Kenya Insights

Category: Business

  • Why Former BOC Kenya Chairman Has Moved To Block Carbacid Takover Of BOC

    Why Former BOC Kenya Chairman Has Moved To Block Carbacid Takover Of BOC

    Billionaire businessman Ngugi Kiuna is seeking the termination of the Carbacid Investments’ buyout of BOC Kenya after filing an objection to the deal at the Capital Markets Tribunal citing undervaluation.

    Mr Kiuna, a former BOC Kenya chairman, said the Capital Markets Authority (CMA) erred in approving the takeover by ignoring the undervaluation of BOC besides disregarding the protection of interests of minority shareholders.

    The tycoon, who holds 1.4 million BOC shares equivalent to a 7.6 percent stake, filed the appeal on March 1, 2021.

    The legal action means that the buyout process, which was scheduled to close on April 6, 2021 will be put on hold until the issue is determined.

    Carbacid and Aksaya Investments LLP, a firm controlled by its major shareholder Baloobhai Patel, have teamed up to offer BOC investors a buyout price of Sh63.5 per share or an aggregate of Sh1.2 billion.

    “That the approval granted by the first respondent in respect of the proposed takeover offer by Carbacid Investments Plc and Aksaya Investments LLP to acquire up to 100 percent of the issued ordinary shares of BOC Kenya Plc be set aside in its totality for being invalid, null and void ab initio,” Mr Kiuna said.

    The businessman laid out the grounds for his contention that Carbacid’s offer is inadequate. He said that as of December 31, 2020, BOC had Sh1.1 billion in cash and cash equivalents alone.

    The company holds 14.8 million shares in Carbacid currently worth about Sh180 million. Mr Kiuna said that BOC has not revalued its freehold land and buildings at market rate, adding that they are grossly undervalued at the stated historical value of Sh46.4 million.

    “The information presented in the [BOC] financial statements is incorrect, not up to date and misleading, with some entries having been exaggerated and others understated,” he said.

    Dyer and Blair Investment Bank, the independent financial advisor hired by BOC to review Carbacid’s offer, said that the bid undervalued the company by 30.8 percent.

    Dyer and Blair stated that BOC share was worth Sh91.76 a piece, valuing the firm at Sh1.7 billion. This is Sh552 million more than Carbacid’s total bid price of Sh1.2 billion.

    The board of BOC agreed with the investment bank’s assessment and told shareholders to make up their own mind with regard to the merits of Carbacid’s offer.

    This came after BOC’s majority shareholder, BOC Holdings, had already committed to sell its 65.38 percent stake to Carbacid at the Sh63.5 per share offer price.

    Mr Kiuna filed documents which he said demonstrate that the CMA went out of its way to accommodate Carbacid’s takeover bid, including by relaxing the buyout conditions and aiding information blockage.

    “The proposed takeover offer is not conditional as to acceptances and therefore its success is guaranteed and the level of acceptances by the minority shareholders in [BOC] is inconsequential,” Mr Kiuna said.

    The CMA on its part has insisted that all the relevant disclosures to BOC shareholders have been made and it is upon them to make their own individual decisions.

    “The Authority has also noted the contents of the final independent financial advisor circular and is satisfied that the circular contains material information … that the shareholders of BOC Kenya and their independent professional advisors would reasonably require or expect to be informed about in relation to the offer,” the CMA wrote to BOC’s board on February 15 this year.

    This was the same stance taken by the regulator in 2018 when it refused to wade into allegations that US conglomerate Seaboard Corporation was undervaluing Unga Group in its bid of Sh40 per share.

    The regulator, however, appeared to take a tougher stance in earlier buyout deals, including scuttling BOC’s previous bid to acquire Carbacid.

    BOC announced its intention to buy Carbacid in December 2005. Shareholders of both companies were happy to conclude the transaction but the CMA was not satisfied with the manner in which BOC waived its minimum threshold for acceptances, freezing the deal until October 2009 when it was called off.

    Mr Ngugi becomes the second high-net-worth Kenyan to protest a buyout of a Nairobi Securities Exchange-listed firm on the basis of undervaluation, among other grievances.

    Centum Investment Company, controlled by billionaire investor Chris Kirubi, in 2014 filed cases at the High Court and the CMA tribunal to challenge the buyout of agricultural firm Rea Vipingo by British brothers Richard and Jeremy Robinow.

    The brothers had initially offered to buy out the company’s minority shareholders at Sh40 per share but were later forced to more than double it to Sh85 per share as part of a settlement with Centum.

    The investment firm had sued the CMA for approving the duo’s revised bid of Sh85 per share despite the fact that it was contingent upon the sale of part of Rea Vipingo’s land on unspecified date and price.

    This is the latest business dispute involving Mr Kiuna, who has launched legal battles to defend his rights in various companies including Old Mutual Life Assurance Company (OMLAC) and liquor distributor Maxam Limited.

    He filed a suit arguing that OMLAC’s shares were undervalued in the company’s merger with UAP Holdings. He also sued Dutch brewer Heineken International for ending the exclusive local distributorship of his company Maxam by appointing other sellers.

    He was awarded Sh1.8 billion, which the multinational disputed in an appeal. Mr Kiuna’s business interests include stakes in Maiden Lane Investments Limited, Proctor & Allan (EA) Limited and land holdings in Tatu City.

    (BD).

  • Rapper Jay-Z Signs A Music Streaming Deal With Twitter Founder Jack

    Rapper Jay-Z Signs A Music Streaming Deal With Twitter Founder Jack

    What’s the cost of mission drift? For Jack Dorsey, the founder of Square, it’s more than $4 billion by one measure. That’s the amount of market value that investors swiped from the payments company on Thursday morning after it handed over $297 million to superstar rapper Jay-Z and put him on its board.

    Dorsey’s $100-billion behemoth is buying streaming music service Tidal from Jay-Z. The payments firm can easily swing the bill, but the rationale is head-scratching. Companies that creep into other adjacencies find even small deals bring big headaches.

    Six years ago, Jay-Z launched Tidal after buying control of its Swedish parent for $54 million. The vision was bold. A music platform for artists owned by artists – including Kanye West, Daft Punk and Madonna – with crisper sound and better royalties. It never fully took off with the public at least — estimates for Tidal’s subscribers range anywhere from 1 million to 5 million according to press reports. Spotify Technology, by contrast, has amassed 155 million customers.

    Square believes the acquisition of Tidal squares with its own goal of “economic empowerment” extending now to musicians. The payment ecosystem could help artists sell more merchandise or tickets perhaps. But beyond e-commerce, it’s hard to see how Square’s expertise will generate more subscribers already tuned in to Amazon.com, Apple and Spotify.

    True, under Dorsey’s leadership Square has done exceptionally well, even if he splits his time running Twitter. Square staked out territory with small businesses with an easy-to-use point-of-service system, and shareholders have been rewarded. In five years, its stock is up nearly 2,000%.

    But as Thursday’s stock decline suggests, drifting has a cost. Verizon Communications, for instance, swayed from selling mobile-phone services when it bought AOL and Yahoo, two dying internet firms, for around $9 billion only to write down most of the value. Square may have no problems right now, but Jay-Z could very well bring one in the future.

  • How the proposed Landlord and Tenant Bill will tame rogue Landlords

    How the proposed Landlord and Tenant Bill will tame rogue Landlords

    Leader of Majority in the National Assembly Hon. Amos Kimunya has sponsored a Bill that aims to change the current laws governing the rights of both Landlords and tenants in commercial and residential property.

    If adopted, the proposed Landlord and Tenant Bill 2021 will see rogue Landlords who evict tenants and seize their belongings over rent arrears jailed for up to six months or pay a fine double the amount in dispute.

    “A landlord and any agent or servant of a landlord who evicts a tenant without the authority of a tribunal or willfully subjects a tenant to any annoyance with the intention of inducing or compelling the tenant to vacate the premises or to pay, directly or indirectly a higher rent for the premises commits an offence,” Kimunya’s bill read in part.

    According the Bill, landlords will not seize any tenant’s property over default in rent payment without following the due process of the law as the Landlords will also be compelled to keep signed records of all the rent paid and share the record with the tenants.

    Landlords who fail to keep such records which must include the  details of the parties to the tenancy, details on the rented premises and of all rent paid will be compelled to pay a fine not exceeding one month’s rent.

    The Landlord and Tenant Bill further clarifies in a scenario where a tenant dies or abandons the premises while in rent arrears, landlords will have to apply to the tribunal to sell or dispose of the tenant’s belongings.

    “Before the landlord calls or otherwise disposes of a tenant’s property, an inventory of the goods in the premises shall be taken by an officer of the tribunal and be filed in the tribunal,” the Bill read.

    But if a member of the tenant’s family or an administrator of the estate claims the property within six months, the landlord will be compelled to deposit excess proceeds from the sale of the tenant’s belongings after deducting rent arrears or expenses incurred in the auction.

    “The Bill seeks to introduce a legal framework which balances the interests of landlords and tenants in a free market economy by ensuring that landlords earn reasonable income from their investment in housing and also protects the tenant,” says Amos Kimunya in a memorandum accompanying the legislation.

    Majority Leader in the National Assembly Hon. Amos Kimunya . He is the sponsor of the Landlord-Tenant Bill [p/courtesy]
    The draft legislation proposes the establishment of a tribunal through the Judicial Service Commission (JSC) whose function will be to adjudicate disputes brought forward by landlords or tenants.

    The tribunal, with five full-time members, will be chaired by a person qualified to be appointed a High Court judge, a deputy chairperson that has served as an advocate and three members, one of whom should have expert knowledge of valuation of premises.

    The Bill will also give sitting tribunals powers to give determinations that will be binding to both landlords and tenants. For example, the tribunal can determine, assess or vary the rent payable in any premises and tenancy period. It can also determine the service charge payable on a given property, the much each tenant in the building should contribute and demand payment of rent arrears or service charge.

    The tribunal will also have the power to compel landlords to carry out repairs that they are liable for or authorize tenants to pay for the repairs and deduct the same from their monthly rent. Failure to comply with the decision of a tribunal or honoring summons will attracts a fine of up to Sh100,000 or a one-year prison term, or both.

     

  • Betika Delays Payment For Betting Winner For Two And A Half Years

    Betika Delays Payment For Betting Winner For Two And A Half Years

    Imagine placing a bet and receiving a confirmation message that you have won the bet but the betting firm refuses to pay you! This was the predicament in which Timothy Muchina, an avid punter, found himself in when a betting company delayed for two and half years to pay his winning prize.

    According to Muchina, he placed a winning bet on the ‘sababisha daily jackpot with Betika’ on 8th July 2019 and the bet was successful for a winning prize of Kshs 50,000. However, he did not receive his betting prize by the following day as per the regulations of the firm and despite making numerous calls to the customer care and follow up; the money was not hitting his account.

    The continuous unresponsiveness by the betting firm pushed Muchina to lodge a complaint with the Betting Control and Licensing Board (BCLB)–the body mandated to regulate and control betting, lotteries and gamming in the country–but the board failed to investigate the matter prompting him to seek the intervention of the Office of the Ombudsman.

    The Commission by a way of inquiry took up the matter with the Chairman of the BCLB leading to the payment of the winning reward to Mr. Muchina by Betika on 28th January 2021.

  • Kenya Power in ambitious plans to launch electric car charging stations

    Kenya Power in ambitious plans to launch electric car charging stations

    The loss making Kenya Power is planning to introduce electric car charging stations as part of its initiatives to open up more revenue earning streams as the world moves from a fossil fuel-driven economy to one that is sustainable, green and attempts to mitigate climate change.

    The electricity retailer plans to build charging stations and flatten the hurdles of using the electric cars in as Kenya joins the Western nations in embracing the new model of cars that don’t rely on diesel or petrol.

    Kenya-Power announced the ambitious plans despite analysts’ warning that electric cars will not attract the African market unless governments lobby and push for policies that would see a reduction in their prices.

    “We are developing appropriate infrastructure and building internal capacity to enable us to support the use of electric vehicles across the value chain. To this end, we plan to set up charging facilities across the country beginning with Nairobi to support direct charging of vehicles,” said Kenya Power MD Bernard Ngugi.

    Mr Ngugi, however, did not disclose any set deadlines the electricity distributor is expected to install the electric car charging stations along major highways and shopping malls.

                                                                                                               [p/courtesy]
    The big announcement comes after Kenya Electricity Generating Company (KenGen) also announced its plans to invest in the growing electric car charging system to reap from car owners who will need their cars charged.

    US, Germany, Norway and Netherlands are some of the countries in the world that are hell bent to cut down excess carbon emission by embracing electric cars, a model that is still expensive for many to afford in places like Africa.

    An electric car is about Sh6 million but the Kenyan car market is flooded with imported second hand cars from Japan or China.

    Only Nopia Ride, a taxi company that uses electric car has been able to heighten up its operations in Kenya with charging stations installed in three locations including the Two Rivers Mall, the Hub Karen and Thika Road Mall.

     

  • HELB And Safaricom Launch Students Loans Smart Payment Solution

    HELB And Safaricom Launch Students Loans Smart Payment Solution

    Higher Education Loans Board (HELB) and Safaricom (NSE: SCOM) has today partnered with to roll out a smart mobile payment solution for students of tertiary institutions to access and utilise their loans and bursaries.

    The solution will aid HELB to promote responsible spending with the funds locked for specific allocations, such as tuition or library fees only accessible to the specific Paybill account of the recipient’s University or TVET institution. The students upkeep allowance can now also be transferred into the student’s M-PESA wallet for everyday use.

    “Technology today is not only revolutionizing every aspect of our lives but also creating opportunities to enhance efficiency and accountability. We are pleased to support the Higher Education Loans Board to deploy a solution that suits the digital lifestyle of students in tertiary institutions,” said Sitoyo Lopokoiyit, Chief Financial Services Officer, Safaricom.

    Students can access the system through HELB USSD and the mobile app once completed from where they will view their loan allocations, current balances, statements and make payments.

    HELB disburses over KSh. 15 billion to over 200,000beneficiaries annually. Part of the loan is usually channeled directly to the learning institution to settle part of the tuition and accommodation fees while the rest is sent to the student for upkeep.

    The solution will create efficiencies for all stakeholders by reducing queues during registration as students can now pay through their mobile phones. There will be effective management and monitoring of all loans throughout the loan lifecycle.

    “The rollout of this smart solution marks a major milestone in our digitization journey. It not only enhances efficiency in our operations, but also enables us to step up the experience of beneficiaries, who are digital natives. The solution will allow the student to access and make transactions within the solution’s ecosystem,” said Charles Ringera, HELB’s Chief Executive Officer.

    The platform grants HELB visibility of funds from various sources, which it can aggregate, reconcile real-time and report to its financiers. Continuing students can receive notifications and utilize a financial planning tool on the portal; while those who have graduated can track their repayments and generate statements.

  • Britam Is Retrenching 138 Staff

    Britam Is Retrenching 138 Staff

    Insurance group Britam Holdings #ticker:BRIT is set to retrench up to 130 employees, mostly in its Kenyan operations in a process that could cost it up to Sh700 million.

    This is the second wave of layoffs at the company, which spent Sh664 million to let go of 110 employees in 2018.

    The new retrenchment kicked off on February 26 and will run until the end of May, featuring a voluntary early retirement (VER) programme and the elimination of some roles, including 10 top executive positions.

    Britam says the move has been necessitated by the company’s financial and share price underperformance relative to its peers, adding that its current staff costs remain bloated.

    “Over the past few years Britam has been plagued with inconsistent results performance that has heavily impacted on its perception amongst the investing community, thereby keeping its share price depressed,” the Nairobi Securities Exchange-listed firm said in a statement.

    “There is a need to address both the inconsistent market approach and high operating costs to ensure a more credible results performance in future.”

    The insurer added that the remuneration of employees accounts for half of its operating costs.

    The company says it could cut 10 to 15 per cent of its total workforce which stood at 923 in December 2019, according to the latest available disclosures.

    This places the estimated job cuts at 138. Most of the layoffs will be in the Kenyan operation – its biggest and which employed 624 people or 67.6 per cent of the total staff count at the end of 2019.

    Britam says employees whose roles have been affected by the restructuring are eligible to apply for the VER (early retirement).

    The exit package includes compensation for accrued leave days, the balance of medical cover for 2021 and notice pay as per individual contracts.

    The company also said it would make ex-gratia payments above the statutory minimum of 15 days for each year of service, subject to board approval.

    Those who would not have applied and their roles impacted by the restructuring will lose out on some of the benefits and will be given a one-month redundancy notice.

    The company spent a total of Sh3.9 billion on staff costs in the year ended December 2019, eating 10.7 per cent of the total income of Sh36.4 billion in the period.

    Paper losses

    In the half-year ended June 2020, Britam slid into a net loss of Sh1.63 billion from a net profit of Sh1.67 billion a year earlier.

    The loss was largely caused by paper losses on its listed equities investments, including stakes in Equity Group and HF Group as the Covid-19 pandemic intensified the bear run on the Nairobi bourse.

    The new retrenchment is being implemented under the leadership of the new chief executive Tavaziva Madzinga who was appointed on February 1, replacing Benson Wairegi who had been with the company for four decades.

    Mr Madzinga, a Zimbabwean national who previously served as the chief executive of Old Mutual’s Kenyan business, has been tasked with boosting returns for Britam’s shareholders.

    Britam has grown shareholder wealth by nearly two per cent, including dividends since its initial public offering in September 2011 when it went public at an offer price of Sh9 per share.

    (BD)

  • Kebs Ban 27 Tissue Brands Over Poor Quality

    Kebs Ban 27 Tissue Brands Over Poor Quality

    The Kenya Bureau of Standards (Kebs) has suspended 27 brands of consumer tissue whose products such as toilet paper and handkerchiefs it said are substandard.

    Kebs managing director Bernard Njiraini said the firms had not complied with Kebs standards including those that prescribe the quality of products.

    “They have not complied with various parameters including quality,” said Mr Njiraini in response to Business Daily queries.

    Kebs subsequently asked retailers to withdraw the 27 brands from their stores with immediate effect.

    “Following market surveillance on toilet paper brands in circulation around the country Kebs detected non-compliances with the requirements of the Standards Act Cap 496, Laws of Kenya,” said Kebs director of market surveillance Peter Kaigwara in a letter to the Retail Traders Association of Kenya (Retrak) chief executive Wambui Mbarire.

    “We request your good office to notify your members to withdraw these brands from your outlets across the country until further notice.”

    Some major brands among those banned include Cosy by Kim Fay Limited, Poshy by Jubilee Tissue Industries, Bloom by Tissue Kenya Limited, Tosha by Interconsumer Products, Peacock by Twiga Stationers and Printers, and Tulip by Phoenix Paper Ltd.

    Others are Imara by Purex Holdings, Sofken by Ameriken Limited, Law Prima Kenya and Uno by UAE, Sunrise by Mikeline Ltd and Meek and Lucao both by Benco investment.

    Retrak CEO Wambui Mbarire said retailers had already complied with the Kebs order.

    “Yes (we have complied),” she said in response to Business Daily queries.

    Other brands affected by the order include Best by Zaam industries, Rapras by Rapra Limited, Tiny by Tim Trade, Mwangaza by Amonah Ltd and Jambo by Zaam.

    Also included in the list includes Violet by Phoenix, Purex, Lona and Taji by Nasco Paper, Stelly by Newstelly Ltd, and Nice one by UR Home International.

    Mr Njiraini said among breached standards by the firms include health and safety aspect where Kebs warned some of the products could cause spread of diseases, PH- Low and high where Kebs warned some products could cause burns and bruises to the body tissues.

    Some tissues breached the moisture content standard with high moisture content that could encourage proliferation of microorganisms.

    At the same time some products breached standards for dimensions, grammage, number of sheets per roll, perforation and tensile strength.

    (BD)

  • Report: 16 Wealthy Kenyans axed from ultra-rich list by covid-19

    Report: 16 Wealthy Kenyans axed from ultra-rich list by covid-19

    A report compiled by Knight Frank has seen sixteen wealthy Kenyans dropped from the list of Kenyan billionaires with the demotion being blamed on the covid 19 pandemic that has ravaged businesses across the globe.

    According to the Knight Frank Wealth Report, Kenyans with a net worth of at least $30 million (Sh3.3 billion) shrank from 106 in 2019 but there still hopes that it will grow to 110 by 2025 if the pandemic is defeated to allow full reopening of economies.

    African billionaires have been the most affected by the pandemic with up to 88% of the respondents including financial institutions saying that covid-19 still remains their biggest threat.

    The pandemic has resulted to serious corporate losses, lay offs and  freezing of dividends in firms owned by the ultra-rich Kenyans. Nairobi Security Exchange for instance saw bear run in 2020 due to depreciated property prices which due to the lock downs and travel restrictions among other rules to stem covid-19.

    Equity Bank CEO Dr James Mwangi [p/courtesy]
    The report further reveals that the measure of the investor wealth fell by Sh220 billion while the NSE All Share Index went down by 9.28 % between January and December 30 when the blue chip NSE 20 share Index also shed by by 30.19 %.

    Kenya is ranked fourth among African countries with individuals with more than Sh3 billion. Nigeria tops the list with 867 super rich people followed by South Africa (742) and Egypt with 583.

    But the Knight Frank wealth report feared being dragged in the ongoing hustler vs the dynasty debate and therefore did not name any individual but hinted at the families of former presidents Jomo Kenyatta and Daniel arap Moi and the late powerful minister Nicholas Biwott as some of the country’s ultra rich.

    Billionaire Chris Kirubi who is among top Kenyan investors who recorded losses at the NSE last year is still boasting of a net worth of over Sh 3 billion even after the market value of his 30%  stake in Centum Investment shed by close to Sh2 billion. His stake is now worth sh3.4 billion after he bought an additional 5.7 million shares.

    Dr James Mwangi of Equity Bank also suffered a loss of Sh2.6 billion with many billionaires also recording paper losses running into hundreds of millions of shillings from their listed equities portfolio with the lender.

    The wealth report shows that other billionaires who suffered losses with the lender like James Ndegwa, Andrew Ndegwa,  Baloobhai Patel, James Ndegwa and John Kibunga Kimani are still listed in the club of ultra-rich.

     

  • Firm Seek To Stop Rebranding Of Silverstone Air Over Unpaid Debt

    Firm Seek To Stop Rebranding Of Silverstone Air Over Unpaid Debt

    The once popular airline Silverstone is plotting for a comeback under new name. The airline has already informed the Kenya Civil Aviation Authority(KCAA) over their intention to rebrand to Jetlite Air Limited in a strategic direction to steer clear from the negative publicity the airline received in the heights to its suspension by the regulator in 2019.

    While making the bed for a comeback, Silverstone in a PR interview said that they’ve met most of their debt obligations. The firm says that they’ve paid off 85% of their debts including tickets repayment and money owed to suppliers.

    Even though it was faulty old planes, security threats that led to the halt of the wheels, Silverstone in the interview attribute their fall to competitors in the market who were jealous of their success.

    Trouble for Silverstone started in 2019 when it experienced a series of minor accidents, forcing it to suspend scheduled passenger services. In October 2019, one of its DHC-8-300s skidded off the runway at Nairobi Wilson, injuring two of the 50 passengers on board. In November the same year, another one of its Dash-8-300s made an emergency landing at Eldoret after one of its wheels came off.

    This prompted the Kenya Civil Aviation Authority (KCAA) on November 12, 2019, to temporarily suspend Silverstone’s Dash 8 turboprop fleet for inspection.

    In December 2019, Elix Aviation Capital repossessed Silverstone’s fleet of Dash 8 turboprops, which consisted of two DHC-8-100s and four DHC-8-300s.

    Some of Silverstone’s remaining fleet was chartered out to Somali domestic carriers Salaam Air Express, Som Express Airways, and Maandeeq Air.

    In September 2020, a Silverstone air cargo flight was reported to have crash-landed at Mogadishu airport.

    Silverstone Air Services started as a charter and contract air operator using a Cessna (single turboprop) CE208 to serve northern Kenya and South Sudan, primarily on behalf of NGOs. In 2017, the company rebranded as Silverstone Air, deploying two 50-seater Fokker 50s to serve Kisumu and Ukunda in October that year. The airline then expanded to the coastal destinations of Malindi and Lamu, adding two DHC-8-Q100s.

    According to the ch-aviation fleets advancedmodule, Silverstone Air continues to have eleven aircraft, including one CRJ100ER(F)leased from Avmax Aircraft Leasing; seven F50s, of which three are wet-leased to Maandeeq Air; and three F50(F)s.

    While Silverstone hopes with rebranding the PR nightmares of negative publicity will go away, some moves could work against them and delay their return.

    Catherine Wanjiru proprietor of Saffara Travel Ltd has written to KCAA seeking compensation before the company changes its name in what could legally lock out those that are still owed. Catherine in a tweet addressed to the regulator claims that Silverstone was lying about having paid back their debts.

    “Silverstone Air owes my company Kshs. 147,124. Maurine Bittah says in the article that they have paid their debts. They have not. They must pay their debts before name change is considered.” She demanded as a condition for KCAA in considering the name change and possible repercussions to those still owed by the company.

    While making her claim clear, she posted a screenshot of an email from Silverstone dated February 18th 2020 when the firm promised to pay ticket reservations money that had been sent.

    “Good Afternoon Catherine,

    This is a confirmation that Silverstone Air is still and h. been committed to fully refund you for the un-utilized tickets. We kindly request that you bear with us as we work through the bulk of requests that our team is and h. been handling.

    You request has been regarded as VERY urgent and with HIGH importance. We take your sentiments positively and with great Interest.

    Once again we sincerely apologize for the delay occasioned in the refund process.

    Thank you so much for your co-operation and patience.” The email reads.

    This could see others owed money by the airline run to the regulator for help in recovering their money before Silverstone finally closes doors and opens newly as Jetlite.

    The bigger concern is if the airline will change its aircraft or mode of operations with the rebranding and that’s for KCAA to ensure it conforms with the industry’s standards.

  • M-Pesa Set To Lose Its Mobile Money Market Dominance Advantage In Proposed Law

    M-Pesa Set To Lose Its Mobile Money Market Dominance Advantage In Proposed Law

    MPs are set to commence debate on a Bill that seeks to compel Safaricom , Airtel and Telkom Kenya to split their telecommunications business from the mobile money transfer and lending units.

    Safaricom, which dominates in the various business lines, faces the biggest threat from the new effort to break up telcos.

    The Bill seeks to address concerns that Safaricom has become too big through its dominant market share in voice, mobile data and mobile money.

    Currently, Safaricom controls about 65 percent market share in voice while its mobile money business has virtually no challenger.

    The push to force Safaricom to be split has previously failed.

    The Kenya Information and Communications (Amendment) Bill sponsored by Gem MP Elisha Odhiambo is among 50 that have been given priority for debate and approval in the current session of the National Assembly.

    The Bill has been distributed to MPs ahead of formal introduction on the floor of the House once the House Business Committee slots it in the Order Paper.

    If approved, telecommunication firms with existing businesses will within six months of the law coming into force ensure that the business is compliant.

    The mobile phone companies will be required to form separate entities to manage any other business they engage in outside telecommunications services.

    The telecommunications firms will then be licensed to only offer voice, data and SMS services while mobile money services will be licensed as banks.

    In developed markets, anti-trust enforcement has gone further to require a conglomerate to sell some of its divisions or subsidiaries.

    The Bill seeks to amend Section 25 of the Kenya Information and Communications Act to require any person operating a telecommunications service to “obtain the relevant licences from the respective regulators of any industry or sector ventured into.”

    The proposed law will also compel telecommunications firms’ owners to provide separate accounts and reports in respect of all businesses carried out.

    Those who will provide any service without the relevant licence will be liable on conviction to a fine not exceeding Sh10 million or an imprisonment term not exceeding two years or to both.

    Past attempts by MPs to push Safaricom to split its telecommunications services business from its mobile money transfer platform, M-Pesa have failed.

    M-Pesa currently accounts for 34 percent of Safaricom’s sales, up from 24 percent in 2016.

    Revenues from the mobile money payment doubled over the period from Sh41.5 billion in 2016 to Sh84.4 billion last year.

    The committee on Information, Communication and Technology (ICT) chaired by Marakwet West MP William Kisang in 2018 opened an inquiry into telcos’ mobile money, service charges and alleged dominance by some players but its report has not seen the light of day.

    The investigations focused on mobile money services and rates, including transaction charges, transfer fees, loans and interest levied by telecommunications companies.

    The inquiry also looked into mobile airtime and data rates, including airtime loans and services. Further, the committee set to establish legislative and regulatory gaps affecting competition in the sector and recommend measures to address shortcomings that lead to anti-competitive behaviour or restrictive growth within the sector.

    The inquiry looked at the market share of telecommunications service providers, broadband services and rates as well as call and short message service termination fees.

    Mr Odhiambo, who sat on the ICT committee during the inquiry, said the Bill further seeks to control anti-competitive practices by the large industries in the sector.

    The Bill proposes compensation for call drops by holding a licensee liable.

    (BD)

  • WPP-ScanGroup Board Suspends CEO Bharat Thakrar and CFO Satyabrata Over Gross Misconduct

    WPP-ScanGroup Board Suspends CEO Bharat Thakrar and CFO Satyabrata Over Gross Misconduct

    WPP-Scangroup Chief Executive Officer Bharat Thakrar and the Chief Finance Officer Satyabrata Das have been suspended.

    The Board of Directors said the suspension is to allow for investigations into allegations of gross misconduct and possible offences in their capacity as senior executives and employees of the company.

    At the same time, the board has delegated authority to an interim Chief Operating Officer Mr Alec Graham to run the company.

    The company has also issued a cautionary announcement on the stock market. “For the time being therefore, shareholders and investors are advised to exercise caution with dealing in the company’s securities.” The warning reads.

    SATYABRATA DAS.

    There are unconfirmed allegations that the CEO is said to be in the habit of luring female employees with treats through expensive business trips, but forces them to sleep with him and pays them for their silence, a WPP investigation shows.

    He’s also being investigated over allegations that he also created numerous dummy PR agencies that he uses to steal funds from WPP ScanGroup by invoicing for non-existent works.

    Bharat Thakrar started an advertising company he named Scanad in 1982, the year some misguided Kenya Air Force soldiers decided it was wise to overthrow the government of the then President, Daniel arap Moi.

    Thakrar’s father was the commercial director at Skyline Advertising, then the largest in Kenya and where he often apprenticed. Forfeiting a chance to study medicine in the USA, Thakrar made his bones at Skyline, first as an account trainee enroute to account director. Skyline closed shop and he moved to Advertising Associates which was bought by McCann-Erickson but bile, after being overlooked for a promotion, saw him quitting and co-starting a food distributorship, but he didn’t enjoy the gig.

    He left to found Scanad without a client, but it grew organically into an advertising giant, taking it public in 2006.

    Among inherent advantages of taking a company public is that it “multiplies its value and enables the owner to grab real money but leaves him total control over the cornucopia.”

    Scangroup, in the fullness of time, grew through mergers and acquisitions including ceding 27.5 percent in 2008 to Cavendish BV which trades as WPP.  In 2011, WPP scaled stakes up to 29 percent and on a 50.1 percent stake in cash and share deal worth Sh8.2 billion in 2013.

    That saw its name changing to WPP Scangroup where Thakrar has been the CEO of what is today Africa’s largest integrated marketing services conglomerate. Thakrar not only earned Sh78 million in annual salary last year but he is also WPP Scangroup’s largest individual shareholders with a 13.2 percent stake worth Sh2 billion co- owned 50-50 with his wife, Sadhna Thakrar.

    Heller notes that “going public has considerable financial benefit-simply because the parts can be made wondrously more than the whole” and WPP Scangroup is enough proof.

  • Vast Wealth: Inside Nyachae’s Empire

    Vast Wealth: Inside Nyachae’s Empire

    If Kenyan bank shareholders and directors were required to attend AGMs on the same day, Simeon Nyachae would have had difficulty choosing which ones to go to or skip.

    Mr Nyachae, who died yesterday at 88, owned stakes in Credit Bank, Prime Bank, Commercial Bank of Africa (now NCBA), Transnational Bank and I&M Bank — making him part of elite business clique that dominated the economy and politics.

    The former Cabinet minister and senior public servant had 3.1 million CBA shares, which ensured he was one of the leading owners of recently created NCBA Group after the merger with NIC Bank.

    He owns 9.5 million shares or 0.5 percent stake in NCBA while his Sansora Group holds 6.9 million shares or 0.4 percent stake in the new lender.

    Mr Nyachae was among the top owners of Transnational Bank through Simbi Investors’ 8.2 million shares or 4.11 percent of the bank before it was bought out by Nigeria’s Access Bank.

    He owns 14.96 per cent stake of Credit Bank through Sansora Group where he was the founding member and formerly served as the chairman.

    In court fillings for the winding up of Swan millers, one of his many investments, it was revealed that he owned stakes in Prime Bank and I&M Bank.

    The Unclaimed Financial Assets Authority (UFAA) at one time listed the former Cabinet minister as among those whose docile shares in KCB, Safaricom and Cooperative Bank were forwarded to the agency.

    Although Mr Nyachae controlled a vast business empire with interests in manufacturing, transport, and large-scale agriculture he seemed to have an inclination to banking and milling.

    He was a shareholder at Swan Millers and Sansora Limited, milling businesses that echoed his 1954 Sansora Bakery operations at Nyantunango Market.

    His was typical old money, made a time when business and State were joined at the hip and whose owners sat next to each other on company boards or Cabinet meetings.

    At NCBA Mr Nyachae owned a stake alongside Naushad Merali and the families of Kenya’s founding President Mzee Jomo Kenyatta and former Central Bank of Kenya governor Philip Ndegwa.

    At Transnational Bank he was among close associates of former President Moi, including Joshua Kulei and former Vice President George Saitoti.

    He also kept the business in the family, with his wife Grace Nyachae sitting on the boards of Credit Bank, Sotik Tea Company Limited, Sansora Group.

    Grace served as Mzee Kenyatta’s secretary at State House in 1969.

    His son Leon Nyachae sat on the boards of Credit Bank and Sansora Group and was his alternative director at Kenindia where Sansora owned a 7.9 percent stake.

    The Swan Millers case showed a glimpse of how he transacted business with his many related businesses and involved close family members.

    “Directors were given the opportunity to look for buyers of the company assets, but Mr. Simeon Nyachae, unfortunately rejected an earlier offer made to the company and proceeded together with his son one Michael Nyachae; his alternate director in the company, through the firm of Nyachae & company Advocates , a firm run by his other son one Charles Nyachae, to sell the assets and property of the company at a gross undervalue of Sh300,000,000/= to Mombasa Millers Limited without the resolution of the board of directors,” Justice Francis Gikonyo said in the ruling.

    External Link.

  • Telkom’s 4G Expansion Delt A Blow

    Telkom’s 4G Expansion Delt A Blow

    Telkom has announced that its Loon technology pilot programme with Google to provide seemliness 4G network in remote areas of Kenya will come to an end on 1st March 2021.

    The news follows the decision by Alphabet, Google’s parent company to wind up Loon LLC which has been piloting the technology for 9 years in various countries.

    “Telkom remains cognisant of the integral role our core terrestrial network plays in keeping our customers connected. We continue with our long-term terrestrial network expansion plan that is informed by our overall company strategy, which will see us scale up to 80% of our network to 4G, increase our network footprint across the country, and get more Kenyans online,” said Mugo Kibati, CEO Telkom Kenya.

    Launched in pomp and colour in July last year in Radat Baringo County, Telkom and Loon LLC expected 35 solar-powered internet balloons to connect at least 14 counties with high-speed internet.

    However, after seven months of trial in Kenya, the programme comes to an end worldwide while leaving a trail of crashes in four continents where it was being piloted.

    Loon technology was being backed to help bridge the digital divide through the provision of 4G/LTE coverage using floating cell towers (balloons), in areas that were difficult to access and connect via terrestrial solutions, as well as in areas that were not commercially viable for service providers.

    “Loon would not have been possible without a community of innovators and risk-takers who were willing to take a chance on us and build something the world has never seen before. While we’re sad to share that Loon’s journey is coming to an end, we are grateful to the Telkom team for their vision and partnership,” said Alastair Westgarth, Loon LLC CEO.

    Loon LLC is now embarking on ensuring the operations of the balloons which have been hovering on the Kenyan airspace are recovered and discarded safely.

    “Telkom believes in taking bold decisions. It was very exciting therefore, to partner with like-minded pioneers in the adoption and usage of innovative technologies such as Loon, with the aim of filling in the Internet access gaps in areas that were difficult to service. Their vision – to connect unconnected and under-connected communities by inventing and integrating audacious technologies – sat well with our mission, to provide the best value for a simpler life, efficient business and stronger communities,” Kibati added.

  • Chinese Billionaire Jack Ma Resurfaces After Going Dark For Months

    Chinese Billionaire Jack Ma Resurfaces After Going Dark For Months

    Alibaba and Ant co-founder Jack Ma has resurfaced after months out of public view, quashing intense speculation about the plight of the billionaire grappling with escalating scrutiny over his internet empire.

    China’s most recognizable entrepreneur addressed scores of teachers on an online conference Wednesday, part of an annual event the billionaire hosts to recognize the achievements of rural educators. His appearance, first reported in a local blog, was confirmed by people familiar with the matter.

    Ma’s re-emergence may help quell persistent rumors about his fate while Beijing pursues investigations into online finance titan Ant Group Co. and Alibaba Group Holding Ltd. The executive had kept out of public view since early November, when Chinese regulators torpedoed Ant’s $35 billion IPO, tightened fintech regulations, then ordered an overhaul of Ant and launched a separate antitrust probe into Alibaba — all in a span of days.

    The assault on Ma’s trillion-dollar corporate empire encapsulates a broader campaign to rein in a generation of Chinese tech giants that Beijing now views as wielding too much control over the world’s No. 2 economy. The flurry of actions against his twin companies drove home how Beijing has lost patience with the outsize power of its technology moguls, perceived now as a threat to the political and financial stability President Xi Jinping prizes most.

  • Porsche Center Nairobi Loses Franchise Deal

    Porsche Centre Nairobi, the Kenyan dealer which has been selling the high-performance German sports cars, has had its contract terminated effective the end of this month.

    The franchise owner, Stuttgart-based Porsche AG, is expected to transfer the dealership to a new entrant or one of the existing dealerships in the local market.

    Other dealers of luxury cars are DT Dobie (which sells Mercedes Benz), Inchcape Kenya (Jaguar, BMW and Land Rover) and Bentley Nairobi (Bentley). Porsche Centre Nairobi and Bentley Nairobi have common ownership through their parent company Multiple Hauliers.

    Sources familiar with the matter told Business Daily that Porsche Centre Nairobi will continue to offer parts and service to clients until March.

    The reason for the termination of the dealership agreement was not immediately clear but sales of the luxury sports cars have dwindled in recent years.

    Porsche had not responded to our request for comment by the time of going to press.

    The dealership was well received when it opened in May 2014, with sales rallying to 125 units within the first eight months.

    Orders for the models, led by the popular sports utility vehicle (SUV) Cayenne, stood at 102 units in 2015 and dropped to 54 units the next year as the slump continued.

    The dealer had sold a cumulative 420 cars as of November, according to data from the Kenya Motor Vehicle Industry Association (KMI).

    Showroom prices of the Porsche cars range from Sh10 million to Sh28 million, meaning that the dealer has generated sales of at least Sh5 billion over the past seven years.

    The strong initial sales were linked to a huge pent-up demand for the sports cars among wealthy individuals who could now enjoy access to parts and service from a local dealer.

    Buyers of the Porsche models previously had to import them and face the challenge of sourcing parts and mechanical expertise on their own.

    The weaker sales recorded by the dealer in recent years has been attributed to a mix of internal and external factors including stockouts of cars, higher taxes and stricter lending standards by banks.

    Porsche’s move continues the musical chairs seen in Kenya’s new vehicle market where automakers are constantly reviewing their existing franchisees.

    The churn, for instance, saw DT Dobie take over the Volkswagen dealership from CMC, DT Dobie lose Nissan franchise to Crown Motors and General Motors terminate Isuzu East Africa’s sale of Chevrolet cars.

    External Link.

  • Safaricom To Slash M-Pesa Transaction Rates Effective January 2021

    Safaricom To Slash M-Pesa Transaction Rates Effective January 2021

    Safaricom has announced new Mpesa tariff that will see a reduction in money transfer costs by up to 45 percent starting January 1, 2021.

    The company’s Chief Executive Officer Peter Ndegwa says the new tariffs is in consideration of the expiry of the period for the zero-rated M-PESA transactions and the ongoing Covid-19 and economic circumstances.

    “These tariff reductions will affect more than 90 per cent of all customer transactions when sending money,” The Safaricom boss said

    In the reviewed tariffs, it will now cost Sh6 to send between Sh101 and Sh500, down from Sh11. At the same time, Transactions of between Sh1,501 and Sh2,500 will cost Sh32 down from Sh41.

    What’s more, Ndegwa noted that all transactions of Sh100 and below will remain free. The Safaricom CEO further disclosed that all Mpesa customers will continue to enjoy free transactions between Mpesa and bank accounts.

    “The price cuts are permanent, effective from January 1, 2021 and will enable more than 26.8 million customers to continue enjoying lower costs whenever they send money.” Ndegwa noted

    Ndegwa noted that the Central Bank of Kenya the Principles on the Pricing of Mobile Money Services was instrumental in the decision taken to reduce the M-PESA tariffs for lower value transaction bands.

  • Businessmen’s bid to stop building of SGR depot flops

    Businessmen’s bid to stop building of SGR depot flops

    Four Nairobi based businessmen have lost their bid to stop the ongoing construction  of an inland container depot for the Standard Gauge Railway (SGR) in Syokimau, Nairobi.

    John Muswanyi, John Mugo Njeru, Byron Kanyu, and Victor Muiru sought a court injunction to stop the building of the SGR depot claiming that they own the 15-acre land where the dry port is being developed.

    The four claimed that the land was part of a 37-acre land allocated to them in July 1998 whose title they processed and registered under their names on February 4, 2005.

    They told court in April 2020 that a company known as Syokimau ICD Limited trespassed on the suit property as it claimed ownership of part of the same plot and purporting to be from the Kenya Railways Corporation (KRC).

    They also told the court that the company had begun erecting permanent structures on the disputed land that only an injunction in their favor would solve the issue before they suffered losses which may not be compensated.

    However, Justice Erick Obaga dismissed their application after he established that the developing company was already in possession of the plot based on a lease from the Kenya Railways Corporation.

    Evidence adduced in court revealed that the land was surveyed in 1969 and in 1971 when it became a subject of compulsory acquisition by the state.

    “The question which will have to be interrogated later on is whether the land which had been subject of compulsory acquisition in 1971 could again be available for fresh allocation in 1998. This is more so because the Applicants did not place before the court any materials to show that there was a surrender of the acquired property as to be available for fresh allocation,” said the judge.

    Justice Obaga ruled that the four businessmen did not support their case with probability of success since it was still unclear how a property compulsorily acquired by government would later allocated to civilians ten years on.

    But the judge added that the portion of the disputed plot is capable of valuation and they can be compensated if they demonstrate their case well with evidence.

    “Alternatively, the constructed portion can be demolished and restored to its original status. The Respondent has built a large area with cabros which can be used as a dry land port. Even on a balance of convenience, the balance tilts in favour of the Respondent which is already in possession based on a lease from Kenya Railways Corporation,” Justice Obaga added.

    But the accused, Syokimau ICD Limited, said it has a lease of 15 years with effect from November 29, 2018 in the entire 15 acres piece of the land which has not been surveyed.

    The company added that after the signing of the lease, it moved in to begin the process of constructing a multimillion inland container depot that will be used by the new SGR.

     

  • New law to allow KRA, NIS to track gamblers

    New law to allow KRA, NIS to track gamblers

    A new proposed law to tame gambling will allow The Kenya Revenue Authority (KRA) and state agencies like Police and National Intelligence Service (NIS) to track betting activities on real time.

    The amendments that have received the backing of the state will create a platform that will enable more agencies to trail and apprehend gamblers behind suspicious bets to combat money laundering and flow of dirty money.

    The government is forcing the changes amid piling concerns that betting firms are offering services where proceeds of crime and corruption are rinsed without any declarations to the KRA and the Betting Control and Licensing Board (BCLB).

    The amendments that are already in parliaments are improvements to earlier changes that only gave the Communications Authority of Kenya (CA) real-time access to gambling activities.

    If adopted the new laws will allow security agencies and the Financial Reporting Centre (FRC) which tracks illicit money to be added to the list of institutions that will track the bets whenever they are placed.

    “The Board (Gaming board) shall establish a framework to facilitate real time monitoring of online gaming activities which shall be accessible for monitoring by the Communications Authority of Kenya, the board and any other relevant government agencies,” the Bill read.

    The law is targeting plungers who deal in large transactions but bet with a small fractions. Those making small, regular and suspicious bets will also be on the radar of the government.

    Kenya is known for inflows of dirty money, majorly proceeds of crime, corruption, drugs and shady business deals by tender bandits in government who end up investing in luxurious cars and real estate.

    In 2019, state revoked licences belonging to more than 15 betting firms over fresh demands for more taxes and shareholder disclosures which resulted to  court fights with giant gambling firms like SportPesa and Betin.

    The gambling industry has achieve a combined revenue of Sh204 billion as it becomes the best ground for criminals to ‘rinse’ dirty money.

    Criminals collude with gambling executives to feed their illicit money into their betting wallets, bet a small share then cash out the remaining bulk.

    The new rules will also force gambling firms to get advertising approval from the regulator. The advert will also have a warning message that must constitute a third of the actual advertisement.

    The State has recently lost its bid to freeze betting accounts and seize cash that remains unused for three months in a row amid money laundering concerns.

    But the parliament’s committee on Sports, Culture and Tourism rejected the proposal because confiscation of idle cash is the role of the Unclaimed Financial Assets Authority (Ufaa).

    In what looked like a move influenced by the deep pocketed gambling cartels, the parliament was also swayed to reject changes to the Betting Bill that aimed to empower CS Fred Matiang’i.

    Parliament rejected the move that would see the Interior CS freeze the accounts and order gamblers to show proof and declare source of cash before accessing the money.

  • Equity Ranked 2nd Most Valuable Brand In Kenya

    Equity Ranked 2nd Most Valuable Brand In Kenya

    Equity has been ranked as the 2nd topmost valuable brand in Kenya, according to Brand Finance, an organization that specializes in brand valuation across all sectors.

    Each year, Brand Finance undertakes the world’s largest study on brand valuation, ranking over 5000 of the world’s biggest brands across all sectors and geographies.

    Millions of data points are analysed, calculated and combined to form over 50 annual rankings released each year.

    For the first time this year, Brand Finance launched the Africa150 ranking; a ranking of Africa’s most valuable and strongest brands. Equity, with a customer base of 14.2 million customers emerged among the topmost rated brands during the period.

    Equity Group Holding plc is also the 2ndhighest valued company by market capitalisation at the Nairobi Stock Exchange at Kshs 132.3 billion.

    The inaugural Brand Finance Africa 150 2020 ranking saw Equity ranked in position 69 in Africa. Equity was a front runner amongst banking sector peers in the region.

    The Bank’s ranking is evidence of the Group’s continued brand growth and influence in the society in which it operates.

    According to Brand Finance, the top 150 African Brands stand to lose 630 billion of cumulative brand value, resulting from the devastating COVID-19, pandemic impact.

    The company assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was in January this year.

    Despite the business disruption caused by the COVID-19 pandemic, Equity’s strategy has ensured it remains committed to its customers through its product and service offering.

    As at end of the year 2019, Equity’s balance sheet size stood at Kshs 673.7 billion, making it among the top 10 ranking banks in Africa, based on financial soundness, return on risk, and profitability.

    In the year under review, Equity registered a 14% increase in profit after tax, which was driven by a 23% growth in the loan book.

    Commenting on the ranking Dr. James Mwangi, Equity Group Managing Director and CEO said, “This recognition is a testament to Equity’s commitment to living its purpose of transforming lives, giving dignity and expanding opportunities for wealth creation.

    Over time Equity has established itself as a Social and Economic brand, scaling on both fronts, owing to its unique approach.

    The Group has and will continue to impact lives and livelihoods of people in communities where it operates by using existing infrastructure, strategic partnerships and a strong brand.”

    Brand Finance is a London based organization that evaluates the strength and value of more than 5000 global brands every year, since 2008.

    The company evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.

    Brandirectory holds all the Brand Finance rankings, specialist reports and whitepapers published since 2007.

    With over 40 sectors and industries covered in 46 countries, Brandirectory is the most comprehensive collection of original brand valuations, brand strength analyses and royalty rate calculations.