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Satchu's Rich Wrap-Up
Thursday 14th of April 2016

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Macro Thoughts

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Bart Ouvry Quiet early morning wake up @BrusselsAirport - a sunny day ahead of us

“I have felt the wind on the wing of madness.” ― Charles Baudelaire

“I should like the fields tinged with red, the rivers yellow and the
trees painted blue. Nature has no imagination.” ― Charles Baudelaire

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This Is a Voice exhibition looks inside vocal tracts, restless minds and speech devices to capture the elusive nature of the human voice. Photograph: Nils Jorgensen/REX/Shutterstock

The works in this show push those questions further into the self,
into gender, identity; “the noises that we make to communicate with
each other that aren’t linguistic,” as Chapman puts it.

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Russia jets make 'simulated attack' passes near U.S. destroyer: U.S. @Reuters
Law & Politics

Two Russian warplanes flew simulated attack passes near a U.S. guided
missile destroyer in the Baltic Sea on Tuesday, the U.S. military
said, with one official describing them as one of the most aggressive
interactions in recent memory.

The repeated flights by the Sukhoi SU-24 warplanes, which also flew
near the ship a day earlier, were so close they created wake in the
water, with 11 passes, the official said on Wednesday. The planes
carried no visible weaponry, the official said.

A Russian KA-27 Helix helicopter also made seven passes around the USS
Donald Cook, taking pictures. The nearest Russian territory was about
70 nautical miles away in its enclave of Kaliningrad, which sits
between Lithuania and Poland.

"They tried to raise them (the Russian aircraft) on the radio but they
did not answer," the official said, speaking on condition of
anonymity, adding the U.S. ship was in international waters.

The events were reminiscent of the Cold War, when a series of close
calls led to a bilateral agreement aimed at avoiding dangerous
interactions at sea that was signed in 1972 by then-Secretary of the
Navy John Warner and Soviet Admiral Sergei Gorshkov.

The agreement prohibited "simulated attacks against aircraft or ships,
performing aerobatics over ships, or dropping hazardous objects near
them." The accord can be seen here: www.state.gov/t/isn/4791.htm

The incident came as NATO plans its biggest build-up in eastern Europe
since the Cold War to counter what the alliance, and in particular the
three Baltic states and Poland, consider to be a more aggressive

The Baltic states, Estonia, Latvia and Lithuania, which joined both
NATO and the European Union in 2004, have asked NATO for a permanent
presence of battalion-sized deployments of allied troops in each of
their territories. A NATO battalion typically consists of 300 to 800

Moscow denies any intention to attack the Baltic states.

"We cannot treat this as anything else than provocation, yet another
example of aggressive intentions towards NATO, towards the United
States, towards Poland," Poland's Defense Minister Antoni Macierewicz
told private radio RMF.

The USS Donald Cook had just wrapped up a port visit in the Polish
city of Gdynia on April 11 and proceeded out to sea with a Polish
helicopter on board.

The first incident took place on April 11, when two SU-24 jets flew
about 20 passes near the Donald Cook, coming within 1,000 yards
(meters) of the ship, at about 100 feet (30 meters) in altitude.

That was followed by even closer passes by the SU-24s the following
day and the passes by the Russian helicopter.


Russia remains very much on the Front Foot. They have reset Syria.
Show-boated some spectacular military hard-ware gains. I think the
real Challenge to the US comes from China and that because of a
Bureaucracy that was brought up on the Cold War and the Big Bad Bear,
the US is losing its focus on the Panda, by continuing in this Russia
Groundhog type attitude.

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Carter to Visit Philippine Base Near Disputed Spratly Islands
Law & Politics

U.S. Secretary of Defense Ash Carter is in Manila amid tensions
between the Philippines and China over Chinese militarization of
features in the South China Sea.

Carter’s arrival Wednesday follows approval by the Philippines’
Supreme Court of a new agreement between Washington and Manila to
allow U.S. rotational military forces on Filipino bases spread across
the archipelago.

“I wanted to come here as soon as possible after that to signify the
importance of that to us and the alliance,” Carter told reporters en
route to Manila Wednesday.


I do not think 1 versus 2 is a serious idea at this moment. The US is
currently triangulated between China and Russia.

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Worried About Russia's Economy? Give Putin a Call on His Hotline
Law & Politics

The authorities have “only one trump card and that’s the president,”
while Putin’s perception of himself has changed during his long rule,
Bunin said. “If before he regarded himself as a manager, now more and
more in the elite call him the sovereign.”

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1259
Dollar Index 94.96
Japan Yen 109.40
Swiss Franc 0.9671
Pound 1.4125
Aussie 0.7652
India Rupee 66.604
South Korea Won 1154.55
Brazil Real 3.4971
Egypt Pound 8.8816
South Africa Rand 14.6184

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Singapore Surprise Policy Easing Spurs Asia-Wide Currency Rout @business
World Currencies

Singapore’s dollar slumped the most since August, dragging down other
Asia-Pacific currencies, as surprise easing by the central bank fueled
speculation other policy makers in the region will follow suit.

New Zealand’s dollar, Malaysia’s ringgit and Indonesia’s rupiah also
weakened after the Monetary Authority of Singapore said it would seek
a policy of zero appreciation against an undisclosed basket of
currencies, returning to a neutral stance it adopted in the global
financial crisis in 2008. Singapore’s central bank cited “a less
favorable external environment” in its policy statement, adding to
concern the outlook for global growth is worsening.

“Today’s decision by the Monetary Authority of Singapore has put
downward pressure on currencies in the Asia-Pacific region," said
Hirofumi Suzuki, an economist at the treasury department of Sumitomo
Mitsui Banking Corp. in Singapore. “Some market participants fear a
revival of a competitive currency devaluation."

Singapore’s dollar slid 1.2 percent to S$1.3667 to the U.S. currency
as of 6:51 a.m. in London, the biggest drop since Aug. 11. New
Zealand’s dollar tumbled 1.2 percent to 68.38 U.S. cents, the ringgit
declined 0.9 percent to 3.9088 per dollar and Indonesia’s rupiah
weakened 0.4 percent to 13,210.

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.@Nestle Sales Beat Estimates on Nescafe, Nespresso Coffee @business
International Trade

Nestle SA, the world’s biggest food company, reported first-quarter
sales that beat analysts’ estimates, as Nescafe and Nespresso were
boosted by marketing to ward off competitors in coffee.

Sales rose 3.9 percent on an organic basis, the Vevey,
Switzerland-based maker of KitKat bars and Perrier water said in a
statement Thursday. Analysts had expected 3.6 percent, according to
the median estimate in a Bloomberg survey. Nestle expects “further
momentum” in the second half, Chief Financial Officer Francois-Xavier
Roger said on a call with analysts.

Nestle’s world-leading coffee business faces a fresh challenge from
JAB Holding Co., which has spent more than $30 billion acquiring
assets like Keurig Green Mountain Inc., the maker of the U.S.’s most
popular single-serve coffee system. Nestle’s revenue from powdered and
liquid beverages -- predominantly the coffee business -- rose 6.3
percent. That was boosted by advertising and promotions, according to
Jon Cox, an analyst at Kepler Cheuvreux in Zurich.

“Nestle invested money into marketing in the fourth quarter, which
actually dampened group margin in 2015, but is now paying off,” Cox
said. “It’s taking advantage of the uncertain situation among
competitors in coffee amid JAB’s rapid acquisitions of multiple

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South Sudan: Rebel Deputy Returns to Capital As Part of a Peace Deal DW

The deputy chief of South Sudan's rebels has returned to the capital,
Juba, as part of a peace deal. The main opposition leader, Riek
Machar, is also expected to return to the capital to work out a unity

South Sudan's rebel deputy chief returned to Juba as part of the peace
deal signed in August 2015, despite repeated ceasefire violations by
both sides.

Alfred Ladu Gore, a former general and minister, spoke about peace
upon arrival, saying he: "came here to proclaim peace and I have come
to reaffirm that peace will not be reversed."

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"If there is no credible signal from South Sudan that this time things will be different, then they will get far less than what they could get," said Balazs Horvath

It’s not just the donors who are losing patience with South Sudan’s
leaders. Citizens who feel the brunt of the crisis are increasingly
vocal about their government’s failures. “There’s a lot of corruption
in the government,” says a retired colonel who has been waiting for
hours to get fuel.

“People in the army and government are benefiting from the black
market fuel business,” says the man, who didn’t want to give his name
for fear of retribution. “It’s the ordinary citizens who are left with

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How liberators turn into oppressors - a study of southern African states Henning Melber

Since coming to political power, the anticolonial movements of Angola,
Mozambique, Zimbabwe, Namibia and South Africa have remained in
control of the former settler colonies’ societies.

At best their track record of running the countries they helped
liberate is mixed. From the “oiligarchy” in Angola under José Eduardo
dos Santos and his family clan and the autocratic “Zanufication” under
Zimbabwean President Robert Mugabe to the presidential successions in
Mozambique, Namibia and South Africa, all movements embarked on what
could be termed “state capture”.

This is true of all five: the People’s Movement for the Liberation of
Angola (MPLA), the Mozambique Liberation Front (Frelimo), the Zimbabwe
African National Union (ZANU PF), Namibia’s South West Africa People’s
Organisation (SWAPO) and the African National Congress (ANC) in South

During the years of organised resistance, activists in the liberation
movements often internalised a “we-they” divide that categorised
people as comrades or enemies. This was true in exile politics and
armed struggle, as well as militant internal underground mobilisation.

The repressive regimes the liberation movements opposed were based on
human rights violations as an integral component of minority rule. To
have a chance of success against them, the struggle mainly operated
along the lines of command and obedience. Operating in exile or for a
banned organisation at home left no room for complacency. Suspicion
was required for survival. It is normal for resistance movements to
adopt rough survival strategies and techniques while fighting an
oppressive regime.

Unfortunately that culture takes root and is permanently nurtured.

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Angola Should Ease Forex Law to Help Oil Sector, TGI Says

Angola should lift restrictions on foreign-currency transactions to
help ease the struggles of oil companies that have been hit by the
sharp drop in crude prices, according to Alex Thomson-Payan, founder
of investment company TGI Group.

A law from 2012 requires companies in Angola to pay suppliers and
salaries in the local kwanza currency, while last year the central
bank ordered businesses and citizens to cut foreign-exchange use by 50
percent amid a dollar shortage.

The oil-price slump has hammered Angola, Africa’s largest crude
producer after Nigeria, which relies on the fuel to generate about 70
percent of revenue and 95 percent of export income. The kwanza has
lost 19 percent against the dollar this year, while Standard & Poor’s
cut the southern African nation’s credit rating by one notch to B,
five levels below investment grade, in February.

When foreign-currency controls were announced, the government wanted
“to boost the local market, making the kwanza more valuable,
diversifying the economy,” Thomson-Payan said in an interview in the
capital, Luanda. “But now there is an oil crisis and the law is
hampering the only sector generating foreign currency.”

Economic growth in Angola will probably slow to 2.5 percent this year,
from 3 percent in 2015, the International Monetary Fund says in its
World Economic Outlook on Tuesday. The economy is forecast to expand
2.7 percent in 2017.

Growth in Angola and other crude exporters will slow “as the negative
impact of lower oil prices is compounded by disruptions to
private-sector activity through exchange-rate restrictions,” the IMF

Angola-based TGI Group’s investment portfolio includes oil, mining,
telecommunications, real estate and financial services, and it helps
international companies starting operations in the country. “If the
law is changed, I think the level of investment will be incredible,”
said Thomson-Payan.

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Deafening Silence from Ethiopia FPIF

Since November, state security forces have killed hundreds of
protesters and arrested thousands in Oromia, Ethiopia’s largest
region. It’s the biggest political crisis to hit the country since the
2005 election but has barely registered internationally. And with the
protests now in their fifth month, there is an almost complete
information blackout.

A teacher arrested in December told me, “In Oromia the world doesn’t
know what happens for months, years or ever. No one ever comes to
speak to us, and we don’t know where to find those who will listen to
our stories.”

Part of the problem is the government’s draconian restrictions on news
reporting, human rights monitoring, and access to information imposed
over the past decade. But restrictions have worsened in the last
month. Some social media sites have been blocked, and in early March
security officials detained two international journalists overnight
while they were trying to report on the protests. As one foreign
diplomat told me, “It’s like a black hole, we have no idea what is
happening. We get very little credible information.”

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The rand gained as much as 1.1 percent to 14.5344 per dollar, the strongest level since Dec. 9, when Zuma unexpectedly removed Finance Minister Nhlanhla Nene

Yields on benchmark rand bonds due December 2026 dropped 11 basis
points to 8.98 percent, falling below 9 percent for the first time
since the start of the political crisis.

The cost of insuring South Africa’s dollar debt against default for
five years using credit default swaps dropped 20 basis points to 295
basis points, just six points shy of the level they traded at before
Zuma fired Nene.


More like a vicious short squeeze and a sense that @SAPresident is
seriously wounded.

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Dollar versus Rand 6 Month Chart INO 14.6133 [SELL THE RAND]

Egypt EGX30 Bloomberg +5.92% 2016


A year after he took office, President Muhammadu Buhari’s strong
preference for command-and-control style economic measures over
market-driven policies, so-called ‘Buharinomics’, is showing serious
signs of stress.


@NGRPresident President Buhari arrives the People's Republic of
China | 11 April 2016 #PMBInChina


@NGRPresident President Buhari and his delegation formally
welcomed to China by President Xi Jinping, 12 April 2016


Nigeria All Share Bloomberg -13.98% 2016


Ghana Stock Exchange Composite Index Bloomberg -4.89% 2016


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Taiwanese deported from Kenya 'suspected of fraud in China'
Kenyan Economy

A group of Taiwanese deported from Kenya to China after being
acquitted of cyber crime are wanted for suspected fraud in China, the
Chinese government said on Wednesday.

In a case that has enraged Taiwan, which has accused Beijing of
kidnap, the Kenyan government said the people were in Kenya illegally
and were being sent back to where they had come from.

Kenya does not have official relations with democratic Taiwan and
considers the island part of "one China", in line with the position of
Communist Party leaders in Beijing.

Only 22 countries recognize Taiwan as the Republic of China, with
most, including Kenya, having diplomatic relations with the People's
Republic of China, with its leaders in Beijing.

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ICC failure 'spells doom' Raila Odinga @AFP via Times LIVE
Kenyan Economy

The ICC's failure to try top Kenyan leaders for crimes against
humanity in the country's worst violence since independence spells
"doom" for global efforts to fight impunity, former Kenyan leader
Raila Odinga said.

Despite this setback, African countries must not quit the
International Criminal Court as the continent is "the biggest violator
currently of human rights", the ex-prime minister said.

War crimes judges dropped cases against Kenyan President Uhuru
Kenyatta at the end of 2014, and against Deputy President William Ruto
last week.

More than 1300 people died and about 600000 others were left homeless
after disputed elections in 2007 in Kenya's worst wave of violence
since independence from Britain in 1963.

But the ICC said it was forced to declare the defendants had no case
to answer because of a "relentless" campaign of witness intimidation
as well as Nairobi's refusal to co-operate, a charge that Kenya

"This decision spells doom for the international justice system and
fight against impunity," Odinga - who was declared the runner-up in
the 2007 vote - said during a visit to Paris.

Now, he regretted: "No African head of state needs to fear being tried
by the ICC because you can destroy the evidence, you can kill

"The ICC allowed itself to be blackmailed by Kenya," said Odinga, 71.

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From Business Daily How Deloitte's Islamic assets audit row caused a run on Chase Bank Kenyanwallstreet
Kenyan Economy

Sharp differences between senior managers of Chase Bank and auditing
firm Deloitte on how to handle assets in the lender’s possession under
the Islamic banking window triggered a rapid-fire series of events
that led to the bank’s collapse. The Business Daily has reliably
learned that the outcome of the two-week audit row is what pushed the
SME-focused bank over the cliff, leading to its closure on April 7.
Chase Bank found itself in a tight position after the Central Bank of
Kenya (CBK) directed it to restate its financial results to show the
significant changes in its insider lending position that arose from
the differences over the method of accounting for the lender’s Islamic
banking assets.
Chase Bank’s restated figures showed it had under-reported insider
loans by a whopping Sh8 billion, casting doubts over the financial
health of the lender, which also reported a surprise Sh743 million
The bank’s former group managing director, Duncan Kabui, last week
told criminal investigators that Deloitte was yet to complete its
audit of the bank and submit a report to the board as is standard
practice when the restated financial results were published on April
“The final audit report does not exist and has not been completed. The
bank’s auditors have not submitted the audit report to the board’s
audit and risk committee for discussion and approval and to the full
board as is practice,” Mr Kabui told investigators — raising questions
as to the basis of the CBK’s action against the bank.
The CBK moved in to take charge of Chase Bank last Thursday — a day
after Mr Kabui and Zafrullah Khan, the bank’s chairman, were forced
out following revelations of massive irregular insider lending that
precipitated a run on the bank.
The CBK said Chase Bank had experienced liquidity difficulties that
rendered it incapable of meeting its financial obligations on April 6.
Mr Kabui says in his statement to the police that the so-called
insider loans were assets held in Chase Iman’s joint ventures financed
under Musharakah – a sharia-compliant investment platform where
partners are entitled to a share of profits in a ratio that is
mutually agreed.
Mr Kibui says it was Deloitte’s aboutturn on how to treat those assets
that led to their classification as insider loans that caused panic in
the market and led to massive withdrawal of deposits that ultimately
sunk the bank An exchange of emails between Chase Bank executives and
Deloitte shows that sharp differences emerged over the classification
of assets from Chase Bank’s Islamic window. “During the course of the
audit and inexplicably the auditor changed his interpretation of these
assets to loans to related parties. The auditor claimed lack of
technical capacity to understand Islamic contracts yet it had been
handling the bank for more than 18 years,” said Mr Kabui.
An earlier draft of Chase Bank’s financials prepared by Deloitte shows
that the disputed Sh7.9 billion was classified as ‘other assets and
interest receivable’ in the balance sheet only to emerge in the
restated financial statement as loans advanced to an unnamed director
and associated companies.
The exchange of emails show that Fredrick Aloo, an audit partner at
Deloitte in charge of Chase Bank’s account, surprised the bank’s
executives with his demand that the Islamic assets held in special
purpose vehicles (SPVs) be charged for purposes of proper accounting.
Chase Bank, responding through its head of legal, Sevastone Makanda,
warned of the danger of charging the assets, saying the action would
turn them into loans that would then have to be provided for.
Mr Makanda further warned that registering a charge on the properties
and turning into loans would run afoul of Islamic financing.
“The bank will become a lender and the special purpose vehicles (SPVs)
borrowers obligated to make monthly repayments plus interest which
will be in breach of the existing obligations, ownership,” Mr Makanda
said in an email dated March 14, 2016.
Mr Aloo rejected Mr Makanda’s proposals through an email dated March
24, 2016, insisting that he had sought independent counsel from a
lawyer and a banker and that he had come to the conclusion that the
proposed trust deed for the SPVs would not suffice.
Mr Makanda had proposed that Chase Bank creates long-term leases over
the properties receiving sharia-compliant financing as a strategy to
register the bank’s interests.
The list of assets held under the SPVs included a business park in
Karen, a threeacre parking lot in Nairobi, some 240 acres of land on
Mombasa Road, a three-acre plot next to the German Embassy in
Riverside Drive and various properties in Dubai.
Mr Kibui told the police that he did not understand the auditor’s
sudden demand for a change in treatment of the Islamic assets
insisting that they were fully charged to the bank.
“Even in this auditor’s midway change of accounting treatment, the
properties were either fully charged to the bank or pending charging
where the new titles were being processed,” he said.
Deloitte’s statement of account, dated March 16, 2016, shows the
auditors had suppressed Chase Bank’s loan loss provisions at Sh527
million, resulting in a net profit of Sh2.6 billion. But after the
change in treat ment of the Islamic assets, Chase Bank was forced to
increase its loan impairment costs nearly threefold to Sh2.09 billion
from Sh757 million in 2014, a move that wiped out the lender’s
Deloitte did not respond to questions on its audit actions citing
customer confidentiality rules and that the responses may prejudice
ongoing investigations.
“The matter is under investigation and therefore we cannot comment on
this. We are bound by client confidentiality and therefore we cannot
respond to this,” said Sammy Onyango, the chief executive at Deloitte
East Africa.
Mr Kabui disclosed that the SPVs, where he is a director, were formed
to capture the letter and spirit of Musharakah and that he only held
the position in trust for the bank.
“It is not true that I advanced to myself the said loans as these were
mere auditor-induced adjustments from previous years when they treated
the properties correctly as investments,” he said.
Dr Njoroge last week said the Sh7.9 billion associated with the
Islamic assets were irregularly lent to an unnamed Chase Bank
director, raising questions as to the regulator’s dealings with
commercial banks that are licensed to offer Islamic products.
It was the disagreement over the treatment of Islamic assets that saw
Deloitte make a U-turn to issue Chase Bank a qualified audit opinion
and a surprise full-year loss from an earlier unqualified position
where the lender was in the profit zone.
The restatement of the financial results was done in response to the
CBK directive that set in motion a chain reaction that finally
resulted in a run on the bank.
“The errors noted were there was no mention of a bank’s auditors and
whether the auditors issued a qualified or unqualified opinion,” said
CBK director of bank supervision Gerald Nyaoma in a leaked letter
dated April 4, 2016.
“The purpose of this letter therefore is to direct the institution
(Chase Bank) to republish its audited financial statements and
disclosures as at December 31, 2015.”

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Kenya Shilling versus The Dollar Live ForexPros 101.07 [8 month Highs]
Kenyan Economy

Nairobi All Share Bloomberg -0.63% 2016 [snapped a losing streak which
had seen the All Share retreat 1.844% since the 7th of April]


Nairobi ^NSE20 Bloomberg -3.25% 2016 [-3.57% since 7th April when its
closed at a 2016 High of 4,054.29]


3,909.47 -15.85 -0.40%

@Barclays_Kenya share price data -24.63% in 2016


.@National_Bank share price data -39.04%


Heathrow slot sale earned Kenya Airways Sh5.3 billion @BD_Africa


Every Listed Share can be interrogated here


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

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