Fortune August September 2016 issue by Afritech Media

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VOL 4 - AUG -SEP 2016

Prof. Douglas Shitanda, Principal, Co-operative University College of Kenya

Co-operative University College of Kenya: A unique hub for learners Tricky cartels KPLC Stakes are high as New pipeline boosts will not ‘domesticate’ Toyota Kenya plot to Kenya’s capacity to overnight squeeze GM’s market transport fuel to the share East African region www.theafricanbusinessfortune.com

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Editors Note In this world that is becoming more insecure by the day, sticking together is the only insulation. This is a lesson that Africa should start to think from that lesson. African leaders should look for ways and alternatives to strengthen their union and, most importantly, regional economic communities such as the East African Community (EAC), create unbreakable bonds and be their brother’s keeper. Already top British firms with operations in Kenya have expressed optimism and desire to stay put ‘no matter what’ and that’s pretty encouraging. It is still very early to gauge the effect of Brexit, but the losses made today from the outcome will take some time to recoup, but it will surely give isolationists the ammunition they need. Brexit should give EAC and other regional blocs on the continent sleepless nights, watching and analyzing as there are many lessons to glean. Notably, it is very important that integration efforts on the continent are genuinely built around people’s aspirations. There are fewer boil-water notices in place, and targeted investment is finally happening with regards to statements of assurances issued by some British firms in Kenya and around the continent.

Brexit should act as a unifying factor for Africa

....he Brexit referendum in the United Kingdom (UK) has not made things any easier in the kingdom and is expected that its ripple effects will dent a huge economic rift in Africa. Shockwaves were not only felt in London, but world markets including Africa took massive blows at the news that the UK, one of the European Union’s (EU) most important members, had voted to cut itself off the union. But Britain’s referendum should not be seen in negative light all the way. If the UK vote could have repercussions on all continents, then it is an indication that there is strength in unity, that staying together is healthier than being a lone ranger.

Surely and methodically, nations allied to the UK should now come up with long-term strategic plans to upgrade the network, and a sense we are finally grappling with a problem which has been ignored for so long. But mammoth issues remain, not least of which is the lack of confidence from both public and private sectors. That said and done, we hope Brexit can only make the continent STRONGER not the REVERSE.

Editor midha Steve U

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M A G A Z I N E

EMPOWERING AFRICAN BUSINESSES

Contents COVER STORY

Finance & Admin Michael Wandey

Co-operative University College of Kenya: A unique hub for learners

Managing Editor Steve Umidha Consulting Editor Zack Owuor

Pg 18

Staff Writers Brian Tirok Monicah Muema Contributors O. Benard Dan Mganda Olive Gerro Maurice Momanyi Alon Mwesigwa Guy Lawrence Photography Ayub Muiyuro Design & Layout Bob Wafula bobb.wafula@gmail.com Business Development Paul Arithi Abel Nyakundi Abigael Shon Circulation and Distribution The African Business Fortune Ltd Publishers The African Business Fortune Limited, Southern House 3rd Floor, Muranga Rd

ECONOMY Kenyaâ&#x20AC;&#x2122;s economy on the right track

Pg 08

P.O. Box 6388 - 00200 Nairobi, Kenya +254 20 221 3570, +254 737 469 534, info@theafricanbusinessfortune.com www.theafrican businessfortune.com Copyright 2016 The African Business Fortune Ltd is a Monthly publication. All right reserved. No part of this publication may be reproduced or transmitted in any means, electronic or mechanical, including photocopy, or any storage and retrival systems, without prior written permission from the publishers. The African Business Fortune Ltd is entirely independent of all commercial interests in all sectors and regions of its coverage. Unsolicited manuscripts will not be accepted for publication.

FINANCE End-days for the dark underworld that is forex trading?

Pg 27

ENERGY Kenya to host 2016 African Green Revolution Forum

Pg 58

THE AFRICAN BUSINESS FORTUNE - ECONOMY

Kenyan businesses begin to feel effects of post-Brexit vote By Steve Umidha

enyan businesses are beginning to feel the pain of a postBrexit slump, new report has shown.

Findings by Standard Chartered-MNI Business Sentiment Indicator (BSI) for Kenya shows that business conditions fell to 57.8 in July 2016 compared to 59.9 a month earlier - the lowest level since February as companies expressed concerns about the impact of Brexit on the economy and the shilling. “While sentiment is still broadly positive firms have been less optimistic about current conditions in recent months, which could reflect softening economic momentum. Businesses reported a significant slowdown in both domestic and external demand in July. As a result, firms have slowed hiring, and are holding fewer inventories,” said Razia Khan, Standard Chartered Chief Economist for Africa.

come under pressure. The report also indicate a decline in the demand for Kenyan firms’ goods in the period under review, which was attributed to the high interest rates paid by the firms, increasing by 4.2 per cent.

The report comes in the wake of earlier suggestions by top UK firms in Kenya who expressed confidence that Brexit would not curtail their operations in Kenya and would not consider moving jobs out of the country following UK’s vote to leave the European Union (EU).

“We are committed to the Kenyan market and do not have intentions to pull out. I’m not anticipating any material long term impact on us, may be short term we will have a little of that,” said British Airways Kenya’s commercial manager Mr. Kevin Leung in an interview with this writer last in June, adding that a plunging British pound and the anticipated slump in Britain’s economy would not cut into the number of UK passengers visiting the country. Mr.-Kevin-Leung-British-Airways-Acting-Commercial-Manager-Kenya-

And while business environment improved during the period under review, albeit relatively weak, the report further indicate that the Kenyan businesses were more concerned in July about the impact of the currency on their businesses in the coming months.

The Kenyan shilling has remained relatively stable at the exchange rate following the UK’s vote to leave the EU on 23 June, despite concerns from Kenyan businesses that the shilling could

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THE AFRICAN BUSINESS FORTUNE - ECONOMY

Kenya’s economy on the right track

Planning Statistics Principal Secretary Saitoti Torome, Water and Irrigation Cabinet Secretary Eugene Wamalwa, Devolution CS Mwangi Kiunjuri with KNBS director general Zachary Mwangi and chairman Terry Ryan

By Brian Yatich

he recently released 2016 economic survey conducted by Kenya National Bureau of Statistics (KNBS) shades a glimmer of hope for the country’s economy. The country’s gross domestic product grew by 5.6 per cent in 2015 compared to 5.3 per cent growth recorded in 2014. The survey attributed the improvement to significant growth in key sectors like agriculture, construction, real estate, finance and insurance. The spike in growth in agriculture was mainly supported by improved weather condition that resulted in significant increases in output of maize, horticultural produce and livestock. During the period under review, maize production increased by 9 per cent down from 39 million bags in 2014 to

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42.5 million bags in 2015 due to reduced incidences of Maize Lethal Necrosis Disease. However, heavy rains in 2015 were unfavorable to cultivation of some crops like potatoes and tomatoes. Nevertheless the significance of crops that were favored by weather outweighed that of crops negatively impacted upon as the sector recorded an accelerated growth of 5.6 per cent in 2015 compared to 3.5 per cent in 2014 an impressive growth of 5.5 per cent which ultimately influenced the performance of the whole sector.

Construction industry recorded the fastest growth of 13.6 per cent in 2015 compared to 13.1 per cent in 2014, which can be attributed to the activities mainly driven by the ongoing public infrastructure

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development coupled with the resilient private sector’s expansion in the real estate sector. The financial and insurance sector maintained a robust expansion to grow at 8.7 per cent in 2015 from 8.3 per cent in 2014. This growth was mirrored by a 19.2 per cent rise in the total domestic credit to Ksh 2,830.5 billion in De cember 2015 compared to a growth of 16.1 per cent in December 2014.

Jobs creation

According to the survey, the number of new jobs generated in the economy last year stood at 841,600 compared to 799,700 in the previous year. The Increased activity in the key sectors that demonstrated growth like agriculture, manufacturing and trade

THE AFRICAN BUSINESS FORTUNE - ECONOMY

sectors triggered this job market increase. The formal sector jobs accounted for 15.2 per cent of the 128,000 jobs generated last year which is a sigh of relief for the unemployment crisis that has grappled East Africa’s largest economy in the past five years. Devolution cabinet secretary Mwangi Kiunjuri said that the government will utilize the statistics provided to develop stronger policies geared towards boosting sectors that slowed in growth, including the tourism industry has slumped in numbers due to insecurity. “The largest contributors to wage employment in the private sector were agriculture, forestry and fishing, manufacturing, wholesale and retail trade, repair of motor vehicles and motorcycles and education,” read the survey. The statistics shows that job opportunities in the formal sector that grew in 2015 were 20,000 more than it did the previous year when the number stood at 106,300. Private companies accounted for 71 per cent or 90,880 of the total new formal sector jobs including self-employment. Agriculture which accounts to 30 per cent of the GDP employs nearly 70 per cent of the population. Overall, 15.1 million

Kenyans had jobs in both public and private sectors in 2015 compared to 14.3 million a year earlier. This means that about 10 million remain unemployed, with 25.5 million people in the working age bracket. Kenya’s ability to create new jobs has lagged behind population growth, resulting in a narrowing of employment opportunities, especially for entry-level workers fresh from college.

Key macroeconomic indicators remained relatively stable and supportive of the growth during the year under review. Overall inflation eased from 6.9 per cent in 2014 to 6.6 per cent in 2015 mainly due to lower prices of energy and transport. Monthly inflation rates fluctuated between 5.5 per cent and 8.0 per cent but were largely contained within the Central Bank’s target throughout the year. Generally, the Shilling depreciated against

Agriculture

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THE AFRICAN BUSINESS FORTUNE - ECONOMY

Ongoing construction in Kenya

its major trading currencies as reflected by the weighted trade index which worsened by 5.7 per cent during the review period. The Shilling was mainly supported by a significant fall in the international oil prices as the country cut-back expenditure on importation of petroleum fuels and increased diaspora remittances. However, lower earnings from the tourism sector impacted negatively on the exchange rate of the Shilling in 2015.

The weighted average interest rates on commercial banks loans and advances rose by 1.40 percentage points to 17.45 per cent in December 2015 compared to 15.99 per cent in December 2014. In 2015, the current account balance improved largely due to a decline in the import bill against a considerable growth in export earnings. The decrease in the import bill was mainly due to the fall in the international oil prices. The growth in export earnings was largely driven by improved prices for some commodities which more than offset the effects of the fall in quantities of export. However, the country’s export growth was curtailed by suppressed external demand. The effects of the fall in fuel prices were experienced across most of the industries, with the main beneficiary being transport and storage where there was a significant decline in costs of 10

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production. Other sectors that significantly gained from the lower fuel prices include construction and thermal generation of electricity. Transport sector output went up by 6.4 percent to Sh951.4 billion owing to improvement at the Port of Mombasa as well as the railway transport sub sector.

Underperforming

However, progress slowed in a number of sectors including; Tourism, Information and communication, mining & quarrying, and wholesale & retail trade. The economic survey indicates that despite efforts to show Kenya as a better destination, tourism numbers from abroad were lower than the previous years, the number of international visitor arrivals continued on a downward trend, contracting by 12.6 per cent from 1.35 million in 2014 to 1.18 million in 2015. This mirrored lower revenues as Kenya collected Sh84.6 billion in 2015 compared to Sh87.1 billion the previous year. “The sector’s suppressed performance was mainly due to security concerns, particularly in the coastal region, and the negative travel advisories from some European source markets,” the report read.

THE AFRICAN BUSINESS FORTUNE - FINANCE

Fieldstone Africa opens Nairobi office with eye on renewable energy By Monica Muema

ieldstone Africa has opened a Nairobi office to drive expansion into the energy and infrastructure sectors. The firm, an independent investment bank that specialises in energy and infrastructure said that the move is a market responce to the growing demand for investments in the sectors as well as related large capital intensive projects currently being undertaken across the region. Jason Harlan, the company’s chief executive said earlythis month that the Nairobi office will serve its existing clients and expose local companies with interests in the sectors to its global network. “East Africa and Kenya particularly present a compelling case and we recognise the opportunities in the pool of existing talent and new entrants to work together to develop models mobilizing local financial capacity and attracting international capital to economically necessary projects,” said Mr. Harlan, during the launch in Nairobi. The launch comes in the wake of an increased drive by the Kenyan government through the ministry of energy and petroleum to boost the country’s electricity production by over 5,000 megawatts (MW) next year, with a key focus on renewable energy mix including geothermal, wind and solar to supplement the overly used hydro power generation. Fieldstone Africa is credited for having advised on the largest single foreign private investor ever in the sector on the Lake Turkana Wind Power project launched in April this year by President Uhuru Kenyatta. Meanwhile, the company has named Ms. Catherine Adeya-Weya as its Director for East Africa following her experience in the governmental and private sector interface as a senior governmental figure in a major infrastructure initiative. “The firm will deliver product and performance to the standards with deeper understanding of local and regional markets,” she said.

Andrew Smith Maxwell - Chairman Fieldstone Group (left) Dr. Catherine Adeya -Weya Fieldstone East Africa Senior Representative (Centre) and Jason Harlan Fieldstone Africa Group CEO during the launch in Nairobi

Renewable energy

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THE AFRICAN BUSINESS FORTUNE - ADVERTORIAL

New pipeline boosts Kenya’s capacity to transport fuel to the East African region

Works during construction of the Sinendet – Kisumu pipeline

efined fuel exports from Kenya to Uganda, Northern Tanzania, Rwanda and other parts of the region are expected to rise with the completion of a new pipeline from Sinendet in Nakuru to Kisumu.

The 10-inch pipeline valued at Sh5.7 billion has been designed to deliver higher volumes of fuel to the Kenya Pipeline Company’s (KPC) Kisumu depot on the shores of Lake Victoria. It will run parallel to an already existing six-inch pipeline to enhance petroleum product availability. Being the only ‘white oil’ pipeline

operator in the region, the regional economies rely on KPC for a costeffective and safe means of transporting petroleum products. It is expected that with the new line in place, there will be enough petroleum products to power the local and regional economies. This new development will increase KPC’s competitive edge in the region and by extension reaffirm Kenya’s status as a regional economic powerhouse. For instance, 60 per cent of the product in Kisumu is exported to the neighboring countries and this means that the new line has brought the product closer to the consumers easing product evacuation

and crossborder distribution. China Petroleum Pipeline Bureau (CPPB) built the pipeline whose cardinal aim is to increase oil products supply in Western Kenya for local use and to export to Uganda, Rwanda, Burundi, Northern Tanzania, South Sudan and Eastern Democratic Republic of Congo. The building of the 122km pipeline started in mid 2014 and was completed in 14 months. A study done by a Chinese firm, Shengli Engineering and Consulting Company Ltd, shows that petroleum products demand in western Kenya is approximately 1.2 billion litres and the export market needs about 2.3 billion

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THE AFRICAN BUSINESS FORTUNE - ADVERTORIAL litres per annum. KPC is now certain that the new line will serve this market a lot more effectively because the Kisumu depot has in the past experienced shortage of petrol, diesel, kerosene and jet A-1 fuel. The depot receives fuel from Mombasa port through Nairobi, Nakuru and Sinendet. KPC’s pipeline system currently consists of 450km of Line 1 from Mombasa to Nairobi, 325km each of Line 2 and Line 4 from Nairobi to Eldoret and 122km each of Line 3 and Line 6 from Sinendet to Kisumu. “KPC expects the new pipeline to lead to offtake of petrol from Kisumu depot increasing to two million litres daily with 60 per cent destined for export to the regional market and 40 per cent for local consumption,” said KPC’s Managing Director, Joe Sang. With the commissioning of the new line, the evacuation of diesel is set to rise to two million litres, kerosene to 500,000 litres and jet A-1 to one million litres daily of which 60 per cent will be exported. The depot previously handled 1.1 million litres of petrol, 1.4 million litres of diesel, 300,000 litres of kerosene and 440,000 litres of jet A-1 per day. Mr Sang said tests have been carried out on the new line, which is expected to increase oil flow to Kisumu depot by an additional

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Grading of land during construction of the Sinendet –Kisumu pipeline

THE AFRICAN BUSINESS FORTUNE - ADVERTORIAL 350,00 litres per hour to fill up the 39-million litre capacity that is the Kisumu depot. “With an increased product flow to Kisumu depot of 350,000 liters per hour from the previous 110,000 litres per hour, the new line will drastically enhance optimisation of tank utilisation, which currently stands at 30 per cent,” Mr Sang told journalists at a forum recently.

Kisumu’s full tank capacity stands at 39 million litres and the new line is expected to increase KPC’s competitive edge in the region in conformity with the company’s new Corporate Strategic Plan dubbed ‘KPC Vision 2025’. The project has the potential to turn Kisumu into a focalpoint for oil and gas commerce in the region besides creating new jobs and generating the necessary income for the government to power the local economy. This is in tandem with the overall government’s development agenda of transforming Kenya to a middle-income

country by the year 2030.

The Sinendet - Kisumu oil pipeline also presents new avenues of opportunity for the region. It will open up development of other projects such as the Kisumu Oil Jetty and the Kisumu-Busia Pipeline. The planned oil jetty project is designed to facilitate transportation of petroleum product via Lake Victoria to our East African neighbours through Mwanza, Bukoba, Entebbe, Kampala, Jinja and Musoma ports. This will be a massive boost aimed at cutting transit costs, stimulating economic growth and serving the region better. In addition, the new line has heightened the possibility of extending the pipeline to the border town of Busia on the Kenya-Uganda frontier, underlining KPC’s critical role in fostering development and growth in the region through suficient and reliable supply of petroleum products in line with the public company’s overall growth strategy. KPC continues to be on the forefront in implementing Vision 2030 goals and aspirations through her projects and programmes. Having invested about Sh60 billion to transform the oil infrastructure across the country, the company’s goal is to have cheaper and reliable energy for the people of Kenya and those from neighbouring countries to trigger socioeconomic development.

Machinery at work during the construction of the Sinendet – Kisumu pipeline

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ADVERTISERâ&#x20AC;&#x2122;S CORNER - KENYA PIPELINE COMPANY PICTORIAL

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KPC KPC Bottom loading at the Embakasi KPC

KPC KPC Reinjection motors

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Depot

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CSR Donation of an ambulance worth Ksh10m to Marsabit County for the Beyond Zero Campaign

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Kenya Pipeline Company storage tanks at Nairobi Terminal

KPC

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Top government officials during an inspection of the ongoing Mombasa - Nairobi pipeline

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Morendat Institute of Oil and Gas inaugural class.

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Control room staff monitoring KPC KPC KPC pipeline operation

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KPC engineers during a routine pump service

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Trucks in KPC Kisumu Depot during top loading

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Inspecting of the now complete Sinendet - Kisumu pipeline

Staff in the lab taking product samples

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Food distribution to a resident of Thange.

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THE AFRICAN BUSINESS FORTUNE - COVER STORY

Co-operative University College of kenya; A ubique hub for learners Excerpts of an interview with Prof. Douglas Shitanda, Principal, Cooperative University College of Kenya

Who is Prof. Douglas Shitanda?

am Professor Douglas Shitanda; A professor of Processing Engineering, JKUAT. Currently Prof. Shitanda, is the Principal of The Co-operative University College of Kenya, a position he has held since April 2014.

What is the potential of The Co-operative University College of Kenya in the achievement of Kenya’s vision 2030?

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CUCK is a powerhouse towards achievement of the Kenya’s vision 2030. Ours is a unique niche of Co-operatives which is a key driver of the Kenyan economy. We train high caliber of manpower so much needed to run the multi-billion sector the cooperative is in Kenya and for record, Kenya’s co-operative sector remains unrivalled in Africa and 7th best Globally. In a nutshell, co-operative sector is the driving force towards poverty alleviation leading to a globally competitive and prosperous Kenya.

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THE AFRICAN BUSINESS FORTUNE - COVER STORY

Kenya is ranked the best in Africa in terms of the Cooperative Business Model and 7th best in the World. Do you think credit needs to come to The Co-operative University College of Kenya?

To a large extent! Recall that since 1952, we have trained for the co-operative movement not only in Kenya but also several Nation States of Africa including South Africa, Rwanda, Lesotho, Ethiopia, and Nigeria among others. Without prudent management, how can a sector so vibrant, productive and gigantic be? Further, we should also note that the co-operative movement operates under several principles which make the movement cohesive. In our training at CUCK, quality has been our hallmark and we live to that. Further, we have been involved in research and most of the cooperative riddles have been undone by CUCK! So, yes, we are key players in the success with of course other stakeholders in the sector.

Co-operatives are now a devolved function; how is the University College aligning itself to build capacity at the grassroots’ level for continuity of this function to Counties?

We have taken the University College to the Counties; already, we have entered into Memorandums of Understanding with several County Governments in Kenya. This is however, a continuous process and we hope to work with virtually all County Governments in Kenya. Meru County, Machakos County, Taita Taveta County, are already on board and several others are in course and lots of work is going on currently.

Is CUCK the University of the Future? What are its competitive ends?

First of all, CUCK stands tall in terms of its mandate; to offer Quality Co-Operative Training Research and Consultancy. We are indeed not only the University in the horizons but the University of the Moment. Our competitive edge is majorly on our niche; the co-operatives; the sector touches the heart and soul of almost

every Kenyan.

As the CEO of one of the oldest institutions, what are the plans for robust growth in terms of students’ population?

Some few years ago, in fact in 2012 we were less than 1,000 students, currently we are shy of 5,000 students. We are now gearing towards Charter acquisition which will see our numbers almost double. The industry is thirsty of our graduates and the human resource capital we inject into the market. This need itself is our key strength towards numbers. But, quality lingers in our mind most as compared to numbers.

Milestones covered by the University in terms of infrastructural development?

We are almost completing a state-ofthe-art lecture theatre with a sitting capacity of 2,000 persons. We have also commenced plans for an ultra-modern Learning Resource Center which will be an iconic research hub in East and Central Africa. It will house among others a library, a conference facility and a pack of other facilities for a modern University.

That Co-operatives are moving the Kenya’s Economy, how can the youths be roped in?

The youth in this Nation are an enormous

resource. They need success stories and they themselves are those stories, what is just needed is a little tip of mentorship. At CUK, we have moved a notch higher; for instance, our own students have formed the first ever in Kenya, a Sacco Society managed, and run and owned by students themselves. This is meant to be a replica after their schooling here.

What is the future of Cooperatives in Kenya?

Very bright! It will make Kenya a rising and a shining star! Already this is the best movement in Africa and 7th best in the World! With over 19,000 registered cooperatives and the number is moving up, is an upbeat path towards a bright future.

What’s in store for Co-operative University College on of Charter award?

We will roll out more degree programmes and post graduate studies will take root.

Parting shot

CUCK remains an epicenter for Quality Education, Training and a Research Hub. We remain open to partnerships not only because that is direction the Business World is moving but also because one of the Principles of co-operatives is co-operation among co-operators. I can tell you CUCK is a great deal both for the co-operative sector and higher education in Kenya!

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THE AFRICAN BUSINESS FORTUNE - MINING

Kenya poised for mining rebirth

Titanium mining in Kwale

By Steve Umidha

enya is poised for unprecedented mining boom within the next ten years, as companies begin prospecting for largescale development. The newly modified Mining Act, assented to by President Kenyatta in May, 2016 and a 20-year strategy written by Mining CS Dan Kazungu are some of the key ingredients hoped to increase investor appetite for oil companies like UK’s Tullow Oil, which have been prospecting in Kenya for years. Speaking ahead of Kenya Mining Forum set to be hosted in Nairobi next month; Mining CS Dan Kazungu said that the government would use the two crucial improvements to prepare the country for the next big wave of mining activity to attract foreign investors. “With just a handful of companies operating in the country, the two implementations will offer mining companies and investors with vast opportunities to discover and tap into new Greenfield projects and make Kenya a mining frontier,” said Kazungu. Kenya is set to host a two-day mining conference in September where industry players are expected to discuss the recently updated mining act and how it will boost investments and development of the sector. The country has a high mining potential and already ranks the third largest producer of soda ash and the seventh producer of fluorspar globally, and it is also known for gemstone mining, currently dominated by small scale miners – who account for 60 per cent of annual gemstone production. With further exploration from firms such as Base Titanium, 20

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Base Resources wholly-owned subsidiary that operates Kwale as well as the implementation of the updated Mining Act, it is estimated that the industry could generate up to five-folds the Sh1.65billion revenues government earned from mining and mineral operations in the last financial year. It is understood that Base Resources has already applied to undertake further exploration around its mines and foreign companies are equally considering digging for niobium along the coastal region. Acacia which is owned by Canadian conglomerate Barrick Gold is also prospecting for gold mining on the shores of Lake Victoria. The new legislation is also expected to address thorny issues that have existed in the industry for decades. It includes plans on principles of land policy, local content and environmental considerations and rights to natural resources among other concerns. In its old stature the Mining Act did not make provision for local content for instance. The Mining Bill states that where a company whose planned capital expenditure is over the prescribed limit it shall, within 4 years after obtaining a mining licence, offload at least 20 per cent of its equity at a local stock exchange – and the Cabinet Secretary may extend the required period if he deems it fit after consulting with the National Treasury.

THE AFRICAN BUSINESS FORTUNE - ENERGY

Kenya Power targets more poles for last mile project

he Kenya Power company has said it will increase the number of poles for the first phase of the Last Mile Connectivity Project (LMCP). The company yesterday said that the procurement of poles will increase significantly in the next four years, and it will continue to give priority to local manufacturers and suppliers of electrical equipment in the implementation of the multibillion project. The implementation of the last mile project targets to accelerate electricity access in the country by 70 per cent by the end of 2017, up from the current 55 per cent. “Under the first phase of Last Mile, we expect to procure over 350, 000 poles”, said Kenya Power Chief executive Ben Chumo. Kenya Power has since purchased 377,000 poles from more than 40 local companies involved in treatment of wooden poles and production of concrete ones, in support of the government’s “buy Kenya build Kenya initiative” in the last two years to drive its electrification programme. A total of 314,000 customers are targeted to be connected during the first phase of the Last Mile Connectivity Project that is funded by the African Development Bank, with the programme further expected to provide better and reliable power supply to Kenya Power’s 4.9 million customers, according to the company. “We are implementing a network upgrade program across the country at a cost of Sh10

Kenya Power Chief executive Ben Chumo.

billion which involves replacement of wooden poles with concrete poles, maintenance of way leaves through vegetation management, replacement of broken parts such as fuse carriers, extension of medium and low voltage lines and enhancement of conductor capacity to carry more loads,” said Chumo. Some of the poles have been used to implement the Global Partnership on Output- Based Aid (GPOBA) programme funded by the World Bank to aid cheap connections, mainly in slum areas – with a total of 1.14 million customers having been connected to power under the programme since 2014.

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THE AFRICAN BUSINESS FORTUNE - LEADING WOMEN

Kenya’s women entrepreneurs mean business – but they need financial backing By Steve Umidha

n more recent times, it used to be that the business setting was a man’s turf. Times are changing, and they are changing so fast! Today, our women are exerting more and more supremacy and are now beginning to do something that’s been a male attribute for decades – taking business risks, albeit the number of those taking risks is still low. Men are wired to be risk takers, and they make decisions swiftly. Sometimes it’s not always the right decision, but it is a decision nonetheless, while women on the other hand, tend to scrutinize, think things through, weigh all the elements, and then make a decision. As difficult as it is for small business owners to access finance in general, women entrepreneurs in Kenya continue to face some of the harshest challenges – including lack of suitable bank products and the fact that local banks are still skeptical in funding majority of women-owned businesses.

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THE AFRICAN BUSINESS FORTUNE - LEADING WOMEN

Even the title, “woman-owned business,” denotes the minority status of female entrepreneurship. You hardly hear the corresponding, “man-owned business” principally because it’s more common and expected. On the supply side, local banks sometimes avoid serving women-led businesses as they perceive them to be high-risk borrowers who are ‘tricky’ to serve, as opposed to their male counterparts. And very often, banks do not develop products that meet the needs of women; rather these banks offer products with high interest rates and collateral requirements – something financial institutions will need to advance on if they are genuine in their quest to empowering women entrepreneurs – whose inability to raise funds holds back growth. Financial inclusion was the immense theme at this year’s annual Women Entrepreneurship and Networking Workshop dubbed Financial Management which was held in April in Nairobi and hosted by Gulf African Bank (GAB), an acknowledgement that those women entrepreneurs are a force to reckon with today. According to a recent research by World Bank’s financial arm, International Finance Corporation (IFC), an astounding 39 percent of Kenya’s 134,000 formal small and medium enterprises are owned by women. Despite the growing numbers, women continue to face numerous challenges when it comes to financial inclusion compared to male counterparts. As the Head of Women Banking at Gulf African Bank Ms. Najma Jabri recognized before the forum’s proceedings, the bank had got it right in Kenya – although as one bank official pointed out, most local banks were on course to developing incentives for women in terms of products and infrastructure, but there’s an existing huge gap to be filled. “Women are more demanding and they need a lot from banks,” says Najma during an interview at the bank’s head office in Upperhill, Nairobi. In a candid tête-à-tête with Ms. Jabri, GAB’s Manager – Women Banking (Annisaa) for six years now, the softspoken lady reckons that three major things continue to stand in the way for women entrepreneurs’ success. “A major hindrance to access to finance is that women lack tangible collateral,

like when you look at land in Kenya today you’ll find that only one percent is owned by women. What we have done at GAB for instance, we have a special product for women in business whereby the collateral is ‘soft’ collateral like cluster items such as jewelry and we guarantee them up to Ksh1.5million with soft collateral. We are also the first bank to allow jewelry as security for accessing finances,” she says. Although women can function well without a brick and mortar facility, Najma says the fact that they have no collateral is proving to be a huge problem for most bankers. Other challenges women entrepreneurs still face include the numerous obstacles in securing start-up financing, working capital or growth funding, with many at a disadvantage when seeking financing from banks.

Similarly, a lot of women executives also lack confidence in their business acumen and are intimidated by their male counterparts, according to Ms. Najma, but that ‘fear,’ she believes is being loosened by some of the initiatives GAB has had to employ in its operations as it seeks to break the barrier. Insufficient information on finance and record keeping are other stumbling blocks facing these women, according to Ms. Jabri. Najma says, often women have little experience in the process or documentation needed to secure an investment, and while they may be passionate about their concept, they often lack a clear business plan.

“The bank expects you to have good records, cash flow analysis and business projections. Basically what we’ve done, the workshop addresses those challenges, we are trying to enhance capacity for women in order for them to understand what it takes to be eligible for bank loans,” she says. Even before the workshop, Najma says the bank had managed to address some of those concerns. GAB had identified the most important factors that encourage women to put aside their fears and start a business. Presently Gulf African bank is the only local lender that has only-women bank branches dedicated specifically for women, an initiative she says was put together in 2012 when the bank’s first branch opened in Eastleigh. The initial aim was to cater for unbanked population in that area. “We have women champions in all our branches to make women feel comfortable. We noticed a lot of them were shying away from asking even the most of basic questions, and with time the barrier was getting broken,” she says. Najma says the bank is also in the process of coming up with new exciting initiatives aimed at working to foster these relationships and allow women executives to expand their enterprises. “We have a lot of products in the offing so watch this space,” she says. Additionally, the bank has rolled out similar initiatives in other towns like Mombasa and most parts of North Eastern region targeting women entrepreneurs that have been locked out of financial inclusion for years. A lot of female executives are familiar with the obstacles and are choosing alternative resources, she says. Peer-to-peer financing, locally referred to as chamas and government assistance programs like Uwezo fund (loosely translated as ability) among other programs have come to the rescue for many new start-ups that are women-led. Even when there are no legal barriers to starting a business, courage is still required and women entrepreneurs will need to have courage. Yet, even among entrepreneurs, there is a gender gap in confidence and women are often more afraid of failure. Ultimately, every impoverished woman who manages against all odds to become a successful entrepreneur is heroic.

THE AFRICAN BUSINESS FORTUNE

AUG-SEP 2016

THE AFRICAN BUSINESS FORTUNE - REAL ESTATE / PROPERTY

Poor awareness to blame for slow uptake of REITs in Kenya By Steve Umidha

isted real estate investment stocks in Kenya have so far delivered below par track record and low subscriptions level among Kenyans. This follows investors’ lukewarm appetite for Real Estate Investment Trusts (REITs) witnessed in the industry in which all the three firms namely; Stanlib Fahari I-REIT, Home Afrika and Fusion D-REIT failed to live up to the buildup of the investment vehicles introduced by capital markets regulators to help individual investors own pieces of the property market. Analysts are now blaming the lack of broad investor education and workable illustrations by companies that own and operate incomegenerating property projects to the current state of affairs and want improved corporate governance around issuance of REITs.

The Cytonn weekly report on the industry has recommended on a complete fix of the initiative and a new drive by industry players. “It is time for the industry players in financial services, real estate and regulators to review the initiative and give it new impetus. Failure to rejuvenate the REIT market would be very negative to the market,” said the report released in August.

The high minimum cost required to invest in REITs have also been blamed on the low uptake which has since the Fusion D-REIT Sh5million offering for instance extended twice indicating failure to raise required amounts. There is also little clarity on its closure which was scheduled for 4th August, 2016.

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The Stanlib Fahari I-REIT on the other hand achieved only 29 per cent subscription, and is now trading at just Sh 16.35, 18.25 per cent below its issuance price of Sh 20, while Home Afrika which went public in 2013 at Sh 12 per share is now trading at Sh 1.25, which is 89.6 per cent below its issuance price. Stanlib REIT has s ince applied for regulatory extension to meet reporting obligations. The report comes on the back of another report by Oxford Business Group last year which showed only four per cent of Kenyans actively invest in the NSE stock market largely due to low awareness of the bourse’ products.

THE AFRICAN BUSINESS FORTUNE - MANUFACTURING

Kenya on course with the construction of Steel mill By Monica Muema

enya’s building and construction sector is set for a serious makeover following deals signed between Kenya’s ministry of Industrialisation and Chinese corporations at the just concluded China-Africa Cooperation summit in Beijing, China. The deals between the Industrialisation ministry and the Fujian Province State-owned Assets Supervision and Administration Commission (SASAC) as well as the prior MoU between the ministry and Chinese-based steel company, Sinosteel for the construction of a steel mill in Kenya is poised to meet the country’s deficit for steel products. “The deal, though currently at Letter of Intent stage, is being highly prioritised and will soon see Kenya get its first Integrated Iron and Steel Mill,’’ said Kenya Investment Authority Managing Director Moses Ikiara after the signing ceremony last Month.. Available figures indicate that Kenya had a shortfall of 1.8million metric tonnes of steel as at 2013 and the demand is forecast to hit 2.5million metric tonnes by 2020 and double by 2030 - highlighting the dire need for a local plant to meet that

Kenya Investment Authority Managing Director Moses Ikiara

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demand and supply the ongoing government-led infrastructure projects. The 2016 economic survey released early this year further points to the increased expenditure by the government on iron and steel which grew by 16.7 per cent to Sh 88 billion last year owing to construction activities, particularly road and railway line infrastructure. The government has ongoing infrastructure projects including Standard Gauge Railway project (SGR), LAPSSET corridor project and the 10,000km new road network project that rely heavily on the steel and steel products. Investors in the real estate, building and construction sectors often used to importing steel products from China and other markets will also benefit from the plant, with its construction dates yet to be confirmed. The signing of the deals further coincides with unconfirmed merger revelations which The African Business Fortune cannot independently confirm that four powerhouse Chinese steel companies were planning to consolidate into forming two main steel producers in China. Hebei Iron & Steel Group, China’s biggest mill by output and Shougang Group would merge and form Northern China Steel Group, while China’s second largest producer of steel, Shanghai Baosteel Group Corp would also join forces with Wuhan Iron & Steel Group Corp into Southern China Steel Group. The move according to insiders is aimed at positing Chinese mills the capacity to rival other global players like ArcelorMittal, and will also boost their government’s efforts to tame over capacity in the Yen-rich sector. The move would equally see smaller steel firms in China swallowed into the two groups upon establishment. No formal agreement or approvals have been arrived at yet from both the industry’s regulator and stakeholders involved. China is the world’s largest steel producer and accounts for close to half of global supply of alloy used in construction and real estate sectors as well as appliances.

THE AFRICAN BUSINESS FORTUNE - FINANCE

End-days for the dark underworld that is forex trading?

By Staff Writer

he Capital Markets Authority (CMA) is calling on stakeholders and the public to take part in the drafting of a new law hoped will bring sanity in the online forex trading – an industry that has seen brokers earn by directly taking on their muggiest punters. In statement last month, the authority said it was inviting comments from the aforementioned in amending the draft capital markets (Licensing Requirements for Online Forex Brokers and Conduct of Online Forex Business) Regulations, 2016, in order to come up with a regulatory framework that will provide a safe online forex trading environment for Kenyans. The announcement comes after the National Treasury had called on amendments to the CMA Act, through the Finance Bill, 2016 to facilitate the emergence of an effective and secure online forex trading environment for those taking part in the trade. “Providing a legal framework for the online trading of foreign currency will aid in ensuring potential traders have a safer trading environment, facilitate diversification of financial activities and will serve to strengthen Nairobi’s position as a financial hub,” read the statement. Online forex trading refers to speculative forex trading activities undertaken by individuals or companies through the internet with a sole purpose of profiting from fluctuations in the currency markets – which is usually facilitated by brokers.

Presently there is no regulatory framework governing online forex trading in the country – a situation that has seen the Forex Trading (FT) branded ‘shifty’ business and continues to expose thousands of innocent traders to losses. It is also estimated that over 50,000 Kenyan investors are participating in the trade through foreign registered brokers who log into the internet to access the highly liquid currency clearing centers in the USA, Europe and Japan among other countries.

THE AFRICAN BUSINESS FORTUNE

AUG-SEP 2016

THE AFRICAN BUSINESS FORTUNE - TECHNOLOGY

Remix Mini, world’s first Android PC set for Kenya launch

This little Personal Computer wants to convert you from your Windows Operating System (OS) to Android OS By Brian Yatich

emix Mini PC makes a grand revolutionary breakthrough to become the world’s first Android PC and is set to launch in Kenya in the coming month. The small lozenge-shaped device which was engineered by Jide technology, is a Chinese company founded in early 2014 by three exGoogle engineers with a goal of making productive Android computing accessible and affordable to people in emerging markets and throughout the continent. The device basically acts like the normal Linux, Windows or Mac PC; any user would do anything they would normally do on a desktop. Remix Mini last year raised USD 1.6 million in funding on Kickstarter in 45 days, shipping almost 30,000 Mini PCs to more than 125 countries, including Kenya. Tawanda Michael Mahere, Emerging Markets Manager, Jide Technology said that over the last few months they have set up retail channels in North American, Europe, Africa and Asia. “We recently made the Mini available in South Africa and Nigeria and will soon launch it online in Kenya.” He said. Specs Inside the egg-shaped lusterless plastic body is a 16GB of storage and 2GB of RAM. The Remix Mini runs on an operating system called Remix OS a productivity-focused version of Android. The device operates on a 1.2GHz quad-core allwinner processor, nothing that’s out of the ordinary; it’s just like any other normal android smartphone. The Remix Mini runs on Android 5.1. OS based on android lollipop which is highly customized to make it feel like the normal windows operating system complete with applications running in windows as it contains the file browser, task bar, and the notification area making the user feel like in a windows pc environment. The beauty of this device is that it supports Wi-Fi and Bluetooth connectivity, so you could easily connect to a cordless keyboard and mouse. It comes pre-installed with Play Store and is bundled together with a couple of Google’s applications, which is tailored towards android smartphone users as they are familiar with its operation. 28

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THE AFRICAN BUSINESS FORTUNE - TECHNOLOGY

The device basically acts like the normal Linux, Windows or Mac PC; any user would do anything they would normally do on a desktop.

One slight difference from windows operating system is that it has a multi-layered system in which android apps can run in the background from each other; for instance if you are on the internet you can switch back to your PCs desktop at ease to write a document, edit a spreadsheet or create a slideshow, remix OS enables them to do all these tasks smoothly on one device. It has 4k video hardware decoding with 1080P HDMI output and support for 1920 x 1080 resolutions. However, the real charm of the Remix Mini is power saving, the typical windows desktop computer clocks in at anywhere between 65 to 250 watts. Remix Mini gives you the same power of desktop computing at 10 watts. By simply using the already existing power efficiencies found in mobile CPU architectures, Remix Mini is able to save you so much more in power without sacrificing anything in performance. The device connects on a screen of any size regardless of how readjusted the screen resolutions in the settings are, but the Chinese company says it works better on a PC monitor or a smaller TV. On the back it has an HDMI hole, two USB ports 2.0, a mini SD card slot, a headphone jack, an

Ethernet hole for LAN internet connection, and space for the power adapter. Jide tech team says that the Android PC, focused on productivity will access the entire bionetwork of more than 2 million Android apps which is the best suited for both individual consumers and enterprises. The device has received vast interest and usage in the United States and Western Europe and it recently received the Best of MWC award from Android Authority at the Mobile World Congress in Barcelona, Spain. The Remix Mini was also featured at the Consumer Electronics Show in Las Vegas in January 2016 and was named one of the Best Gadgets of CES 2016. As a show of its dexterity the company has already developed its own model dubbed “the Remix Ultra Tablet” almost similar to Microsoft’s Surface. This Jide’s Remix PC could become a more fascinating alternative to computer users than traditional desktop Windows. The PC currently retails at $ 70 in the global markets. It might be the first-cheap computer for a growing economy like Kenya where people who can’t afford a computer of their own can run apps and games in their own environment where there are a limited number of machines.

THE AFRICAN BUSINESS FORTUNE

AUG-SEP 2016

THE AFRICAN BUSINESS FORTUNE - HEALTH

Ksh1.3b facility to train 10,000 health professionals

Farid Fezoua, GE Healthcare Africa President and CEO, Jay Ireland, GE Africa President and CEO, Dr Cleopa Mailu, Ministry of Health for Kenya

By Staff Writer

S multinational General Electric has commissioned a $13million (Sh1.3billion) healthcare training school in Karen, Nairobi. The centre, the first by GE in Africa will train over 10,000 healthcare professionals in the country and East Africa in the next three years and will use the firm’s experts in offering training to biomedical engineers, radiologists and technicians in handling the equipment. The training centre is part of GE’s Healthcare’s global plan to develop and deliver localized and modern facilities in the healthcare sector – a move that is expected to address the shortage of qualified healthcare professionals in the region. Speaking during the launch of the facility last month, Health Cabinet Secretary Dr. Cleopa Mailu said the centre would be expanded to offer leadership, biomedical 30

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General Electric (GE) Africa President and CEO Jay Ireland

THE AFRICAN BUSINESS FORTUNE - HEALTH

and clinical education courses in collaboration with the Ministry of Health, private healthcare providers and other educational partners. “Demand for quality healthcare is increasing and this facility will play a critical role in supporting the capacity while at the same time helping to reduce the skills gap and build a solid national healthcare system,” said Mailu.

The firm said it had installed radiology departments, X-ray, ultrasound machines as well as screening equipment for breast cancer adding that it was keen on more partnerships to build the capacity. “We have already signed three new partnerships for skills building in Kenya and East Africa with Kenya Medical Training College (KMTC) and international companies IntraHealth and Management Sciences for Health in an effort to deepen and support our human capital and capacity building,” said Farid Fezoua, President and chief executive GE Healthcare Africa.

Machakos hospital has recently upgraded to an Ultra-Modern Level 5 referral facility. GE is responsible for the wide-scale radiology infrastructure modernisation component like the computer numerical control machine for breast screening

GE had in February 2015 in a Managed Equipment Services Project (MESP) signed a Sh42billion partnership with the ministry of Health to modernise the tele-radiology infrastructure and imaging equipment in 94 county hospitals across the country and four national referral hospitals.

The CS said the agreement which had initially received opposition from some governors, is now being rolled out to some county governments like Kericho County and will see the deployment of more than 500 pieces of imaging equipment that are supported by a long term servicing contract. The financing model allows the government to sustainably budget healthcare expenditure over several years by deferring upfront capital outlays. To date 70 hospitals in 42 counties have had radiology departments modernised.

Ateam from GE Healthcare’s Life Support Solutions business with Dr. Mark Newton, an American anesthesiologist at Kijabe hospital with GE’s 9100c anesthesia machine

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THE AFRICAN BUSINESS FORTUNE - TECHNOLOGY

Uber presses its service button in Dar Global taxi hailing company causes anxiety as it launches in Tanzania By Ben Oduor

fter getting fierce reception from Kenyan taxi operators, global taxi hailing company Uber has launched services in Tanzania’s commercial capital with a system that charges per kilometre. The launch, which took place in June, marked Dar es Salaam the 475th city to join Uber’s growing global network following its recent entry into Accra, a city with a population estimated at 2.27 million, as its 467th market.

Speaking during the launch, Alon Lits, General Manager for Uber Sub-Saharan Africa said: “We are proud to launch Uber in Tanzania at such an exciting point in its growing economy. As the infrastructure of Dar es Salaam rapidly urbanises, so the demand for affordable, easy and flexible transport grows. Lits said the new service would partner with stakeholders in Tanzania’s transport sector to shape the future of urban travel. “Uber is part of a broader global evolution in transportation. Dar es Salaam is a vibrant, thriving city with a growing youthful population that is ready to support our service. Together, in partnership with the current transport system in Dar es Salaam, we will shape the future of urban travel to benefit passengers, drivers and the environment.” However, its entry was hit by mixed reactions as taxi operators viewed the new service as a potential catastrophe to their business, while the travelers saw it as a game changer in the chauffer services.

Alon Lits, General Manager for Uber Sub-Saharan Africa said:

THE AFRICAN BUSINESS FORTUNE

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Market reports state that local taxi drivers charged up to TSh30000 for a 10 kilometre distance, but Uber’s reduces this to about TSh5000, a move that has gripped the local taxi operators with fear. As its marketing strategy immediately after the launch, Uber initiated an overwhelming four days promotional ride at a cost of Tsh20000. The company is set to benefit from its new market, which has a population of over 4million and that is its 14th country in Africa, and 4th in East Africa after

THE AFRICAN BUSINESS FORTUNE - TECHNOLOGY

have banned the service; with a German court deciding it violates transport laws hence imposes £181,000 fines for each violation.

Changing the norm

A taxi-driver waits for passengers in Dar es salaam

Nairobi and Mombasa to launch such services. Explaining why they chose Dar as their frontier, Samantha Allenberg, who is in charge of Uber Communications for Africa said: “It made sense to launch in Dar es Salaam because of the size of its population and because people in Dar es Salaam are willing to embrace innovation and technology.” She also confirmed that the company would continue exploring other cities across Africa and lauded the regulators from markets they have set base for supporting Uber’s technology. Earlier before setting base in Tanzania, the company had launched in Uganda charging a minimum USh5000 fare, a move that was lauded by passengers terming it a timely initiative coming at a time when the taxi market was in chaos and confusion. Uber develops markets and operates its mobile application, which allows consumers with smartphones to submit a transport request which is then routed to Uber contracted drivers who use their own cars.

regular taxi operators blame Uber for their plummeting revenues, and have consistently opposed its rivaling growth. In April, French cabbies set up barriers around Marseilles and Aix-en-Province in South East France to protest against the new taxi operator UberPOP, whose services they claimed had to be issued with a ‘special license.’

In Nairobi, the government had to intervene after ordinary cab drivers waged a war against the firm, claiming it had taken over its customers with services they claimed were extremely lower compared to market rates. At some point, this conflict turned ugly as Uber drivers were beaten by regular taxi operators and their vehicles torched. Germany, South Korea and Netherlands

Interestingly, it now seems Uber is not the only player on a charm offensive to automate taxi operations at affordable rates. Weeks after its launch in Kenya, operators such as Maramoja and Easy taxi have set base in the country, with the former signing up over 700 drivers and the latter recording significant milestones before it closed shop in May. Further, as if to develop a vigorous playing-ground in the cab market, Kenya’s biggest telecoms operator- Safaricom- in partnership with a local software firm, early July, launched a transport-hailing app called Little Cab to compete Uber. Safaricom, which is partly owned by Britain’s Vodafone, partnered with Craft Sillicon, a Nairobi-based software firm to offer the taxi services at a time when Uber enjoyed monopoly as an affordable cab operator. Little cabs offer free WI-FI to passengers, charges cheaper fares compared to its competitors and give drivers a higher share of revenues, with its services initially accessible on Android and Windows phones but later on iOS platforms. Probably, with the rising number of techcentric chauffer services, the transport sector maybe geared towards a major transformation.

Fierce reception

Headquartered in San Francisco, California, Uber was founded in 2009. In 2012, it started its international expansion and is now present in 73 countries. However, growth has not been a rosy affair within a section of markets they have launched services. In the United States for instance,

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THE AFRICAN BUSINESS FORTUNE - TELECOMMUNICATION

Mobile services contribute over $150b to African economy By Brian Yatich

ore than half a billion people in Africa are now subscribed to mobile services as the continent continues to migrate rapidly to mobile broadband networks, states a new GSMA study. ‘The Mobile Economy: Africa 2016.’ The report, released at the Mobile 360 highlights the increasing contribution of Africa’s mobile industry to the regional economy, including employment and public funding, and mobile’s role as a platform for digital and financial inclusion.

“More than half a billion people across Africa are now subscribed to a mobile network, providing them not just with connectivity but a gateway to a range of other essential services in areas such as digital identity, healthcare and financial services,” said Mats Granryd, Director General, GSMA. “The rapid move to mobile broadband networks is also unlocking new opportunities for consumers, businesses and governments, growing an ecosystem that last year added more than US $150 billion in value to Africa’s economy.” The report finds that there were 557 million unique mobile subscribers across Africa at the end of 2015, equivalent to 46 per cent of the continent’s population, making Africa the second-largest – but least penetrated – mobile market in the world. Africa’s three largest markets – Egypt, Nigeria and South Africa – together accounted for around a third of the total subscriber base. The number of unique mobile subscribers is forecast to reach 725 million by 2020, accounting for 54 per cent of the expected population by this point. African mobile subscribers are rapidly migrating to mobile broadband networks and services, a result of ongoing network rollouts and the increasing availability of affordable mobile broadband devices and tariffs. Mobile broadband (3G/4G) accounted for just over a quarter of total connections at the end of 2015, but is expected to account for almost two-thirds by 2020. By mid2016, there were 72 live 4G networks in 32 countries across Africa, half of which have 36

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THE AFRICAN BUSINESS FORTUNE - TELECOMMUNICATION

launched in the last two years.

Meanwhile, the number of smartphone connections in Africa is forecast to more than triple over the next five years, rising from

many of the social challenges in Africa, including the ability to provide citizens with official identities, tackling the ‘digital divide’ by enabling access to the mobile internet, and delivering financial inclusion via mobile money services. 226 million in 2015 to 720 million by 2020. The use of mobile technologies and services across Africa generated US $153 billion in economic value last year, equivalent to 6.7 per cent of the region’s GDP. This contribution is expected to increase to US $214 billion by 2020 (7.6 per cent of expected GDP) as countries in Africa continue to benefit from the improvements in productivity and efficiency brought about by increased take-up of mobile services. Africa’s mobile ecosystem also supported 3.8 million jobs in

2015 and made a US $17 billion contribution to the public sector via general taxation. The number of jobs supported is forecast to rise to 4.5 million by 2020, while the tax contribution is expected to increase to US $20.5 billion. The report also explains how mobile is powering innovation and entrepreneurship across Africa. It notes that there are now approximately 310 active tech hubs across the region, including 180 accelerators or incubators. Mobile operators are supporting this ecosystem by opening up APIs to third-party developers in areas such as messaging, billing, location and mobile money, which has allowed start-ups to scale quickly. Mobile technology is also playing a central role in addressing

The number of mobile subscribers in Africa that access the mobile internet has tripled in the last five years, reaching 300 million by 2015, equivalent to a quarter of the African population. An additional 250 million subscribers are expected to become mobile internet users by 2020, bringing the total to 550 million (41 per cent of expected population).

“The positive transformational impact of mobile is being felt more profoundly in Africa than anywhere else in the world; Africa’s mobile industry is at the forefront of helping to deliver the United Nations’ Sustainable Development Goals5,” added Granryd. “We are focused on creating a better future for citizens

and businesses across Africa, providing access to essential information and services, improved employment and economic opportunities, and greater productivity and competitiveness.” The new report ‘The Mobile Economy: Africa 2016’ is authored by GSMA Intelligence, the research arm of the GSMA. THE AFRICAN BUSINESS FORTUNE

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THE AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

Young techie develops product that secures buildings, cars Youth started small but now offers solution-based security services

“I decided to venture into security because one of my relatives was car jacked... I

thought I could come up with a way to track the vehicle.” Kelvin Macharia

scholarship award - he found his uncle a worried man. He had been carjacked and lost all the valuables in the car. He could not trace it despite having a tracker and to worsen the situation, Macharia also lost a laptop and could not recover it. It is from the risks that he read a deficit. “Had there been a more robust and customised tracking system, probably we would have traced these valuables,” says Macharia, whose mind remained unsettled since then swearing to find a more trusted solution.

Growing the business

Armed with Sh30000 savings, Macharia established Sunrise Tracking Limited in 2012, a Nairobi-based company which offers car and buildings tracking solutions. “Since at the time Nairobi was East Africa’s largest economy with a high growth rate, I knew cases relating to carjacking and burglary would be prevalent thus I opted for tracking services as a viable business opportunity,” he says.

Innovator Kelvin Macharia

By Ben Oduor

s his classmates juggled between books and a social life, Kelvin Macharia was keenly training his focus on solving real life challenges. He was perturbed by the nuisance cockroaches and insects caused in his dormitory, and knew he had to act fast to solve the menace. Within weeks of consistent research and tests from plant extracts, he discovered an organic product which could eliminate the insects promptly.

“I sourced the chemical from green plants which were mixed to come up with an organic product that was highly reactive. I sold the product to neighboring schools,” he states, saying this was the starting point to his entrepreneurial journey. In 2011, when he returned from South Africa’s African Leadership Academy where he had been pursuing a diploma in entrepreneurship and leadership - courtesy of a 38

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In its annual crime report 2014, National Police Service statistics on offences such as robbery, breakings, theft of stock, theft by servant and vehicle &other thefts within Nairobi County summed up to 1680, ranking the capital atop other counties on such vices. Apparently, it is from such alarming data that Macharia conceived the business idea.

However, scaling up become a tussle since a number of clients underestimated his expertise on account of his age, and mobilizing capital to tap clients slowed his pace, but he worked harder optimistic of a fruitful future. Indeed, his resilience is paying off as the company now offers a wide range of security services tailored to construction and automobile industries. For vehicles, the company offers fleet

THE AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

and fuel management services, stolen vehicle recovery and vehicles service and maintenance while it offers CCTV systems ranging from basic CCTV, IP CCTV and biometrics for monitoring buildings through trailing movements. “I decided to start with providing security services for vehicles since carjacking were more prevalent. However, we have diversified from products offers to software solutions for cars and other devices.” Most intriguing of the services is fleet management, where a company with a fleet of more than 100 vehicles can track each using GPRS (General Package Radio Service) and GPS (Global Positioning System) to identify the vehicle’s location. The tracking system is automated in such a way that it denotes all conversations within your car from which you can trace its location hence being able to restrict it from leaving the place. Additionally, the system notifies the car owner of an attempt to siphon fuel and whenever the car engine is ignited, they can get text message alerts on their phones and immobilize the car by simply sending a counter text message. “Even though car tracking services have been in the market, ours is more customized and unique. The user has the ability of managing his fleet at the comfort of his quarters,” he explains. Currently, the over Sh15million $150000 firm has increased its staff from one at inception to seven and expanded its branches to three, two in Nairobi and the other in Nakuru, and attracted a huge clientele ranging from transport companies, corporate and higher institutions of learning.

Innovator Kelvin Macharia displaying a multipurpose drone he is making.

world’s universities, during a student querying forum at Kabarak University, and was listed among Top 10 Kenyans to Watch Out for in 2016 by Nairobi News. Additionally, in 2015, Macharia attended the Dartmouth College in America as a Young African Leader under Mandela Washington Fellowship, an initiative by US President Barack Obama. He also featured among Forbes’ Top 30 most promising Young Entrepreneurs in Africa, Business Daily’s Top 40 men under 40 and won the African Youth Awards’ Young Entrepreneur of the Year hosted in Ghana in 2015.

And in 2014, Macharia, who is currently a final year pursuing a Bachelor in Economics degree at Nairobi University, was recognized by CNN as Africa’s start-up of the year, before being crowned winner of the South African CEO Global Titans-Building the nations award. He says Sunrise Tracking is currently fine-tuning parts of a drone that will be the first of its kind to be sold in the Kenyan market. “This (drone) is what is currently keeping me busy. It’s a product we have pioneered in Kenya and I hope it will revolutionize our security systems,” the techie visualises.

Crowning success

At 25, Macharia’s hat is filled with national and international awards and accolades. He has been appointed the Kenyan Youth Ambassador for the Road to Nairobi 2016 project under Building Bridges Foundation, and serves as a mentor under the Equity Foundation Wings to Fly program. During the same year, he was appointed to serve as judge in the HULT PRIZE, a start-up accelerator for budding young social entrepreneurs emerging from

Kelvin Macharia features in Top 40 men under 40 at the Business daily Top 30 most promising Young Entrepreneurs in Africa,

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THE AFRICAN BUSINESS FORTUNE - ECONOMY

Group of companies target over 250,000 entrepreneurs in new drive

By Monica Muema

consortium of private companies has launched an initiative that will seek to equip over 250,000 young entrepreneurs in Kenya with right skills to get a job or build a business. Dubbed Africa-Working, Barclays Africa, Emerging World, Franklin Covey, Knod, Microsoft, Safal Group and Syngenta committed to empower 200,000 youth and 50,000 entrepreneurs through the programme announced in July that will initially be rolled out in Kenya and South Africa.

Speaking during the launch in Nairobi, Lutz Ziob, Dean of the Microsoft 4Afrika Academy said the association targets to roll out the programme across the continent by 2020 and will leverage on existing and innovative approaches to help get youth career- and businessready, and create a pipeline of recruitable talent for member companies.

“Most large corporations are looking at youth skills development in one form or another, because it’s crucial to their business. The idea behind Africa Working is to bring these corporations together, align our efforts, share our learning and build human capital on a pan-Africa scale,” says,” he said. Charles Reed, General Manager for Community Investment for Barclays Africa said the project will provide an

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opportunity to engage the youth, help them develop relevant skills and find meaningful employment opportunities.

The initial platforms will focus on YouthWorks – a Microsoft entrepreneurship platform linking youth to career guidance, internships and entry-level job opportunities, and an employability platform powered by Knod. AfricaWorking members will use the platform to create talent pipeline and shape the skilled employees when and where they need them, through real world projects that form the basis of this innovative learning model.

“There is currently a significant mismatch between the skills youth have and the skills employers are looking for. The announcement comes hot on the heels of a proposed Sh15billion from World Bank aimed at increasing employment opportunities among Kenya’s vulnerable youth. The WB project is slated to start in July 2016 and is expected to focus on training and internships to improve youth employability, job creation and labour market information and policy development as major components. On improving youth employability, the global lender has proposed an allocation Sh7.5 billion to cater for both formal and informal sectors to scale up the Kenya Youth Employment Programme (KYEP).

Nkumba University

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Nkumba University, one of the largest private universities in East Africa, provides an enabling environment for students to achieve competence, creativity, confidence and character so as to think critically and act responsibly in an increasingly competitive national and global environment. That is in keeping with the University motto: “I Owe You.” The University promotes education in business, sciences and technical disciplines, the arts, social sciences, communication as well as cultural fields. Nkumba University is located 27 kilometers along Kampala-Entebbe Highway, which is 10-minutes’ drive from Entebbe International Airport. The University has six Schools: • • • • • •

School of Business Administration; School of Education, Humanities and Sciences; School of Social Sciences; School of Law and Institute of Criminal Justice; School of Industrial, Commercial Art and Design; and, School of Sciences.

The School of Sciences, which was until recently the School of Hospitality and Environment Sciences, was transformed accordingly in order to additionally teach Applied Sciences, which is in line with government efforts to popularize Science and Technology Innovation (STI) in tertiary institutions as well as public life.

The School of Law is the only one of its kind in the East Africa region offering programmes leading to the award of Bachelor of Criminal Justice as well as Diplomas in Criminal Justice. These are new programmes suitable for members of the public as well as the Armed Forces such as the Police, Prisons and the Army. The University aspires to excel through quality assurance practices as well as external assessment of University programmes and facilities by National Council for Higher Education (NCHE) and the Inter-University Council for East Africa. The aim is to ensure that the University programmes are nationally and regionally accredited and comparable internationally. The University admits students in August and February in the course of each Academic Year, which runs from August to June. The University programmes run on Day, Evening, Weekend and Distance Learning arrangements. Inquiries and applications may be directed to: The Academic Registrar Nkumba University P O Box 237 ENTEBBE, UGANDA. Tel: 256 (414) 374994/302283. E-mail: ar@nkumbauni.ac.ug www.nkumbauniversity.ac.ug

THE AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

Failure is an option The story of Enwealth’s Founder, Simon Wafubwa

Enwealth Board Chairman Nelson Kuria right the companys MD Simon Wafubwa and Retirement Bene its Authority CEO Edward Odundo after unveiling the new logo

einvention is a panic move for some ventures but for Enwealth, it is part of the normal course of business. Successfully starting one of the country’s leading independent Pension Fund, Administration and Consulting firm with relatively little startup capital made it easy for Simon Wafubwa to take another big bold step for his next entrepreneurial trip – rebranding his firm Liberty Pension Services to a new beguiling phrase, Enwealth. The firm launched in 2011 from its subterranean beginnings and multiple strategic pivots as a solidly entrenched financial services provider.

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But in a clear case of “taking baby steps,” Mr. Wafubwa and his business partner gambled with the little money they had, and then saw their new startup quickly take off in the initial months of operations. “We started out with little money but made quick businesses in succession, Sh 600,000 in the first month and Sh720, 000 in the second,” says Wafubwa, the Founder and Managing Director of Enwealth Financial Services Ltd. “Nothing forces you to make better and faster decisions, because you feel the pain of every mistake acutely. You’re more apt to respond quickly to

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what works and what doesn’t when you don’t have a lot of money,” he opens up during an interview in his office on Ngong road, Nairobi. Enwealth is a business venture whose founders used their resourcefulness, hard work and resilience to create a multimillion-dollar enterprise, now over Sh40billion and already serving more than 100 corporate customers in Kenya, five years later. “We gave it everything while starting out, we saw an existing gap and were determined to bridge it even though we knew we were introducing to the market a new brand that was not guaranteed

THE AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

About Simon Wafubwa: Age 38 years An MBA holder actuarial science, part-time lecturer at College of Insurance, has over 15years experience in pension business with practice stints in Nigeria and Tanzania Council member ARBS Married with two kids

About Enwealth: Started in 2011 with just Sh300, 000 capital Deals in Pension, Insurance, Property and Training (retirement planning) Set up its board in the 6th month consisting of 5 members has 23 permanent staff Presently managing a fund valued at over Sh40billion and growing.

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THE AFRICAN BUSINESS FORTUNE - ENTREPRENEURSHIP

immediate success,” says the father of two. Wafubwa says it was an unexpected resignation from a well-paying local job that left him at a crossroads, “Work for someone again or do something myself.” He chose the latter, spending Sh300, 000 from his savings to begin the long

regulator at a cost of Sh10million and later marshaled his team to a successful rebrand exercise. “The re-brand has nothing to do with the name but rather as part of a growth strategy to boost our market share from 5to 20 percent to tap the SME market,” he says.

“One of our mantras is, Enriching Lives through innovative social security financial services. “Despite our history, we’ve been careful not to grow by pursuing every new concept that comes along as tempting as that can be by becoming laser-focused on what we do best, the ability to

torturous journey ahead. “We bought our first furniture in Mutindwa at Sh6, 000 and a few other seats upon getting an office which we were paying Sh35, 000 as monthly rent,” says Wafubwa. For a while the venture generated enough revenue to sustain itself and put food on the table, he says. But within five months, amid rapidly growing competition, Mr. Wafubwa made another major stride; he acquired an operating licence from Retirement Benefits Authority (RBA) – the industry’s

The soft spoken 38-year old maintains a resolve to grow his business methodically. Restraint, he tells me, has served him well. He didn’t even hire administrative assistant or personal assistant (PA) until he’d been in business long enough to begin contracting professional services. “Those were the days when you were the PA to yourself, office messenger, administrator and your own manager,” he recounts wistfully. Focus has also been fundamental to Enwealth’s ascent.

provide a service built on expertise and responsiveness to clients’ needs,” he says. The company further seeks to grow its regional outreach with a more comprehensive product offering that includes the post- retirement healthcare funds for retirees and a diaspora pension scheme for retirees while leveraging on technology. The takeaway is that lack of money won’t keep a good business idea; at least one that has been executed well from succeeding and the journey of Enwealth is a true testament to that.

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THE AFRICAN BUSINESS FORTUNE - TELECOMMUNICATION

Huawei targets Kenyan youth with new high-end devices By Brian Tirok

hone maker, Huawei in August unveiled four smartphones in the Kenyan market; Huawei Y311, Y511, Y611, and GR5mini as part of the firm’s strategy to tap into the lucrative youth segment and at the same time grow its market share.

Speaking at the launch Mark Hemaobin, the GM, Huawei Mobile Kenya described the youth market as untapped with a great potential for Huawei to continue positioning various products and services to this target group.

“The devices have unique features that are able to seamlessly fit within consumers’ lifestyle at an affordable price are key elements of Huawei Mobile’s marketing strategy in the mid-range level,” he said.

Devices in the Y and G series feature refined, elegant designs that highlight their beautiful high contrast displays with CPU boosting power up 100 percent, GPU performance up 125 percent, and power efficiency up 70 percent. The four new devices will retail between Kshs 7,999 to Kshs 19,999. Huawei has increased its visibility by partnering with various retail stores to avail most of its devices closer to the consumers.

The Mobile Company has expanded across the country by opening several services Centers in major cities such as Nairobi CBD, Eldoret, Nakuru, Mombasa and the flagship shop Garden City Mall, in Nairobi.

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THE THEAFRICAN AFRICANBUSINESS BUSINESSFORTUNE FORTUNE--ENERGY ENERGY

Tricky cartels KPLC will not ‘domesticate’ overnight manufacturers who are the major consumers of electricity. We are however going to continue to monitor the situation to ensure the industry is free from these cartels,” said Dr. Chumo in a telephone interview.

By Steve Umidha

...while the company was not losing substantial amount in the illicit trade, extra efforts were being laid out to tame possible upsurge of cartels in the industry.

lum areas are safe haven to several violent cartels responsible for illegal power connections, a thorny issue the Kenya Power is yet to completely tackle if it is to recuperate millions it is losing in the trade. Generally, these individuals charge a minimum fee of Sh 2,000 per connection per household in a slum dwelling (that is Sh1, 000 for single bulb connection) including additional Sh2, 000 monthly charges associated to maintenance fees.

Most slum households use at least two bulbs, and are charged every month by these cartels – making it more costly compared to households fitted with KPLC meters and pay only what they consume inform of ‘units token,’ and lower than KPLC’s Sh15,000 one-off connection fees for households in the radius of 600metres from transformer. Kenya Power’s managing director Mr. Ben Chumo yesterday said that while the company was not losing substantial amount in the illicit trade, extra efforts were being laid out to tame possible upsurge of cartels in the industry. “An illegal power connection is still not a crisis in Kenya at the moment since reported cases are mainly happening in slums and not with

The brutal cartels are understood to be minting millions of shillings from the black market at the expense of the firm while exposing thousands of lives in slums areas. Mr. Chumo however, declined to disclose the magnitude of losses Kenya Power was exposed to in terms of revenues saying, “We are not losing a substantive amount from these cartels.” Kenya Power’s manager Safety, Health & Environment John Guda did not however rule out the possibility that individuals involved in the illegal connections were being helped by some of the company’s employees who were equally profiting from the trade. “We have not heard of cases touching our staff, but I can’t rule out the possibility all together. Persons involved in the informal connections have a bit of knowledge in ‘wiring’ and are taking advantage of clients who have no idea about these cartels,” he said. Previous reports had indicated that the operatives were not in the business ‘alone’ and were colluding with some Kenya Power employees in supplying power to households without the consent of the company, a trade that has since spiraled to other slums outside Nairobi. In April this year for instance, seven people were arrested in Nairobi for illegal power connections in an ongoing campaign to weed out illegal connections.

The company’s graphic figures indicate that Western, Nyanza regions and some parts of Nairobi were still leading in cases of illegal connections. Kisii, Siaya, Homabay and Nairobi’s Mukuru Kwa Njenga and Reuben were earmarked for having recorded an increase in such cases. Kenya Power confirmed that it had secured an additional Sh1.3billion loan facility from the World Bank which it will use to upscale the ongoing slum electrification project being implemented in various parts of the country in an effort to tame the vice. The additional funding is a culmination of the Sh4.2billion the firm had acquired in 2011 for the financing of the Global Partnerships Output Based Aid (GPOBA) which has so far connected 1,271,915 homes in 40 counties over the last 5 years since 2011.

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MAGAZINE THE AFRICAN BUSINESS FORTUNE - REAL ESTATE / PROPERTY

HassConsult announce new landmark development By Brian Yatich

ass Consult has announced the launch of Montave, a high-end mixed use development that will further change the skyline in Nairobi’s Upperhill.

Montave features a towering 40 floors and 160 meter high, to deliver Nairobi’s most prestigious address offering the best in luxury, practicability at a convenient and central location. Montave is a proposed development that presents an intricate mix of shopping, working, visiting, living and leisure at 3.54 acre site in the Upperhill financial district of Nairobi.

HassConsult has been appointed to direct the design, construction and management of Montave whose developers include an investment consortium comprising local and foreign investors. Sakina Hassanali, Head of Research and Marketing at HassConsult said that they have designed Montave to meet a distinct market gap. “As Upperhill holds a third of the city’s commercial property, there is very little supply of residential, retail and entertainment facilities in the suburb. We see this as a way of bringing vibrancy to upper hill through a mixed use development that encompasses all lifestyle components – in effect trying to revolutionize the offering of commercial zones to meet the needs of a more social and connected audience,” he said

“Montave will afford users the most panoramic view of Railway Golf Course and Uhuru Park, the only development that will show the greenest of Nairobi at such a high level. The building also features a rooftop helipad -the first of its kind in a mixed-use development in the suburb,” said Hassanali.

The project sits on a Sh1.83billion piece of land nestled at the junction of Lower Hill Road and Haile Selassie Avenue and fronting Kenya Railways Golf Course with views of Uhuru Park and the City Centre. It is served by major road arteries making it is easily accessible from any node in the city. The location also sits at the doorstep of the Central Business District (CBD), the Community Area administrative node that hosts the law courts, government offices and the city’s health belt that is served by Nairobi and Kenyatta hospitals and affiliated healthcare providers.

An artists impression of Hass Consults Montave development

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THE AFRICAN BUSINESS FORTUNE THE AFRICAN BUSINESS FORTUNE - REAL ESTATE-/ MAGAZINE PROPERTY

On completion the building will house one, two, three-bedroom apartments, penthouses, a commercial tower, shopping mall, mini-theatre, resident lounges, business lounges, convention center, an elevated park, a grand piazza, a 30 meter infinity pool twenty stories high and health club – all designed to the highest in global standards. Hassanali says that Market demand is highest for developments that have enveloped high-end commercial.

“Such properties will command price appreciations of up to 40 per cent on top of average market rates. We have kick-started off-plan sales where we are offering the one bedroom luxury apartments from Sh8.9million, Sh12.9million for the two bedrooms and Sh22.9million for the three bedroom apartments,” she added. Construction of Montave is expected to begin in the second half of 2017 and is expected to be completed within three years.

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THE AFRICAN BUSINESS FORTUNE - REAL ESTATE / PROPERTY

Investors cash in on Capital Fusion’s D-REITs boom By Steve Umidha

new bidding war is breaking out in real estate sector and the targets of attention aren’t ordinary investors, but something more fashionable; ‘professional investors.’ The investors will need a minimum of Sh5million to invest in Kenya’s first Development Real Estate Investment Trust (D-REIT) launched in July, 2016 to finance the development of a Sh3.7billion project. This comes barely months after Capital Markets Authority (CMA) granted approval for the issue and listing of Capital Fusion’s commercial and a residential D-REIT, five months following another approval to Stanlib’s Fahari Income-Real Estate Investment Trust (I-Reit) in November 2015. Capital Fusion’s D-reit targets to raise Sh2.3billion for investing in the property development. The cash raised through the offer is to be used to put up Greenwood City – an upscale high potential development in Meru County that consists of a shopping mall, office block and apartments to tap into the growing middle class in the region. The

firm has already invested Sh800million through bank loans. Capital Fusion will sell the D-Reit in units of Sh23 and investors will need to buy units worth not less than five million shillings to participate in the initial public offering (IPO). “The offer is open to professional investors only who will have a chance to access development returns in Kenya by investing in property development through this new concept, a first in the region,” said Luke Kinoti, the chief executive of Fusion Capital Group. A D-reit is a tax-efficient, listed collective investment instrument that allows investors to pull capital to develop large scale real estate units. The D-REITs are traded on the Nairobi Securities Exchange (NSE) like any other listed security and the investors benefit from capital appreciation during the listing and construction window. Economists say the concept could boost the country’s property market while at the same time detecting true value of property and determine exact value of underlying property asset and similar

units. NSE boss Geoffrey Odundo implied that the new concept would gain huge appetite and traction compared to the previous REIT that saw Stanlib’s Fahari I-Reit ‘miss’ to meet its original target. “We are confident the new instrument will go a long way in quenching the thirst for Real Estate Investment in this market, which is another opportunity for our investors to diversify their portfolio,” he said. Fahari managed to raise under onethird of the targeted Sh12.5 billion in what market observers blamed on competition from other instruments and low awareness of the concept. The Fahari I-reit managed to raise Sh 3.6billion through the offering despite calling the process a success in a notice since it exceeded the minimum of Sh2.6billion target. The poor market response saw International Finance Corporation (IFC) cut investment to just Sh684million compared to Sh 1.53billion it had earlier proposed to invest in Fahari’s I-REIT. IFC later said the change was to match other investors.

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THE AFRICAN BUSINESS FORTUNE - EDUCATION

National libraries’ set for serious facelift By Monica Muema

he government has rolled out an initiative that will see all the 61public libraries across the country digitized in an attempt to set up a world-class library system to foster reading habits and facilitate research among digital-savvy generation. The two-year project launched in July by Kenya National Library Services (KNLS) and World Reader targets over 580,000 learners across the country with access to digital books (e-books) in Kiswahili and English using mobile devices – and will be undertaken in four phases in the 34 counties where Knls has presence. Under the proposed pilot project, 11public libraries in Kibera, Kakamega, Siaya and Kisumu have already been developed to serve as model libraries with more emphasis expected to be laid

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on the economically backward counties. “Our libraries are closed or simply lack relevant books. These conditions have left visitors starved for reading material. We will in partnerships with other stakeholders establish networks of digital libraries for sub-Saharan Africa and help ensure a smooth transition to a digital future,” said Hassan Wario, Cabinet Secretary for Sports, Culture and Arts during the product launch in Knls’ Buruburu branch.

The project titled Libraries, e-Reading, Activities and Partnerships (LEAP) the Kenyan national library service received 3,000 e-readers each preloaded with 200 books at a total cost (grant) of $3.5million from World Reader in form of equipment (e-readers) and digital books as well as in

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training facilitation. The KNLS anchored in the Ministry of Sports, Culture and Arts said it will fashion a national virtual library in the public libraries in order to aid an inclusive database on digital resources with the help of information generated in the country. “The KNLS board has committed a matching fund of Sh7.2million to cover costs for training libraries, customs clearance charges for the e-readers, charging and storage system and monitoring,” said KNSL Director Richard Atuti. The government has a similar ongoing initiative, dubbed laptop project that targets primary schools with laptop gadget and is being undertaken by the ministry of Education.

THE AFRICAN BUSINESS FORTUNE - MOTORING

Stakes are high as Toyota Kenya plot to squeeze GM market share By Steve Umidha

takes are high for car makers as race hots up to gain lucrative market share. The scramble for sales comes amid signs of increasing demand for trucks and commercial vehicles caused partly by resolute housing market with at least two car companies – Toyota Kenya and General Motors East Africa (GMEA) set to emerge with bloodied noses. Other players like Nissan and Mitsubishi also have much riding on the outcome.

Toyota Kenya’s announcement this week that it will partner with the government to undertake a research to set up local assembly plant for its new car models, is one small sign of the ferocious battle now underway for the wallets of Kenyan car buyers. The catalyst for the dust up is Toyota’s drive to boost its market share with the introduction of new Hilux and Fortuner models unveiled last week – meant for pick up and sport utility vehicle (SUVs) markets respectively. The company has described the new models as ‘designed for Kenya, focusing on changing personal preferences, lifestyle and infrastructural, technological and agricultural advancements.” What’s more, Toyota rivals are fighting back with all the ferocity they can muster, according motor consultant Stephen Mbuthi.

“Pick-ups are among CMC’s Ford and GM’s Isuzu which are popular among Kenyan buyers and the industry’s most profitable vehicles in that class and will be critical to these companies’ turnaround plans,” he says. The two brands also have the advantage of strong customer loyalty, according to Moses Opallo, a car dealer in Nairobi who says

GM and Ford also have the advantage of strong customer loyalty. According to Edmunds.com, an online auto data service, 70 per cent of Silverado owners who traded in their vehicle bought another GM model. Loyalty to GMC and the F-Series was also high.

Kenya’s vehicle sales have slipped to 6,900 to June, 2016 from a year earlier against the total number of units the industry sold last year, according to Kenya Motor Industry Association (KMI) Q2 statistics slated for official release next week. The industry sold 19,966 vehicles in 2016, a growth rate of 15 percent compared to 17,499 units sold in 2014 and 14,542 units in 2013.

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THE AFRICAN BUSINESS FORTUNE - AGRITECH

How WeFarm has put smiles on the faces of farmers The unique service hopes to revolutionize farming activities across the globe.

WeFarm start-up team

By Brian Yatich

he growth of digital initiatives has sparked a range of user-friendly programs, from chat forums, photo-sharing sites to a now international network for farmers like ‘WeFarm’. Investors behind some of the world’s newest industries have started to put their money on what is now known as “ag-tech” one of the world’s oldest industry with an ambitious agenda to generate enough food for the generations to come. Kenny Ewan, Co-founder and the Chief executive of WeFarm, invented an innovative peer-topeer network device that targets smallholder agronomists.

The service targets farmers in rural areas who do not have access to the internet and enables them to share information, ask & answer questions and also get farm tips from other farmers across the globe. After graduating from university, Ewan spent seven years in South America. While working with indigenous agricultural communities he often saw innovative solutions being developed by farmers, yet farmers in nearby villages were rarely aware of these new innovative techniques. He then joined Cafédirect Producers Foundation (CPF) in 2009, an independent UK charity that

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works with co-operatives of coffee, tea and sugar farmers across Africa and Latin America. Kenny led the development of WeFarm as part of their start-up team - where farmers could share useful farming techniques with other farmers through their mobile phones. According to Dennis Odera, WeFarm Business Consultant, who is based in Nairobi, the platform is where farmers can get a chance to interact and share information on solutions relating to farming problems.

The idea is conceived from an ideological perspective of an internet without internet, where farmers communicate to a global front using SMS. “Kenny Ewan had an idea of how a virtual library of farming techniques and vital information would be incredibly valuable to farmers” Odera says. He points out that once a farmer has registered with WeFarm by sending a free Short Messages Service (SMS) saying ‘JOIN KENYA’ to 22301 they can then ask any question on agriculture by sending a free SMS to the WeFarm number, beginning their SMS with ‘Q#’ the followed with the question. “All questions are processed by our algorithm

THE AFRICAN BUSINESS FORTUNE - AGRITECH

which determines which farmers to send the question to (locally, nationally and internationally). Other farmers receive questions by SMS, and can send their answers and solutions back by SMS. Each farmer who has asked a question should receive 3-5 answers within a couple of hours, and may also receive an answer from a different country within less than 24 hours” he says. Odera joined WeFarm because he is passionate about innovation and enjoys the challenge of coming up with unique and creative solutions to problems. He says that WeFarm has achieved lots of great strides ranging from the user numbers, generating revenue to user metrics with 44 per cent of users being active every month compared to twitter’s 18 per cent and the service has garnered 90 day retention of 85 per cent compared to WhatsApp’s 77 per cent. “These numbers are all fantastic, but I would have to say that our greatest achievement is our social impact. 70 per cent of our farmers have said that they have improved their livelihoods with information they received through our service and we have loads of great stories about farmers saving sick livestock, diversifying into new crops, and starting microbusinesses.” Odera narrates.

Why farmers

“We chose farmers because 90 per cent of the world’s 500 million smallholders still do not have internet access, so they don’t have any easy way to access information. These same farmers produce 70 per cent of the world’s food and are highly susceptible to climate change. With crowdsourced information from WeFarm they can improve their farms, yield, and ultimately

Kenny Ewan, Co-founder and the Chief executive of WeFarm

improve their livelihoods” he says The platform currently has 70,000 farmers using the service and over 10.6 million pieces of information have been shared through the WeFarm platform worldwide - all without any internet connection.

Challenges

One of the major challenge, Odera says is getting their service to the rural communities. “The majority of the small-scale farmers are located in remote areas with no internet access and limited access to other traditional forms of media. We have tried to overcome this challenge by trialling lots of different types of marketing strategies in order to reach our target audience” he explains. The company scooped a MEFFYS Innovation Award for Technology in 2015, along with the Wazo Prize from the Climate Information Prize (CIP), and the company was also named one of the ‘Ideas from Europe’ by the EU Commission. “The service is growing now more than ever, especially in Kenya. There is an huge number of farmers in Uganda too only a few months after launching there. Our goal is to reach 1 million farmers in the next 12 months so we need to increase our rate of growth but we are confident that we can hit the 1 million mark in 2017” he says. Odera says that their goal for the next 12 months is to reach 1 million farmers within the countries they are operating in. “By 2021 we aim to have reached 10 million farmers - to facilitate this we will likely launch in a range of other markets including Tanzania, India, Brazil, and many more” He says. THE AFRICAN BUSINESS FORTUNE

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THE AFRICAN BUSINESS FORTUNE - BANKING

Proposed law means a BIG win for Kenya’s top-tier banks …the move could however see banks become more reluctant to lend

By Special Correspondent

The Banking Bill was passed by Kenya’s parliament on 27 July and proposes to regulate both loan and deposit rates and include a loan rate cap of 4 per cent above the central bank’s benchmark rate

big change for Kenya’s top-tier banks is set to come down the pipe if President Uhuru assents to the proposed Banking (Amendment) Bill in August. Fitch Ratings report has said that leading banks like KCB Group, Co-corporative and Equity banks among other top tier lenders are better placed than their smaller competitors to manage the fall in profitability and rise in loan impairments likely to arise from the proposed new rate caps. The Banking Bill was passed by Kenya’s parliament on 27 July and proposes to regulate both loan and deposit rates and include a loan rate cap of 4 per cent above the central bank’s benchmark rate (CBR), currently at 10.5 per cent, and a floor on deposit rates of 70 per cent of the CBR. The bill is still subject to presidential sign off and its immediate impact will is expected to see a sharp reduction in net interest margins for all banks. But large players, with stronger franchises and more diverse business models, should be able to attract new business and, with greater volumes, offset some of the squeeze on profitability, according to the report released in early August. “We think loan rate caps will also make it difficult for banks to price risk correctly, leading to further weakening of asset quality. Banks might also become more reluctant to lend, adding further

pressure on economic growth,” read the report. Fitch ratings further said the situation could condense Kenyan banks and become risk averse and placing excess liquidity into government bonds, a similar scenario witnessed in South Africa recently after it had introduced a rate cap on unsecured consumer lending, resulting to a retrenchment from this segment by some banks. “If rates are capped, profitability could be squeezed as a result, although banks could try to offset this by increasing fees and cutting costs,” the report said. If some types of lending prove to be unprofitable, the report says that the business models might have to be overhauled, particularly at the smaller banks. Kenya’s ‘B+’ sovereign rating is on Negative Outlook. Kenyan banks have priced loans off the Kenyan Banks’ Reference Rate (KBRR) since 2014, which currently stands at 8.9 per cent with the average lending rate standing at 18.2 per cent. If the rate cap is introduced and assuming no change in the CBR, this would mean that no loan could be priced above 14.5 per cent. Rate caps could also force loan prices to converge, forcing lenders to compete more aggressively on products and service. This is more likely to benefit larger banks. THE AFRICAN BUSINESS FORTUNE

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THE AFRICAN BUSINESS FORTUNE - ENERGY

Kenya to host 2016 African Green Revolution Forum By Brian Yatich

reparations for the African Green Revolution Forum, a major continental agriculture and food security conference to be held in Nairobi in September, are at an advanced stage. Strive Masiyiwa, chair of the Alliance for a Green Revolution in Africa (AGRA), on Thursday met President Uhuru Kenyatta at State House, Nairobi, and briefed him on progress in preparations for the summit, which will run from September 5 to 9. Deputy President William Ruto also attended the briefing session. President Kenyatta welcomed the forum and affirmed his Government’s commitment to working with stakeholders in agriculture to boost Kenya’s food security. He said the forum would showcase the country’s agricultural leadership on the continent, and forge closer partnerships with the private sector. The African Green Revolution Forum (AGRF) brings together stakeholders in African agriculture to share the expertise and experience that will move African agriculture forward. The forum is expected to encourage investment in the agricultural sector, to end hunger, improve nutrition, and drive economic opportunities for Africa and its people. AGRF has attracted political and financial support from development partners and the private sector: several African Heads

THE AFRICAN BUSINESS FORTUNE

the African green revolution forum 2010 held in Ghana

of State and Government are expected to join private sector leaders at the summit — and one of the most prominent private sector attendees in prospect is the American business magnate, philanthropist, and founder of Microsoft, Bill Gates. Kenya was asked to host the 2016 AGRF because of President Kenyatta’s leadership in championing African agriculture, and his quest to transform the sector for the benefit of Kenya’s farmers and consumers. The forum secretariat is hosted by the Alliance for a Green Revolution in Africa (AGRA), an institution whose aim is to put farmers at the heart of Africa’s growing economies. Mr. Masiyiwa – who is also the founder and executive chairman of the international telecommunications group Econet Wireless – was accompanied by the President of AGRA, Dr. Agnes Kalibata, and Ministry of Agriculture officials led by Cabinet Secretary Willy Bett.

AUG-SEP 2016

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