Category: Business

When he was named by Forbes as the youngest African Billionaire, Mohammed Dewji better known as Mo didn’t know he would inspire a generation, most likely for him, it was just a personal success story and a plus to his empire. Unknown to him, a young entrepreneur in Kenya, Mr. Boniface Agengo was studying and following his steps as an inspiration.

Born to a single mother, Mr. Agengo had to drop out of University as her struggling mother couldn’t afford to pay for his fees. Left with less to do, he manned up to be the man of the family. With natural entrepreneurial spirit, he maneuvered his way from the ghettos of Kayole to the rich city of Dubai where his business journey took off.

Working in the freight industry, the determined young entrepreneur, pushed his way into a business conference in Dubai in 2018 where he had vowed to go against all his odds to meet his mentor. This meeting changed his life.

Shockingly, to Mr. Agengo, Mo was so supportive, motivational and moreover, took him as his protege. Mo would later invite him to Tanzania to show him the empire he’s built as an inspiration. A two weeks intense visit that put his endurance into test, he passed. Mo, was impressed, this was a total stranger to him but their business passion and to make Africa better, made them more comfortable, friends and eventually business partners.

For Mr. Agengo, he’s always had the eye on Africa and it’s market, he believes it has the potential and a huge space to be exploited. He moved back to Kenya to establish his own business, TAG, a detergent production company and he plans to open soon the MO energy drink.

Currently, he’s being mentored by Mo, as he grows up in his business which is fast taking shape given its unique marketing strategies to outdo traditional brands.

Coming from a humble background and not with a silver spoon like most wealthy business men, Mr. Agengo says his life is guided by a simple principle, “I am motivated by the fact that we are all born winners and it’s a sin to live a life that you were not stationed to live.”

He aims to be one of the youngest Kenyans to be named as the richest through legitimately acquired wealth. Most young rich Kenyans can’t account for their sources as most opt for shortcuts to be wealthy in most cases scams.

As a new entrant into the market and with bigger vision, Mr. Agengo is looking forward to expand his business empire in the near future. Now in the distribution industry, his aim is to climb to the manufacturing which he says is coming in the near future.

Lake Turkana Wind Power (LTWP) which is Kenya’s largest private sector project may get a new investor as American multinational technology company, Google has announced interests to buy into the project.

The 310 megawatt (MW) capacity wind farm was commissioned in July and has since attracted the attention of investors interested in green energy projects from all over the world.

Google’s interest in LTWP has been disclosed by Norwegian investment company Norfund which has a 6 pc stake in the power plant. “Now that the plant is operational, more international investors, including Google, are looking to invest,” Norfund’s annual report states.

Google had committed to invest in the farm in 2015 but then went silent. “Today, we’re committing to invest in the Lake Turkana Wind Power Project in Northern Kenya, our second clean energy investment in Africa. When complete, Lake Turkana will bring 310 megawatts of clean energy onto Kenya’s grid—enough to power more than two million households across the country.” Rick Needham, at that time Google’s energy and sustainability director, had said on its ‘Green Blog’

No financial value was put on the investment, but it was widely reported at around $40m. Google was expected to buy Denmark’s Vestas Wind Systems which is a 12.5% stake.

Google is one of the highest-profile corporate backers of wind and solar, most notably through power purchase agreements. The web giant claims it is the largest corporate purchaser of renewable energy globally.

According to a new report by international realtor Knight Frank Prime Global Cities Index, House prices in Nairobi have been on a sharp decline in the last quarter of 2019. Housing prices slid by 5.4 pc in the year to September, the Decline has been associated with oversupply as more and more Kenyans opt to invest in the real estate sector.

Prime residential real estate values dropped 6.7 per cent in the year to June as buyers sought opportunities in a market segment still influenced by oversupply and distressed properties. The values have been declining at varied rates year-on-year successively since Q3 2016.

“Prevailing macro- and micro-economic conditions coupled with an oversupply in the segment have resulted in a sustained price correction, subsequently buyers have control of the market,” the report states.

The report has once again cast a dark shadow over the Kenyan real estate industry that was promising in previous years. In the first half of 2019 Kenya Insights had reported local developers were taking major hits as their earnings continued to dip.

The latest report places Nairobi at position 43 out 45 cities that were covered. All prime prices for the 45 cities dropped to an average of 1.1 pc during the year to the third quarter compared to 3.4 pc recorded in the same period last year. Knight Frank’s Kenya Market september 2019 report had shown that prime residential prices in the country fell by 1.8 pc which contributed to a 6.7 pc decline in the year to June. This was a sharp contrast to the 0.4 pc decline that had been recorded in the first half of the previous year.

Anthony Havelock, Agency Head at Knight Frank Kenya says Kenyans shouldn’t expect the prices to go up any time soon. “We haven’t reached the bottom of the cycle yet and we expect to see further reductions in the near-term until the macroeconomic and local situations improve. One of the major issues right now is illiquidity in the market,” he says.

About seven out of ten people who are past loan defaulters failed to pay new loans, a new survey based on reports to credit reference bureaus shows. The survey states 70 pc of mobile loan defaulters will borrow again and still default on the new loans portraying the deterioration in the  quality of borrowers.

Despite the full knowledge of the risks at hand, banks and mobile lending apps continue lending to these high-risk borrowers as the lenders pursue high profits in a booming market. Digital lenders advanced loans to 398,160 borrowers with a default history the report by CreditInfo, a credit reference bureau (CRB), notes.

Banks advanced loans to 115,869 borrowers also with a default credit history, half of the listed borrowers went on to default on the new loans.

“In spite of getting opportunities to borrow after previous defaults, some debtors are still ending up with bad loans on the new facilities. This is a character issue and largely a show of financial mismanagement,” CreditInfo Chief Executive Officer Kamau Kunyiha said. “A good number of individuals who had defaulted on both mobile and traditional loans managed to get new facilities thereafter. About 70 per cent who had previously borrowed went ahead and defaulted, while 50 per cent of the people who previously defaulted went on to skip payments of the new traditional loans they had been given.”

The report analysed mobile loan trends between November last year and April 2019. banks accounted for 93 percent of all mobile loan issues over the review period to represent the industry’s undisputed dominance in credit issuance. The inability to attract new borrowers has been attributed to the observed tapping of the onetime bad debtors by lenders even as they suffer burnt fingers from the subsequent loan defaulting.

“None of the new lenders are coming in to create new borrowers. Some creditors have therefore decided to take a view on some of the defaulters and have recruited them,” Mr. Kunyiha added.

More than two-thirds of mobile loans are taken by men, the report also reveals. Mostly indebted are men under the age of 25 as well as those between 31 and 40 years.

Under 25 males are probably still in school, peer pressure to live fancy lives, gambling or just trying to survive another week while the 31-40-year-old men are struggling to afford them comfortable living, they have to shoulder the burden of young families in a sinking economy with payslips showing unbelievable tax cuts. Men in both age groups opt to the digital lenders to finance their basics and pressured lifestyles, this has in turn seen them end up in a dreadful debt cycle.

Only 35% of women took loans. Men also take bigger loan amounts, at an average of Sh6,086, compared to the average loan size that women take at Sh5,472.

The Nairobi County government has threatened to sue Central Bank of Kenya (CBK) Governor Patrick Njoroge and Kenya Revenue Authority (KRA) boss James Mburu jailed over Sh4.49 billion that was withdrawn from the county’s recurrent expenditure account going against a court order.

Through advocate Cecil Miller, The Mike Sonko administration says the taxman went ahead to disobey court orders they had obtained stopping KRA from enforcing the agency notes when the amount was withdrawn. The said enforced agency notices were initially issued on December 6, 2016 and fresh ones on April 12, 2019.

Due to the encroachment by the taxman, Mr Miller now says county operations have come to a stand as it has no money for its recurrent expenditure. The enforcement, he says, was calculated to cause economic sabotage and to blackmail the county government into giving in to KRA’s demand.

The withdrawal of the money was also in violation of a Public Finance Management Act as the county exchequer was withdrawn without approval from the controller of budget. The money, withdrawn from the County Revenue Fund, was not authorised, contrary to Article 207(2) of the constitution.

The administration says County officials are yet to be paid since the county is unable to meet any of its recurrent expenditures and service deliveries.

This comes as counties stare at a financial crisis that could cripple their operations after the tenure of the acting Controller of Budget Stephen Masha ended before releasing funds to the devolved units

Ksh.2.1 billion has been set aside by Centum Investment in anticipation of a loss from its funding of the distressed multi-billion shillings Amu Power Company coal plant.

The cash will act as a loss-provision for the investment. “The provision is made in view of uncertainties surrounding the timely closure of this matters,” the firm noted on Thursday

This comes just days after the African Development Bank (AfDB) and the European Investment Bank (EIB) withdrew their support sighting changed in investments industries.

Despite the multi-billion shillings project facing major problems like loosing its environmental impact assessment license in June, Centum Chief Executive Officer James Mworia remains hopeful of the realization of a profit from the investment in the hope for better days for the delayed project.

“The provision does not in any way alter the prospects of Amu Power. As responsible investors, we will do our best to pursue a return on investment,” he said

The 1050 megawatt Lamu coal plant has seen resistance from subsequent uprisings from civil society groups who view the plant as an environmental hazard.

Centum is now set to clear outstanding project debt at company level by the end of June 2020. The firm had posted a net profit growth of 226 pc to Ksh.6.8 billion for the first half of the 2020 financial year to September 30 with the notable spike in earnings being largely determined by increased investment income.

NCBA group, formed after CBA Group merged with NIC Group has risen to rank as the fourth largest in terms of absolute profits after overtaking DTB Group and the local branches of Standard Chartered Bank and Barclays Bank. The bank reported a total net profit of Sh7.7 billion in the nine months to September. This is a spike of 17.3 percent compared to Sh6.5 billion the year before.

Just who owns NCBA? here’s a list of significant stakeholders in no specific order,

Mr Naushad Merali has a significant stake with his ownership in the listed bank standing at 2.9 pc and is worth about Sh1.5 billion.

Mr Muhoho Kenyatta, holds a direct stake worth Sh400 million in NCBA. He also holds other shares in the bank indirectly alongside other members of the presidential family whose total ownership in the lender is estimated at 13.2 percent or the equivalent of about Sh6.8 billion. His direct stake in NCBA now stands at 0.77 pc. The Kenyattas became shareholders in the lender after buying out Bank of America between 1984 and 1992.

Former Cabinet minister Simeon Nyachae who held shares in the former CBA Group has now emerged as one of the leading shareholders of NCBA Group with 8.6 million shares worth about Sh300 million. The politician had 3.1 million CBA shares that converted into 8.6 million shares in NCBA. His direct stake in NCBA now stands at 0.57 pc.

The family of the late Philip Ndegwa, which controlled NIC with a stake of 25 percent before the merger, held 6.6 million shares in CBA that were converted into 18.2 million shares of NCBA and which have a current market value of Sh631 million. The merger saw the Ndegwa family (James Ndegwa and his brother, Andrew Ndegwa) emerge with an NCBA stake estimated at 12 pc and valued at Sh6 billion. The Ndegwa family, acquired their initial 12 pc stake in NIC between 1993 and 1996 by buying shares from the lender’s previous owner, Barclays Bank of Kenya.

NCBA’s profitability is expected to rise in coming years as the merged entity cuts costs.