Post market trends, news and Information ups and downs, IPO'S that is NSE.

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Nairobi Stock Exchange
The Nairobi Stock Exchange (NSE) is the principal stock exchange of Kenya. It began in 1954 as an overseas stock exchange while Kenya was still a British colony with permission of the London Stock Exchange. The NSE is a member of the African Stock Exchanges Association.

Nairobi Stock Exchange is Africa's fourth largest stock exchange in terms of trading volumes, and fifth in terms of market capitalization as a percentage of GDP.[1] The Exchange works in cooperation with the Uganda Securities Exchange and the Dar es Salaam Stock Exchange, including the crosslisting of various equities.

The exchange has pre-market sessions from 09:00am to 09:30am and normal trading sessions from 09:30am to 03:00pm on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance.[2]

The NSE's offices and trading floor are located at the Nation Centre along Kimathi Street. Trading is done through the Electronic Trading System (ETS) which was commissioned in 2006. A Wide Area Network (WAN) platform was implemented in 2007 and this eradicated the need for brokers to send their staff (dealers) to the trading floor to conduct business. Trading is now mainly conducted from the brokers' offices through the WAN. However, brokers under certain circumstances can still conduct trading from the floor of the NSE.

Two indices are popularly used to measure performance. The NSE 20-Share Index has been in use since 1964 and measures the performance of 20 blue-chip companies with strong fundamentals and which have consistently returned positive financial results. Included in the Index are Mumias Sugar, Express Kenya, Rea Vipingo, Sasini Tea, CMC Holdings, Kenya Airways, Safaricom, Nation Media Group, Barclays Bank Kenya, Equity Bank, Kenya Commercial Bank, Standard Chartered Bank, Bamburi Cement, British American Tobacco, Kengen, Centum Investment Company, East African Breweries, EA Cables, Kenya Power & Lighting Company Ltd. and Athi River Mining. This index primarily focuses on price changes for these 20 companies.

In 2008, the Nairobi Stock Exchange All Share Index (NASI) was introduced as an alternative index. Its measure is an overall indicator of market performance. The Index incorporates all the traded shares of the day. Its attention is therefore on the overall market capitalization rather than the price movements of select counters.

There is however a third Index; the AIG 27 Index that compares price movements of 27 companies identified as relatively stable. The rational behind the index compares to that of the NSE 20-Share Index. But whereas the AIG is primarily defined by the AIG company (a financial service company and part of the AIG Group), the 20-share Index is from the NSE itself.
Infor: Wikipedia.

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Consultations are going on that will see companies listed at the Nairobi Stock Exchange cross-list at the Johannesburg Stock Exchange (JSE).

JSE business development manager in charge of African desk Geoff Musekiwa said the negotiations with various stock markets in Africa, including the NSE aim at allowing companies with a market capitalisation of at least Rands 500 million (Sh5 billion) to list at the biggest stock market in Africa.

Successful firms will list at the JSE Africa Board which is part of the JSE main market segment launched in February this year.

For a firm to list, must be based in Africa or most of its operations be based on the continent.

It must meet the Africa Board listing requirements and appoint a JSE approved sponsor to guide the process.

Mr Musekiwa said they have held talks with stock market players in Kenya, Zambia, Zimbabwe and Tanzania.

“We have met with Mr Peter Mwangi (NSE CEO) but we could not see Ms Stella Kilonzo (Capital Markets Authority CEO) because she was engaged elsewhere but we left some documents with her office,” Mr Musekiwa told the Daily Nation during a trip to the bourse in Johannesburg by journalists attending the 3rd Standard Media Forum.

The listing firm will retain its local listing with the costs depending on the monetary value of the listed securities.

Currently, Kenya Commercial Bank, Kenya Airways, Jubilee Insurance and East Africa Breweries are also listed at the Tanzania, Uganda and Rwanda stock markets.

Mr Musekiwa said companies that list at the JSE will have access to a market where they can raise more capital in Africa and have access to local as well as international investors.

“It is part of our efforts to promote the stock markets in Africa given their significance in economic development while enabling our firms to grow,” said Mr Musekiwa.

Already, a Namibian financial services firm, Trustco, has listed at the JSE and is in the process of raising R.200 million (Sh2 billion) for its expansion programme...

http://www.nation.co.ke/business/news/-/1006/624862/-/iibrxnz/-/index.html

Rwanda: KCB Shares Start Trading On Stock Market

John Gahamanyi And Ruth Kang'ong'oi
18 June 2009

Nyarugenge — Kenya Commercial Bank (KCB) group shares, started trading on the Rwanda Over the Counter (OTC) market yesterday, partly igniting the bank's share rise on the Nairobi Stock Exchange (NSE). The event marked the listing of the first equities stock in the market and the first cross-listing of any stock in the 18-months-old market.

James Musoni, Minister of Finance and Economic Planning launched the trading that saw KCB share opening at Rwf160 and closing at Rwf163 on its debut on the ROTC market. "KCB has, by this cross-listing, shown its confidence in our financial sector and the growth of our economy thus giving our people the opportunity to buy its shares," Musoni said before ringing the bell to inaugurate trading at Kigali Serena hotel.

Market reports show that out of 50,000 shares offered for sale on the ROTC market, 42,800 shares were traded in 12 deals. At the close of the session, KCB counter had 7,200 shares on offer at Rwf163 per share and 800 shares on bid at Rwf160.

Celestin Rwabukumba, Operations Manager of Capital Market Advisory Council (CMAC) said that the volume is bigger than the number of KCB shares traded on the Uganda Stock Exchange (USE) in the last six months. "This is encouraging," Rwabukumba said. By press time, Rwabukumba said KCB share on the NSE was continuously gaining, attributing the trend to the cross listing and other market conditions.

Immediately after Musoni rang the bell, it was reported that KCB's share on the Nairobi Stock Exchange (NSE) had jumped to Ksh22.78 (Rwf166) from Ksh20.27 (Rwf151). KCB cross listing makes it the only listed company on the ROTC market which is predominantly characterised by debt securities.

Musoni said Rwanda's economy has high growing demand for long term capital investments than the domestic capacity is able to support.

"The integration of regional capital markets will provide an avenue through which the economy will tap the regional capital markets," the Minister added.
Oduor-Otieno, the bank's group CEO said cross listing was very vital for the growth of Rwanda's stock market.

"This is a very important occasion for us as we help open a new chapter for this country's finance market. We believe this will now provide investment opportunities to thousands of Rwandans willing to invest in the stock market since it now makes it convenient for them to invest in the company right here in Rwanda," said Oduor-Otieno

KCB's cross listing in Rwanda comes barely seven months after it began operations in the country.Peter Muthoka, KCB Group Chairman said last year the bank posted Rwf42.7 billion profit before tax, 42 percent above the group's performance in 2007 which enabled the board to pay a dividend of about Rwf7 for every ordinary share.

The bank has had its shares cross listed in Uganda and Tanzania.Musoni hoped that private companies in Rwanda would follow suit and put their shares on the ROTC market.

By WACHIRA KANG’ARU
Posted Saturday, August 8 2009 at 16:12

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After fleeing at the height of the global financial crisis, foreign investors in Kenya are back at the Nairobi Stock Exchange taking advantage of the low-priced shares. Monthly statistics from NSE show that last month, foreign investor activity at the bourse accounted for more than 60 per cent of the total market turnover.

“Since March 2009, foreign investors have been doing a lot of business,” said Mr Job Kihumba, executive director Standard Investment Bank, and the second vice chairman of NSE.

“Unfortunately, it does not seem to be the case with local retail investors.”
Data compiled by CFC Stanbic Financial Services shows that between April 4 and Friday last week, foreign investors had bought over Sh4 billion worth of shares while selling about half of that, meaning they are buying more than selling.

This is also an indication that they are taking up positions in readiness to reap any expected upturn in the stock market. This is a different scenario from what prevailed in the last half of 2008. Over the third quarter ending September 30, 2008, foreign investor activity accounted for 37 per cent of total NSE market trade with the month of September recording the heaviest foreign turnover of 72 per cent.

And other than July 2008, the other two months recorded a net sale meaning that foreign investors sold more than they bought. By the third week of October, the NSE year-to-date return on the index was down 40 per cent, leaving investors smarting. “Shareholder value dropped by Sh196 billion between September 1, and October 9, 2008 as global financial woes intensified,” CFC Stanbic Financial Services reported.

A majority of the foreign investors are returning to take positions in companies that they had earlier exited. On Thursday last week, for example, foreign investors were most active on the Safaricom counter where they bought 97 per cent of the counter’s total turnover.

Also notable for having attracted heavy investor activity were Equity Bank, KCB and BAT (K) counters. “Although foreign sales on the counters were higher than foreign buys,” says CFC Stanbic Financial Services. On Wednesday, foreign investor trade accounted for about a third of the day’s total turnover, while on Tuesday their activity accounted for more than 50 per cent of the day’s traded volume.

Holding steady
“Foreign interest on these counters has seen the prices either holding steady or inching higher in recent times,” said CFC Stanbic Financial Services. With local investors having shifted from the stock market to the bond market, with investment in government papers seen to give better returns than stocks, foreign investors have been left to take advantage of the low prices at the stock market.

Notable is the fact that while the NSE 20 share index has declined 7 per cent year-to-date, it has recovered 40 per cent from its low of 2,360 in March 2009, meaning an investor who brought shares in all the companies that make up the NSE 20 share index in March has today made Sh4 for every Sh10 invested. For local investors, however, it seems once bitten twice shy is their philosophy; one that might prove costly as the market limps on.

They have failed to take advantage of the fact that NSE’s Price earning (PE) ratio - the most common measure of how expensive a stock is - has dropped from a high of 23x in July 2008 to current 13x. This is the reason why foreign investors are trooping back and buying cheap after having sold high last year.

Start buying
Expectation is that local investors will start buying when the share price starts to rally, by which time the prices will be high with little to make of the price gains. At the time, foreign investors will be preparing to sell. “It is a process of both education and experience,” Mr Kihumba said. “Local investors need to know that when the market takes a downturn, it is time to enter, not to turn away.”

i love this site, it gives me the chance to jot my thoughts

i love this site, it gives me the chance to jot my thoughts

Matt1783 your highly welcome to this forum we look forward to see more contributions from you on business and other topical issues.:cheers:

Published on 24/08/2009

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Nairobi Stock Exchange (NSE) investors have every reason to smile when real estate is listed at the bourse. This follows reports that the Capital Markets Authority is at an advanced stage with plans to list the first real estate investment trust, popularly known as Reit in financial jargon .

"We are formulating rules to guide how retail investors will be able to trade in quoted REITs at the bourse," said Ms Stella Kilonzo, the chief executive of the CMA in a recent interview. A source at the CMA said following the announcement of rules guiding the formulation of collective investment vehicles — the launch of the first Reits would follow soon.

"The announcement of the first Reits will be done soon," said the source who requested anonymity citing a confidentiality agreement with CMA. Reits provide an avenue through which investors can pool resources to develop or trade in properties with returns shared equitably after a specified trading period.

Reits are traded at stock markets in the form of shares, helping liquidity as property can be sold at the exchange in whole or bits, once they are floated. With the listing of the first Reits, individuals with property will have the option of offloading such property into the market and trade with it at the bourse.

Once a Reit is listed at NSE, anybody can buy and sell their shares to trade in real estate business while creating a pool of resources that can be used to develop the property market and address the current shortages in the residential, commercial and industrial housing. Such a listing will also allow small-scale investors wishing to trade in real estate to have a chance to trade in the shares of such a Reits — effectively owning and trading in real estate by buying the quoted shares of any Reits listed at the bourse.

Earning returns
Real estate investment experts say that the development is bound to address liquidity crunch, which property owners find themselves in after putting all their money into developing a property, whereas sometimes takes time to make recoup investments or begin earning returns.

Mr Paul Sigsworth, the managing director of ICEA Asset Management said that the timing was appropriate because Nairobi has been generating interest on the global property scene due to its unique poison as the launch pad to the East African economies. "The recent publication of the rules to allow pension funds to invest in property earning funds, Reits and other collective investment schemes without necessarily being listed at the bourse is a welcome one," said Sisgworth.

The first Reits listing — widely anticipated before the end of the year — will increase activity at the bourse as individuals and companies, including the National Social Security Fund (NSSF) and insurance companies, which hold so much property will have an avenue to dispose of huge properties which they were otherwise constrained to. "Such a listing would increase the level of development as private developers can easily access tied up capital in properties whenever they sense an investment opportunity elsewhere," said Prof Johnstone Kiamba the chair of the Kenya Institute of Planners.

The world over, Reits have been used as the avenues to spur real estate development particularly in mobilising funds to address residential housing projects. Best remembered is Darin Gunesekera, an expert in low cost housing development from Colombo, Malaysia, who employed an almost similar model to increase affordable housing in his home country and eliminate slums. "Kenya can use Reits to collect capital from the stock market to eradicate slums and provide decent housing," said Gunesekera at a past conference.

Investment outlook
Since the debate on REITs came a fore, a number of firms have shown interest, citing immense opportunity that the listing of the first Reits portends for the real estate sectors. Among the big names that have shown interest in the concept include Rutleys — the investment arm of KnightFrank — an international property company.

Last year the firm launched a Sh13 billion property fund in response to what it termed a "good property investment outlook" for the country and the East African region. The firm, however, had to list its shares in Johannesburg and London stock exchanges, leaving out NSE after it failed to find a suitable local REIT partner coupled with specific guidelines on the operations of such investment trusts in the country

Another local property company with US ties Bora Capital was also keen to venture into the market using REITs. "As soon as the regulations have been put in the market by CMA, we would be more than willing to take up the opportunities that such a development brings along," said Mr Joe Macharia, chief executive of Bora Capital.

Advance plans to launch a Reits follow the successful completion of a study on the best model to apply when introducing the first Reits. Reits, however, have their downside for a country like Kenya. Analysts say that enough caution should be put in place to ensure that the correct valuations of buildings are reflected in the Reits.

If an overvalued property is listed in a Reits, the level of return from such shares would be minimal as the property does not reflect the true market trends. There has also been concern on the need of a solid statistics base on the trends on the level of returns for property in the country as the real estate business is highly varied and could be misleading to some investors.

Thu Sep 24, 2009 11:28am GMT

http://af.reuters.com/resources/r/?m=02&d=20090924&t=2&i=11707031&w=450&r=2009-09-24T114012Z_01_AJOE58N0WF200_RTROPTP_0_OZABS-KENYA-INVESTORS-20090924

NAIROBI (Reuters) -
Kenya will pay out 302 million shillings to investors who lost money when a stock brokerage collapsed last year, finance minister Uhuru Kenyatta said on Thursday. The east African nation has been taking measures to restore flagging investor confidence at the Nairobi Stock Exchange after the fall of Nyaga Stockbrokers, followed by Discount Securities. "Protection of investors is critical to sustained growth of securities markets world over," Kenyatta told a news conference. "The main objective of the payout is to restore confidence."

The minister appointed a former central bank governor, Micah Cheserem, as chairman of market regulator Capital Markets Authority in March, in a bid to stem the lack of confidence. An antifraud unit for the stock market has been set up and stockbrokers published half-year financial results for the first time this year. CMA is also prosecuting the directors of Nyaga. More than 27,000 investors will be paid money back with 90 percent getting full payment, Kenyatta said. The law allows for a maximum payment of 50,000 shillings per investor.
© Thomson Reuters 2009 All rights reserved

NSE Outperforms African bourses

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A trader at Nairobi Stock Exchange. The bourse recorded strong growth for the first half of the year,
a recovery after past years of reduced activity. Photo/FREDRICK ONYANGO

By Johnstone Ole Turana
Posted Tuesday, August 24 2010 at 00:00

The Nairobi Stock Exchange has outpaced its peers in Africa, positioning Kenya as a preferred investment destination. The bourse recorded strong growth for the first half of the year, a recovery after past years of reduced activity. “The equities and bond markets have recorded robust growth due to positive interim results and expected strong economic recovery,” said Mr Eddy Njoroge, the chairman of Nairobi Stock Exchange (NSE).

The NSE equity turnover since the beginning of the year grew to Sh61 billion, almost double the annual equity turnover in 2009, which was Sh38 billion.Analysts say the improved performance is due to growth of the bond market which has witnessed a threefold increase on its turnover, which topped Sh338 billion by last month.

The entire bond turnover for 2009 was Sh110 billion.
The NSE 20 Share Index has also gone up by 37 per cent outperforming other major stock markets such as in Nigeria, Ghana and South Africa which grew by 24.7 per cent, 14.75 per cent and 2.49 per cent respectively. Wider representation of key sectors in the bourse and robust counters especially from Kenya’s financial sector which saw minimal effects of the global banking crisis has also lifted the stock market.

“Nigeria’s stock exchange is still smarting from the banking crisis which forced the Central Bank of Nigeria to rescue the troubled banks which accounts for huge proportion of trading, Ghana’s equities market is still small and thin while South Africa’ stock exchange is yet to recover from the effects of the global financial crisis due to its strong linkage,” said Mr Edwin Nyaducha, a managing principal of Inkubate, a corporate finance and business advisory firm.

The capital market is expected to continue recording improvement as the new constitution comes into effect. “The vote is an upside for the socio-economic environment and signals a brighter future for the local economy and the exchange,” said Mr Njoroge while presiding over the listing of the KCB Bank Rights Issue shares at the Nairobi bourse.

Increased borrowing
The stock exchange is riding on the increased borrowing appetite from the public as businesses shy away from banks loans. “The focus on domestic fund raising initiatives is critical as it not only prove the ability to tap resources, but acts as a barometer of level of maturity to potential investors especially for foreign direct investment,” said Mr Amish Gupta, an investment banker with Standard Investment Bank. The strong performance of NSE is a pointer to the resurgence of equities markets in Africa as it is viewed by investors as one of the strong emerging markets.

“This year, Africa will account for 20 per cent of business hence our focus is to increase the footprint in Africa both in terms of presence and operations,” said Mr Stephen Jennings, chief executive of Russia’s Renaissance Capital which has a subsidiary in Kenya.

The discovery of oil in countries such as Ghana, Uganda and Angola and improved global commodities prices has made Africa a hotspot for foreign investors.The East African Community Common Market has opened up the region with Kenya as the preferred hub due to its relatively advanced economic status. With an estimated market population of 130 million people, the demand for goods and services is expected to provide rich business ground for investors. Increase in disposable income and changing lifestyles have necessitated the need to meet the growing demand.
http://www.businessdailyafrica.com/NSE%20outperforms%20African%20bourses/-/539552/995488/-/item/1/-/6n2g7rz/-/index.html

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CtC6Yj0hwX0

23 August - Kenyan Markets Wrap - Samuel Gichohi - Standard Investment Bank

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GFvGYVtmU-Q

Bharti Airtel's plans for Africa with CEO Manoj Kohli

Manoj Kohli, CEO of Bharti Airtel International has been tasked with cementing India's biggest mobile company's place in Africa's burgeoning telecoms market. But he faces some tough competition from already established players like South Africa's MTN, Vodacom, and the Vodafone powered Safaricom. ABN's Nicolette Arends spoke to Manoj Kohli about the company's strategy in Africa.



-4ZLQdG6wTo

8 September - Kenyan Markets - Samuel Wachira - Drummond Investment Bank

Alishia Seckam speaks with Samuel Wachira, General Manager at Drummond Investment Bank, looking at:

State of the NSE 20
Kenyan economy expected to grow 5.2%
Private investment
Nation Media Group to cross list on Rwandan Bourse

NSE demutualisation to kick-off by January 2011

Updated 4 hr(s) 57 min(s) ago
By JAMES ANYANZWA

The Capital Markets Act will be amended in the next four months to pave way for the planned demutualisation of the Nairobi Stock Exchange (NSE).The current members of the NSE approved the proposal for a demutualised exchange in March this year, but a lethargic political process required to enact the necessary legislations into law has held the process back.

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Traders at the NSE. Once demutualised, the exchange will be called Nairobi Securities Ltd,
with an authorised share capital of Sh1 billion.

In a demutualised exchange, the ownership, management ad trading rights are segregated from one another.Peter Mwangi, the NSE chief executive, said amendments to the CMA Act would come into force on January 1 next year, after the Finance Bill is passed into an Act of Parliament. He said the exchange stands ready to make the necessary applications to effect its demutualisation once the 2010 finance bill is assented.

"In furtherance of this, the NSE recently streamlined its operations in preparation to becoming a full service securities exchange," he said at the First Annual African Alliance East African Investor Conference Gala dinner in Nairobi. Traders at the NSE. Once demutualised, the exchange will be called Nairobi Securities Ltd, with an authorised share capital of Sh1 billion.

The NSE members, mainly stockbrokers and investment banks, resolved to retain 80 per cent shareholding in the demutualised company for two years, before diluting it to 40 per cent through an initial public offering (IPO). The CMA’s Investor Compensation Fund (ICF) and Treasury will each own 10 per cent stake in the new entity. The existing 19 stockbrokers and investment banks would split the 80 per cent stake equally among themselves.The ICF is expected to its sell a portion of its stake in the demutualised company to replenish its reserves. Currently, brokers enjoy a monopoly of the NSE. The demutualisation process seeks to deal with corporate governance by separating ownership and trading rights of the member firms.

conflict of interest
Proponents of the process see it as the solution to the challenges facing the exchange, which include conflict of interest. In some cases brokerage firms, who are the principal members of the bourse, act as dealers, and fund mangers. The brokers also agreed to change the name of the demutualised exchange to Nairobi Securities Ltd, with an authorised share capital of Sh1 billion, and the change the memorandum and articles of association to reflect the new status.The NSE’s current paid up capital is fixed at Sh200 million. Demutualisation is expected to transform the exchange, and position it to realise its vast potential, and attain its vision of being a leading securities exchange in Africa with a global reach.

http://www.standardmedia.co.ke/InsidePage.php?id=2000017950&cid=14&j=&m=&d=

Featuring Lisa from Kenya in the Apprentice..2010

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http://www.thinkersroom.com/blog/wp-content/uploads/2010/03/The-Apprentice-Logo-763060.jpg

Watch Season 10:

Watch Season 10 : Ep. 6
The Apprentice Week 6 (http://www.hulu.com/watch/184785/the-apprentice-week-6)

Watch Season 10 : Ep. 7
The Apprentice Week 7 (http://www.hulu.com/watch/188127/the-apprentice-week-7)

Watch Season 10 : Ep. 8
The Apprentice Week 8 (http://www.hulu.com/watch/184785/the-apprentice-week-6)

http://images.buddytv.com/usrimages/usr3465121/3465121_8e0f6703-44ad-476c-943c-2f8efe229834-nup-140303-1669.jpg

LIZA is tough,i like her,though i don't think she stands a chance of winning.

LIZA is tough,i like her,though i don't think she stands a chance of winning.

It's really gruelling, though I tip one of the following 3 to win Season 10 The Apprentice. Hopefully our girl lisa will squeak through to the final two so long as she maintains her tempo, be more proactive and use aggression as needed.


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Steuart Martens
Age: 27
Hometown: Washington, D.C.
Background: Martens was once the successful owner of four companies. Unfortunately, as the economy took a downturn, he was forced to close down two of his companies and lay off his entire staff. A serial entrepreneur, he is always looking for the next big business opportunity. Martens attended Purdue University on a swimming scholarship and received a Bachelor of Science in business. He also made it to the Olympic trials for swimming and is heavily involved in D.C. government.

http://i.i.com.com/cnwk.1d/i/tim/2010/09/16/NUP_140303_1434.jpg
Clint Robertson
Age: 40
Hometown: Austin, Texas
Background: Robertson received a Bachelor of business administration in accounting from Texas Christian University and a Juris Doctorate in law from Southern Methodist University. He went on to be a successful certified public accountant, real estate attorney and developer to having an estate sale where he was forced to sell a large amount of his family's possessions due to the economy. Currently living off of credit, Robertson is also a strong believer in God and spends much of his free time with his wife of 18 years and their three boys.

http://i.i.com.com/cnwk.1d/i/tim/2010/09/16/NUP_140303_1215.jpg
Anand Vasudev
Age: 31
Hometown: New York City
Background: Vasudev worked for a lucrative private firm managing several large multi-million dollar real estate investments. The successful Emory University graduate thought he was "indispensable" to his firm because of the high level of expertise he had developed over the years. His eventual layoff came as a huge shock, yet was very motivating. In the face of adversity, Anand followed his dream and moved to New York City, where today he is a struggling entrepreneur trying to launch an innovative new vitamin-infused wine company, while still also looking to get involved in media and entertainment business.

http://i.i.com.com/cnwk.1d/i/tim/2010/09/16/NUP_140303_1669.jpg
Liza Mucheru-Wisner
Age: 30
Hometown: Corpus Christi, Texas
Background: Born in Kenya, Mucheru-Wisner was part of the Kenyan National Golf team and was recruited to play golf at Texas A&M University-Corpus Christi. She completed her education and received her Masters degree while simultaneously starting an educational technology company. However, her business venture fell victim to the recession and she is struggling to make it a success. Mucheru-Wisner, now a wife and mother of two, works hard to stay connected with her family in Kenya and Ireland and is looking for opportunities to grow and expand her business.^^

Infor:-http://www.cbsnews.com

Rules have been published under which the Nairobi Stock Exchange would sell its shares to the public in four months.

Related Stories

German firm buys 25 p.c stake in Resolution Health (http://www.nation.co.ke/business/news/German%20firm%20buys%2025%20pc%20stake%20in%20Resolution%20Health/-/1006/1089412/-/jepu1dz/-/index.html)

The public has until February 23 to present its comments to the Capital Markets Authority on the guidelines published in the dailies on Tuesday.

The process, known as demutualisation, seeks to separate the stock exchange ownership and management.

“The publication of the guidelines is a major milestone which we are keen to complete within the first quarter of 2011,” chief executive and chair of the stock exchange demutualisation steering committee Stella Kilonzo said on Tuesday.

Demutualisation is expected to improve the stock exchange’s governance and deepen the capital markets.

“It is good for the market because it will boost investors’ confidence and enable the NSE to position Kenya as the financial services hub for East and Central Africa,” NSE CEO and committee vice chair Peter Mwangi said when contacted.

After the demutualisation, the NSE, which is currently a privately-owned company, limited by guarantee, will become a firm limited by shares.

It will also change its name to Nairobi Securities Exchange and give way to three types of shareholders after an initial public offering.

The 18 sto
Rules have been published under which the Nairobi Stock Exchange would sell its shares to the public in four months.


The public has until February 23 to present its comments to the Capital Markets Authority on the guidelines published in the dailies on Tuesday.

The process, known as demutualisation, seeks to separate the stock exchange ownership and management.

“The publication of the guidelines is a major milestone which we are keen to complete within the first quarter of 2011,” chief executive and chair of the stock exchange demutualisation steering committee Stella Kilonzo said on Tuesday.

Demutualisation is expected to improve the stock exchange’s governance and deepen the capital markets.

“It is good for the market because it will boost investors’ confidence and enable the NSE to position Kenya as the financial services hub for East and Central Africa,” NSE CEO and committee vice chair Peter Mwangi said when contacted.

After the demutualisation, the NSE, which is currently a privately-owned company, limited by guarantee, will become a firm limited by shares.

It will also change its name to Nairobi Securities Exchange and give way to three types of shareholders after an initial public offering.

The 18 stockbrokers and investment bankers who currently have seats on the board will have both trading and voting rights as well as hold a maximum of 40 per cent stake of the new entity in less than three years.

Public shareholders will only have voting rights and hold a minimum of 40 per cent stake and the Investor Compensation Fund, which will also only have voting rights and a 20 per cent stake.

The stock exchange is expected to provide the proposed plan for the separation of the commercial and regulatory functions of the exchange.

Other key documents include the NSE’s development plan, new rules or amendments to existing rules to implement demutualisation and the most recent audited financial statements.ckbrokers and investment bankers who currently have seats on the board will have both trading and voting rights as well as hold a maximum of 40 per cent stake of the new entity in less than three years.


Public shareholders will only have voting rights and hold a minimum of 40 per cent stake and the Investor Compensation Fund, which will also only have voting rights and a 20 per cent stake.

The stock exchange is expected to provide the proposed plan for the separation of the commercial and regulatory functions of the exchange.

Other key documents include the NSE’s development plan, new rules or amendments to existing rules to implement demutualisation and the most recent audited financial statements.

First Community Bank (FCB) has introduced an Islamic-compliant unit trust underlining the growing list of Islamic products targeting the Muslim market.

The firm has received approval from the Capital Markets Authority (CMA) to rollout the fund, which will make selective investments in equities, government bonds and real estate options that are Sharia-compliant.

The new unit trust fund adds to the Islamic banking, insurance services, food, medicine and hospitality products launched in the country in the past few years by firms like FCB, Gulf African Bank and Takaful Insurance of Africa.

Services

Players are hopeful that Islamic financial services will take off, arguing that the market is largely untapped.

“Islamic finance is an alternative investment that is yet to be tapped. A lot of Muslims want to buy bonds or stocks but they cannot because the products are not structured to satisfy their faith,” said Nathif Adam, the chief executive of FCB. “We see this move as strengthening our portfolio of Islamic financial services,” Mr Adam said.

FCB has been seeking to expand its financial services venturing into takaful – Islamic insurance services— last year in partnership with Cannon Assurance.

Its banking business, which was started in 2008, is yet to break even but has seen a reduction of losses.

In the six months to June last year, the bank made a net loss of Sh67.8 million, representing a reduction of 24 per cent compared to the net loss of Sh89.1 million a year earlier.

Mr Adam attributed the sustained losses to an ongoing expansion plan that saw the bank open six new branches last year, adding that the bank should break even

Interest

Kenya’s 4.3 million Muslim population, whose numbers have more than doubled in the past two decades and are richer than ever before is being seen as the reason for main driver of the attention business is paying to their interests.

It has also helped that Kenya has become the natural destination of choice for thousands of rich Somali Muslims fleeing two decades of war in their country.

Sharia law bars financial services providers from earning or charging interest and instead offers a return to savers by sharing profits from ethical businesses that do not include alcohol, tobacco and gambling.


http://www.businessdailyafrica.com/Corporate%20News/Sharia%20compliant%20unit%20trust%20fund%20is%20launched/-/539550/1100492/-/undc1sz/-/index.html

^^the way to go :cheers::cheers:

Desertb could you explain to me how this Islamic banking phenom' works out, the issue of interest and how the banks make their money esp in a competative market with diverse and large players?

Desertb could you explain to me how this Islamic banking phenom' works out, the issue of interest and how the banks make their money esp in a competative market with diverse and large players?

one thing i remember is that sharia law does not allow charging intrest. desertB can educate us a lil bit on the details

http://www.businessdailyafrica.com/Corporate+News/Nairobi+opens+exchange+for+carbon+credits/-/539550/1134236/-/12ptfumz/-/index.html

NSE to sell its shares to public by April

The proposed separation of ownership and management of the Nairobi Stock Exchange — demutualisation — is part of broader ongoing reforms aimed at deepening the capital markets in the country.

The industry regulator, Capital Markets Authority, published rules last month that will guide the process, which will see the NSE selling its shares to the public by April this year.

“The legal, institutional, and regulatory reforms are expected to broaden markets by increasing competitiveness, encourage development of new financial products, enhancing governance structures and bolstering investor confidence,” said CMA chief executive, Mrs Stella Kilonzo.

She added the reforms are in line with Kenya’s aspirations under the Vision 2030, where the capital markets are expected to play a pivotal role in mobilising long-term resources to support productive economic activities.

She was speaking during a discussion on demutualisation at the International Organisation of Securities Commissions Africa Middle East Regional Committee Conference in Mauritius.

The stock exchanges in Mauritius — the first stock exchange to demutualise, South Africa and Dubai, have already demutualised, while Nigeria recently announced plans to embark on the process.

Speakers pointed out some of the positive impacts of demutualisation on their markets such as increased trading volumes as a result of embracing technolog.

Daily Nation (http://www.nation.co.ke/business/stocks+++forex/NSE+to+sell+its+shares+to+public+by+April/-/1008/1109610/-/nw01b9z/-/index.html)

First NSE cross-listing to open window for investors

The Nairobi Stock Exchange (NSE) is set to see the first ever cross-listing of a company from a neighbouring country, opening a new investment opportunity for investors keen on diversifying their portfolio beyond Kenya’s economy.

The intended cross-listing of “at least two companies” from neighbouring countries is still at the discussion stage, but the NSE said at least one of the firms is expected to start trading before the end of this year.

Mr Donald Ouma, the head of product development and research at the NSE, said the new stock is expected to be listed by way of an initial public offering (IPO).

He, however, declined to reveal the identity of the firms citing client confidentiality, but said more details will be made public before the end of next month.

“We have held discussions about a yet-to-be listed stock from the region, the company to be cross-listed would be by way of an initial public offer,” said Mr Ouma.

Rwanda’s biggest State-owned lender Bank de Kigali’s is expected to be sold to the public later this year in an IPO, making it a prime candidate for the intended cross-listing.

At least seven Kenyan companies are cross-listed in Uganda, Tanzania and Rwanda stock exchanges, but no company from the region has listed its shares at the Nairobi bourse.

The cross-listed companies include Kenya Airways, KCB, Nation Media Group, Centum, Diamond Trust Bank, Jubilee Holdings and Equity Bank.

Regional markets

Safaricom, Stanbic Bank Uganda and Rwandese beer maker Bralirwa have floated cross-border IPOs, giving local investors a chance to diversify their investments even though they their exposure to neighbouring countries remains small mainly because the other regional capital markets are still at their infancy.

In Rwanda for instance, the Kigali Stock Exchange was launched in January this year.

It has only three listed companies, Bralirwa — the country’s biggest beer and soft drinks maker, Nation Media Group and KCB.

The expected cross-listing will take the tally of listed firms at the NSE to 56 with at least five other local firms, among them British-American Investments Company and TransCentury expected to list at the bourse before the end of the year.

In an interview last week, chairman of Dyer and Blair Investment Bank, Mr Jimnah Mbaru, predicted that the company most likely to be cross-listed at the local bourse would be Bank de Kigali, which is expected to sell 25 per cent of its shares to the public to raise additional capital to fund growth.

“The only offering I expect to go public and cross-list at the NSE would be the Bank de Kigali,” said Mr Mbaru, whose firm was a joint transaction adviser in the listing of Bralirwa.

He is betting on the capital requirements by both governments and corporations across the entire region to encourage fundraising activities beyond their jurisdictions- a key factor informing the ongoing push for the integrating of the regional capital markets.

Mr Ouma added that the NSE was working with the other stock exchanges to introduce a trading platform that would integrate their operations aimed at minimising price differentials in the specific markets for cross-listed shares.

BusinessDailyAfrica (http://www.businessdailyafrica.com/First+NSE+cross+listing+to+open+window+for+investors/-/539552/1158432/-/item/0/-/u9f78w/-/index.html)

Kenya shilling falls to almost 90 against dollar
The Kenya shilling Monday fell further to trade at Sh89.50 against the US dollar.

This came even as the market was alive to the fact that the local currency could plunge to as low as Sh90 against the green buck soon.

Market records indicate that the last such levels were witnessed in March 1994.

The all time lows, dealers in the market have noted, is a worrying trend, having been sustained in the last one month.

“We have seen the demand rising over the last one month and not the same can be said of supply.

“This is very worrying for the market,” a dealer at a local bank, who did not wish to be named, said.
continue reading (http://www.nation.co.ke/business/news/Kenya+shilling+falls+to+almost+90+against+dollar+/-/1006/1180350/-/33rit2/-/index.html)...

If only Kenya's economy was geared towards exporting huh? Inflation is expected to increase.

New CMA chairman steps in with focus on market reforms
The newly-appointed chairman of the Capital Markets Authority (CMA), Mr Kung’u Gatabaki, plans to steer market reforms as he steps into his new role in the regulatory body.

Mr Gatabaki said his priority would be to add urgency to the process of re-structuring stockbrokers’ ownership and management of the Nairobi Stock Exchange (NSE), which is behind schedule.

“I realise the important role of the capital markets in accelerating capital-raising to finance investment. I will work closely with fellow CMA board members to ensure we steer the authority to deliver on this important development agenda,” said Mr Gatabaki.
continue.. (http://www.businessdailyafrica.com/New+CMA+chairman+steps+in+with+focus+on+market+reforms/-/539552/1181536/-/9gclbj/-/index.html)

Shilling firms against the US greenback
The Shilling firmed against the dollar Wednesday helped by off-shore selling of the greenback and traders said the Kenyan currency was still under pressure from the energy and food sectors.

Commercial banks quoted the Shilling at 89.20/30 against the dollar -- after touching a high of 89.00/10 earlier-- stronger than its Tuesday close of 89.35/45.

“The Shilling has been boosted by off-shores selling dollars in early trade. We are likely to see some corporate demand push it lower though,” said Mr Dickson Magecha, a senior trader at Standard Chartered Bank.

Traders said they expected the Shilling to trade in the 88.50-89.50 range against the dollar in the days ahead, after it hit an all-time low of 89.80/90 on Monday.
continue.. (http://www.businessdailyafrica.com/Shilling+firms+against+the+US+greenback/-/539552/1181550/-/wx4j44/-/index.html)

CMA flags off Shelter Afrique’s fourth bond issue

Mortgage financier Shelter Afrique has received the Capital Markets Authority’s approval to sell the first tranche of its Sh3 billion bond, setting the stage for this year’s first corporate issue.

The housing financier will start by issuing a Sh2.5 billion note.

Founded in 1982, Shelter Afrique is owned by governments of 42 African countries, the African Development Bank and the African Re-Insurance Corporation. Kenya owns 13 per cent of the firm.
continue.. (http://www.businessdailyafrica.com/CMA+flags+off++Shelter+Afrique+s+fourth+bond+issue/-/539552/1181540/-/dfwsbvz/-/index.html)

How you could own a piece of prime real estate
Mention the term real estate investor and what comes to mind is a well-heeled individual who can put millions of shillings into a building project with relative ease.

Because of its capital-intensive nature, real estate investment is for the rich.

The less materially-endowed Kenyan majority, just as happens in many other economies, have to join forces and pool resources if they want to invest in the property market.

Happily, that is about to change, thanks to a new investment window that seeks to allow real estate to be traded on the Nairobi Stock Exchange.

The Capital Markets Authority has drafted rules for a special investment vehicle known as Real Estate Investment Trusts (REITs) that will allow individual investors to buy and sell shares of properties listed on the bourse in much the same way people trade in stocks and shares of companies listed on the stock exchange.

Large investors will be allowed to raise money from the public through the capital market, making it possible to channel capital into the real estate sector in a more structured manner.
continue.. (http://www.nation.co.ke/Features/DN2/Move+to+trade+real+estate+on+NSE++/-/957860/1181592/-/vytnt3/-/index.html)

Uncertainty in financial markets as Kenya shilling touches historic low

Money markets remained jittery on Thursday amid concerns about stability of the shilling, as it was pushed above Sh90 to the dollar.

At one point, the currency exchanged at Sh91.05, a level which market traders noted was a historic high.

The last time the local currency flirted with such lows was in March 1994 at the height of the Goldenberg scandal.

As the local currency slipped, there was evident anguish among importers who now fear losing billions of shillings to the weak shilling.

Analysts pointed to weakening in the coming days, notably in offshore interests, as well as the economic turmoil in the Euro zone, especially Greece, having an impact.

“We are not seeing any inflows and without action, it can weaken further,” Mr Steve Lagat, a dealer at CfC Stanbic Bank, told the Nation

The febrile mood in the markets was accentuated by silence from the Central Bank of Kenya, which appeared caught off-guard by the movement.
Source (http://www.nation.co.ke/business/news/Kenya+shilling+touches+historic+low/-/1006/1183790/-/34hdraz/-/index.html)

Eddeux, what are your opinions/projections/analysis about the stock exchange... you have been reposting what's in the media...

sharia loans might not be charging interest...but you do think you paying back the same amount...nope.you will be paying imputed interest which will be added on the loan.nairoberry..if you have some time read about the financial mess of dubai, you will have a better understanding of this sharia loans-how the global markets are dealing with these loans....good question nairoberry.

Eddeux, what are your opinions/projections/analysis about the stock exchange... you have been reposting what's in the media...

Honestly, I dunno. It's so unpredictable, imo.-_-..The weak shilling definitly isn't improving my prospects for the NSE, but we'll see. we'll just have to wait and see how things turn out.:)

Defensive share plays on NSE to beat weak shilling
The Central Bank of Kenya moved to stem the tide by raising the Central Bank Rate by 25 basis points to 6.25 per cent. But the shilling has continued on a losing streak, touching lows of Ksh91 to the dollar last week.

If, as widely expected, the shilling continues on a downward slide against the dollar in coming weeks, which stocks will be safe?

Renaissance Capital analysts pick Athi River Mining, KCB, KPLC, Safaricom, EABL and Mumias.
TheEastAfrican (http://www.theeastafrican.co.ke/business/Defensive+share+plays+on+NSE+to+beat+weak+shilling/-/2560/1189076/-/6jqh00/-/index.html)

NSE to introduce new performance indicators
Nairobi Stock Exchange is expected to introduce new performance indicators to reflect its expanded portfolio of companies.

The bourse, according to second vice-chairman Job Kihumba, has engaged the London-based FTSE and other experts to come up with the new indices. Commonly referred to as footsie, the FTSE 100 is a share index of the 100 most highly capitalised UK companies listed on the London Stock Exchange.

“We hope that once the new indices are in place, it will be used by investors to accurately gauge the performance of listed portfolios at the NSE,” Mr Kihumba said Thursday during the listing of TransCentury shares.

Currently, the market has two indices – NSE 20 share and All Share Index – used in measuring performance with plans to introduce the Treasury Bond Index.

The NSE 20 share index is a compilation of 20 blue-chip companies with strong fundamentals listed at the market, while the Nairobi Stock Exchange All Share Index (NASI), introduced in 2008, tracks all the shares. The business segments of the market will be reclassified from next month.
BusinessDailyAfrica (http://www.nation.co.ke/business/news/NSE+to+introduce+new+performance+indicators/-/1006/1201370/-/5cb2ce/-/index.html)

NSE closes week on low curve, dips 15pc in 6 months

Performance of the Nairobi Stock Exchange closed the week on a low drive, a trend it has maintained in the past six months.

The market has been down 15 per cent in the six months of 2011, but is expected to pick up in the coming week as listed firms release their half year results.

The day’s top gainers were ‘unusual suspects’ according to African Alliance Kenya Securities, among them included Kenya-Re, Crown Berger and Express Ltd.

Significantly, Olympia Capital gained 3.4 per cent to Sh4.50 after news that management decided to sell its loss making South Africa-based subsidiaries

The market shaved off 5.06 points in the week to close at 3777.41 points on the NSE 20 share index.

The more inclusive Nairobi All Share Index (NASI) was also down 1.39 per cent during the week to settle at 85.57 points.

However, turnover for the week went up to Sh2.25 billion from last weeks Sh1.71 billion.

In the main market segment, Sasini was the most heavily traded counter, accounting for 74,000 of the day’s trade. Rea vipingo moved 28,000 shares in the segment at Sh14.65 in the day’s session.

In the commercial sector, a total of 83 million shares were traded, accounting for an estimated 60 per cent of the day’s volume.
ScanGroup touched a high of Sh52.50, continuing with its status as the best performer in the market in the first half of 2011.

Safaricom on the other hand moved 72 million shares during the week, closing at Sh3.65.

This was on the background of a review of its Internet pricing, mostly targeted at users of its modem facility. The counter continues to witness heavy performance from foreign investors.

In the financial sector, Kenya Commercial Bank was heavily traded with 25 million shares exchanging hands. Equity Bank went down 2.17 per cent to close the week at Sh22.50, while Co-operative Bank ended the week at Sh15.

Daily Nation (http://www.nation.co.ke/business/news/JOSEPH+BONYO/-/1006/1206080/-/ux1o1kz/-/index.html)


CMA to map out regulations for listing of SMEs

The Capital Markets Authority will meet in October to harmonise regulations, touching on the legal aspects, to the enable small and medium enterprises be listed at the Nairobi Stock Exchange. CMA chief executive Stella Kilonzo also hinted that they are exploring other products such as the real estate corporate to be listed in the special market division, to raise enough capital for their expansion strategies and bridge the equity gap.

The SME sector for example contributes about 18 per cent to the Gross Domestic Product and employs about 75 per cent of the workforce. “We are undertaking a product development in the market, which would be driven strictly by the regulatory board,” she said. Ms Kilonzo also disclosed that they are in discussion with financial regulators to explore possibilities of creating a one-stop shop to handle similar issues on companies seeking approval for listing.

The regulators are Central Bank of Kenya, Capital Markets Authority, Insurance Regulatory Authority, and the Retirement Benefits Authority. “We will work with the market players on how best to support the innovation for a particular product or service to be introduced,” she promised. Ms Kilonzo said that discussions are underway to explore possibilities of the regulators holding joint supervision concerning issues of a given sector that converge as part of the regulator’sefforts to increase the number of companies to list at the stock exchange.

“We aim to join hands to regulate the entire finance industry and ensure there is no regulatory arbitrage by sharing information between the regulators,” she said, urging for the market players to be patient as this is a process.

SME capital market

The market division will have less stringent regulations for the sector. Currently, the bourse is made up of the Alternative Investment Market Segment (Aims) and the Main investment Market segment (Mims). Their listing requirements have discouraged small and medium enterprises from participating in the stock market. Companies wishing to list at the NSE have an asset base of between Sh20 million and Sh100million, a shareholder roll of between 100 and 1,000 and constantly publish its financial reports and disclosures publicly as a public firm. Firms also have to be profitable for five years in a row before listing.
Daily Nation (http://www.nation.co.ke/business/news/CMA+to+map+out+regulations+for+listing+of+SMEs/-/1006/1205274/-/jqsqeq/-/index.html)

Weak shilling cuts spending on imports

Delays in placing import orders because of the weak shilling and a declining petroleum bill is improving Kenya’s balance of trade.

Latest data from the Central Bank of Kenya shows that the deficit between import bills and export receipts declined to Sh47.6 billion in April, from Sh65.9 billion reported in March, the highest level since 1998.

The value of imports for April was Sh87 billion compared to Sh109 billion in March. Exports declined to Sh39.4 billion in April from Sh43.9 billion in March.
[..continued]
Business Daily Africa (http://www.businessdailyafrica.com/Weak+shilling+cuts+spending+on+imports/-/539552/1205392/-/ys6n65/-/index.html)

New listings at EA bourses boost for share registrars

This year’s new listings at various stock exchanges in the East African region have opened up opportunities for share registrars.

Registry services have been facing intense competition causing them to expand into other countries and diversify into other revenue streams.

The share registrars, who have also been investing in technology and offering value added services such as coordinating annual general meetings, are looking to attract new clients from companies listing on the bourses.

The new entrants include Bralirwa, which was listed on the Rwanda Stock Exchange (RSE) in February through an initial public offer.

The deal was handled by Kenya’s Central Depository and Settlement Corporation (CDSC).
[..continued]


BusinessDailyAfrica (http://www.businessdailyafrica.com/New+listings+at+EA+bourses+boost+for+share+registrars/-/539552/1205582/-/fry22g/-/index.html)

Equity Bank reports 57 pc growth in half-year profit

Equity Bank has reported a 57 per cent profit after tax increase in its first half-year results for 2011, largely from increased deposits.

The bank has also embarked on an ambitious expansion plan in Kenya, leveraging on the agency banking as opposed to the expensive physical infrastructure.

Profit after tax improved to Sh4.74 billion in the period ending June 2011 up from Sh3.01 billion over a similar period 2010.

Customer base grew from Sh4.96 billion to Sh6.3 billion, representing a 28 per cent improvement.

The group’s deposits increased from Sh87.8 billion to Sh130 billion over the same period. However, the bank’s total operating income rose to Sh13.1 billion up from Sh10.1 billion, a 30 per cent increase.

The bank’s chief executive Dr James Mwangi also said that they would expand into the regional market and tap the rising opportunities, readying to open 10 branches each in Rwanda and Tanzania.

“We registered the fastest growth in Uganda. In December 2010, we were in position 22 out of 23 commercial banks but as of now, we are ranked tenth,” he said.

The bank however said that it would maintain its interest rate, at 14 per cent. Central Bank of Kenya, the Industry regulator increased the rate (6.25) at which it charges loans advanced to commercial banks.

The approach is meant to tame the runaway inflation, which hit 14.49 per cent in June and a weakening Kenyan shilling against international currencies such as the dollar, pound and euro.
[...continued]
Daily Nation (http://www.nation.co.ke/business/news/Equity+Bank+reports+57+pc+growth+in+half+year+profit/-/1006/1207282/-/14npojnz/-/index.html)

CBK’s rules raise money transfer costs

Mobile phone firms will be forced to invest in new software and expertise to comply with Central Bank of Kenya demands on money transfer services.

The companies will be required to file a security audit report with the regulator and adopt new measures to protect their systems from hackers.

The move means that Safaricom, Airtel, Telkom’s Orange, and Essar’s Yu will have to contract professional bodies capable of conducting system audits on their behalf.
The policy is also expected to have an impact on software vendors and those that provide storage facilities (data centres) for transactions with mobile firms.

The proposal was drawn by the Ministry of Information. “Kenya, being the pioneer of mobile money transfer, stands to lose a lot if there are no policies that will tighten the security around this area,” said Information permanent secretary Bitange Ndemo at the East Africa cyber forum held in Nairobi.

Dr Ndemo said audits must be done by licensed firms. The mobile operators Monday said they would not comment on an issue that had not been brought to their attention. The policy is borrowed from the one used by the major electronic card service providers such as Visa, MasterCard, Discover and American Express.

Known as the Payment Card Industry Data Security Standard (PCI DSS), the policy is to be made legally effective in three weeks through the Kenya Gazette Notice.

The PCI DSS is a widely accepted set of policies and procedures developed jointly by the four major card companies in 2004 to optimise the security of credit, debit, and cash card transactions and protect cardholders against misuse of their personal information.

Mobile money transfer started in Kenya in 2007 when Safaricom introduced M-Pesa.

The service’s cumulative value of transactions since inception to March this year was Sh828 billion.

It has a customer base of 13.8 million. The innovation has not only been replicated by its other rivals, but it is also being adopted by other mobile operators around the world.

This comes at a time when global trends on cyber security indicate that hackers are moving from computers to financial transactions on mobile handsets which are used to store, send and receive money. Christopher Painter, a former US senior director of cyber security in the National Security Staff, said threats of being targeted by hackers were real.

“Governments need to be proactive to tackle cyber related crimes as criminals are always on the move with new technologies and know where money is,” said Mr Painter. In an increasingly cash-less world, e-crime has become a major transnational challenge for law enforcement agencies throughout the world, but there appears to be no breakthrough on how to contain it effectively.

Electronic thieves operate in all countries. In Africa, most, but not all, cyber criminal activities emanate from Nigeria.
BusinessDailyAfrica (http://www.businessdailyafrica.com/CBK+rules+raise+money+transfer+costs/-/539552/1207608/-/woq8isz/-/index.html)

KCB’s half-year net income increases by 42 per cent to 4bn

Increased earnings from loan interests, fees and commissions helped Kenya Commercial Bank (KCB) return a 42 per cent jump in profit after tax for the first six months to June 2011.

The bank’s half-year net income increased from Sh2.8 billion same period last year to Sh4 billion. In the period under review, profit before tax grew by 36 per cent from 4.2 billion last year to Sh5.7 billion.

“We are confident about prospects for good performance over the full year 2011,” said KCB group chairman Mr Peter Muthoka, while releasing the results Thursday.

The provision for bad debts went down by 17 per cent, having provided for Sh1 billion last year, and Sh840 million this year. Operating expenses increased from Sh8.6 billion to Sh10.3 billion attributed to costs arising from network expansion and a restructuring that has seen some of its top management leave.

The bank, ranked first in terms of assets, its total assets increased from Sh226 billion to Sh279 billion, helped by increase in loans and advances by 35 per cent from Sh130 billion to Sh175 billion in the six months to June.

The bank, with operations in South Sudan, Tanzania, Uganda and Rwanda, said its earnings per share rose to Sh2.75 from Sh2.58
Daily Nation (http://www.nation.co.ke/business/news/KCB+half+year+net+income++increases+by+42+per+cent+to+4bn/-/1006/1209680/-/egqashz/-/index.html)

Financial stocks dominate trade at NSE

Financial stocks have dominated trading at the bourse as investors take positions ahead of half-year result announcements by banks.

The stocks accounted for 34 per cent of the shares traded on the bourse yesterday and 70 per cent of the market’s turnover, with banks accounting for 93 per cent of the financial counters’ turnover.

Financials accounted for more than half of the shares traded and 33 per cent of the turnover on the exchange on Wednesday and 22 per cent of the shares traded on the bourse and half of the market’s turnover on Tuesday.

On Monday the sector accounted for more than half of the shares traded and three quarters total equity turnover with bank stocks accounting for 99 per cent of the financial shares traded having continued from the previous week where 45.5 million of the 141 million shares traded or 32 per cent came from the financial sector. Banks moving 43.9 million shares.

“Investors are preferring to take bets on the banking stocks,” said Anthony Waweru, a dealer at Standard Investment Bank.

The KCB counter has recorded the highest activity in the sector, sometimes turning higher volumes than telecommunications company Safaricom, which is the most traded counter on most days.
BDA (http://www.businessdailyafrica.com/Financial+stocks+dominate+trade+at+NSE/-/539552/1209620/-/c544xo/-/index.html)

Shilling weakens after Central Bank retains interest rate

Central Bank of Kenya’s decision to hold its benchmark interest rate piled pressure on the shilling, which slipped to 91.20 units against the dollar from Wednesday’s average exchange rate of 90.40.

The banking sector regulator held the Central Bank Rate at 6.25 per cent following its bi-monthly meeting on Wednesday, against analysts’ expectations of a rate hike to support the weakening currency.

The Monetary Policy Committee, CBK’s top policy advisory organ, argued that any more rate increase to curb inflation would be counter-productive to economic growth as the rising commodity prices were mainly driven by commodity shortages and not over-supply of money. CBK said growth of money supply was below target since September last year.

“The shilling has weakened mainly due to failure by CBK to adjust rates upwards,” said Wilson Mutahi, a dealer at ABC Bank.

He said that raising interest rates would suppress availability of loans. The market had anticipated that CBK would slightly increase lending rates to commercial banks in a move to control inflation, but the regulator focused on sustaining growth choosing to hold the rate.

Dealers said increased demand for diesel powered generators and fuel from abroad to mitigate the impact of power rationing by Kenya Power will increase dollar demand, weakening the shilling further.

Analysts at Cooperative Bank of Kenya said high demand for imported maize was one of the factors that will continue to negatively affect the local currency.

High fuel prices on the global market will also continue to pile pressure on the shilling, increasing the country’s dependence on imports.
BDA (http://www.businessdailyafrica.com/Shilling+weakens+after+Central+Bank+retains+interest+rate/-/539552/1209578/-/14atjgmz/-/index.html)

I guess financial stocks are the safest as of now on the NSE. With power rationing coming, rising inflation, high oil prices and the shilling weakening (which it'll probably continue to do throughout the year I bet), stocks from other industries may not be that attractive...

I guess financial stocks are the safest as of now on the NSE. With power rationing coming, rising inflation, high oil prices and the shilling weakening (which it'll probably continue to do throughout the year I bet), stocks from other industries may not be that attractive...

Last year witnessed some of the worst performance by listed stocks at the Nairobi Bourse(In whole of Africa). Worst still the overall market capitalisation looks to pretty much be just dependent on the stability of the fluctuating shilling rather than numbers of attracted IPO's or trading volumes, thus signalling very depressing growth patterns.

I suppose the proposed(beginning) of listing the reit stocks may just do the magic since the real estate markets are some of the most lucrative in Kenya at the moment.

Draft rules set the stage for regional corporate bonds

East African companies that plan to sell corporate bonds in neighbouring member states will be required to have a minimum capital base of Sh76.5 million ($850,000) and net assets of Sh153 million ($1.7 million).

The companies will also have to apply for approval of their bond issues from respective capital market regulators, according to draft regulations drawn by the East African Securities Regulatory Authorities (EASRA).

The proposed rules are meant to facilitate access to a larger pool of capital for governments. Companies in the East Africa looking to raise huge amounts of money to finance large scale projects will also benefit from the new rules.

The issuers would be allowed to raise a minimum of Sh76.5 million ($850,000) from the regional bonds.

Institutions and companies that issue bonds in the region will, however, pay more than they would if they issued bonds in Kenya, Tanzania, Uganda and Rwanda since each regulator that approves the bond issue will get an equal share of fees — set at 0.1 per cent of the issue — subject to a minimum of Sh4.5 million ($50,000) and a maximum of Sh22.5 million ($250,000).

The authority expects that if the new rules are passed the amount of bonds outstanding will increase, boosting development projects in the region.
BDA (http://www.businessdailyafrica.com/Draft+rules+set+the+stage+for+regional+corporate+bonds/-/539552/1212372/-/item/0/-/b0p167z/-/index.html)

Weak shilling approaches all-time low against dollar

The Kenyan shilling weakened to near its all-time low against the dollar Tuesday, dragged down by demand for the greenback from importers, notably in the energy sector, traders said.

At 10.00 GMT, commercial banks quoted the shilling at 91.40/60 against the dollar -- the same level it was before central bank’s action -- and down from Monday’s close of 91.20/30.The shilling hit a record low of 91.90 on June 22.

Traders said they expected the shilling to trade in the 91.00-92.00 range during the session with a bias for further weakening.

The central bank -- also wrestling with a shortage of shillings in the market -- said it injected 14.66 billion shillings ($160 million) into the market through reverse repos. The bank has been doing reverse repos in the recent weeks in a bid to manage liquidity and fill a funding gap that traders said will only be filled once some government securities mature.
BDA (http://www.businessdailyafrica.com/-/539552/1212344/-/5qog0oz/-/index.html)

Banks squeeze depositors in race for super half year profits

Commercial banks cut deposit rates and kept lending rates up to create new headroom for interest income growth that helped power their profits to the double digits territory in the first half of the year, industry statistics show.

Profit growth in top-tier banks that have so far reported half-year results was helped by a steep drop in interest expenses and robust defence of the deposit base against high inflation and currency shocks.

Slashing interest expenses saved the lenders hundreds of millions of shillings, leaving companies and individuals with large piles of cash in their bank accounts in a tight spot.

Mr Alkarim Jiva, the chief financial officer at Diamond Trust Bank told the Business Daily that excess cash in circulation, low inflation and interest rates that prevailed from the second half of 2010 till March this year had made the cuts possible – even as he warned of major shifts in the remaining part of the year.

“The low expenses were the product of high liquidity and a low interest rate regime that left the T-Bill rate at about two per cent at the beginning of the year,” Mr Jiva said.

Interest rate on the 91-day T-Bill dropped from 6.8 per cent in January 2010 to less than three per cent a year later – before rising steadily to the current average rate of nine per cent. Banking industry data shows that companies and individuals with large cash piles in fixed deposit accounts were the worst hit as deposit rates fell by nearly one percentage point in the past 12 months.

The average interest on fixed deposits stood at 4.45 per cent in June last year but dropped steadily to Sh3.51 per cent in a similar period this year, according to the Central Bank of Kenya.

This means that a depositor with Sh10 million in a fixed account can now earn only Sh368,000 per annum, down from Sh445,000 last year.
BusinessDailyAfrica (http://www.businessdailyafrica.com/-/539552/1215086/-/5qmfaxz/-/index.html)


Brokers reap from upsurge in NSE listings

ecent listings at the stock exchange have breathed new life into stockbrokers’ business as demand for transaction advisory services has risen after a two-year lull.

Family Bank announced last week that it has picked transaction advisors for its listing expected later this year.

Dyer and Blair is coming out as the greatest beneficiary following Family Bank’s decision to hire the investment bank as the lead transaction advisor, a role it also handled for the TransCentury listing last month.

CFC Insurance Holding had its sister company CFC Stanbic Financial Services take up the transaction lead role while British American has a joint lead advisory team of NIC Capital and KPMG.

Transactional advisory services usually earns the brokers more lumpsum money than ordinary brokerage services.

TransCentury spent Sh8 million on professional advisory services for both financial and legal teams, and an extra Sh4 million on stockbrokers’ commissions.

CFC Insurance paid out Sh12 million to the transaction advisers while NIC Capital and KPMG have budgeted Sh24.3 million for their advisory services to British American.
BusinessDailyAfrica (http://www.businessdailyafrica.com/Brokers+reap+from+upsurge+in+NSE+listings++/-/539552/1214994/-/ymfksd/-/index.html)

Ecobank Kenya First-Half Net Rises 7.8% as Loan Income Increases
Businessweek (http://www.businessweek.com/news/2011-08-11/ecobank-kenya-first-half-net-rises-7-8-as-loan-income-increases.html)

Ecobank Transnational Inc.’s Kenyan unit said first-half profit climbed 7.8 percent as earnings from loans increased.

Net income grew to 126 million shillings ($1.34 million) in the six months through June from 117 million shilling a year earlier, Ecobank Kenya Ltd. said in a statement published in the Nairobi-based Daily Nation newspaper today. Net interest income, the money banks earn from interest charges on loans, jumped 42 percent to 543.3 million shillings, it said.

http://www.businessdailyafrica.com/image/view/-/1220102/medRes/287032/-/maxw/600/-/ip7o3o/-/banks.jpg

Commercial banks recorded double-digit growths in foreign exchange earnings in the first half of the year, turning focus on the lenders’ forex dealing practices amid accusations that they were profiting from speculative trading of the Kenyan currency.

KCB, Barclays, CitiGroup, Equity and Co-op collectively reported a 35.7 per cent growth in forex earnings to Sh5.1 billion in six months to June.

Equity Bank, Kenya’s biggest lender by profitability and customer base, recorded the biggest jump in forex earnings to Sh683.4 million, a 135.4 per cent increase.

Income grew

CitiGroup was second with a forex income growth of 79 per cent to Sh1.2 billion, while Co-op Bank’s currency dealing income grew 43.9 per cent to Sh534.8 million. Barclays’ increased by 12.9 per cent to Sh1.3 billion.

Central Bank of Kenya (CBK) governor Njuguna Ndung’u has regularly attributed volatility of the shilling to speculative trading by commercial banks seeking to make outsized forex gains.

Lately, Prof Ndung’u has restricted the banks’ access to cash from CBK by tightening rules for the overnight borrowing window to stem further weakening of the currency.

=>Source (http://www.businessdailyafrica.com/Banks+earn+Sh5bn+in+six+months+from+forex+trade/-/539552/1220100/-/i1mrt9/-/index.html)

They are growing, but I read an article last month saying despite all of this banks are still reaping off of high interest rates. The article said it was due to high overheads mainly. Perhaps Kenya's 44 banks should be reduced..Possibly to say 25. Let some of the larger ones like Equity Bank, KCB, Co-operative Bank, Standard Chartered, & Diamond Trust buy out some of the smaller ones.

the article (http://allafrica.com/stories/201107120578.html):

Banks Reaping From High Interest Rates, But This Trend Has No Long-Term Future

The biggest controversy with regard to the banking sector over the past few years has been that of the interest rates.

The current high and rising interest is a challenge. Commercial banks have been lending at the upper end of the interest rate spread despite the lowering of the CBK base rate between 2008 and early this year.

President Kibaki, Finance minister Uhuru Kenyatta, and Central Bank of Kenya governor Njuguna Ndung'u have tried to persuade commercial banks to lower lending rates with little success. High overheads have been cited as the root cause of the problem. While this may be true, it could also be that we have too many commercial banks.

Although the increased number of banks would normally be expected to induce competition, the 43 banks currently operating in the country are too many for a small economy such as ours. Countries with bigger economies and higher population have far fewer banks.

The increase in the number of banks has led to competition in the clamour for deposits from few sources, resulting in high cost of funds in the form of paying high rates to big depositors, contrary to the norm that competition brings down prices.

Kenya's banking system could do better with fewer banks. Some banks are small, yet they have to invest heavily in their own switch, open up many branches, and roll out products for just a few customers, making their cost per customer high.

This is eventually passed on to the client. If we had fewer banks spread over the same number of customers, the cost would reduce, translating into lower lending rates.

The decision by the Central Bank to increase the minimum core capital of banks from Sh250 million to Sh1 billion was the opportune time to slash the number of banks.

However, we seem to have missed the chance because CBK either gave the banks too much time or most banks were already meeting the new requirement.

If the time to meet the requirement was shortened or a core capital higher than Sh1 billion set, some banks would have been compelled to either merge or be taken over by bigger banks.

The quest to post high profits is also responsible for high banking and lending rates. The assertion that credit risk and/or overhead cost is to blame for the high cost of lending is, therefore, only partially true.

According to a recent World Bank report, the interest rate spread in Kenya has remained relatively steady and hovered between 10-12 per cent for the past few years.

Overheads and profit margins have kept the spread high, contributing 4.22 and 3.19 per cent respectively.

Profit margin contributes around 33 per cent of this spread, compared to provisioning for bad and doubtful debt loans, which accounts for only around 15 per cent of the spread.

Although urgent attention is needed to bring sanity and fairness to the system, there is little the authorities can do to force banks to lend at reasonable rates.

If commercial banks have not responded to CBK's reduction of the base rate by lowering their own lending rate, policy makers stand little chance of persuading banks not to raise their lending rates now that the base rate is headed north. Kenyan businesses and households can only hope that the moral conscience of commercial banks can trigger a favourable response to calls to reduce interest rates.

The commercial banks owe it to themselves and to the nation to lower the cost of borrowing. The current state of affairs is not tenable.

Commercial banks must realise that excessive interest charges increase the risk of huge loan losses and financial instability in the medium-term, which creates a necessity for them to moderate short-term profit expectations.

They must see provision of affordable credit as being in their own interest. They need the economy as much as the economy needs them. In fact, it is not possible to talk about long-term stability of the banking sector without a strong and prosperous economy.

One of the major sources of funds that keep banks going is interest payments from the private sector. A weak private sector is a serious threat to financial stability and will not be in the long-term interest of the banking sector.

Kenya’s Central Bank Increases Its Overnight Discount Window Rate to 13.9%
Bloomberg (http://www.bloomberg.com/news/2011-08-16/kenya-s-central-bank-increases-its-overnight-discount-window-rate-to-13-9-.html)

Kenya’s central bank raised its overnight lending rate to 13.87 percent today from 11.34 percent yesterday, when it began tightening restrictions on borrowing.

The bank announced on Aug. 12 it would begin applying a 3 percentage-point “penalty” on the benchmark interest rate or interbank rate, whichever is higher, to loans by banks from the overnight window. It previously applied the benchmark lending rate, currently at 6.25 percent and reviewed bi-monthly.

The measures were taken to further tighten monetary policy, the bank said, after inflation accelerated for a ninth straight month in July and the shilling weakened to its weakest level in 17 years earlier this month. Today’s increase was posted on the Nairobi-based regulator’s website.

The shilling, Africa’s second-worst performing currency this year, weakened 0.4 percent against the dollar to 93.20 by 12:42 p.m. in Nairobi today.

The monthly average interbank rate last exceeded 13.87 in November 1999, when it rose to 16.62 percent, according to data on the central bank’s website. It didn’t provide daily data.

NIC Bank profit up by 35 per cent
Nation (http://www.nation.co.ke/business/news/NIC+Bank+profit+up+by+35+per+cent/-/1006/1221156/-/hl5w2gz/-/index.html)

NIC Bank has reported a 35 per cent increase in its after tax profit for the half-year period ending June 30, 2011.

The bank recorded Sh1.09 billion compared to the Sh818 million it had in a similar period last year.

In a statement sent through the Nairobi Stock Exchange, the bank’s profit before tax also jumped 33 per cent in the period.

This saw it record Sh1.6 billion in the period under review up from the Sh1.2 billion it posted in 2010.

Net interest income for the commercial bank grew by 17 per cent largely on loans and advances, although earnings from government securities went down.

In the period, it managed Sh2.7 billion compared to the first-half of 2010, where it posted Sh2.3 billion.

On the other hand, non-interest income for the bank grew marginally by three per cent from a previous Sh964 million to Sh1 billion.

Customer deposits with the bank, however, went down in the six months under review by 15 per cent to Sh761 million.

Last year in the same period, customer deposits with the bank peaked at Sh892 million.

Like its peers, the bank also realised marked gains in foreign exchange trading, which went up by 19 per cent.

This rose from Sh303 million in 2010 to Sh362 million in the first half of the year.

Nairobi bourse recovers slightly from decline
Nation (http://www.nation.co.ke/business/news/Nairobi+bourse+recovers+slightly+from+decline++/-/1006/1221906/-/db4e6sz/-/index.html)

The Nairobi Stock Exchange slightly recovered from its decline in the week to close the trading session at 3546.33 points.

The one per cent rise in the NSE 20 share index came after the market, at the beginning of the week, suffered its worst fall in 20 months.

Analysts have indicated that the market is in a buyers form, with massive bargain opportunities

The more inclusive Nairobi All Share Index (NASI) also edged up slightly by 0.04 per cent during the week to settle at 78.63 points.

According to a report from the NSE, the telecommunication and technology sector was the most traded segment, accounting for about 58.48 per cent of the week’s activities.

“Safaricom was the week’s main feature with 98.2 million shares changing hands at between Sh3.15 and Sh3.40,” noted the report.

Year to date, the market has shed 22 per cent in activity due to a number of factors, top being a weak currency.

Others are escalating fuel prices, a surge in local liquidity prompted by heavy bank lending to the private sector, and food inflation caused by the region’s persistent drought.

This has seen mostly foreign investors take the centre stage at the market, as local investors shy away.

Banks told to pass on benefits of reforms by lowering rates
Nation (http://www.nation.co.ke/business/news/Banks+told+to+pass+on+benefits+of+reforms+by+lowering+rates+/-/1006/1221908/-/8g54bi/-/index.html)

Commercial banks have been challenged to pass the benefits of reforms being carried in the banking sector to customers by lowering their lending rates.

Deputy Prime Minister and Minister of Finance, Mr Uhuru Kenyatta, made this call when presiding over the official opening of the Meru Currency Centre to serve banks in the upper Eastern region.

Currency Centres are Central Bank of Kenya initiative to set up banks’ cash drop off points outside its three branches, — Nairobi, Mombasa and Kisumu — cutting on distance and, by extension, the cost incurred by financial institutions in banking with it, or when seeking to replace old currency.

Meru is the third of such centres, with Nakuru and Nyeri making up the other two.

“I encourage all banks to take advantage of the currency centres to cut down their operational costs and ensure that the benefits accrued are passed on to the customers in order to lower the overall costs of financial services,” Mr Kenyatta said.

The centres are estimated to cut on transportation costs by up to 30 per cent.

Central Bank Governor Njuguna Ndung’u said the Meru, Nakuru and Nyeri currency centres were handling 12 per cent of the total currency activities in the country and served 172 commercial banks’ branches.

He said the currency centres’ concept had encouraged many banks to expand their network and led to good circulation of money.

Kenya Bankers’ Association chief executive officer Habil Olaka said banks had already cut down operational costs.

“There are numerous instances where one commercial bank branch would be making a trip to Nairobi to deposit cash at the Central Bank and, on the way, the cash in transit van would meet with another van coming from Nairobi, having withdrawn the same exact amount of cash.

When the costs of the transportation, staff, police escort and chase cars are considered, the savings that this project brings to the industry are self-evident,” he said.

NSE Market Wrap

_I39H6xBQ1w
http://abn.pl.privatelabel.co.za/pics/abn-logo.gif

Kenyan shilling dips vs dlr, stocks edge up
NAIROBI, (Reuters)

The Kenyan shilling dipped against the dollar on Friday as energy sector importers bought the U.S. currency after its slide the previous day, while stocks rose for a fourth straight session as investors continued bargain hunting. The shilling had gained in the previous session after it became harder for banks to fund long dollar positions following the central bank's move to tighten its overnight lending rules last week, sending the discount window rate up.

At the 1300 GMT close of trade, commercial banks quoted the shilling at 92.85/93.05 against the dollar, weaker than Thursday's close of 92.75/95. "The shilling has been on the back foot because of dollar demand from the energy and corporate sectors with subdued supply," said Sameeer Lagadia, head of trading at Diamond Trust Bank.

Traders said activity was muted as banks squared their books ahead of the weekend, but they expected the shilling to resume its winning form next week as the squeeze on liquidity persists. They said banks were also still trying to work out how to best adjust to the tougher rules for accessing liquidity from the central bank.

"There is some uncertainty around the discount window as the market tries to understand what that means," said Raphael Owino, assistant general manager of treasury at Commercial Bank of Africa.

On the stockmarket, the benchmark NSE-20 Share Index edged up 0.17 percent to 3,546.33 points as investors bought into cheaply priced shares following weeks of steep losses that sent the index to an 19-month low last week.

"People are buying on most counters as they feel the prices had fallen to good levels. They are taking advantage of this to get into positions," said an analyst at Sterling Investment Bank, who did not wish to be named.

Agricultural stocks dominated the list of the day's biggest gainers as investors bought those shares in anticipation that the weak shilling would translate into higher export earnings. Shares in tea and fresh produce grower Kakuzi led the gainers, jumping 6.72 percent to 71.50 shillings, while Kapchorua , another tea grower, rose 4.35 percent to 120 shillings.

"There are sentiments that agricultural firms will have better results due to the weak shilling this year," said the analyst at Sterling Investment Bank.

In the debt market, corporate and government bonds worth 10.07 billion shillings were traded this week, down from 10.24 billion shillings traded in the previous week.

Traders said the liquidity crunch in the market had affected trading in the fixed-income market.

"There has not been much activity. What is happening is buy-sell-backs rather than outright trading. The only buyers in the market right now are fund managers," said James Chweya, a trader at Standard Chartered Bank.
http://abn.pl.privatelabel.co.za/pics/reuters_logo.jpg

A chart showing NSE's performance since May...

http://196.30.144.98/irsites/cnbc/graphs/Kenia_NSE%2020_3m.png?r=0.6123002055210677


It's been a rough summer:(

Central Bank Governor Sees Slower Inflation Once Somali Famine Eases
Bloomberg (http://www.bloomberg.com/news/2011-08-19/kenya-central-bank-governor-sees-slower-inflation-once-somali-famine-eases.html)

Kenyan central bank Governor Njuguna Ndung’u said he’s confident inflation will slow in coming months after being pushed higher by surging demand for food from tens of thousands of Somali refugees fleeing famine.

“We should see a significant decline in food prices by October,” Ndung’u, 52, said in an interview yesterday in his Nairobi office. The cost of corn, Kenya’s staple food, has begun declining after the humanitarian crisis in the Horn of Africa rekindled concern over food shortages and worsened the inflation outlook, Ndung’u said. The drought in the region is the worst in 60 years, according to the United Nations.

Kenya’s inflation accelerated for a ninth month in July, to 15.5 percent, driven by a 24 percent surge in food prices. The jump in price growth has led to a 13 percent decline in the shilling this year and a warning on Aug. 12 from Fitch Ratings that a failure to lower inflation and stabilize the exchange rate would bring downward pressure to bear on its credit rating.

“A turnaround in inflation is expected in the next few months,” according to notes provided by Ndung’u during the interview.

The central bank aims to keep inflation within its 3 to 7 percent target range. Growth in East Africa’s biggest economy is expected to slow to 5.3 percent this year from 5.6 percent in 2010. That compares with a government target of boosting annual growth to 10 percent and sustaining it through 2030.

Somali Refugees

Food prices in Kenya have risen as refugees fled Somalia to the Dadaab refugee complex in northeastern Kenya, the world’s biggest such facility with more than 400,000 people. The UN has declared a famine in five regions of Somalia and predicted it may spread across the country’s southern region and persist until at least December.

“Food prices are coming down,” he said. “But even when they are coming down, we have seen more hungry faces crossing the border from Somalia and Kenya to compete for the already constrained supply.”

The Central Bank of Kenya in March predicted inflation would decelerate to 7.5 percent by year-end. Ndung’u wouldn’t comment on what the bank’s current inflation forecast is. Food costs in the domestic market may start declining as early as September or more likely in October, he said.

What if the drought lingers on into next year?http://img.photobucket.com/albums/v232/korn0818/09954248.gif

Weak shilling set to lose more ground against dollar
BDA
(http://www.businessdailyafrica.com/Weak+shilling+set+to+lose+++more+ground+against+dollar++/-/539552/1223604/-/prw89fz/-/index.html)

The shilling eased against the dollar yesterday and traders said it may lose more ground due to dollar demand, especially from the energy sector.

In the morning, commercial banks quoted the shilling at 92.90/93.10 to the dollar, compared with Friday’s close of 92.85/93.05.

“There’s a lot of (dollar) demand right now, especially from the energy sector and every time we dip towards levels below 93 there is heavy demand coming from the corporates,” said Solomon Alubala, head of trading at Co-operative Bank.

The shilling — down 15 percent this year — was expected to trade in the 92.70-93.50 range in coming days, banks predicted.

Traders said the currency might take some support from rising interbank lending rates, which has made it more attractive to hold shillings in favour of long dollar positions.

The weighted average interbank lending rate rose to 19.0341 per cent on Friday, from 16.9266 per cent a day before, and from 8.3426 on August 12, when the Central Bank of Kenya tightened its overnight borrowing rules.

Apex Africa half-year net profit up after cost cutting
BDA (http://www.businessdailyafrica.com/ApexAfrica+half+year+net+profit+up+after+cost+cutting+/-/539552/1223620/-/item/0/-/iiqvn2/-/index.html)

ApexAfrica Capital’s net profits for the first half of the year increased 30 per cent on the back of a cost cutting drive that shielded the stockbrokerage firm’s earnings from a drop in revenues by the same margin.

Profits after tax rose to Sh15.4 million as at the end of June this year, compared to Sh11.9 million in the first six months of last year as deep cost cutting saw total expenses drop by 37 per cent to Sh27.1 million.

ApexAfrica’s brokerage commissions dropped by 30 per cent to Sh46.4 million, reflecting the reduced activity at the Nairobi Stock Exchange (NSE).

The broker’s total income fell by 22 per cent or Sh13.7 million to Sh48.5 million compared to Sh62.2 million as at June last year.

Mr Muchiri said high inflation and a weak Shilling had reduced the purchasing power of investors and affected the participation of foreign buyers at the bourse, adding that many stockbrokers may see reduced brokerage commissions for the rest of the year.

According to data from the NSE, the number of shares traded dropped by 28.6 per cent to 2.8 billion shares traded between January and June this year compared to 3.7 billion shares traded over the same period last year.

The number of deals also dropped by 34.4 per cent to 229,106 deals as at the end of June this year compared to 307,922 deals over the same period last year while turnover dropped by 5.25 per cent to Sh47 billion as at the end of June this year compared to Sh49.6 billion over the first six months of last year.

Bond turnover for the first six months of this year also dropped by 10.6 per cent to Sh245.5 billion compared to Sh274.5 billion posted over the first half of 2010.

In March this year, ApexAfrica Capital Limited decided not to upgrade its licence from a stockbroker to an investment bank in line with new capital markets regulations that require investment banks to have minimum capital of Sh250 million and stockbrokers to have minimum capital of Sh30 million.

Mr Muchiri said not having an investment banking licence —which would allow a broker to offer advisory services — had not affected the business since ApexAfrica was not heavily involved in transaction advisory.

New rules to help SMEs list at the bourse

Nation (http://www.nation.co.ke/business/news/New+rules+to+help+SMEs+list+at+the+bourse+/-/1006/1223476/-/2x531q/-/index.html)

Small and medium-sized enterprises will need to have a maximum asset base of Sh10 million to list at the Nairobi Stock Exchange, down from between Sh20 million and Sh100 million.

The proposed amendment on the regulatory framework is expected to enable the sector to raise the much-needed capital to accelerate its growth.

With a raft of proposed amendments to the rules governing the trading at the stock market, interested companies applying for listing must have a minimum five directors, with at least a third of the board as non-executive directors.

The directors are also expected to disclose other details, including their past roles, in a bid to improve the sector’s corporate governance and attract more investors.

Identify directors

Prospective firms wishing to be listed must identify directors, senior management and advisors, such as persons responsible for the information disclosed, besides providing the name, home or business address and function of each of the persons.

Those interested “shall also be a public company limited by shares and registered under the Companies Act (Cap. 486 of the Laws of Kenya),” reads a part of the regulations.

The issuer must have not less than 100,000 shares in issue, as opposed to a shareholder roll of between 100 and 1,000.

This is a departure from the current establishment where the bourse is made up of the Alternative Investment Market Segment (Aims) and the Main Investment Market segment (Mims).

By listing through a special market division with relaxed rules, this will “provide an avenue for access to capital by SMEs”.

The statement also noted that the bourse has developed the Nairobi Stock Exchange (Nominated advisers) Rules, 2011, to provide for the procedure for listing SMEs.

British American Investment of Kenya Gets Bids for 60% of Shares on Offer
Bloomberg (http://www.bloomberg.com/news/2011-08-23/british-american-investment-of-kenya-gets-bids-for-60-of-shares-on-offer.html)

British American Investment Co., the Kenyan financial-services company, said it received bids for 60 percent of the shares on sale in its initial public offering as demand was curbed by the U.S. debt crisis.

The company raised 3.5 billion shillings ($37.6 million), compared with the 5.85 billion shillings it had sought, it said in an e-mailed statement today from Nairobi. The offering of 650 million shares attracted only 23 foreign investors and 72 institutional buyers, it said.

“Generally the market conditions at this time were not conducive; inflation is high, interest rates are up,” Suki Muia, an analyst at Nairobi-based Kestrel Capital East Africa Ltd., said in a phone interview today.

British American, whose shares will begin trading on the Nairobi Stock Exchange on Sept. 2, sold 390.6 million shares at 9 shillings each, it said. The company said earlier this month the funds raised will be used to finance its expansion.

Kenya to be (Sub-Saharan) Africa’s fourth most banked economy by 2020
MMA (http://mobilemoneyafrica.com/?p=3976)

Kenya is poised to become the fourth most banked economy in sub-Saharan Africa by 2020, predicts a report by the Economic Intelligence Unit, a London-based economic forecasting firm. The country’s asset base is expected to more than triple to $48 billion within the next decade, from $15 billion last year.

But Tanzania and Uganda’s banking industries are expected to outpace Kenya’s growth rate — the two countries’ asset base will more than quintuple from $5.6 billion to $28 billion in the case of Tanzania, and from $3.5 billion to $18 billion for Uganda.

Currently, Kenya dominates the East African banking scene, accounting for over 60 per cent of the region’s total assets, which are worth about $25 billion. The EIU predicts that the country will continue to be the regional leader in banking, even though by 2020, its share of the anticipated $94 billion total regional assets will shrink to 52 per cent, as the financial sectors in Tanzania and Uganda deepen.

But East Africa pales in comparison with the growth expected of South Africa and the emerging economic powerhouses on the continent: Nigeria and Angola. Already, the South African banking industry boasts an asset base of $368 billion, 10 times more than that of Kenya, Tanzania and Uganda combined. This is expected to grow to $558 billion by 2020.

Nigeria is already extending its economic reach all over the continent, with banks like United Bank for Africa and Zenith International Bank among the top 10 multinationals in Africa. The size of the country’s banking market is poised to grow from $86 billion in 2010 to $289 billion by 2020. Angola’s asset base is already about the size of the EAC’s — $25 billion — and the EIU forecasts that it will swell to $262 billion by 2020.[/B]

The report indicates that the three main drivers of this development will be high rates of economic growth, financial deepening to fulfil huge unmet needs for basic financial services, and new technologies to provide them — particularly over mobile phones.

Kenya is already a global leader in mobile banking, a technology that is likely to bring millions of unbanked Africans into the formal economy, and support domestically financed credit extension. A recent report by Renaissance Capital states that the continent boasts of about 500 million mobile phones, and that with every 10 additional phones per 100 people, the continent’s GDP growth rises by between 0.6 and 1.2 per cent.

In addition, high GDP growth is expected to be sustained in many African economies, driven in large part by “recent resource discoveries and a global commodity supercycle that will sustain high prices for oil and gas, basic metals and a variety of agricultural products,” according to the EIU.

The loan-to-deposit ratio in the domestic market is also very healthy, meaning that local banks have cash to spare. Renaissance Capital asserts that domestic financing is a viable option for more and more governments as they seek capital for investment, stating that, “Progress is obvious in Kenya where the government can now borrow for 20 years in local currency, which could help pave the way for long-term investment projects to be financed locally.”

Positive policy decisions will also reinforce the trend. The EIU reports that many countries in sub-Saharan Africa have adopted pro-growth economic policies, including openness to foreign lenders and building the infrastructure to expand banking systems, such as issuing sovereign bonds and constructing national and regional markets for stocks and bonds.

The EIU anticipates financial sector deepening across the continent, resulting from more households and businesses saving, borrowing and transferring money to and from banks, and using these services more intensely. Bank deposits and assets are thus projected to expand at 1.5 times the rate of GDP growth. Under this scenario, assets will grow by 248 per cent to $1.37 trillion, while deposits will expand by 270 per cent to $1.1 trillion by 2020.

The expansion of the banking industry will not be uniform across the continent, however. Growth will be strongest in poorly served countries that are enjoying new resource booms, including Angola, Uganda, Ghana and Tanzania. In each of these high-growth countries, the EIU foresees bank deposits and assets rising at least threefold in the next decade, which could grow much more quickly with financial sector deepening.

Not bad going from $15 to $48 billion. Still, growth could be better. I think growth in Kenya (hopefully) and Nigeria's banking sector is being underestimated. Well especially in Nigeria, if Angola is going to roar ahead by over 1000% I don't see why Nigeria can't be around $350 billion or higher by 2020 if its economic growth increases. That and the nation has like 8 times as many people, which only 25-30 million having bank accounts and a huge infrastructural deficit just like Angola, though not as severe.

Still, it will be interesting to watch how the banking sector comes along. I seriously hope more banks merge to make 4-5 large banks in Kenya and a multiple amount of smaller ones. That seems to be the case in Nigeria now with Access merging with Intercontinental and Oceanic's assets being bought by Ecobank.

Industry regulator proposes exclusive market for SMEs
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An exclusive stock market for small and medium-sized enterprises with flexible listing rules could be in place by January next year.

The proposed stock market is expected to open access to capital for the SME sector, raising savings and investments through additional listings.

Speaking when she opened a forum to discuss the proposed market in Nairobi on Wednesday, Capital Markets Authority chief executive Stella Kilonzo cited difficulties in accessing funding as one of the challenges facing SMEs.

“Access to funding and high cost of finance through the traditional channels have been major constraints to SMEs hence the need to explore alternatives,” she said.

She added: “The introduction of an SME market is in line with the government focus on the SME sector as one of the key drivers of the Vision 2030 economic blueprint which play an effective role in economic growth”

In Kenya, she said SMEs are responsible for about 80 per cent of employment and contributes 40 per cent of the gross domestic product, making them an integral part of the country’s economy.

Some of the proposals for the new stock market include lower listing and trading fees, with considerations to be made on how the fees are to be reduced within the sector. A new process for listing and offering will also be factored in.

A new regulatory environment will be determined, with amendments to the regulatory framework to allow SMEs raise capital in an environment specifically designed for their needs.

The CMA chief executive also asked stakeholders to consider issues on whether to attract both individual and institutional investors to the market so as have diverse shareholders.

Fitch warns of likely sovereign credit downgrade
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Kenya’s credit rating could drop due to the high inflation rate, volatility of the Shilling and rising political anxiety ahead of next year’s General Election.

Fitch, an international credit rating agency, has said the country’s economic fundamentals and growth are threatened by rising inflation and the depreciating Shilling.

Fitch earlier this month affirmed its B+ rating for Kenya with a stable outlook.

“Securing macro stability is a major challenge this year and a failure to bring down inflation and stabilise the exchange rate in the context of twin budget and balance-of-payments deficits would push down the rating,” said Fitch in a research note released last week.

A downgrade of Kenya’s credit rating would increase the government’s borrowing costs, with the likelihood of spilling over to the cost of funds for companies which ordinarily raise money at a premium above Treasury’s security rates.

Fitch Ratings has said that the continued investment by the government and the Central Bank of Kenya’s (CBK) policy to try and keep interest rates low is sustaining investment by private firms which will in turn help the economy to post positive growth.

“Kenya’s ratings are supported by its economic diversity and sustained economic recovery since the last quarter of 2009. Nevertheless, high inflation and growing balance of payments pressures pose a downside risk to macroeconomic stability,” said Veronica Kalema, director for sovereign and international public finance at Fitch. The international ratings firm said Kenya’s economy “is facing headwinds from rising oil and food prices.”

Kenya FinMin pushes to restore 'monetary stability'
ABN Digital (http://www.abndigital.com/page/news/top-business-stories/1002100-Kenya-FinMin-pushes-to-restore-monetary-stability)

NAIROBI, (Reuters)

Kenyan Finance Minister Uhuru Kenyatta said on Thursday there was a need to restore monetary stability in east Africa's biggest economy, where interbank interest rates surged past 20 percent this week.

Speaking to reporters to announce a 1.1 billion shilling ($11.9 million) food aid grant from China, Kenyatta said the Finance Ministry was in discussions with the Central Bank of Kenya about monetary policy.

He also said inflation was clearly above the predicted range and high energy costs were a challenge for industries, but the growth pattern seen this year was likely to continue.

The weighted average interbank lending rate rose to 24.25 percent on Wednesday from 22.29 percent a day before and from 8.34 on Aug. 12, when the central bank tightened its overnight borrowing rules to support the under-pressure shilling.

"We need to take some action towards that end, basically just to ensure we restore some kind of stability on the monetary side of our affairs," Kenyatta told reporters.

"We are in discussions with the central bank to deal with this particular issue so that stability and normalcy returns."

While the high interest rates have helped stem the shilling's slide this month, they have also ramped up the cost of borrowing for the Treasury.

Kenya raised just over a third of the 10 billion shillings ($108 million) it had sought in sales of five- and 30-year Treasury bonds on Wednesday, and yields on both securities jumped.

The central bank said it received bids worth a total 8.7 billion shillings for the bonds, and accepted bids worth just 3.48 billion shillings.

Treasury yields have been rising steadily this year as inflation surged into double digits on the back of high food and fuel prices. The headline rate hit 15.5 percent in July, the ninth straight monthly increase.

"Inflation numbers are definitely out of the range we had originally predicted," said Kenyatta.

"We are having stress in terms of our projected outlook because agricultural targets may not (be met)... Definitely as a result of the higher costs in terms of fuel and energy our industries are facing a number of challenges."

"But we are confident the growth pattern that has now taken effect will continue," he said.

Talk about NSE hitting new low, KCB interim numbers, diverse investing in banks, rising interest rates impact on banks, etc.

2wNkgDxD6O8

Treasury hands CBK power to license banks
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Treasury Building in Nairobi

The Ministry of Finance has ceded its powers to license commercial banks to the Central Bank of Kenya in a move expected to ease compliance for the lenders.

The minister, Uhuru Kenyatta, made the changes through a legal notice that amended the Banking Act, giving CBK the authority to issue licences. Previously, banking licence fees were paid to the ministry while the documents were issued by the Permanent Secretary to the Treasury.

Treasury’s ceding of licensing power to regulatory bodies such as CBK and the Insurance Regulatory Authority (IRA) makes Kenya international best practices compliant on supervision of financial institutions.

Mr Kenyatta also moved some oversight powers held by his office over the insurance industry to the IRA.

Transfers and amalgamations in the insurance sector were, until the changes, being approved by the Ministry of Finance. Approving such transfers ensures they do not compromise the stability of insurers and that they do not fall foul of anti-competitive practices. The licensees file quarterly reports with the industry regulator, allowing them to deal with violations more promptly.

The IRA will have control over the assets of financially -troubled insurers, unlike in the past where the authority’s only option was to place the company under statutory management.


The changes are also in line with new rules seeking to protect public funds in the financial sector while deepening access to services.

The rules on control of assets will protect the interests of policy holders by ensuring compliance with risk management obligations without disposing assets irregularly.

“It is a best international regulatory practice to ensure independence of the sectors,” said Robert Bunyi, CEO of financial consulting firm Mavuno Capital.

Political interference and absence of strong rules have seen the public incur losses in the stockbrokerage, insurance, banking and pensions sectors as institutions went under with their hard-earned savings.

EABL overtakes Safaricom as most valuable stock
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East African Breweries Limited has overtaken Safaricom as the most valuable company at the Nairobi Stock Exchange, reflecting changes in investors’ expectations of future performance of the two largest firms at the city bourse.

Safaricom’s share price has been on a decline since the second week of August, falling below the Sh3.40 mark which saw it cede the biggest market capitalisation spot to EABL.

The beer maker had a market capitalisation of Sh138 billion as at close of market on Tuesday, against Safaricom’s Sh122 billion.

Share Price

Analysts say Safaricom’s share price decline reflects the general market trend as investors, both local and foreign, have made more sales than purchases pulling down stock valuations.

Mr Eric Musau, a research analyst at Standard Investment Bank, said Safaricom had suffered more due to perceptions that competition in the telecommunications industry was hurting the mobile phone firm more than the changing regulatory environment was affecting EABL.


“It is has a lot to do with shareholders who are less pessimistic on EABL and this is why it is trading at higher multiples,” said Mr Musau.

Safaricom has 40 billion listed shares, the most among all companies listed at the Nairobi Stock Exchange. “With that many number of shares even a 30 cents drop greatly affects its capitalisation,” said Mr Gould.

With the 40 billion share float, a 30 cents drop translates in Sh12 billion market value being wiped out, nearly the equivalent of the capitalisation of multi-media firm Scan Group.

The market capitalisation for Equity and Barclays Bank— the other large caps at the NSE— have also dropped below the $1 billion mark, mainly attributablee to the shilling’s weakening against major currencies.

EABL overtakes Safaricom as most valuable stock
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East African Breweries Limited has overtaken Safaricom as the most valuable company at the Nairobi Stock Exchange, reflecting changes in investors’ expectations of future performance of the two largest firms at the city bourse.

Safaricom’s share price has been on a decline since the second week of August, falling below the Sh3.40 mark which saw it cede the biggest market capitalisation spot to EABL.

The beer maker had a market capitalisation of Sh138 billion as at close of market on Tuesday, against Safaricom’s Sh122 billion.

Share Price

Analysts say Safaricom’s share price decline reflects the general market trend as investors, both local and foreign, have made more sales than purchases pulling down stock valuations.

Mr Eric Musau, a research analyst at Standard Investment Bank, said Safaricom had suffered more due to perceptions that competition in the telecommunications industry was hurting the mobile phone firm more than the changing regulatory environment was affecting EABL.


“It is has a lot to do with shareholders who are less pessimistic on EABL and this is why it is trading at higher multiples,” said Mr Musau.

Safaricom has 40 billion listed shares, the most among all companies listed at the Nairobi Stock Exchange. “With that many number of shares even a 30 cents drop greatly affects its capitalisation,” said Mr Gould..

Seems like Safaricom is having problems putting off subsequent fires stroke by a more energized and ambitious Airtel, its high time they consolidate their position and bring out their A game otherwise it may be too late for them to retain their slowly diminishing market-leverage as for EABL there's the ever promising South Sudan but watch out for competitors especially the stubborn SAB and encroaching Heineken.

NSE ranked worst performing African bourse in August
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The Nairobi Stock Exchange (NSE) was the worst performing African bourse in August, compared to the continent’s top 16 equity markets.

The NSE 20-Share Index— which tracks changes in share prices—lost 7.74 per cent in the month, trailing the Nigeria All Share Index that dropped 7.72 per cent and the Egypt-EGX 30 index that declined 6.89 per cent.

Investors at the NSE lost an estimated Sh100 billion in August, as market capitalisation dropped from Sh1.05 trillion at the end of July to Sh950 billion on August 31.

Renaissance Capital Kenya Managing Director Patrick Mweheire said the weakening shilling, rising inflation and interest rates had caused investor uncertainty, pulling down stock prices at the Nairobi bourse.

Kenya to Move to ‘Cash-Light’ Economy Over Next Five Years to Cut Costs
Bloomberg (http://www.bloomberg.com/news/2011-09-16/kenya-to-move-to-cash-light-economy-over-next-five-years.html)

Kenya, East Africa’s biggest economy, will introduce regulations to help develop a “cash- light” economy over five years as it seeks to lower financial transaction costs, a senior Treasury official said.

“We need to see a dramatic reduction in costs for financial services and this cannot be achieved using the models of the past,” Geoffrey Mwau, the Finance Ministry’s economic secretary, told reporters today in Nairobi, the capital. “It will be driven by technology. It means moving away from using cash as a primary payment mechanism. That’s key for becoming a cash-light economy over the next five years.”

More than three-quarters of Kenyans are outside of the formal banking system, according to Financial Sector Deepening Kenya, a donor-funded group known as FSD Kenya, aimed at giving low-income earners more access to financial products.

Safaricom Ltd.’s M-Pesa, or “mobile money” in Swahili, started a service in 2007 enabling users to send and receive money via their mobile phones. A survey by the company in 2009 showed that customers saved as much as $3 and three hours of their time by transferring money through M-Pesa compared with traditional methods, such as traveling with the cash by bus, Betty Mwangi-Thuo, chief of new products at Safaricom, said in October.

Competitors Bharti Airtel Ltd. (BHARTI), Telkom Kenya Ltd. and Essar Telecom Kenya Ltd. have also started mobile phone-based banking systems. New products allow users to pay for everything from airplane tickets to crop insurance, or open a deposit-taking bank account with local banks that pay interest.

“We think there is a huge pent-up demand for financial services but at a much lower price,” FSD Kenya director, David Ferrand, said today at the same news conference.

State forms special team to stop the shilling’s slide
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A team of key officials has been formed to halt the slide of the Kenyan shilling, the latest move to restore confidence in the ailing currency.

The committee is made up of officials from the Office of the President, the Treasury, the Central Bank of Kenya, the Planning ministry, the statistics office, the private sector, as well as the secretariat overseeing Kenya’s plan to become a middle-income nation by 2030.

Prime Minister Raila Odinga’s office said in a statement that efforts by the Central Bank had not been sufficient to stop the decline of the shilling and further action was needed.

While analysts recognise there are a number of fundamental economic reasons why the shilling has fallen against the dollar this year, criticism of central bank policymaking has been growing, at home and among foreign investors. The statement came shortly after the Central Bank said it would hold its next Monetary Policy Committee meeting on October 5, just three weeks after a special meeting where it raised its benchmark lending rate by 75 basis points to 7.00 per cent.

Analysts said they expected the central bank to raise rates again, but not by enough to save the shilling.

The government issued a new 12-year bond to fund infrastructure projects on Wednesday targeted at Kenyans living abroad, but bids only came to Sh13.3 billion, well below the Sh20 billion on offer.

Analysts said the government needed to look beyond just monetary policy to resolve the crisis as the risks to the wider economy from the shilling’s weakness were significant. “A co-ordinated approach, going beyond the limits of monetary policy alone, is needed.

“This suggests a joint solution is in the works covering fiscal policy, possibly lumpy capital imports, cooperation from the private sector, and a determined stance from the central bank,” said Ms Razia Khan, the head of research, Africa, at Standard Chartered Bank.

CBK has tinkered with rules for interbank lending and borrowing from its emergency window to try and support the currency, sending overnight interest rates as high as 30 per cent, but any reprieve for the shilling has been brief.

In the latest move unveiled on Friday, the central bank said it would buy and sell hard currency directly with end customers and cut out the banks it partly blames for driving the shilling lower through speculation.

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CMA unveils plan to tap foreign capital

The Capital Markets Authority (CMA) has unveiled a five-year-plan that would see new products developed and regulations streamlined.

The plan, dubbed ‘Capital Markets Master Plan’ is expected to catalyse co-ordinated growth of the capital markets in line with Vision 2030.

The market regulator has so far adopted risk-based supervision (RBS) model for its market intermediaries, and has lined up a string of new products to cater for the diversified needs of investors.

New products under consideration include futures market, derivatives, real estate investment trusts, and Shariah compliant investment products, which are designed to satisfy the needs of the Muslim community.

Ms Stella Kilonzo, CMA chief executive, said the regulator would work with the private sector to create an environment conducive to innovation.

"The Authority is honored that the industry stakeholders have shown willingness to come together and discuss a shared strategy for executing the capital markets role in mobilising long-term resources to finance the Vision 2030," she said.

Drum-up

Kilonzo was speaking at a stakeholder forum organised to drum-up support for the proposed Capital Markets master plan in Nairobi.

The event also culminated in the formation of a steering committee to conceptualise and implement the Master plan.

The forum included CMA Board members – led by the Chairman, Kung’u Gatabaki – and representatives from the Council of the Kenya Association of Stockbrokers and Investment Banks, Nairobi Securities Exchange, and the Central Depository and Settlement Corporation.

Others are investment bankers, stockbrokers, fund managers, investment advisors, and collective investment schemes.

The regulator hopes the introduction of these products will create new avenues for growth and development of the local capital markets

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Surge in T-Bills will affect government projects, says PwC
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The government may not raise enough money to finance new infrastructure projects due to surging costs of borrowing, financial consulting firm PwC has said.

Treasury is facing a Sh236 billion financing deficit for this year’s Sh1.2 trillion national budget, a big chunk of which is expected to go towards funding new road, energy, health, school and water projects.

The cost of borrowing through Treasury bills and bonds has shot up by more than 13 percentage points this year alone, slowing down Treasury’s uptake of debt from domestic investors – who are expected to fund Sh119.5 billion of the deficit.

“There is a significant funding challenge for the government in the current interest rate environment and infrastructure projects in the pipeline will certainly suffer,” said Vishal Agarwal, the head of infrastructure financing at PricewaterhouseCoopers (PwC).

Treasury’s borrowing to finance development projects has suffered heavy under-subscription as investor preference shifts to higher yielding, short term securities – which are unsuitable for funding long-term infrastructure projects.

Mr Agarwal said the government’s prospects of raising funding for the new projects are narrowing due to the high interest rates environment that has persisted over the second half of the year.

Joseph Keiyah, an economist at the public policy institute Kippra, says that the government has to choose from a list of ‘very tough’ options if it has to continue funding infrastructure projects.

“The government can run a deficit or borrow from its bilateral lenders but both options are likely to hurt the cost of credit and destabilise the currency.

An alternative would be reviewing the list of projects that the government must finance,” said Prof Keiyah.

So far, the State is funding several emergency projects including the military incursion into Somalia, drought and flooding which were all unplanned and are now further stretching the available resources, he added.

James Kihumba, the executive director at Standard Investment Bank, says the surging costs may see Treasury cut its development spending in the supplementary budget early next year .


Emerging Africa targets Sh9bn to fund ICT projects
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Emerging Africa Capital (EmAC), a Nairobi-based investment advisory firm, is in the process of raising a Sh9 billion ($100 million) private equity fund to invest in ICT, fast-moving consumer goods and renewable energy.

The firm, which plans to hive off the PE entity into a separate outfit, is currently negotiating with a South African and a UK investor who have promised the funds, EmAC chief executive Michael Musau said.

He said the UK investor had undertaken to contribute $70 million to the fund while the rest of the cash is expected to be raised from within the region though there is a possibility of a Chinese firm getting a stake in the fund.

Mr Musau said he could not reveal the names of the UK and South African firms because negotiations on the details of the deal are still ongoing.

Uchumi to replace CMC at the bourse

Posted Friday, December 9 2011

http://www.nation.co.ke/image/view/-/619210/highRes/85859/-/maxw/600/-/15f5qro/-/SUB1PIX.jpg
Customers shop at Uchumi Supermarket. Photo/FILE

Uchumi supermarket is set to replace CMC Holdings at the Nairobi Securities Exchange (NSE), a statement from NSE’s CEO Peter Mwangi seen by the Nation shows.

“Uchumi Supermarkets Ltd emerged as the best qualified firm for inclusion in the NSE 20 share index,” the statement read in part. The criteria for inclusion to the NSE 20 share index are pegged on market capitalisation, shares traded, and number of deals and turn-over during the period under review.
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Uhuru seeks new weapon against inflation with change in tax law
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Treasury is seeking new powers to vary excise duty chargeable on goods according to the rate of inflation in yet another signal of the unease that the spiralling cost of living is causing policy makers.

Through amendments to be introduced in the Finance Bill 2011, Finance minister Uhuru Kenyatta is seeking powers to vary excise duty beyond the current limit of not more than 30 per cent of the applicable (official) rate.

“The minister may, by a notice in the Gazette, adjust the specific rate of excise duty to take account of inflation,” reads one of the new clauses that Mr Kenyatta will introduce in the Customs and Excise Act.

The tool would be particularly useful in the event of widespread social unrest caused by a steep rise in the price of consumer goods as has happened in recent months.

Section 119 of the Customs and Excise Act that Mr Kenyatta is seeking to amend allows him to increase or decrease excise duty by up to 30 per cent of the statutory rate without consulting Parliament.

The Act imposes excise duty on a range of goods, among them petroleum products, shampoos, deodorants, alcoholic drinks, cigarettes, wrapping materials, juices and bottled water.

Tax experts said the proposed changes imply that in future, the level of the government’s intervention may go beyond the current statutory limits if required.

Listing for small and medium enterprises to start in June

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Small and medium enterprises (SME) with a capital base of at least Sh10 million can list at the Nairobi Securities Exchange (NSE) without necessarily selling shares to the public from June 2012.

This follows approval of rules governing the listing of SMEs by the capital markets regulator.

The budding enterprises will be listed under a new segment called Growth and Enterprise Market Segment (GEMS).

The listing is expected to make it easier and cheaper for medium-sized enterprises to raise funds through rights issues or corporate bonds, while easing the process of trading shares for the shareholders.