Connect with us

Analysis

Businesses suffer as Kenyans hoard cash

The general election spreads across two quarters and it is not clear when political tensions will ease

Published

on

It’s much easier to snag a seat in Nairobi’s popular Strollers bar these days – a problem that manager Stephen Ngatia partly blames on Kenyan consumers hoarding their money during the turbulent election period.

Monthly sales have fallen by half since June, as cautious customers saved cash in case the August 8 elections turned violent and they had to leave town fast. Many remember the violence that followed the disputed 2007 election, when 1,200 people died.

The August polls were relatively peaceful, but a ruling by the Supreme Court nullifying the presidential race and ordering a re-run means many consumers are still staying home and saving. The new election is scheduled for October 17.

“Because of the repeat election, people don’t want to spend their money. We are not expecting a recovery until maybe in December,” Ngatia told Reuters.

Kenya’s capitalist tradition, stability and role as a Western ally in a region roiled by conflict have made it a favoured East African headquarters for international firms.

But the prolonged election period is slowing growth in the country, East Africa’s richest per capita. The government projected the economy would expand by 5.9 percent this year, but first quarter growth was at 4.7 percent, mainly due to drought and a slowdown in private sector credit growth.

“The general election spreads across two quarters and it is not clear when political tensions will ease,” said Irungu Nyakera, a Principal Secretary in the ministry of Planning.

Slowdown across sectors

The slowdown affected business sectors in different ways. Hospitality, retail and transport all suffered as consumers stayed home. But tourism and agriculture, two of the main foreign exchange earners, were largely unaffected.

The Nairobi bourse lost Ksh130 billion (US$1.27 billion) over two sessions after the Supreme Court judgment. It has since recouped about half of that but the blue chip index, the NSE-20, is still 300 points below its year-high of 4114.01 points hit on August 15.

ALSO SEE: Elections dampen business, survey reveals

The biggest firm by market capitalisation, telecoms operator Safaricom, said it lost Ksh308.7- 411.6 million (US$3-4 million) in revenue from its mobile financial services business, M-Pesa, during last month’s vote.

East African Breweries, controlled by Britain’s Diageo, said business slowed over elections but declined to give details.

The retail sector was also hit, said Wambui Mbarire, the head of the Retail Trade Association of Kenya. Customers had stuck to buying basics like bread, milk and sugar, where the margins were thinnest, she said.

Low fuel consumption

The transport sector lost money, despite a rush of voters travelling to their home villages, as other fearful citizens stayed home. Fuel consumption in August declined by 10-12% compared to July 2017 due to the slowdown, said the Kenya Private Sector Alliance (KEPSA), the main business lobby.

Demand for cement, estimated by industry executives at 500,000 tonnes a month, dropped by 15% in the weeks around the August 8 vote, said Pradeep Paunrana, the chief executive of ARM Cement, a leading producer.

“A lot of the construction sites were closed and the retail distribution chain, stockists were not keeping any more stock,” Paunrana told Reuters.

In the port city of Mombasa, a regional gateway, cargo leaving the port dropped to 70% of normal levels during election week, said Bernard Osoro, corporate affairs manager at the port. It has since recovered to almost normal.

Many employers anticipate a similar slowdown when the elections are repeated, said Phyllis Wakiaga, chief executive of the Kenya Association of Manufacturers, representing 1,000 companies.

Wait and see approach

“We have seen people take a wait and see approach in terms of making serious investment,” Wakiaga told Reuters.

The manufacturing sector contributes 10% of the annual economic output of Ksh7.3 trillion (US$70.5 billion).

So far, veteran opposition leader Raila Odinga has rejected the October 17 date for a re-run with President Uhuru Kenyatta. Odinga wants several senior election board staff members to resign, and to be given access to the election board’s computer servers before polls are held.

On Tuesday, opposition lawmakers boycotted Kenyatta’s opening of parliament, saying he is a lame duck president. Hate speech has also spiked: there were three times as many incidents in the week after the judgment than during the whole 10-week-long campaign, the government said.

Related: Matatu industry hit hard by election fever

After the 2007 vote, the violence sent annual economic growth crashing to 1.7% in 2008 from 7.1% the previous year.

This week delegates from the Kenya Private Sector Alliance, the main business lobby, went to meet Kenyatta to express the group’s concerns. The president sought to reassure them, saying: “Let business continue. No politician will be allowed to interfere with peace and stability.”

But businessmen said the economy would not pick up until elections were over.

“With prolonged electioneering … the country is expected to witness slowdown in business in various sectors that can lead economic decline,” their statement said. (US$1 = Ksh102.7500).

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Analysis

Kenyan real estate firm clinches Sh47b financing deal

The financing term sheet signed between Kings Pride Properties Limited and Milost Global Inc is being provided as a combo of Debt and Equity, of which Ksh 16 billion will be an equity facility

Published

on

Oakmont Gardens in Tigoni. Both the company and the investor, New York-based Milost Global Inc, are expected to sign a commitment letter by November 16, 2017

Kenyan real estate development and investment company, Kings Pride Properties Limited, has announced that it has signed a financing term sheet of Ksh 47 billion (US$450 million) with Milost Global Inc, a New York based Private Equity Firm.

This is a working capital and development facility for the company which is being provided as a combo of Debt and Equity, of which Ksh 16 billion (US$150 million) will be an equity facility and Ksh 31 billion (US$300 million) will be debt facility. Both the company and the investor are expected to sign a commitment letter by November 16, 2017.

Kings Pride Properties Limited Chief Executive Officer Maj (Rtd) David Karau stated: “The best Solution the company has garnered this last quarter of 2017 is this key Partnership with Milost Global Inc. Players in our market know how securing financing locally has taken a twist and became very scarce and expensive. This went all the way into project execution lacking the business charisma expected by the market more so low ROI as well as unaffordability by the end user. We opened our finance and investments doors for this strategic partnership and we hope it comes in as a solution to our property development agenda.”

The Senior Partner & President of Milost Global Africa, Solly Asibey, said: “The wealth of knowledge, track record and growth strategy of Kings Pride with regards to the real estate development market in Kenya has endeared Milost to partner with them. Our aim is to help grow Kings Pride into a formidable company in the East African region, whilst creating value for all our stakeholders in the process.”

Milost Global Inc President and COO Mr Bernard Yaw added: “Despite weaknesses in global economic performance, Kenya’s GDP growth has remained consistently solid in the range of 5.3%-5.9% for the last six years, helped by FDI and private consumption.”

READ: Why Jumia is on its way to becoming Africa’s Alibaba

“Under the 15thblueprint of the Kenya Economic Update, unlocking the affordable housing market is one of the key economic focus. With 61% of urban households still living in slums and an urbaniSation rate of 4.4%, Kings Pride Properties Limited is sitting in a huge market. We are proud to be associated with Kings Pride and together we hope to fund and expand into other sub-Saharan Africa with Kenya as our launching pad,” he added.

Kingspride Properties is a seasoned Property development company in Kenya currently eyeing the greater sub Saharan Africa as an expansion plan. The company has been a leading solution provider towards affordable housing in Kenya as well as top notch developments in the high end markets of Nairobi.

Continue Reading

Analysis

Firms craft smart ways to survive NASA boycott

Every company wants to win more customers to be assured of its existence, but not to lose even a single customer and the three firms must work hard to maintain their loyalty

Published

on

Desperate times call for desperate measures, and three companies targeted for economic boycott by the NASA brigade are facing these difficult times, if at all the six million plus supporters of its leader Raila Odinga heed the call.

Every company wants to win more customers to be assured of its existence, but not to lose even a single customer and the three firms must work had to retain their loyalty. But they might not be on the progressive path in terms of customer base, if the unfolding events in NASA strongholds are anything to go by.

Like in a relationship, the companies are not easily letting go their once loyal customers to new service providers like Airtel, Uniliver and New KCC to whom the boycott was good news.

In the telecommunication industry, Safaricom have unveiled new data plans in a bid to try and change the minds of customers contemplating of leaving the largest network in Kenya.

The giant mobile network provider unveiled its 4G bundles to retail at Ksh 999 for 3GB of data valid for 30 days, Ksh 499 for 1GB of data with the same validation period and Ksh 99 for 200MB valid for one week. The promotion runs from November 9 to January 16, 2018.

The boycott call has seen Safaricom investors’ value go down by Ksh 20 billion on the Nairobi Securities Exchange in four days this week.

On its side, Airtel is marketing itself as an unresistable brand with their plan for  new customers, seemingly capitalising on Safaricom’s exuberant call rates.

“Purchase an Airtel line today and call for just 2 bob per minute to any network and get 50MB’s for FREE. Karibu Airtel!?” entices Airtel.

Airtel-1-300x150 Firms craft smart ways to survive NASA boycott

On matters mobile money services, Airtel has even issued a guide on how to apply to become an Airtel Money agent. “Becoming an Airtel Money agent has never been so simple! All you need is a Certificate of incorporation or registration, a KRA pin certificate, a Business permit, minimum deposit of Ksh5000 and copies of the ID of the directors or business owners. After presenting these documents, you will be required to fill in a registration form. That’s it!”

The telco is also maximising on its popular social media customer care staffer, Caro wa Airtel, to woo new customers.

“Caro says you can now send money via Airtel Money for FREE to ANY NETWORK! Try it by sending her 20 bob today 🙂 ^Jamo,” reads an ad currently running on social media platforms.

Airtel-1-300x150 Firms craft smart ways to survive NASA boycott

Media reports indicate that Homa Bay town has been hit by a shortage of Airtel lines, with the Indian-owned company indicating that they have registered over 11,000 new customers in the past one week in the town.

READ: Crazy deals up for grabs in Jumia Black Friday festival

As the milk consumers turn to other rare brands of milk – putting in mind that brookside has assimilated almost all Kenyan milk companies except KCC, which is performing poorly – it is said that Brookside is selling its milk through Tuskys Supermarket in packets branded ‘Tuskys’. It saw some NASA supporters threaten to include the retail chain in the list of targeted companies.

Airtel-1-300x150 Firms craft smart ways to survive NASA boycott

However, the supermarket has denied the claims, saying that their milk is supplied by Aspendos Dairy Limited, in Kangema, as printed in the packs.

Airtel-1-300x150 Firms craft smart ways to survive NASA boycottHowever, another photo has been doing rounds online showing how Brookside is trying to persuade customers not to boycott their products. In the photo taken from an unspecified retailer in Kisumu, the company (brookside) promises a free Dismy Milk Yoghurt.

Airtel-1-300x150 Firms craft smart ways to survive NASA boycottBidco has not been spared either as the sales to some of their products such as Soya, Golden Fry, Ufuta, Kimbo, Sungold and Elianto cooking oils has reportedly gone down. They have thus opted to ‘discount’ the products in order to attract sales. In another photo, the manufacturing company has reduced the prices by between Ksh25 to Ksh35.

 

 

Continue Reading

Analysis

Political blues cost NSE investors Sh20b on Monday

All eyes were on Safaricom, which had 5.6 million shares transacted at between Ksh 24.75 and Ksh 25.75, in reaction to calls by the Opposition to boycott the company’s products

Published

on

The Nairobi Securities Exchange (NSE) lost Ksh 20 billion paper value on Monday as it struggled to shrug off the cloud of political uncertainty that has hung on the market for the most part of this year.

Market value, also known as market capitalisation, settled at Ksh 2.38 trillion in yesterday’s (Monday) trading compared to Ksh 2.41 trillion posted on Friday.

This represented a Ksh 20.6 billion or 0.86% decline, a marginal drop from its worst performance this year. The bourse opened the week with a total of 15 million shares valued at Ksh 542 million traded, up from 17.5 million shares valued at Ksh 361 million posted on Friday.

The NSE 20 Share Index was down 2.46 points to stand at 3797.96, while the All Share Index (NASI) ended 1.41 points lower to stand at 163.09. The NSE 25 Share Index, on the other hand, dropped 23.98 points to stand at 4278.63.

Monday was the last day for those interested in challenging the re-election of President Uhuru Kenyatta in the October 26 repeat election to file petitions at the Supreme Court.

The financial markets have taken a beating from the goings-on in the political arena in the country, having lost Ksh 130 billion in the two days after the August 8, Presidential poll was nullified by the Supreme Court.  It has since been on a see-saw ever since in reaction to the political stalemate. In yesterday’s trading, most activities were reported in the banking sector, which had shares worth Ksh 166 million transacted. This accounted for 30.75% of the day’s traded value.

The Kenya Commercial Bank (KCB) Group moved 1.7 million shares valued at Ksh 70.8 million at between Ksh 41 and Ksh 42.

Equity Group Holdings was down 25 cents to Ksh 40 as it moved 1.6 million shares valued at Ksh 65 million. The other most active counter at in the banking sector was Diamond Trust Bank that moved 113,000 shares worth Ksh 21 million. It closed the day at Ksh 185.

All eyes were on Safaricom, which had 5.6 million shares valued at Ksh 141 million transacted at between Ksh 24.75 and Ksh 25.75, in reaction to calls by the Opposition to boycott the company’s products last week for its perceived role in bungling the August 8 presidential vote. Yesterday, however, investors seemed not to have been bothered by the boycott going by the trading price.

Safaricom accounts for 42.3% of the NSE capitalisation and any changes in its shares has a direct impact on the overall health of the bourse. It is also one of the most liquid counters at the bourse, given the interest, it attracts from the foreign investors.

READ: Kenyans mourn Governor Gakuru, a visionary leader

Last week, the firm, which is Kenya’s largest technology firm, reported that it had grown its half-year profits by 9.5% to Ksh 26.2 billion in the first half of the year ended September 2017, continuing its standing as East Africa’s most profitable company.

During the period under review, the telco defied a difficult economic environment due to the cloud of uncertainty that came with the prolonged electioneering period in the period to grow its revenue 12 per cent to Ksh 109.7 billion.

The firm, which is now seeking investment opportunities to expand outside Kenya, says the growth would be 21 per cent if it excludes a one-off adjustment of Ksh 3.4 billion it had in a similar period last year. In the six months to September 2016, the firm made Ksh 23.9 billion.

Continue Reading

Analysis

The silent killers in sugar and salt

Published

on

Although sugar and salt in excess have negative effect on your body, you don’t need to get rid of them from your diet completely.

We all know that too much of something is poisonous. This also applies to consuming too much sugar and salt. High sugar and salt intake is known to increase the risks of cardiovascular diseases.

As a nutritionist, I have realised that most of us know that carbohydrates consist of chapattis, rice, potatoes, ugali, bread and pasta and clients tend to cut down on these foods to reduce weight, which is a good step to take especially refined carbs.

Well, sugar is also a type of carbohydrate, which occurs naturally in a variety of fruits, vegetables and dairy products. They can also be produced commercially and added to foods to heighten sweetness during processing.  Sugar taken in high amounts leads to weight gain and other cardiovascular diseases.

Tips to cut back on sugar

• Avoid sugary drinks. One 12-oz soda has about 10 teaspoons of sugar in it, more than the daily recommended limit! Try sparkling water with lemon or a splash of fruit juice.

• Instead of drinking fruit juice, eat a fresh fruit which is also filled with lots of fibre. If you cannot give up on juice, make 100% fruit juice that is not sweetened.

READ: Wonder vegetable that fights many diseases

• Sweeten foods yourself. Buy unsweetened iced tea, plain yogurt, or unflavoured oatmeal, for example, and add sweetener (or fruit) yourself. You’re likely to add far less sweetener than the manufacturer would have.

• Eat naturally sweet food such as fruit, peppers, or natural peanut butter to satisfy your sweet tooth. Keep these foods handy instead of candy or cookies.

Salt on the other hand is essential but we tend to consume too much of it. Salt is composed of sodium and chloride and it’s the sodium that can be harmful to our health. Too much sodium can lead to high blood pressure. For a healthy heart, it is advisable not to eat too much salt.

Try to limit sodium intake to 1,500 to 2,300 mg per day, the equivalent of one teaspoon of salt. Apart from high blood pressure, here are more negative side effects of too much salt intake:

• Kidney disease – kidneys regulate the body’s sodium by getting rid of any excess but if there is too much sodium in the blood stream, the kidneys will not keep up.

• Heart failure due to high blood pressure.• Oedema (fluid retention)• Osteoporosis• Stroke due to high blood pressure.

SEE: Effective ways of fighting cholesterol
READ: How to eat less but remain healthy

Tips to cut back on salt

1. Eat more of fresh foods and prepare them yourself to control your salt intake.

2. Avoid processed meats

3. Use more of healthy herbs and spices for cooking and use them along with lemon juice or vinegar.

4. Read food labels. Go for low salt food alternatives.

5. Watch out for condiments such as ketchup, soy sauce, salad dressing etc they contain sodium.

6. Cut back on salty snacks such as potato chips, nuts, and pretzels.

7. Check labels and choose low-salt or reduced-sodium products, including breakfast cereals.

8. Slowly reduce the salt in your diet to give your taste buds time to adjust.

Although sugar and salt in excess have negative effect on your body, you don’t need to get rid of them from your diet completely. What you need to do is to consume in moderation. Healthy foods choices Eat healthy and live healthy by controlling your sugar and salt intake.

Continue Reading

News Updates

NEWS2 days ago

Pastors drive out accident ghosts on Thika Road

Church leaders and residents from Nyeri and Kiambu Counties Friday held prayers to cleanse and bless the busy Thika Super...

Politics3 days ago

Three NASA MPs arrested ahead of rally

According to Homa bay Women's Representative Glady Wanga, MPs Babu Owino, TJ Kajwang and Steve Mbogo, were taken to Kilimani...

NEWS3 days ago

Kenyan priest charged over Sh104,000 theft

Father Alexander Mutua Munyao is accused of stealing from the Lismore Diocese in northern New South Wales, Australia

NEWS3 days ago

Envoy urges SA firms to aid Kenya’s poor children

High Commissioner Koleka A. Mqulwana stressed the need to work closely with the communities in a bid to raise their...

NEWS3 days ago

Tsvangirai flies back as Mugabe handover imminent

Veteran President has been given an opportunity to negotiate an amicable exit and would hand over to recently sacked VP...

NEWS4 days ago

10 counties took lion’s share of roads funds, study reveals

Of these, Nairobi and Mombasa alone took up more than one third of the total spending, research conducted by the...

Politics5 days ago

Mugabe under siege as military takes power

Zimbabwe’s military on Wednesday confirmed that it had seized power in a targeted assault on “criminals” around President Robert Mugabe,...

NEWS5 days ago

It’s God’s will. Mother says after losing five newborns

Two— a boy and a girl— died immediately after birth while three — two boys and a girl— died at...

NEWS6 days ago

Dar to auction 10,000 Ugandan, Rwandan head of cattle

Livestock and Fisheries Minister Luhaga Mpina said the cattle would be sold in a similar manner as the ones recently...

NEWS6 days ago

Safaricom director to face court over fatal accident

According to the DPP's office, Mrs Sylvia Mulinge is to appear in court on November, 20, 2017 to plead to charge...

Advertisement

Trending