SportPesa and BetIn sent their employees home and shut down their businesses in Kenya in September and October. This not only reduced the mobile money traffic but it was predicted that the telecoms could post a decline in mobile money revenue.

But Safaricom’s MPesa sustained the betting firm shutdowns to post positive growth according to the half-year financial report ending September 2019.

“M-PESA has sustained robust growth in the period recording year-on-year growth of 18.2 per cent despite the impact of the slow-down in the gaming industry,” Michael Josephs, Safaricom Interim CEO said. “Excluding gaming, revenue grew 20.9 per cent YoY and chargeable transactions per customer per month grew 17.5 per cent.”

This is opposed to a report by Genghis Capital that the shutdown of betting firms in Kenya will affect the company’s mobile money revenue by posting a 13.3 per cent year-on-year revenue.

Safaricom says the growth was driven by 12.4 per cent year-on-year increase in 30-day active M-PESA customers to 23.61 million and a 7.8 per cent year-on-year growth in monthly usage per customer to 13 chargeable transactions per month.

“The company added 2.6 million active M-PESA customers with MPESA now accounting for 33.8 per cent of service revenue, further accelerating displacement of traditional voice and messaging services,” the CEO said.

Mobile data has also proved to be a growth area for the company with Safaricom posting a 4 per cent growth in revenue. Mobile data now accounts for 15.9 per cent of service revenue and registered an impressive 14.6 per cent growth on the revenue earned in the second half of last year.

During the period the company installed over 700 LTE sites across the country bringing the 4G coverage in the country to 63 per cent.

“Growth in mobile data revenue is expected to return to double digits in the second half of this year driven by increased penetration and usage,” Josephs promised.

Overall revenue for the telco stood at Kshs 129.9 Bn, with MPesa raking in Kshs 41.97 Bn, mobile data brining in Kshs 19.78 Bn in revenue and voice topping it up by Kshs 46.87 Bn.

Feature Image Courtesy: BiznaKenya

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SIC has conducted major projects in the past including real estate projects such as Rongai Royal, Ruaka Ridge apartments and other land sales across the country.

The Ibuka incubation hopes to educate prospective companies on what is need to list on the NSE and gives them a good ground to begin their share trade.

“Safaricom Investment is the leading cooperative in Kenya today,” Bob Karina, the Vice Chairman at the NSE said. “Safaricom Investment will benefit from visibility, long term corporate sustainability, access to consultancy services, access to equity among others.”

The Safaricom Investment Board Chairman, Peter Gichangi said that “We have gained and learnt a lot over the past 10 years and we could not be more proud in joining this program.”

In an earlier interview with David Waggema, Head of Business Development at the NSE, most companies have shied away from listing at the bourse due to lack of adequate information on selling public shares, the fear of being scrutinized by government agencies and disinterest.

However, Waggema said that the Ibuka program is aimed to clear the uncertainty and rejuvenate the activity at the securities exchange. It is also a way growing companies can gain new liquidity and push out their products.

Safaricom Investment Cooperative will be the seventh company admitted into the incubation program. Others include MySpace Properties, Vaell, Blue Nile rolling mills, Moad Capital, Globetrotter with tea exporter APT Commodities being the first incubated company in January 2019.

Cooperatives have usually been closed organization only focusing on real estate as their only investment option. The success of SIC could signal more activity in the cooperative sector which is laden with cash reserves.

Feature Image Courtesy: Bizna Kenya

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However, this is only true in most urban areas but last-mile connectivity in rural and peri-urban areas leave a lot to be desired.

Kenya’s Economic Update, a report by World Bank has faulted the country for not investing much in the country’s internet backbone and leaving millions behind in the digital economy.

“Rural areas are typically served by a single fibre provider (predominantly government-owned), leading to less competitive pricing and lower service reliability. Often, small towns are not served with a fibre connection at all, resulting in slower end-user speeds due to reliance on microwave backhaul,” the report depicted.

In contrast, Kenya’s “first-mile” has been served by four undersea cables lowering the price of connectivity in the country. The competition between the service provides has seen wholesale international transit pricing has fallen from about USD 7,500 Mb/s per month in 2007 when connectivity was provided primarily via satellite to as low as USD 10 in 2018.

Network routes are often duplicative, with multiple links serving the main population centres, providing competition and protection against service disruption if a line is cut, the World Bank observed.

“Last-mile connections to the end-user are predominantly provided by the major Mobile Network Operators as well as some internet service providers, ranging from high-speed direct fibre connections to the home and businesses in urban areas to lower cost, lower performance wireless solutions in rural areas,” the report noted.

According to the report, the World Bank believes that the country’s economy can benefit from supporting digital infrastructure and enabling the majority to access affordable internet services.

“Every individual, business and government institution in Kenya needs access to affordable and high-quality broadband connectivity and the skills to use it in order to participate in the digital economy, access public services and information, and have a voice in an increasingly online society,” it denoted.

Despite impressive growth in investment and uptake of digital technologies, too many Kenyans remain at risk of being left behind. The significant social and economic benefits that accrue to digitally engaged individuals could further deepen inequality if the digital divide persists.

“A digital divide is also bad for business because the prospects for e-commerce and digital entrepreneurs depend on the growth of a digitally active customer base to create the scale needed for success,” the World Bank said.

Feature Image Courtesy: The Telegraph

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Hass Consult’s Property Index suggests that there was a slight increase in land value in quarter 3 of this year.

“Land prices slightly rise over the quarter as the market awaits on the repealing of the interest rate cap following President Uhuru Kenyatta recommending that Parliament amends the Banking Act,” the report said.

It added that “Repealing of the rate cap is expected to result in banks increasing lending to the private sector which will spur the general economy. Developers and mortgage borrowers expected to benefit from increased lending by a commercial bank.”

Sakina Hssanali the head of research and marketing at HassConsult said that the lack of liquidity has affected the real estate sector.

“We have seen access to credit by developers and buyers become difficult as commercial banks have become conservative at lending but we expect this to change should interest rates become market-driven,” said Hassanali.

She added that real estate projects tend to be long-term (more than three years) and as such when loans are shortened many potential borrowers, be they developers or mortgage borrowers, tend to be locked out of the credit market.

Other factors that are affecting the land prices especially in suburban areas in Nairobi include the completion of roads. “Kitisuru and Loresho suburbs continue to benefit following the completion of the Waiyaki Way-Red Hill link road which has made the two suburbs more accessible,” the report said.

Oversupply in regions like Westlands has seen the dip for the demand for land and property. Westland had fallen to a two year low due to an oversupply of commercial offices and high vacancy rates.

The overall growth of land in and about Nairobi grew by 0.22 per cent for the suburbs and 1.44 per cent for satellite towns.

Feature Image Courtesy: Wikipedia

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This comes hot on the heels of the listing of new shares by NCBA, the new product of NIC Bank PLC and Commercial Bank of Africa merger. The listing has underlined the benefits of mergers in the financial sector.

Although few in between in the past two years, the Central Bank of Kenya, Governor Patrick Njoroge said the country will witness more mergers and acquisitions in the sector.

In the last Financial Sector Stability report, the Central Bank intimated that mergers bore more fruit in terms of profit for the merged entity.

“Despite the decline in profitability in 2014 – 2018, banks that merged are more profitable than those that consolidated through acquisition,” the report said.

It added that “While mergers impact organizational culture and business models, leading to more efficiency and profitability, acquisition may not necessarily be motivated by integration of business model and organizational values. The new entity after acquisition may experience organizational frictions, thus undermining profitability.”

Acquisitions were also motivated by achieving efficiencies that Tier 3 banks or microfinance institutions had, the report noted.

Whereas merges and acquisitions are strategies bank managers adopt to increase profitability, the regulatory perspective is that it enhances stability of the resultant entity and the entire banking sector.

“The benefits of banks consolidating include; improved resilience to shocks given higher capital buffers lower supervisory and compliant costs. The stability benefits of consolidation in the banking sector have informed mergers and acquisition, especially after the liberalisation of the financial sector since 1990-2018,” the CBK stated.

Kenya had twenty-eight (28) mergers in 1990’s, ten (10) in 2000’s and three (3) in 2010’s. In addition, there were two (2) acquisitions in 2000’s and six (6) completed 2010-2018.

Already in 2019, KCB’s takeover of National Bank of Kenya, NIC and CBA mergers and latest Transnational Bank takeover by Access Bank PLC shows a continuing trend that is not about to halt.

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Here in Africa, the surge of population in the urban areas has brought in bigger problems and in most regions cutting the life expectancy numbers. East Africa recorded the highest number of life expectancy only second to Northern African countries.

Below is an excerpt of what is affecting the cities across Africa and in turn cutting down the life expectancy.

Access to Health

Africa has made considerable headway in improving the health outcomes of its population, and as a result, life expectancy at birth has steadily increased from 50 years in 2000 to 64 years in 2019 and is projected to reach 70 years by 2050. However, there remains an evident need to establish robust health care systems and improve the accessibility and quality of health care services.

Poor Air Quality

Air pollution is estimated to claim over 712,000 lives in Africa every year, and is believed to cause more deaths than poor hygiene and malnutrition (Roy 2016). The number of deaths caused by air pollution has increased by over 36% in the last 3 decades. Large metropolitan areas rank among those with the poorest air quality in Africa.

Poor air quality is an issue both for indoor pollution, such as cooking indoors and electricity generators, and outdoor pollution, such burning rubbish and vehicle traffic. With reference to urban mobility, many African cities, such as Dar es Salaam, Casablanca, Tunis, Johannesburg, and Port Louis have adopted efficient public transport systems to help reduce per capita pollution substantially.

Evolving Institutional and Organizational Arrangements

African cities lack the capacity to respond to the current unplanned urban growth (World Bank 2015). They suffer from regulatory bottlenecks and low skills capacity, which have created an unsustainable growth model and resulted in urban sprawl of fragmented and informal settlements.

Institutional arrangements typically disadvantage local government. The effectiveness of African cities depends on the extent to which powers and functions are devolved to them as a service provider and authority. The municipality must:

(i) build a relationship with its citizens and businesses,

(ii) be allowed to receive tariff revenue from services, and

(iii) receive transfers from central government funding and technical assistance associated with the provision of infrastructure.

In reality, however, municipalities are quite marginalized as service providers since a large proportion of services are provided by state-owned entities (SOEs).

Creating Livable Cities: Regional Perspective is a report by African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank.

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The standardization project will benefit over 13,500 women-owned small and medium-sized enterprises who have undergone training in preparation for the award from Kebs. It is also supported by the Women Enterprise Fund (WEF).

Once the products are standardized the women are eligible to apply for certification, which the Fund pays a subsidized rate of Kshs.5,800. As a result, their products will qualify for the KEBS Diamond mark of quality which allows them to access local and international markets.

“A key mandate for WEF is to provide business support services including linkages for the women entrepreneurs to improve on the quality of their products and access markets. This was one of several strategic partnerships we have entered into to support our beneficiaries,” said Charles Mwirigi, CEO Women Enterprise Fund.

 “Over the last 5 years, our beneficiaries have benefited from this partnership which has enabled them to improve their products to industry standards. This includes handling, product quality, packaging and preservation,” added Mwirigi.

The Women Enterprise Fund has disbursed over Kshs 150 Mn to fund beneficiary businesses in the manufacturing and processing sector. It expects this number to grow significantly as the number of SME’s venturing into the manufacturing and processing sector.

“The funding cuts across numerous ventures including vegetable oil processing, soap and detergents making, water purification and bottling, yoghurt processing, aquarium making for sale, honey processing, making of hides and skins products, processing of horticultural produce, making of construction materials e.g. tiles and bricks making, ventilation blocks, milk processing and welding,” a statement from WEF said.

Feature Image Courtesy: siganasworldsite.wordpress.com

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In contract with Ethiopia’s independent power producer Tulu Moye Geothermal Operations (TMGO) PLC, KenGen will also provide water supply system and equipment.

This is the second project for KenGen in Ethiopia after, it won a contract to drill geothermal wells for the Ethiopian Electric Power (EEP) in Aluto, Ethiopia.

The project is being implemented in two phases; Phase I comprises the purchase of drilling rigs while Phase II entails the provision of drilling services. KenGen is supplying about 30 per cent of the components of Phase II which translates into about USD 6.2 Mn (about Ksh 620 Mn).

“As top geothermal energy providers in Africa, KenGen has been an inspiration to the region. TMGO is thrilled to become development partners with such a powerhouse; this agreement is a sign of mutual trust and commitment to advancing geothermal energy, which in turn encourages sustainable development in Ethiopia and Africa as a whole,” a statement from the signing said.

“Since inception, the company has made considerable inroads in Kenya’s energy sector, growing over the years to the current sales market share of about 80% of the electricity consumed by Kenyans,” KenGen said in a statement.

“This contractual agreement is proof that African nations can work together in technology transfer, capacity building and skills development to support the continent in growing its geothermal sector,” it continued. The project is supported by finance from World Bank.

KenGen is the largest geothermal producer in Africa and the 9th globally.

In a 2018 report by International Geothermal Association, Ethiopia has an estimated potential of more than 10,000 MW of power from geothermal alone; a number similar to Kenya’s power potential.

Feature Image Courtesy: ThinkGeoEnergy

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