed a senior ministry of Trade official.

Charles Mbogori, the project co-ordinator at the ministry, says the money will be used develop skills of Kenyan negotiators.
"The money is meant for capacity building that include training negotiators and other stakeholders in order to prepare them for the crucial negotiations whose outcome will have great impact on the local economy", he said.
In an interview with the East African Standard, Mbogori who heads the EU funded Trade Negotiations Support Programme under the Kenya-European Union Post Lome trade Programme said the negotiations are a must win for Kenya.
Kenya, he said, cannot afford to lose the EU market, which is the second largest market for Kenya exports after the Comesa trading bloc.
"We must fight hard to maintain and improve the current trading position with the EU and that is why the on-going talks are so important to all of us," he said.
The negotiations which ends on December 2007 to pave way for a new trade arrangement puts the country’s exports and especially flower exports, in a very delicate position.
In the negotiations, Kenya is grouped with 13 other Least Developed Countries (LDCs), which do not necessarily need to negotiate because the "nothing but arms" arrangement accords them free access to crucial and lucrative European Union market.
"Kenya does not require the preference because it is not contractual. Your exports may be rejected at the airport of a western capital and you have no ground to complain but EPA arrangement is contractual and bidding to all the parties involved," he said.
However, Mbogori has cautioned Kenyans against high expectations saying it is still early to determine the direction of the talks that are taking place in various cities in Africa under several groupings.
Of concern, he says, is the East and South Africa (ESA) grouping where Kenya is supposed to negotiate together with other countries yet their share of trade to the Union is almost negligible.

Investor demand for KCB rights issue overshoots by 7 million
By James Anyanzwa: Financial standard,20th July 2004.

The Government has significantly reduced its shareholding in Kenya Commercial Bank (KCB). It has disposed of a 10 percent stake through a rights issue which kicked off nearly two weeks ago.

Through the rights issue, the Treasury has sold its 17 million rights at an average price of Sh6 above the quoted rights issue price of Sh49. This translated into a total of Sh102 million earnings from the sale.

The rights issue reduces the Government’s shareholding in the bank to 52,360,000 ordinary shares or 25 percent down from the original 35 per cent.

Mr James Murigu, the managing director of Suntra Stocks, the lead broker firm says, the rights issue was designed to increase the stake of individual shareholders in the bank. Other sponsoring brokers include Dye & Blair and Standard Stocks.

The success of the KCB rights issue, has led to renewed calls for increased use of similar processes in the sale of state-owned enterprises.

"It has become evident that the best way to privatise our state corporations, especially those that need new funds for development and expansion is do a rights issue," Murigu told The Financial Standard in an interview last week.

"The process reduces the Government’s shareholding but more importantly, enables the corporation to raise the funds it needs for development," he added.

Throughout last week the rights issue traded an average of three million shares every day leading to a complete take up pf the 17 million shares in the first six days of the three-week process.

"A seven million excess demand was experienced by the time the last 2 million government rights were being sold," Murigu said.

"We had anticipated the current demand for the rights to be 10 million and mostly from individual investors."

KCB expects to raise some Sh2.5 billion from the rights issue by August this year when the books will be closed.

The bank hopes to utilise the proceeds to fast track its transformation process and strengthen its balance sheet by raising an extra Sh51 billion in deposits and loans.

The rights have enabled 120,000 Kenyans own a piece of the bank, out of which 118,000 are individual investors.

Thursday, March 25, 2004

Investment conference opens
Standard Reporter

An international conference to sell Kenya as an investment destination kicked off in Nairobi yesterday.
Officially opened by President Mwai Kibaki, the conference is designed to showcase Kenya as the most attractive place in East Africa to invest.
The major conference is expected to attract crucial investment capital to jump-start the economy.
Speaking at the conference, the President said the government’s reform programme outlines its plans for economic recovery.
He said his Government would address insecurity and promised to develop a comprehensive investment programme that will transform Kenya’s economy into the most "vibrant, stable and investor friendly in the region".

Kibaki pledges key investment reforms
By Tom Mogusu -East African Standard, March ,24, 2004

President Kibaki yesterday promised investors radical reforms to improve the country’s investment climate.
The reforms initiated over the last 15 months, he said, will lead to fundamental change in the country’s waning investment landscape.
To achieve this goal, he said, the government would reverse the serious challenges the country has faced in the last two decades characterised by low Gross Domestic Product (GDP) and declining economic activity.
"My Government was elected 15 months ago to change the situation, and Kenyans want a better deal. My Government is aware that this is only possible if those who create wealth are given a better operating environment," he said.

The three-day Conference at the Kenyatta international Conference Centre is to showcase Kenya as the best investment destination in this region and has attracted investors from around the world. Former British minister Baroness Lynda Chalker was one of the keynote speakers.
Kibaki led a high powered group of ministers to the meeting which was also attended by the Vice President Moody Awori, members of the diplomatic corps, local and foreign investors. President Kibaki said it was unfortunate that corruption had contributed to Kenya’s economic decline over the years.
To arrest this state of affairs, President Kibaki said the Government had enacted the Anti-Corruption and Economic Crimes Act, the Public Officer Ethics Act and the Public Audit Bill 2003.
"These legal reforms are a deliberate and systematic actions to stem corruption, which has in the past been cited as the single biggest obstacle to the flow of new investment into this country," he added.
The President said the Government was continuously working towards improving the investment climate in Kenya adding that the foundation for increased investments had already been laid.
He said reforms will include changes in the legal framework in a bid to revise simplified procedures that govern new investments and privatisation.
The president promised investors that an Investment Bill will be published in the next few days and will be tabled for debate in Parliament.
Kibaki said his Government will also move ahead to address insecurity by enhancing the capacity of the police force through re-training.
"This year alone, we are releasing 600 vehicles to the force," he said and cited that the capacity of police in Nairobi and Mombasa will also be doubled."
The Privatisation, Procurement and Financial Management Bills, he said, are to be re-published and tabled in Parliament’s next session that begins next week.
Kibaki further revealed that his Government has developed a comprehensive investment programme that will transform Kenya’s economy "into a vibrant, stable and investor friendly in the region". He said the cost of electricity, which has been cited as a major constraint, will be reduced to minimise manufacturers operation costs.
"The Government has also set a target of 150,000 new customer connections per year," he said.
The government’s reform program, he said, outlines the actions that will be implemented towards economic recovery strategy. He said permanent secretaries, heads of departments and Chief Executives of parastatals are also being placed on performance contracts.
"We are also implementing an E-government strategy for the entire public sector. These measures will enhance efficiency, reduce corruption and transaction costs," he told the well attending meeting.

He said the Government has also started pursuing public-private sector partnerships as a way of encouraging investments.
Kibaki appealed to foreign investors to enter into joint ventures with local entrepreneurs and announced that sugar companies and cotton processing factories are earmarked for privatisation.
"Opportunities also exist in export-oriented agri-business, horticulture and processing of oil crops, in addition, there exist excellent possibilities for investment in large irrigation schemes such as Hola, Bura, Perkerra and Yatta."
He told investors to invest in the small enterprises directly, or provide credit "that is necessary for the growth of the sector."
"There exists a reservoir of productive micro- and small enterprises that could easily be sub-contracted by large firms to produce intermediate products and input to large manufacturers."
He said the reforms will also directed towards the telecommunication sector. The sector’s reforms, he said, will include the licensing of a second national fix line operator, licensing of a third mobile operator and the liberalisation of Vsat facilities.
"These activities are aimed at enabling Kenya to become an ideal location for companies, operating in East Africa and the Great Lakes region," he said. Kibaki also urged the investors to consider investing in Information Technology-based industries and related services.
"Such investment would take advantage of the huge pool of IT experts and professionals in this country who are globally competitive," he said.

Kenya to host investment talks

By NATION Reporter
Wednesday, February 4, 2004

Nairobi is to host an international conference to promote investment, especially in agriculture.

It is a follow-up of another in November which targeted domestic investors as the country struggles to increase investment to boost the economy. It is organised by the Government and the Commonwealth Business Council.

Titled Kenya 2004, the talks will be held at the Kenyatta International Conference Centre on March 24-26, Planning and National Development minister Anyang’ Nyong’o said yesterday. more…

Italians to start cruise ships in Lake Victoria
By JOHN OYWA

Wednesday, January 21, 2004

Italian investors want to start a boat and cruise ship business in Kisumu.

The Italians have been negotiating a partnership with the Lake Basin Development Authority. The authority’s chairman, Mr Zablon Owigo Olang’, confirmed that consultations were going on.

Details remain scanty but Mr Olang’ hinted that the venture could see the introduction of cruise ships on Lake Victoria. more…

Turnover rises to Sh183m
By NATION Correspondent

Wednesday, January 21, 2004

Buoyed by robust volumes, turnover soared to Sh183 million from the previous day’s Sh78 million.

The number of shares traded stood at 2.8 million against 1.4 million posted previously while the NSE 20 share index was up 4.50 points standing at 2877.93. more…

Beiersdorf revamp its regional plan
By John Oyuke

The German multinational, Beiersdorf East Africa, is reviving its business plans after surviving a scare of hostile take over of its parent company.

Shareholding in Beiersdorf AG, the giant maker of Nivea, Elastoplast, Solea and Limara range of products has been in contention for over two years since the largest shareholders and a leading insurance company, Allianz AG, decided to dispose of their shares. more…

Athi River Mining to Invest Sh700m

The East African Standard (Nairobi)

December 4, 2003

Tom Mogusu
Nairobi

Cement manufacturer, Athi River Mining (ARM) yesterday announced plans to invest Sh700 million into a new clinker plant.

Mr Pradeep Paunrana, the company’s managing director, said the investment is expected to help the firm cut manufacturing costs and increase its production capacity.

Commissioning of the new plant is fixed for 2006 when growth in the domestic cement consumption is expected to reach peak. More

BUILDING STRONGER LINKAGES BETWEEN AFRICA AND ASIA

Alioune P. Ndao
Managing Director
AFRIFINANCE Ltd

The Third Africa-Asia Business Forum will be held in Dakar, Senegal from January 12 to 14, 2004. The event is organized by AFFRIFINANCE with support from UNDP and the Japanese Govt. It is expected that 300-450 business executives and entrepreneurs from 17 Africa and Asia will use the meeting to form new business strategic business relationships and even initiate joint venture business partnerships.

Among the key features of the event will be a banking seminar to sensitize and inform the banking community with regards to the business opportunities and benefits of the AABF process. The Forum will also cover the following industry sectors: agro-industry and food processing; building materials, construction and engineering; ICT; medical equipment and pharmaceuticals; textiles, garments and leather products.

Companies willing to participate in the forum are requested to contact AFRIFINANCE Ltd directly at the details listed below and kindly forward their response to IPC.

AFRIFINANCE Ltd
2 Place de l’Indépendance Immeuble SDIH 4ème étage
B.P. 2127 Dakar RP (SENEGAL)
Tel: (221) 822 25 39 – Fax: (221) 822 46 83
E-mail:[email protected]
Website : ../aa

IMF EXPRESSES FRESH CONFIDENCE IN KENYA

24th November 2003

 The IMF announced on Saturday that it was going to resume lending to Kenya. It was announced that Kenya would receive loans totalling to about Sh. 19.5 billion ($253 million) over the next three years. About Sh. 2.772 billion will be available immediately. More….

IPS increases investment by Sh2.5 billion
By ISAAC ESIPISU
Daily Nation
Tuesday, November 18, 2003

Industrial Promotion Services (IPS) has announced a capital increase of Sh2.5 billion in its East African investments.

The Aga Khan Fund for Economic Development (AKFED), a member of the overall Aga Khan Development network, and affiliated entities will, upon completion of the investment, hold a majority share capital of 51 per cent.

The International Finance Corporation (IFC) will hold 15 per cent while the German organisation DEG will hold 14.5 per cent, with the remainder going to other institutional and individual investors. more…

The Investment Promotion Centre (IPC) opened a new chapter in its operations with the introduction of extensive Information and Communication Technology (ICT) facilities. The new technology is part of a long-term objective to make the Investment Promotion Centre a world class investment promotion agency within the next three years, as well as a wider government strategy to “Computerize the entire system of investment-related offices including the immigration, customs, security vetting services, lands office, and registrar of companies (among others) to ensure that investors and the Investment Authority have real time access to relevant data and information.”  

IPC’s INVESTMENT CAMPAIGNS BEGIN TO BEAR FRUITS:

Following the Center’s Outreach campaign in promoting Kenya as a premier investment destination in various countries in the last quarter of the year 2002 and the first quarter of 2003, a number of inward delegations have been planned to come to Kenya with a view to exploring investment and trade opportunities. .