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Satchu's Rich Wrap-Up
Wednesday 27th of January 2016

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0930-1500 KENYA TIME
Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.

The Latest Daily PodCast can be found here on the Front Page of the site

This Saturday #Mindspeak will be hosting the CS Treasury Henry Rotich.
My Co-Host is @KCBGroup CEO Joshua Oigara

This Session will start at 9 and end at 11 @InterconNairobi

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BBC Newshour @BBCNewshour What happens to the human body in the world's largest desert? #Antarctica

“We are all alone, born alone, die alone, and—in spite of True Romance
magazines—we shall all someday look back on our lives and see that, in
spite of our company, we were alone the whole way. I do not say
lonely—at least, not all the time—but essentially, and finally, alone.
This is what makes your self-respect so important, and I don't see how
you can respect yourself if you must look in the hearts and minds of
others for your happiness.”

― Hunter S. Thompson, The Proud Highway: Saga of a Desperate Southern
Gentleman, 1955-1967

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Donald Trump has soared to a new high of 41 per cent, according to a new poll.
Law & Politics

The national poll by CNN//ORC found that four out of ten Republicans
now say they wold back him to be the president. The tycoon’s support
is more than double that of his nearest rival, Ted Cruz, who trails on
19 per cent. No other Republican candidate makes it out of single


I once spent the evening with him, Cosima Van Bulow and Lin Menuhin at Tramps.

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Iranian President Rouhani Meets Pope Francis
Law & Politics

“I thank you very much for the visit. I have high hopes in peace,” the
pope told Rouhani, according to the Catholic News Service. Rouhani
responded by asking the pope to pray for him


And There You have the difference in the World-view.

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@Aiww What's in a Name?
Law & Politics

What's in a name?

A name is the first and final marker of individual rights, one fixed
part of the ever-changing human world. A name is the most basic
characteristic of our human rights: No matter how poor or how rich,
all living people have a name, and it is endowed with good wishes, the
expectant blessings of kindness and virtue.

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George Soros, the man who broke the Bank of England and, according to some, helped precipitate the Asian financial crisis has been warned off going to “war on the renminbi” by Beijing. @FT
International Trade

“Soros’s war on the renminbi and the Hong Kong dollar cannot possibly
succeed — about this there can be no doubt,” read a front-page opinion
piece by a commerce ministry researcher in the overseas edition of the
People’s Daily headlined “Declaring war on China’s currency? Ha ha”.

Last week the billionaire investor told Bloomberg TV he had bet
against the S&P 500, Asian currencies and commodity-linked economies,
while going long on US Treasuries.

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The company sold 74.8m of its flagship devices in the final three months of 2015, In the same period in 2014 the company sold 74.46m iPhones, meaning sales were essentially flat.
International Trade

Sales of the iPhone account for about two-thirds of Apple’s revenues,
which worries some investors. “Apple is a one-product company,”
declared Berenberg’s Adnaand Ahmad last year, when the German bank
downgraded the company’s stock to “sell”.

Apple posted record quarterly revenues of $75.9bn and record quarterly
profits of $18.4bn, but warned the revenues would fall this quarter.

Chief executive officer Tim Cook said: “Our financial position has
never been stronger.” He said Apple had “the mother of all balance
sheets” with assets totalling $293bn, with $205bn of that in cash. He
added that the company currently has 1bn active devices active – a
major milestone, he said.

As well as slowing iPhone sales Apple reported it sold far fewer iPads
in the last three months of 2015, 16.1m, down from 21.4m tablets in
the same quarter last year. Mac sales, too, were off, though less
drastically: the company sold 4% fewer, for a total of 5.3m.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0864
Dollar Index 99.04
Japan Yen 118.10
Swiss Franc 1.0171
Pound 1.4338
Aussie 0.7016
India Rupee 67.955
South Korea Won 1202.50
Brazil Real 4.0716
Egypt Pound 7.8286
South Africa Rand 16.4013

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One Salmon Costs More Than Barrel of Oil as Slump Deepens: Chart

Western Europe’s biggest oil producer is suffering from the collapse
in crude prices. But another top commodity export in Norway, salmon,
is fetching record-high prices because of low supplies and a weak
currency. As the seafood-industry news site iLaks.no reported this
month, oil has fallen so low and salmon risen so high that one
standard, 4.5 kilogram fish now costs more than a barrel of crude,
measured in kroner.

Emerging Markets

Frontier Markets

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Zimbabwe swaps hyperinflation for deflation with use of US dollar @FT Subscriber

Falling prices are a novelty. Back in 2008, when annual inflation
peaked at 89.7 sextillion per cent — that’s roughly 9 followed by 22
zeros — a single egg could cost well over a billion dollars, assuming
you could find one.

For some, the loss of Zimbabwe’s currency is an acceptable blow to
national pride. “It’s wonderful,” says Patrick Zhuwao, the nephew of
President Mugabe and minister in charge of a government scheme to
“indigenise” foreign-controlled industries. “We have the only stable
currency in the region.”

Ranga, the manager of a nearby mini-mart who is reluctant to give his
surname after criticising government policies, concurs. He recalls
with a shudder the “crazy” years of hyperinflation. Yet, he adds,
casting his eye over half-empty shelves, the price stability that has
come with dollarisation has done his business little good.

People have less money, whether denominated in vanishing Zimbabwe
dollars or rock-solid American ones, he says. “As long as there’s no
production in the economy, it doesn’t matter what currency you use.”

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Smart Africa: Smartphones pave way for huge opportunities William Wallis, African affairs writer FT Subscriber

The mobile phone is to sub-Saharan Africa what the steam train was to
19th century Europe: the mechanical workhorse driving social and
economic transformation.

Seizing the opportunity provided by the first near universally
available infrastructure, hundreds of technology start-ups have sprung
up across the continent to plough new trade routes and seek
breakthrough innovations.

In parallel there is mounting competition between global tech
companies — IBM, Google, Facebook, China’s Tencent- for a slice of
what are some of the world’s fastest growing IT markets.

The ethos pervading this new ecosystem — centred in Nairobi, Lagos and
Johannesburg but with offshoots across Africa — was encapsulated
recently by Mark Essien, creator of one of the first hotel booking
websites in Nigeria. Far from being a handicap, the deficit in
physical infrastructure such as landlines and indeed railways,
provides Africans with a unique chance to step ahead, he argued at a
recent Lagos conference.

“The future of technology for Africa is not in playing catch-up. But
in looking at the things we lack and using each of those gaps as an
opportunity for us to invent something we can use to leapfrog the rest
of the world,” Mr Essien said.

The first big leap came with the adoption of mobile phones. The next
wave of technological advances are occurring as high speed internet
and smartphone handsets become more accessible.

By 2025 half of sub-Saharan Africa’s billion strong population will
have internet access, 360m via smartphones according to McKinsey, the
consultants. Two years ago their research identified this burgeoning
connectivity as providing huge opportunities for IT businesses in
healthcare, education, finance, agriculture, retail and servicing

Already there is an African app out of the starting blocks for almost
everything: herding cattle in Kenya (i-Cow), private security in Ghana
(hei julor!), remotely monitoring patients in Zimbabwe (Econet) and in
Uganda, an Uber-like service (Yoza) connecting dirty laundry to mobile

The future of technology for Africa is not in playing catch-up. But in
looking at the things we lack and using each of those gaps as an
opportunity for us to invent something we can use to leapfrog the rest
of the world

Married to this explosion of creative endeavour are the continent’s
demographics — over 70 per cent of the fast urbanising population are
under 30. “The first thing they want is a phone and the next is
information,” says Aly Khan Satchu, a Nairobi-based investment

Armed with both, Africa’s youth are hooking up to networks far beyond
their immediate communities, creating new outlets for music, TV,
fashion and social comment. Nor can the politicians afford to ignore
the ramifications. The social media campaign unleashed when Boko Haram
terrorists kidnapped more than 200 schoolgirls rebounded to help
deprive Goodluck Jonathan of a second term as Nigeria’s president.

“What the Great Western Railway was to Victorian England, the mobile
networks are to Africa,” says veteran Africa investor, Miles Morland.

For all the excitement, however, there is a caveat: the easy fortunes
were made in the last decade. Then, private equity investors like Mr
Morland made five or ten times their money. They did so by backing
African entrepreneurs who recognised the scale of pent up demand and
jumped in to build telecoms companies while their global counterparts
hesitated (convinced that most Africans were too poor to afford either
handsets or airtime).

Price wars and slowing growth in near saturated urban areas have since
thinned their margins. So, some of the latest innovation is being
driven by commercial necessity. Products like M-Pesa, the mobile money
system pioneered by Kenya’s dominant telecoms operator Safaricom,
raise fresh revenues and help the company retain subscribers.

Safaricom, Kenya's biggest telecoms firm, is a model of how technology
can be used to financially include millions of people with mobile
telephones but without access to traditional infrastructure such as
the banks that are available to the wealthy or those living in cities.
Safaricom in 2007 pioneered its M-Pesa mobile money transfer
technology, now used across Africa, Asia and Europe. It proved that
money can be made from people who earn a few dollars a day.

More broadly, the start-up terrain is treacherous, fragmented, and
only a few companies have yet proved an ability to scale up regionally
and become commercially viable.

“If I had a Martini for everyone who comes into my office with a new
mobile payment system, I would be drunk from now to the next
millennium,” says Mr Morland. “The problem is that for every two that
work 400 will struggle.”

So far, the companies that have been most successful in attracting
investment have tended to be those replicating western models such as
the online retailers in Nigeria, Africa’s most populous nation, Jumia
and Konga. Many tech companies developing consumer apps lack the
finances to market their own products and are obliged to work directly
with the phone operators.
Four tech tycoons shaking up African infrastructure

Ayisi Makatiani, the Kenyan who created pan-African media aggregator
Africaonline and now runs his own private equity fund, says the first
wave of venture capitalists backing more innovative start-ups were
mostly burnt. However, more experienced players are now arriving, he
says, helping to marry international expertise with local knowledge.
”I haven’t seen so many Americans arriving in 20, 30 years.”

At the same time, in more advanced markets, the spread of mobile money
systems and developments in logistics (such as Kenya’s new motorbike
courier service, Sendy) are combining with increased smartphone use to
allow companies to sell everything from insurance to fresh fruit

“The question is how do you now use the current digital platforms to
disrupt the traditional businesses and offer services in a much more
efficient way?” Mr Makatiani says.

It has taken longer for most companies to find the answer than early
enthusiasts for the sector anticipated. The constraints presented by
data costs, regulation, and financing, have proved a drag.

“We are in an evolutionary phase,” says Aly Khan Satchu. “We have not
yet found the ways of creating the kind of commercial value US
companies have been so brilliant at doing. But we are moving in the
right direction.”

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01-FEB-2012 There are two Africas now. The average age in Sub African Africa is 20.

There are two Africas now. The average age in Sub African Africa is
20. These folks are all connected, surfing the now in a way that is
breathtaking. I work not more than 10 minutes walk from the Norfolk.
It is urban, highly aspirational, tech savvy (after all, Kenya was the
laboratory that gave birth to the mobile money sensation M-Pesa], it’s
a hub. The traffic can be frightful but it’s on the move.

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Nigeria Devaluation Bets Tempered as Emefiele Keeps Naira's Peg

Traders lowered their expectations on the size of Nigeria’s currency
devaluation as central bank Governor Godwin Emefiele stuck to his
policy of keeping the naira stable.

Three-month naira forwards strengthened the most on record against the
dollar after Emefiele gave no indication in the Monetary Policy
Committee statement released on Tuesday that he’s ready to ease
controls on the currency. Crude prices at 12-year lows of around $30 a
barrel, an unprecedented government spending plan and black-market
rates near records were heaping pressure on authorities to scrap the
country’s almost one-year limits on naira trading and allow the
currency to depreciate.

“It seems like although there’s been a lot of criticism of this it
really hasn’t gotten through to the governor,” John Ashbourne, a
London-based Africa economist at Capital Economics Ltd., said by
phone. “Some of the wording was a bit worrying. When he talks about
his unyielding support for the current policies and so on. That’s
quite bad news.

Three month non-deliverable contracts rallied as much as 9 percent,
the most ever on a closing basis, to 229 per dollar, before paring
gains to 229.50 by 6 a.m. in Lagos. That means investors now see a
depreciation of about 14 percent in that period, after predicting a
weakening of 21 percent before Tuesday’s announcement. One-year
forwards strengthened 3.2 percent to 278 per dollar.

Forwards fell after President Muhammadu Buhari, who has backed
Emefiele’s policies, hinted in his 2016 budget speech on Dec. 22 that
he would accept a devaluation and said that the central bank would
introduce “some flexibility” to its exchange rate policy. Three month
forwards were as strong as 208.38 in early December.

Nigeria’s growth fell to 3 percent last year, the slowest pace since
1999, according to the International Monetary Fund. The country is
Africa’s largest economy and biggest oil producer.

The government’s plans to raise up to $1 billion of Eurobonds to help
plug its budget deficit may be hindered its foreign-exchange regime,
according to Alan Cameron, an economist at Exotix Partners LLP.
Nigerian officials will soon go on a non-deal roadshow to meet
investors, Finance Minister Kemi Adeosun said last week in an

“The Eurobond roadshow could be a wake-up call,” Cameron said by phone
from London. “They’ll probably be surprised at the extent of
investors’ confusion over their policies.”

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Nigeria All Share Bloomberg -16.79% 2016

23,832.03 -131.61 -0.55%

Ghana Stock Exchange Composite Index Bloomberg +0.16% 2016


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.@IMFNews extends Kenya's existing credit facility as new one discussed
Kenyan Economy

"We are now working on extending it for a few weeks just because we
are in dialogue with the government to present a new programme to our
board before the end of this quarter," Armando Morales told Reuters
late on Monday.

"We agreed with the authorities that it was prudent to maintain that
insurance during the discussion for the new programme," he said.

The Central Bank of Kenya calmed volatility in the markets last year
after hiking its benchmark lending rate by 3 percentage points to
11.50 percent and has increased foreign reserves without turning to
the IMF standby loan.

The shilling weakened 11 percent against the dollar last year, less
than most frontier currencies, and has been steady this year.

Morales said this showed the government had "the will and the tools
necessary" to maintain stability in the economy, strengthening the
case for a new standby loan.

The IMF expects Kenya's economy to grow by 6 percent this year, from
an estimated 5.6 percent last year, driven by farming, expectations of
macroeconomic stability and Kenya's minimal exposure to slowing
emerging markets like China.

Unlike some other African nations, Kenyan is not reliant on commodity
exports to Asia.

"Agriculture has become a more dynamic sector. Weather patterns have
been more benign," Morales said, adding higher growth could be
achieved because of infrastructure projects like a new railway being
built from the main port to the capital.

The IMF was following closely the government's financing plans given
the slowdown in global economic growth, he said.

Kenya's net present value of debt - which reflects the debt's maturity
profile, the proportion of loans taken on softer terms like those from
the World Bank and interest rates - was still below 45 percent of GDP,
he said.

"Kenya remains at low risk of debt distress even with the additional
information that has been incorporated," he said.

Finance Minister Henry Rotich said last week Kenya was looking to cut
spending and would keep engaging international investors to gauge
appetite for future issuance.

Morales said Kenya needed to balance local and external funding
sources in the future but said it could still tap foreign markets.

"That appetite hasn't dried completely. There are still pockets of
investors that are looking for yields," he said.

The yield on Kenya's debut Eurobond that was issued in 2014 was quoted
at 9.096 percent on Tuesday, compared with a yield of 6.875 percent at

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25-JAN-2016 Another point to note is that we have gotten lucky with the weather
Kenyan Economy

Another point to note is that we have gotten lucky with the weather. I
once joked that to be a good economist in Kenya, you need to be a good
meteorologist. The way I see it we have been really lucky. There is
plenty of collateral damage from the El Niño weather pattern but we
have gotten lucky. The agri-economy is doing just fine.

Africa Confidential in its latest edition wrote: “Secondly, the
commodity price crash cannot all be blamed on China and it is not
blighting all Africa’s exports. For example, export earnings from
cocoa, coffee and tea look set to hold up in both the increasingly lu-
crative specialist markets and in the traditional bulk purchase

The dream of oil is now over the horizon but there is a lot of
positive momentum out there and its not getting drowned out by the
cacopho- ny but is beginning to rise above it.

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Kenya Airways to Cut Jobs as Part of Turnaround Strategy
Kenyan Economy

Kenya Airways Ltd., which last year reported the biggest corporate
loss in Kenyan history, is in the early stages of implementing a
turnaround strategy that will involve cutting jobs and selling some
aircraft, Chief Executive Office Mbuvi Ngunze said.

The plan, developed by McKinsey & Co., will be implemented over the
next 18 months, Ngunze said in an e-mailed response to questions in
the capital, Nairobi, on Tuesday.

“It’s a comprehensive plan looking at all things,” Ngunze said. “It
will see us turn around through various measures including cost
management, refinancing business, commercial and sales efficiency and
asset sales.”

Kenya Airways plans to sell five more Boeing 777s, Ngunze said. The
company said last week it had signed a sale agreement for two Boeing
777-200 ER craft with U.S.-based Omni Air International.

The company retired eight pilots last year and more employees would
“be affected by the sale of the planes,” Ngunze said.

Kenya Shilling versus The Dollar Live ForexPros 102.40


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Imperial Bank owners to pump in Sh10b towards the bank's recovery plan
Kenyan Economy

Dr Njoroge said at a press conference that: “Yes they say they have a
proposal to pump in Sh10 billion; we wanted enough resources to reopen
the bank in November, that didn’t happen because no resources came. We
told them we have an account here, put the money there and we get
moving but nothing happened, giving us the impression that they were
unwilling to move in that direction.”

He added: “We had no choice but to take the direction we have
outlined. I will say it now loud and clear that there is an account
here at the CBK and if indeed there is Sh10 billion out there, put it
in that account then we talk.”

Mr Popat, however, said the regulator should equally provide a clear
recapitalisation and recovery framework noting that “to make such a
huge investment required – still requires – a proper framework.”

“As with any investment, the injection of such amounts of new capital
will have to be made within a clear financial and legal framework and
this may bring with it some financial, legal and regulatory hurdles.”

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by Aly Khan Satchu (www.rich.co.ke)
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January 2016

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