What was meant to be an ordinary seminar turned into a mission to enhance Kenya-Italian business relations with the vice chairman promising to take steps to cement the relationship by making a return trip to explore possibilities of establishing partnerships with various Italian businesses to take advantage of Italy’s unique SME model that has earned it a place as one of the world’s most industrialised nation. Italy is known to be the 2nd most industrialised nation in Europe and 5th in the world.
“ICPAK is keen to partner with Italy in areas of technological transfer and joint ventures that will enhance capacity building in Kenya” said Vice Chairman George Mokua in his opening statement as he welcomed the speakers and other delegates at the beginning of the seminar.
The Kenyan Ambassador to Italy H.E. Jackline Yonga congratulated ICPAK members for the bold step and asked them to continue in the trend as Kenya was regarded highly as a business partner and that they needed to take advantage and enhance the value by forging relationships with Italian companies. She said that her office was open to receive and give all the necessary support to ICPAK in its endeavour to heighten it’s accountability standards.
The speakers included CPA Antony Njiru, CFO, Royal Business School and CPA Michael ingutia, CFO, KCA University both from Kenya and Ms. Giusy Cannone, CEO, Fashion Technology Accelerator, Mr. Benjamin Radomski, CEO Business e Via Italy, Mr. Antonio Raimondi CEO, Genius Loci, Mr Francesco Mangiameli, a corporate tax consultant with a private firm in Milan and Advocate David Ottolengi all from Italy. CPA Michael Ingutia in highlighting the ‘take home’, said that it was clear that Italy and Kenya had every reason to partner for the betterment of the two economies and that Kenya had a strong SME base that could be a huge resource if it was structured using the Italian model and that this would be a great reason for seeking partnerships with Italy. He said the Italian technology remained to be archetypal and its commitment to R&D exemplary.
The ICPAK chairlady Rose Mwaura was unable to join the delegates but sent a great speech that was read by Council Member Risper Olique Gangla. In her speech she reiterated the need for ICPAK to stay focused in its role as an overseer . She thanked all the participants for their commitment to the institute and urged them to continue their support for the institution.
]]>What does the Launch mean to KQ and to you as the chairman?
I think it means quite a lot in terms of boosting trade between Italy, Switzerland and east Africa Kenya included, having a direct flight means that exporters and importers can have better prices and an improved turnaround time especially for perishable goods like fish and flowers that Kenya is well known for. It also means that tourism will improve as the tourists no longer have to do long hours caused by stopovers that are sometimes very long and tiresome. Nairobi is also known to be the hub for many multi-nationals who can now enjoy easy accessibility.
How has it been so far?
It’s been very good. The numbers so far are impressive . We started out six months ago and have had a very good uptake since then. The flights to Rome and Geneva combined have been pretty full , the United Nations, World Health Organisation and other international organizations based both in Rome and Geneva have found the direct flights very useful and are using them more and more. We have also had a lot of tourists using the flight to both destinations, in fact recently we had contingents coming from as far as Mumbai, so yes, it’s definitely a good route for us and we believe that it can only get better.
KQ tried the route a few years ago but then stopped, what may have changed that made you come back again.
When we started the route back then, we had a shortage of aircrafts since we had leased out two of our (787) aircrafts which came back at the beginning of this year, so currently we are in good shape. We have also acquired new Aircrafts overtime in order to give our clients better services. Combining Rome and Geneva has also made it more viable in terms of the numbers. Our hope is that once we are able to consolidate the route then we can expand in other potential destinations in Europe which we will decide over time based on a number of issues.
Your record at Safaricom continues to be exemplary, should we expect something similar at KQ ,
This is a difficult question. The situations in the two companies are rather different. I am glad that Safaricom has had so much success and we continue to succeed. It’s an incredible success that we are all very proud of but, you see, one needs to bear in mind that I started Safaricom from scratch. Kenya Airways has a different situation and a difficult one for that matter. At Kenya Airways, I basically inherited an airline that was not doing financially well and which had very old IT and delivery systems just to mention but a few. I therefore have quite a difficult role even though most people think and that since I have been successful at Safaricom, I should also be successful at KQ, of course we are making some progress but it’s not the kind of progress we would like to see.
What are some of the challenges you have as an Airline?
It’s important to note that we are competing against a number of Airlines which without exception are either state owned or state subsidized and this is a very difficult situation for us because kQ is unique in that it is a public/private company.
In fact, before the middle east carriers started flying to Africa, we were profitable but that has now changed, we are no longer profitable because they are massive and they have the capacity to lower Air fares by reducing their costs. Our objective is therefore to get on a level playing field with them even though we might not be able to lower our prices to their level because we have other factors to consider in Kenya. We hope to nationalise the airport and combine Kenya Airways and Kenya Airports Authority into one corporate entity, not because we want to be state owned, but we believe this will enable us to grow and finance our way into expansion. For example, when passengers land at Jomo Kenyatta International Airport they pay landing fee to Kenya Airports Authority which in turn remits the money to the exchequer, so the money doesn’t remain within the aviation industry.
What we are trying to do now is to put everything into one corporate aviation holding company which will allow us to keep the revenue within the aviation industry so that we can use the revenue and the balance sheet both to improve and increase the airport and to expand Kenya airways.
Is there anything else in particular that you need the readers to know that I did not ask you?
I have said it time and again and I will continue to focus on pushing the agenda that Kenya Airways is not just an Airline but a strategic asset for the country. It’s not just an institution that should make money. If we lose it, we will lose such a significant asset that will be difficult to recover and it will be such a shame to the country.
Just look at what Emirates have done for Dubai and What Qatar has done for Dubai Ethiopia has done for Addis and what Rwanda Airline is doing for Kigali. Multi-national companies don’t go to Dubai because of the good weather but for connectivity. Kenya Airways should be given a chance to do the same for Nairobi and Kenya in general.
]]>The event that was named Tembea Kenya cultural and business exchange, whose key word “Tembea” means, to visit and share, was started with the sole objective of bringing together Kenyan and Italian entrepreneurs from various business sectors such as real estate, media, tourism, energy, fashion and culture, to interact and exchange ideas.
In an interview with African Business exchange, the founder John Mwangi said that the Kenyans in Italy had become more active and vibrant than in the past and were ready and willing to bridge the economic gap between Kenya and Italy by creating a common platform where companies and investors from both countries could meet and engage.
The guests took to the stage amid traditional dances, tasty food and beautiful and well displayed traditional items and artefacts, to reinforce the powerful role played by the African Diaspora in the development of both their countries of origin and their hosting nations. The messages from all the key speakers revolved around the proven fact that what was once seen as a challenge was today an opportunity to be taken advantage of: “Africans living and working abroad are strong agents of change.”
Cleophase Adrien Dioma, Coordinator of the Italy Africa Business Week and the African October festival stated that it was encouraging to see African diaspora communities beginning to organize themselves in their cities of residence. He said it was very important for these communities to learn how best to organize and structure their efforts efficiently in order to create synergies with other local stakeholders in their specific areas. He emphasised that the Italian government through the Italian Agency for Development which is under the Ministry of Foreign affairs, was eager to create new partnerships to unlock the potential of the public and the private sector to co-fund and propel start-ups by young African innovators in order to create long lasting small and medium businesses.
African governments such as Ethiopia, Ghana, Mali, Nigeria, Rwanda, Senegal, Tanzania, Uganda and Kenya have acknowledged the decisive role played by the diaspora worldwide and have established specific agencies and ministerial institutions to establish stronger ties with their citizens working abroad, rightfully seen as valid resources in the short, medium and long term. Such institutions also provide guidelines and regulations to facilitate communication and economic flows between Africans working abroad and their counterparts in the countries of origin.
The African Foundation for Development and the African Diaspora Program launched by the World Bank, base their steps on the remittances made by the African diaspora. These remittances are actually said to be much more than the amounts recorded by aid organizations: in 2010 for example, the total diaspora contributions to Africa stood at $51.8 billion compared to roughly $43 billion in Oversea Development Assistance (ODA), according to the studies carried out by World Bank that year. Only two years later the World Bank figures showed that Africans in the diaspora sent back home no less than US$60 billion.
At the Tembea Kenya day, it was underlined that Kenya, in 2017 alone, received 1.7 billion USD in remittances from citizens working in the United Kingdom, the USA, Japan and Italy among other countries that contributed smaller percentages.
This outstanding amount is said to be justified by the qualitative difference between the old and the new diaspora, the latter being formed by young and vibrant men and women prepared to discover new opportunities and become entrepreneurs and masters of their own destinies, rather than be hired by others in white collar jobs. The remittances from the diaspora reach families, thereby helping them in their every day life by paying school fees, buying land and starting or improving local businesses. These contributions have an immediate and a long-term effect on peoples’ lives, thus representing a remarkable factor on the national building process.
Gianfranco Belgrano, the director of Internazionale, an international media group, who also spoke at the event, highlighted the important role of the media in clarifying the importance of the African workers to the Italian public. He stated that Africa was the present and the future of Europe and the world in general and hence opportunities like Tembea Kenya event, where people meet to exchange knowledge and experiences, were vital as possible avenues to building a better world than the one we live in today. He went on to say that the diaspora was a bridge and that the businesses they promote was the way to eliminate the negative stereotypes around Africa. “Let’s not forget that Africa is a booming continent, while Italy is still going through a crisis that is yet to end. In this exchange, Italy stands to gain more,” he said.
John Mwangi who is also the founder of Tembea – Italy Chapter shared his hope in light of the second edition of the event to be held next year saying, “This year we had ten exhibitors, next year we hope to have one hundred, in a much bigger location for at least two days because Italian and Kenyan banks are keen to be part of this event and to facilitate the establishment of business in both countries. This demonstrates that African countries are now placing diaspora at the centre stage.”
By Giulio D’Ercole
]]>The incredible migration of up-to 1.5 million animals that draws hundreds of thousands of tourists from all over the world mainly Europe and the USA begins in November when the short rains bring fresh grazing for the herds which then follow the rains into the Serengeti. By December they spread into the Central and eastern Serengeti, moving Southwards in January. February is the calving season and also a big hunting season for the predators . In march the calves are old enough to manage themselves and therefore the herd is ready to moves from the southern plains.
The long rains start in April and continue into May causing the great trek that leads the animals into the western Serengeti, In June they arrive at the Grumeti River which they cross as they move forward towards the death defying Mara river which they cross around July. By august most of the wildebeests arrive in the Maasai Mara on the Kenyan side of the Mara River where they find the big cats waiting patiently for their arrival, in September the animals enjoy grazing in the Mara before the rains begin to form again in October followed by the short rains that cause the wildebeest to start their journey back into the Serengeti through what is known as the ancient circular route.
The animals are normally accompanied by other animals like the Zebra, Gazelles, Impalas and elands, and trailed curiously by predators such as the lions and hyenas among others who follow this annual trend in order to feed themselves and their families.
The most magical moment in the whole migration is when the animals gather along the river and then suddenly charge into the waters in a frenzy, well aware of the dangers of crossing the Mara river that is highly infested by huge crocodiles that depend on such opportunities to make sumptuous feasts of the helpless animals. Certainly, some of them don’t make it to the other side either because they are trampled upon or drowned or worse still taken down by the Crocodiles of the Mara River.
It normally takes one courageous wildebeest jumping into the water followed by others to set the so called wildebeest migration into a breath-taking stampede, an instant that many tourist from across the world travel for miles to go and watch in amazement.
The pattern is never always the same as the rains can sometimes start early or even delay . This year for example the migration across the Mara river into the Kenyan side in has been delayed causing a lot of discontentment from anxious Kenyan tour operators who are eager to have their tourists see the amazing spectacle. The tourists sometimes have to be lucky to catch a glimpse of what has been labelled one of the eight wonders of nature and when they do , they are always left wanting more.
]]>The product also remains one of the top foreign exchange earners for the country alongside tourism, horticulture, and coffee.
The Eastern African nation has also recently emerged as a major source of innovation in new varieties of tea and single origin artisan teas. Over 60 percent of Kenyan tea is produced by scale farmers and marketed through the Kenya Tea Development Agency (KTDA).
Market
Kenya’s top 10 traditional tea markets account for over 80 per cent of the exports to over 30 destinations. Pakistan remains the main buyer of the produce. Recent industry performance indicates that Karachi, Egypt, United Kingdom, United Arab Emirates, Russia and Sudan among other top buyers accounted for the lion’s share of the commodity. Exports to Pakistan for instance, was 14 million kilograms in the period under review (February 2017-February 2018) – a growth of 55 per cent from the same period last year when exports to the country were nine million kilos.
Egypt maintained the second position at 7.5 million kilograms with the imports having increased by 28 per cent from 5.5 million kilos last year, while UK came in third after buying 4.1 million kilos in the same period. The volumes to UK grew by a significant 48 per cent as fears arose that export would drop following after the exit of Britain from European Union (Brexit). Experts warned that after Brexit, there could be a drop in volumes of tea that the UK imports from Kenya due to anticipated decline of its (UK) re-export market to other nations.
The UK is a major re-exporter and in 2014 it exported 17 per cent of the beverage it imported, with countries such as Republic of Ireland, Germany, Poland and France its major markets.
Export destinations declined from 44 countries to 39 countries in the period under review.
Among the emerging markets that recorded significantly higher tea imports from Kenya included Sri-Lanka, Switzerland, Somalia, the US, India, Ireland, Turkey, the Netherlands, Iran, Indonesia, Japan and Oman.
Kenya is trying to open up new markets and expand the existing ones such as China, which has the potential of buying more of the local beverage, to protect farmers from low earnings.
Local tea consumption for February 2017 stood at 2.20 million kilos against 2.26 million in the 2016 period.
Prices
Tea prices in the world’s biggest exporter of black tea hit record high this year as buyers stocked up over fears that drought in the country would affect production.
The average price for Best BP1’s leapt to $5.01 per kg from the traditional record of $4.00-$4.7 per kg. “Brighter BP1’s met very strong competition and gained $0.34 to $0.66,” a regular market report by the Africa Tea Brokers said.
Forecasts of better than average rains due to begin in October have failed to dampen prices for the best tea, although prices for some lower quality grades fell. There was good but irregular demand for the 77,529 packages (4.9 million kgs) on offer with much tea remaining unsold (19.81 per cent).
Best BP1s fetched $5.06 – $5.01 per kg up from $4.72-$4.22 per kg, at the last sale, while top PF1s changed hands at between $3.58-$3.334 per kg down from $3.70-$3.50 per kg.
Kazakhstan was dominant especially on best BP1s while Pakistan Packers, Yemen and other Middle Eastern countries showed more interest with Egyptian Packers quieter at the start but was more active towards the close.
Tea Prospects for 2018
According to the country’s Agriculture and Food Authority Tea Directorate, tea export earnings are forecast to rise further this year (2018), while total output is expected to improve after a fall in production last year (2017).
Export earnings will rise 5 percent in 2018 to 135 billion shillings ($1.33 billion), while total output is expected to hit 452 million kg buoyed by good weather conditions, after drought had cut the country’s production in 2017, the directorate said in a statement. Total export earnings rose to 129 billion shillings in 2017 – the highest in five years – from 120 billion shillings a year earlier, while total output was down 7 percent to 439 million kg. Drought hit many parts of Kenya’s farming areas in early 2017, affecting the output of tea while processing factories received fewer deliveries. Export volumes were seen rising slightly to 423 million kg this year from 415 million kg a year ago, the directorate added. The average price per kg of tea at the Mombasa-based auction was expected to rise to $3 per kg from $2.98 per kg last year.
Kenya’s main tea export markets are Egypt, Sudan, Afghanistan, Pakistan, UK and UAE with emerging markets including Angola, Vietnam, Philippines, Azerbaijan, South Korea, Czech Republic, Myanmar and South Sudan.
Challenges
Weak trend in the export price of tea. This export price problem is as a consequence of worldwide tea export increases, which has occurred more rapidly than world consumption. Over the last ten years, there has been a consistent surplus of tea supply into the world market, this has had the effect of depressing auction prices. The dollar price released for Kenya tea is at the same level as it was 10 years ago. This problem can be solved by a number of measures, some of a long-term nature, while others can be implemented immediately. Regulating the supply of tea into the world market has also been suggested.
Rising costs of production. This applies most forcibly to the estate sector where labour account for some two thirds of production costs ex-factory. The main problem arises from the pattern of wage awards imposed on the industry. Since 1990, the basic wage rate has risen 10 times; in fact since 1998 it has gone up by more than 50 percent. The danger signals are evident: small producers have been resigning from the industry body in order to escape the statutory basic wage award.
Lack of credit facilities is a major concern to the small-scale farmers. Poor infrastructure, unreliable electricity, high costs of fuel and packaging materials further increase production costs. The factories have been the hardest hit by the ban on procurement of wood fuel from the forest. This is because they rely on wood fuel to cure the tea. Since the ban was effected three years ago the factories have been forced to procure fuel from farms where trees are rare and therefore sold at exorbitant prices.
Negative publicity by some churches is a challenge the tea industry has to overcome. Many do not know the benefits of consuming tea. A study conducted by Dr. Weilsburger director meritus at the American Health Foundation, consuming tea has health benefits. Among the many benefits, tea extracts have been shown to cause cancer prevention these tea extracts prevent the growth of breast cancer and prostate cancer cells.
]]>Where did the story of Pavoni Stone Cutting Machines begin?
Alessandro: The Pavoni story dates back 31 years to the history of the Italian Tuff industry which saw the establishment of many quarries most of which later closed down due to lack of adequate demand, leaving companies such as ours without much work. At that time Frattelli Pavoni as the company was known then, was one of the companies that was specialised in small stone cutting machines which were highly demanded due their efficiency and reliability. When the market started shrinking, we found ourselves with no choice but look elsewhere, and Africa turned out to be our easiest target owing to the relationships that existed between Italian quarry owners and their African counterparts . We explored many markets but one of the countries that received us with a lot of enthusiasm was Kenya. To our surprise the quarries in Kenya were so much bigger than the ones in Italy which meant that we had to redesign our machines to make them bigger and more robust for that market. We basically adapted our machines to meet the needs of the Kenyan clients, in fact our machines are built with unique specifications through joint participation with the clients thus coming up with a product that is a perfect fit for the market and this has perhaps played a huge role in our success because the client gets exactly what they need.
So when did you venture into Africa?
Alessandro: In the late 80’s, in fact the first quarry in Kenya was owned by an Italian who was a friend to Pasquale. Kenya was much different then. I must say the face of Kenya has really changed from the time we first visited – the country has developed really fast and we are very proud to be part of that story, and to be instrumental in its quest for further development given there is a huge potential with so much still left to be done.
Why did you choose Kenya?
Aldo: When we started our venture into foreign markets, we exported to many countries, among them Libya, Tunisi , Yemen and a few countries in Latin America, the choice to focus more on Kenya was not a deliberate one but rather a natural one that was probably influenced by the economic boom and rapid development in Kenya and as I said a track record of excellence and good relationship built over time from the time Pasquale started his engagement in the country. The coming up of a more sophisticated middle class has also given birth to a unique class of entrepreneurs that have grown to become a part of our clientele. Kenya also has good infrastructure and well-built functional structures that compliment business and create a friendly environment for businesses to thrive. I think this explains why 70 to 80 percent of our sales are from Kenya.
How did you manage to build such strong bonds with Africa?
Alessandro: Pasquale Pavoni made several trips to Africa especially Kenya, creating relationships and I believe we have done a good job of building on that, in fact we have enhanced the value of those relationships to position ourselves as true partners by making sure that our clients feel part and parcel of the production process. Our approach has always been to build long term relationships and also provide long term solutions. In deed when we took over from Pasquale Pavoni in 2008 after his retirement, we conserved the same methods and guaranteed continuity in order to benefit from a very rare connection that he had built over time. The English say “if it ain’t broke don’t fix it” and that is what we did, carry on from where he left.
What makes you successful in Kenya and Africa as a whole?
Aldo: I would say attention to Detail. Every component is done by us, so we have full control of the whole process and are able to monitor and ensure we give our clients the very best quality products. Our machines are very durable, some of the machines we sold 25 to 30 years are still running and it makes us really proud when we go around the quarries with potential clients because they see our machines and simply fall in love with them. Our machines speak for themselves. Our capacity has also grown with time and now we are now able to produce up to four machines per month which is a good thing. I think this gives us an edge over the competition. Most of the companies who sell our kind of machines, buy separate parts which they then assemble. The risk with that is that you lose control of part of the process and your delivery time is also dependent on other suppliers who may sometime delay due to unavoidable circumstances making it difficult to guarantee continuity and consistency to a clientele that is becoming more and more sophisticated and demanding.
You seem to have a special affinity for Africa, why is that
Aldo: Most Africans are easy to deal with once you get to understand them. They are very warm and kind, and it takes much less effort to establish true friendships. We have a good feeling especially with Kenyan. I think it would be right to say that the kind of treatment you get in Kenya is very difficult to find elsewhere.
What future do you see with your company in Africa?
Aldo: We believe Africa is the next frontier. The potential is immense. Things can only get better with time as the infrastructures continue to improve in almost all of the main regions of Africa. We have noticed that our clients have become more autonomous and more prepared to deal with some of the small technical issue regarding our machine which is a very positive thing in our growth plan. They are able to give us the kind of feedback that is useful not only in developing our machines but also our approach and strategy to doing business in Africa, thanks to the close relationships that we share with them. I must add that our vision is much different from that of many companies because we ventured into Africa when there was no competition at all, more companies have now discovered and are getting into Africa.
What other countries of Africa are you interested in?
Aldo: Currently we are looking at countries such Tanzania and Somali, even if it has conflicts and other institutional problems that might make it difficult to do business there. In fact, we already have our machines in Tanzania and Somali even though they are very few for now. We are also interested in countries like Angola, Rwanda Djibouti and Ghana among others. We basically see opportunity in every country where there are good stones and quarries, because most of the companies in Africa are still using less advanced means of cutting stone. Our machines would not only enhance the capacity of the individual quarries but also the building and construction industry as a whole in any country we go to, since our machines are capable of producing between 20000 to 350000 perfectly cut stone per day.
What are some of the challenges you have had to face?
Aldo: I think one of the issues maybe the difficulty that some potential clients have in raising the initial capital to buy our machines even though more and more entrepreneurs are beginning to have more access to capital especially through asset financing offered by various African banks. The other challenge we have is government structures and policy. Some countries have poor policy compared to others making it almost impossible to enter the markets. Some countries also have the problem of concentrating development in just a few areas, mostly in the main cities while neglecting other parts of the country, making it difficult to expand. Development in a place like Kenya for example is well balanced because the government funds are spread out in the 47 counties which are very active and manage their own budgets. Thika and Juja areas in Kenya are examples of counties that have a history of dependence on stone cutting as a source of income in fact the towns (Thika and Juja) have been built around the quarries.
Where do you see Africa in the future?
Alessandro: There is great opportunity in African and one can see it in the presence of some of the biggest multinationals in the continent. During my last visit in Kenya, I noticed for example that there are so many Italian companies who have set up in the country, which is a clear sign that more and more investors are beginning to have confidence in the opportunity that Africa has to offer. Most of these companies especially Italian, bring only know how to Kenya, there are many Italian restaurants some of which do not have a single Italian working in them, the Italians have simply passed the know-how which is very interesting
What I always tell our African clients who come to Italy is that Africa must decide the future it wants for itself. The Kenyans and Africans in general are getting more educated and hence better placed to understand what is best for the continent. Most big cities in Africa today look more and more westernised and that’s ok. What I would like to urge Africans from the bottom of my heart though, is that they must conserve their culture and identity because this is the back-borne of any successful economy. everything must revolve around this. One needs to know that he can come to Africa or Kenya for that matter and enjoy nature and the beautiful view of the sunrise and sunset which are things that may be taken for granted but that many people around the world long for but will never have. Modernity is good but should not take away everything.
What advice do you have for European companies that are planning to do business in Africa?
Alessandro: I can speak for the countries where we are represented and say that Africa is hungry for true partnerships based on mutual respect and more than anything trust. There is so much to do in Africa for those that are willing to trust not only in Africa and the opportunities therein, but also in the African people themselves and their capacity to be able to play an integral role in helping investors build strong foundations for huge enterprises that can harness the enormous potential of a continent whose real riches are yet to be fully discovered and explored. This may take time like it did in our case. But they must be seen to be doing something, they must put their best foot forward to show they believe in African and are willing to walk with Africa in the realisation of the African dream.
]]>According to the country’s newly established ministry of Mining, Kenya’s mining industry is dominated mainly by production of non-metallic minerals such as soda-ash, fluorspar and some gemstones. Gold is produced in small scale in the western parts of the country. Nevertheless, there have been marked changes following the discovery of Titanium in the Northern parts of Kenya (Turkana). According to Monica Gichuhi of the Kenya Chamber of Mines, Kenya is emerging as a new and active player in the industry. “We have deposits of titanium and oil in Turkana making Kenya a place to invest in.” she said in a press interview.
In May 2016, the Kenyan Government introduced a new Mining Act to replace an outdated one and according to the mining cabinet secretary Mr. Dan Kazungu, the Act is aimed at making the sector more vibrant and attractive to investors as well as providing for more transparency and credibility. “Following the efforts of galvanising and reforming our legislative agenda to make Kenya a business-friendly country, we have been certified by the World Bank as the top country in Africa recognised for the ease of doing business” said Kazungu. Additionally, the country is also upgrading its infrastructure.
There are also other concerted efforts by stakeholder in the sector ensure growth and success, for instance, the Kenya Mining Forum brings together interested parties to showcase the country as an emerging destination for mining and according to the Forum, Kenya has been working on a 20-year mining plan that already highlighted a potential of USD 62.4 billion in mining revenues.
Other efforts include collaboration between the Kenya Chamber of Mines and the Association of Women in Extractives to work with the Ministry. “We are working at addressing some of the challenges within the Act and the Regulations that the industry is facing to ensure that Kenya offers a viable trading atmosphere and market” explains Alice Muthama, the Managing Director at Rockland Jewelers, one of the key stakeholders in the sector.
According to Alice, through the Association of Women in Extractives, the Kenya Gem and Jewelry Fair premiered this year is among the many efforts aimed at making Kenya a gem trading hub and matching up to its neighbors like Tanzania.
By Linda Ogwell-Teunissen
]]>In the film, Mazrui shows how European colonialism destroyed Africa’s ability to make its own things- a trick he termed as Predatory capitalism.
He gives the example of the Balunda, the Baluba and the Basanga people of what is today the DR Congo, who used clay produced by termites to smelt copper from which they made all manner of farming implements, weaponry and even decorations.
However, the coming of Western imperialism through predatory capitalism and appropriation of resources killed local industries.
“…and then the Europeans came. Did they want to learn from the technology they found here? Oh no! At least the Baluba and the Balunda had consulted the technology of the termites and benefited from it. But European technology was more arrogant more self-confident and less compromising. It abolished the old technological order and in its wake it left new forms of desolation in Africa.” Mazrui said.
As Africa is now too good to ignore, global economic giants such as China, United States, France and the United Kingdom scramble for its share.
Among the four, China is coming out strong just like the European technology.
A case in point is two months ago when Investors at the Nairobi Securities Exchange incurred a loss of Sh118.7 billion as a result of tension in global trade, sparked by looming trade war between the U.S. and China.
According to Kenyas Central Bank Weekly statistical bulletin, all indices and market capitalization declined, slowing post dividend growth momentum when the bourse recorded an equity turnover growth of 46.82 percent.
So how and why, are they doing it?
A story is told in the Financial Times of how China set its foot in Africa way back in the 15th century when shipwrecked sailors from the fleet of Zheng landed in an island off the northern coast of Kenya Pate Island.
The Chinese explorers reached the east coast 500 years ago swapping Chinese treasures with African exotica such as Ivory Ostriches and Zebra’s.
The contact was later consolidated under Mao Zedong with anti-colonial solidarity and the construction of engineering works, notably the 1,860km Tanzam railway linking Zambia with the Tanzanian coast.
Fast forward to today, the Asian economic powerhouse is undertaking the China Belt and Road Initiative to connect Asia, Africa and Europe.
It is a state-backed project for global dominance aimed at connecting China to 65 other countries that account collectively for over 30 percent of global GDP, and 62 percent of the world population.
Monetary-wise, Chinas debt held by Africa stands stands at $143 billion up from $50 billion in 2006 atleast according to Kenyas Standard Media.
This is exclusive of the $60 billion China’s President Xi Jinping pledged to African governments during the recently held Forum on China-Africa Cooperation (FOCAC) summit in Beijing.
The pledge is to be given as $20 billion in new credit lines, $15 billion in foreign aid: grants, interest-free loans and concessional loans, $10 billion for a special fund for development financing and $5 billion for a special fund for financing imports from Africa.
Jinping also urged Chinese private companies to invest not less than $10 billion in Africa in the next three years.
According to data from the China Africa Research Initiative, China has disbursed loans to atleast 48 African countries. Angola is the top recipient of the Chinese loans, with $42.8 billion disbursed over 17 years.
Ethiopia follows in second position with $13.7 billion, Kenya is third at $9.8 billion.
The East African nation currently owes the Asian country $5.5 billion slightly below debt to World Bank that stands at $5.8 billion.
The two lenders alone now account for about one fifth of Kenya’s total public debt load, which has already crossed the $50 billion mark.
In fourth and fifth position is the Republic of Congo and South Sudan owing the Chinese $7.42 and $6.49 billion respectively.
A majority of the lending is used for infrastructure development.
Sri Lanka Example
It is said that when a deal is too good, we should think twice.
This is exactly where Africa, once labelled a dark continent by the West is. Its sweet-sour position has seen some of its countries surrender its precious assets to repay the debts.
For instance, In December 2017, Sri Lanka formally handed over Hambantota Port to China on a 99-year lease after struggling to pay loans from the Chinese nation.
Reports by the New York Times, noted that Sri Lanka politicians said the Hambantota deal valued at $1.1 billion, was necessary to chip away the debt estimated to be more than $8 billion.
Word on the streets early last month was that China, famous for its iconic great wall would lake over Zambia’s National electricity supplier- ZESCO as a guarantee to its debt.
However the Edgar Lungu led Nation has since denied the rumors.
Even as China continues to play santa clause to desperate African Nations, the United states considered Africa’s largest donor is not becoming uncomfortable.
In August, US Senate raised concern about high infrastructure debt issued to developing countries by China under the Belt and Road Initiative. It termed Chinese funding as ‘predatory’.
A letter dated August 3, posted on Georgia senator David Perdue’s website, the senate raises concern about China’s debt trap diplomacy and negative effects of BRI to developing countries which latter turn to IMF for bailouts.
“We write to express our concern over bailout requests to the International Monetary Fund by countries who have accepted predatory Chinese infrastructure financing. The financial crisis illustrates dangers of China’s debt trap diplomacy to countries and security threats to US,’’ the letter said in part.
According to the letter, 23 out of 68 countries currently hosting BRI funded projects are at risk of debt distress while future BRI related financing in eight of those countries raises concerns about sovereign debt sustainability.
CARI reveals that the US disbursed $12 billion just to Sub-Saharan Africa in 2017, and $250 million to North Africa.
However Deborah Brautigam, CARI director says that “This could change under the Trump administration’s budget cuts.”
On the other hand, in her visit to Africa in August, UK Prime minister Theresa May pledged pledged $5.2 billion in support for African economies, to create jobs for young people.
In addition she pledged a shift in aid spending to focus on long-term economic and security challenges rather than short-term poverty reduction.
Data from the United Nations Conference on Trade and Development shows that UK direct investment in Africa was $55.51 billion compared with $57.59 billion from the US.
As the scramble continues, the rest of the world can only watch if African Nations and its leaders will resist the easy to get Chinese loans or (just like T’challa in the fiction movie Black panther) it will rally its muscles and release full power of Black Panther to defeat its foes and secure the safety of its people.
]]>The system uses technology to send money to another mobile subscriber via a text message otherwise known as short message service (SMS). It is run by Kenya’s leading telecommunications company SAFARICOM.
Though Kenya is the second country in the world to come up with such a system two years after Philippines’ Globe Telecom and Smart Communications were launched in 2005, it has risen, just under 10 years, to become a world leader on mobile money.
The system has sparked a mini-revolution in more than 20 countries in Africa and Europe with Romania being one of the places where the technology stands the best chance of gaining adoption.
According to a World Bank study, Kenya today, has more mobile phone subscriptions than adult citizens and more than 80 per cent of those with the mobile phone are subscribed to the M-PESA service.
A recently published study by US News on the long-run effects of mobile money on economic outcomes in Kenya provides some valuable insights that will benefit economic development and financial inclusion policies across Africa and world over. The study found that increased access to mobile money has reduced poverty in Kenya, particularly among female-headed households. Rapid expansion of mobile money has lifted an estimated 2 percent of Kenyan households (some 194,000 as at January 2017) out of extreme poverty. It has also enabled 185,000 women to move out of subsistence farming and into business or sales occupations.
Reaching off-grid
For Kenyans with no bank accounts, and in many other countries where mobile money has expanded, M-PESA has become far more than just a way of sending money. Routine purchases like airtime or utility bills are paid via mobile money. Retailers of all sizes accept M-Pesa merchant payments for groceries, cab fares, airline tickets or even school fees. Microfinance organizations are also able to offer lower interest rates due to saving on cash collection costs by receiving payments through mobile money.
Impact of M-PESA
M-PESA has significantly reduced transaction costs in Kenya. When it was launched the average distance to the nearest bank was 9.2 kilometres. Eight years later in 2015 the average distance to the nearest M-PESA agent was a mere 1.4 kilometres.
When M-PESA started it created a network of agents that were geographically dispersed which meant that more people in rural and sparsely populated areas were within reach of one. This resulted in significant and widespread adoption.
Now that mobile money users are able to form more diverse risk-sharing networks, it’s not surprising that users, compared with non-users, tend to receive more remittances from more people. This is particularly marked when users are responding to negative shocks.
Mobile money users are therefore more financially resilient and can protect themselves better against economic and other shocks. It also allows them to increase their consumption in bad times. This is key to enabling households to lift themselves out of extreme poverty.
The recent findings also show that in areas that have experienced large increases in access to mobile money people were more likely to be working in business or sales rather than in subsistence farming. Additionally, fewer people in these areas reported having secondary occupations.
Both these findings were seen to be particularly true for women. This was found to be true in female-headed households as well as male-headed households. An estimated 185,000 women have been induced to switch from subsistence farming to business or sales as their primary occupation as a result of mobile money access.
That mobile money has a positive impact on economic outcomes for women is particularly notable when seen against some historical studies on related subjects. For example, studies on the impact of micro-finance on female clients, and on the economic returns to capital grants for female-operated small businesses, have tended to show limited results.
This may reveal something crucial. For women, the route out of poverty may be financial inclusion that allows them to better manage their existing financial resources, rather than increasing their financial resources from credit or grants.
This finding has significant implications for policy and poverty-reduction efforts.
As other products built on mobile money platforms are developed, financial inclusion is deepened and users are empowered to improve the management of their financial resources. Other products allow users to, for example, earn interest on savings, access micro-loans and affordable insurance, and invest in government securities.
Mobile money has been transformational in Kenya, and has the potential to similarly benefit not only the sub-Saharan Africa but also the rest of the world.
Impact on the World
It’s becoming clear that mobile payment technology has staying power, however technologies like near-field communication, have been around for many years without gaining huge traction, so what has broken down the barrier to entry? What has changed making mobile payment a viable solution for everybody?
The smartphone, of course, is at the heart of this evolution. In this regard, personalized and real-time marketing and virtual wallets are not just the future of big business. They are already a viable proposition, and one that looks set to blossom in the near future.
But while mobile banking and payments may be getting more and more ingrained in consumers’ lives, as well as the business models of banks and vendors, monetizing mobile money is still proving to be a difficult task. In this segment, we consider three pillars of mobile money on smart phones: personalized, localized and timely mobile marketing; the rise of the digital wallet; and the various business models that are emerging that will influence where the mobile money market is heading.
Mobile marketing
For some, it may be an uncomfortable thought that every movement, purchase and communication they make on their mobile phone leaves behind a data trail that is being analysed by various industry participants, such as banks or specialist providers, to unlock new business potential.
Your searching and spending habits are viewable for all to see and this level of data transparency comes at a time when the card industry’s margins are under pressure, especially in the U.S., where market forces and incoming regulation have impacted interchange fees. This led banks to cut back on their loyalty schemes, as most card issuers used to fund these schemes from the card fees they charged. This does not mean that competition has scaled back, however.
What may be bad news for card issuers has created market opportunities for others. Vendors that can act as a gateway between the merchant and issuer, or who can aggregate and analyze transaction data to enable the merchant and bank to offer personalized, relevant and timely offers to card users, have been growing their business of late. Whichever model is used – the consumer will have to opt in to the service, meaning pushy marketing campaigns become irrelevant. This issue is also linked to regulation about information access and data management.
The development of mobile payments is primarily driven not by demand from potential clients, but by the search for reduced costs or increased revenue that it can offer the payment system operator. In this regard, it is not yet clear what the leading solutions or business models will be, but investments into the sector continue, and some business models are starting to emerge, such as special merchant deals.
In some cases, the mobile phone is turned into a payments terminal, the point of sale (POS). Examples include Square in the U.S. and iZettle in Europe. Typically, there are two models for this business proposition: the mobile phone as a POS where a merchant is typically swiping a card though a mobile device such as Square; and the mobile phone at a POS where the consumer uses their mobile device to pay.
It is hard to quantify a market that has potential but has not yet reached mass adoption. To take just one example, NFC technology has for some time been almost synonymous with mobile payments. It has also been around in Japan and South Korea for years. While these countries are ahead of the curve when it comes to NFC adoption, even in innovation and technology-driven Asia, NFC has not gained traction.
NFC adoption may seem to be making slow progress compared with the speed of other technology-related devices or systems, but when banks, network operators, today’s start-ups and others have worked out the business models that work for them, the future of mobile money will be clearer.
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Kenya has had various presidential petitions challenging an election since it held the multi-party election of 1992 and the courts on technicalities have thrown all of them out. In that year, when the then president, Daniel Arap Moi defeated the opposition, a total of six petitions were filed at the High Court, however, all of them apart from the one by one Mr. Kenneth Matiba, were thrown out on procedural grounds. Nevertheless, in 2017’s August 8 presidential contest, the sitting President, Mr. Kenyatta’s main challenger and Opposition leader Raila Odinga filed a petition at the Supreme Court, the country’s apex court, challenging his win.
According to the electoral agency, the Independent Electoral and Boundaries Commission (IEBC), Kenyatta garnered 8.2 million votes, representing 54.2 per cent of valid votes cast beating his rival National Super Alliance’s (Opposition) Raila Odinga who had 6.8 million votes. Mr. Odinga would later contest the results in the Court of Appeal on a number of grounds. He argued that the results were manipulated to give his fiercest rival, Kenyatta, a win.
He even in one instance, went live on two different television channels, Qatar based Al Jazeera and BBC to claim that his rival colluded with IEBC technology experts to tamper with the results. Mr. Odinga also maintained that he would only participate in another election if the electoral body was restructured to have the official who he said had tampered with the vote resign.
Based on these grounds, a historical ruling and a first in the continent African continent saw the country’s Supreme Court nullify the re-election of President Kenyatta and ordered a new vote to be conducted within 60 days. It was a momentous time for Kenya, one of Africa’s most populous nations, and for democracy in general. Previously, the country’s disputed presidential election in 2007 set off bloodshed that left at least thousands dead and 600,000 more displaced around the country. But this time, figures across the Kenyan political landscape, including the President whose victory was wiped away, appeared to accept the decision and called on supporters to do the same.
The ruling also offered a potent display of judicial independence on a continent where courts often come under intense pressure from political leaders. Fresh elections were initially set for October 17 but later rescheduled for the 26 of the same month.
Opposition’s Odinga made good his threat to boycotted the repeat exercise if no proper changes were not made in the country’s election body IEBC before the second round of elections. The electoral body argued that there was minimal time to make the reforms the Opposition had called for. It instead, asked its chairman, who had been adversely mentioned by Odinga as the mastermind of the flawed election, to step aside and let the other officials conduct the exercise.
IEBC, nevertheless, went ahead to conduct another election without Mr. Odinga. There were however, other candidates in the repeat poll. The incumbent was once again declared the winner having garnered 7,483,895 votes out of the 7,616,217 valid votes cast (98 percent).
Three Kenyans contested the results but Kenyatta’s victory was this time around upheld after the evidence adduced lacked merit. This attracted a mixed reaction from various parts of the country with Kenyatta’s supporters taking to the streets to celebrate the decision while Opposition supporters coming out in protest.
The opposition leader has however maintained that he would have his own swearing in as the ‘Peoples President’ and proceed to implement the opposition manifesto, and true to his word, Mr. Odinga was swore himself in on the 30th of January in a ceremony witnessed by thousands of his supported, an event that saw to the closure of Kenya’s key media houses so that they would not transmit it, further throwing the country into a deeper political crisis. It is not clear what the opposition has up its sleeve while the Uhuru government is yet to give any solid reaction to these events. It is therefore a wait-and-see situation in Kenya at the moment.
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