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Friday 15th of April 2016 |
Morning Africa |
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The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke
Macro Thoughts
Home Thoughts
I thank the British High Commissioner for the Invitation yesterday to the #EatTweet4 Meet-Up. |
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The Serena The Star Africa |
MY memories of the Serena start in Mombasa years back when the managing director Mahmoud Jan Mohamed was the manager. I was then a teenager and remember losing my heart to a girl, who would beat me at table tennis, in a bikini. That table tennis Table is still there. The Serena brand has always been sprinkled with a fairy dust and reminds me of happy; joyful; carefree: halcyon days of youth.
I want to be somewhere like this, with my Wife feeding me Fresh Crab in a Bikini. How about that?
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Hannah Fine Dining The Polana Maputo Africa |
"The future enters into us, in order to transform itself in us, long before it happens." -- Rainer Maria Rilke
"A billion stars go spinning through the night, / glittering above your head, / But in you is the presence that will be / when all the stars are dead." -- Rainer Maria Rilke
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Erdogan Sees Evil in `Lord of the Rings' Where Others See Good Law & Politics |
Turkish President Recep Tayyip Erdogan’s lawyers are about to come face to face with “The Lord of the Rings.”
Six months ago, family doctor Bilgin Ciftci lost his job for posting photographs online that appeared to liken Erdogan to Gollum, one of the most infamous creatures from J.R.R. Tolkien’s epic fantasy novel. The doctor was charged with insulting the president. Now, his freedom hinges on a Turkish court’s reading of an existential question about good and evil: Was Gollum "bad?" Or was he simply corrupted by power?
The affair might seem like a quirky one-off, except it’s one of thousands of cases that Erdogan’s lawyers are pursuing against alleged insults to the president, a crime punishable by more than five years in jail. Like many of them, this one concerns what a private individual can -- and cannot -- say on social media. And with the case drawing more and more publicity, it’s becoming emblematic of a broader debate.
"It’s only the absurd tip of a very large iceberg. There are thousands of insult cases like this being opened up at the moment in Turkey, and often on very shaky ground," said Aykan Erdemir, a senior fellow at the Foundation for Defense of Democracies in Washington and formerly an opposition member of Turkey’s parliament. "This is not a trivial matter."
Conclusions
Erdogan is evidently a trivial Fellow who does not forgive easily and has a Big Ego.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” ― J.R.R. Tolkien, The Lord of the Rings
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2016 Terrorism & Political Violence Risk Map AON Risk Solutions Law & Politics |
Terrorism and civil disquiet loom large, but the most business-threatening risks are war and sudden changes in government. These are less manageable and less foreseeable. The risks from geopolitical rebalancing we flagged last year remain. And a generation of aging autocrats in Africa and other regions suggest a tide of change is imminent.
Kenya country risk rating reduced reflecting an improved security environment
Increased TPV score for 2016 Angola Belgium Bosnia and Herzegovina Burundi Guyana Moldova Mongolia Morocco Nepal Ghana Qatar South Africa Sweden Tunisia Turkmenistan Uzbekistan Zambia Zimbabwe
High-level political changes and geopolitics
The risk of high-level political change through coups, insurrection or war has been attached to 12 more countries this year, bringing the total number of countries at risk to this type of business critical peril to 68. This year, the majority of these additions are due to the risk of coups or other forms of extra-constitutional power seizure. Driving this trend are uncertainties around succession in undemocratic or illiberal states due to aging leaders and the presence of factionalised elites.
Sudden and potentially violent political change at the top as well as war are arguably more business-critical risks than either terrorism or civil unrest as they can have much wider political
risk ramifications. We have added specific risk markers arising from increased risks of coup and insurrection on the map to Angola, Equatorial Guinea, Guinea, Guyana, Kazakhstan, Liberia, Maldives, Moldova, Saudi Arabia, Uzbekistan, Zambia and Zimbabwe.
Sub-Saharan Africa saw the most increases in political violence risks, with six countries having their rating raised – these being Angola, Burundi, Ghana, South Africa, Zambia and Zimbabwe. This was primarily due to the risks of political instability and the potential for coups and civil unrest. Sub- Saharan Africa remains the region with the largest concentration of high to severe risk rated countries (six at severe, and 10 at high).
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Saudi Arabia placed at risk of coup or insurrection in global study Law & Politics |
Saudi Arabia was one of 12 countries placed at risk of coup d’état and insurrection in a 2016 terrorism and political violence map.
The Aon study, produced in partnership with The Risk Advisory Group, gave countries a score based on criteria including the risk of sabotage, commotion and rebellion.
It showed a rise in the number of countries with business-related perils due to coups, insurrection or war.
This year, the risk rating of countries including Angola, Saudi Arabia, Kazakhstan, Zimbabwe and Angola were increased due to concerns over coups or other forms of power seizure from uncertainties surrounding succession.
In the GCC, Bahrain was also ranked at high risk, the second highest ranking below severe. Kuwait, Qatar, Oman and the UAE were ranked at the second lowest level in the five score index, low.
Sub-Saharan Africa was found to have the highest number of countries with high to severe risk, following an increase in the risk rating of Angola, Burundi, Ghana, South Africa, Zambia and Zimbabwe.
Elsewhere, the Middle East had the largest number of terrorist attacks in the last year at 1,114, largely due to the activities of ISIL in Iraq and Syria, according to the study.
This compared to 799 attacks in South Asia, 491 in North Africa and 331 in Sub-Saharan Africa.
“This year’s Aon Terrorism and Political Violence Map shows a rise in political violence and terrorism risks for the first time since 2013. The threat of terrorism is critical, but sudden political change at the top as well as war can arguably be more catastrophic for business,” said The Risk Advisory Group head of intelligence and analysis Henry Wilkinson.
“These risks are less manageable and less foreseeable and have the potential for cascading political risk ramifications across a region.”
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Greenland sees early ice sheet melt Law & Politics |
Greenland's massive ice sheet has experienced such an early and extensive melt that scientists this week thought their models were broken when they saw the data.
Summer-like warm temperatures and rain resulted in about 12 percent of the ice sheet surface area - 1.7 million square kilometres - showing signs of melting ice on Monday, scientists at the Danish Meteorological Institute (DMI) said.
"We had to check that our models were still working properly," climate scientist Peter Langen told DMI's Polar Portal website.
Such a melt is normal for late May, but not mid-April.
Before now, the top three dates for reaching that milestone were previously: May 5, 2010; May 8, 1990; and May 8, 2006.
"Something like this wipes out all kinds of records, you can't help but go, 'This could be a sign of things we're going to see more often in the future,'" Langen said.
Conclusions
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Jamaica Weighs Replacing Queen Elizabeth and Legalizing Pot @business Frontier Markets |
Jamaican lawmakers will debate a constitutional amendment that would replace Britain’s Queen Elizabeth II as head of state and make the island a republic.
The proposal is a “major action item” on the new government’s 2016-2017 legislative agenda, and would replace the Queen with a Non-Executive President, Governor General Sir Patrick Allen said Thursday in a speech to parliament posted on the government’s website.
Jamaican Labour Party leader Andrew Holness scraped a narrow win in general elections in February as voters opted for promises of tax cuts and a higher minimum wage over the previous government’s austerity program. The legislative agenda also includes a proposal to set fixed election dates and term limits for the Prime Minister, as well as a proposal to fully legalize marijuana for “specified purposes.”
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Whither the 'Democratic' Congo's democracy? Peter Pham Africa |
The constitution of the Democratic Republic of the Congo (DRC) could not be clearer: "The President of the Republic is elected by direct universal suffrage for a mandate of five years renewable a single time" (Article 70) and "the number and the duration of the mandates of the President ... cannot be made the object of any constitutional revision" (Article 220). Hence, the country's current ruler, Joseph Kabila — who took power after the assassination of his father in 2001 and was subsequently proclaimed the "winner" of elections held in 2006 and 2011 — should be preparing to vacate Kinshasa's Palais de la Nation to make way for a successor who should be installed there by Dec. 20. Except there seems to be no such movement. In fact, if anything, there are plenty of worrying signs that the 44-year-old Kabila fils and some of those around him may be planning quite the opposite, with potentially devastating consequences not only for Congolese democracy, but the peace and security of Central Africa as a whole.
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Exotix Sees Kenyan Equity Valuations Buoyed by Low Oil, Politics @business Kenyan Economy |
Kenya equity valuations that declined over the past year are now among the most attractive in sub-Saharan African frontier markets, supported by the lowest political risk in a decade and favorable global conditions, analysts from Exotix Partners LLP said.
Lower oil prices, which benefit net crude importers like Kenya, and the prospect that the timing of U.S. interest-rate increases have been pushed out are expected to foster a “relatively benign environment for capital inflows into Kenya,” Hasnain Malik, head of frontier markets strategy, said in an interview Tuesday in the capital, Nairobi. Kenya also continues to attract “refugee capital” from investors in neighboring countries facing civil unrest, such as Somalia and South Sudan, that are seeking a safe haven, he said.
The Nairobi Securities Exchange’s All Share Index fell 11 percent in 2015 amid a sell-off in developing-nation stocks on concern that a slowdown in China, the world’s second-biggest economy, and a collapse in commodity prices would stem growth. The index is down almost 1 percent so far this year.
“Over the past three to four years, we’ve been looking at a Kenyan market that has perpetually hit new highs in terms of its valuation multiple,” he said. “Over the past year, we’ve seen quite a significant derating.”
Exotix favors “all of the big stocks” in the Kenyan index, including East African Breweries Ltd., the region’s biggest brewer, Safaricom Ltd., the country’s largest mobile-phone company, and lenders including Equity Group and KCB Group, Head of Equities Ali Khalpey said. It’s avoiding companies in distress, such as Kenya Airways Ltd., which last year reported the country’s biggest-ever loss, and retailer Uchumi Ltd., he said.
Kenyan banking stocks remain enticing to investors even after the closure by the central bank of three small lenders including Chase Bank Kenya Ltd. and Imperial Bank Ltd. because of governance concerns. On April 10, the central bank announced it would provide liquidity support to banks facing constraints because of “anxiety” about the banking system.
Kenyan police on April 8 ordered the arrest of Chase Bank Chairman Zafrullah Khan and Group Managing Director Duncan Kabui. It’s also asked for the detention of six other directors from state-owned National Bank Ltd. who were placed on forced leave last month pending an internal audit.
“It’s cases of rot at the top and abuse of privilege,” Kato Mukuru, head of equity research at Exotix. “It’s not a crisis, it’s a governance issue.”
Exotix’s positive outlook for Kenya is buttressed by what it sees as relative political stability in an election year, Malik said. The country is scheduled to hold a presidential vote in August 2017.
The ruling Jubilee coalition appears to be more united than at any time since it came to power in March 2013, helped by the failure of war-crimes cases against President Uhuru Kenyatta and Deputy President William Ruto at the International Criminal Court, Malik said. Kenyatta and Ruto faced charges of instigating violence after a disputed 2007 election that left at least 1,100 people dead. The two, who were in rival parties in 2007, joined forces to win the 2013 vote.
With the political opposition looking “incoherent, divided, fragmented and disorganized,” conditions for investors are “a lot lower risk,” Malik said. “Political risk is in Kenya’s favor at the moment.”
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Bank Failures Seen Spurring Kenyan Takeovers in Flight to Safety @business Kenyan Economy |
A series of bank failures is set to trigger a wave of mergers and acquisitions among Kenyan lenders as depositors seek safety in the biggest financial institutions.
Consolidation is inevitable in the $61 billion economy, where 42 banks serve 44 million people, compared with 22 banks in Nigeria, which has a population of 180 million and gross domestic product that is nine times bigger, according to Cytonn Investments Management Ltd., a Nairobi-based money manager.
The nation’s regulators were forced to step in with emergency support to stem depositor panic after the collapse last week of Chase Bank Kenya Ltd., the third lender to be placed under statutory management since August.
“We are on the cusp of a market-led consolidation,” said Aly-Khan Satchu, chief executive officer of Rich Management, a Nairobi-based adviser to companies and wealthy individuals. “The issue for the central bank is to keep it orderly and avoid a disorderly Darwinian situation.”
The nation’s largest banks -- from KCB Group and Equity Group Holdings Ltd. to the local units of Standard Bank Group Ltd., Barclays Plc and Standard Chartered Plc -- will benefit as customers move cash from smaller, mostly family-owned lenders which don’t trade their shares publicly, according to Exotix Partners LLP. That won’t help smaller lenders starved of liquidity, with 80 percent of the system’s cash locked in the seven biggest banks.
“There should be a flight to quality,” Ali Khalpey, head of equities for London-based Exotix, said in an interview in Nairobi. “If people start losing their deposit base, that’s consolidation for you already.”
KCB, the owner of Kenya’s largest lender by assets, is emerging as a potential play maker in buyouts. “We are looking at whether it presents an opportunity that matches KCB strategy,” Chief Financial Officer Lawrence Kimathi said in a conference call Wednesday.
The Nairobi-based unit of London-based Barclays, which is planning to trim its investments in Africa, will focus on expanding existing operations rather than making acquisitions, Chief Executive Officer Jeremy Awori told reporters on Wednesday.
M&A deals have already started happening. I&M Holdings Ltd., Kenya’s No. 6 lender by assets, offered to buy Giro Commercial Bank Ltd. for an undisclosed amount to add seven branches and bolster its short-term lending business. Mwalimu National Sacco Ltd., the country’s largest savings and credit co-operative, acquired 51 percent of Equatorial Commercial Bank Ltd. in October.
Since taking office in June, Central Bank of Kenya Governor Patrick Njoroge has improved oversight by demanding better corporate governance standards, restricting new banking licenses and increasing capital reserve requirements.
“The collapse and consolidation of some of Kenya’s small and medium-sized banks might even create a stronger banking sector replacing small, weak banks, with larger, more stable ones,” John Ashbourne, an Africa economist at London-based Capital Economics Ltd., said in an April 12 note. “All three of the recent bank runs were prompted by unprofessional or unethical activity at relatively small banks, which are unlikely to be repeated in larger, more systemically important firms.”
A run on Chase Bank, which was Kenya’s 11th largest at the time it was placed into receivership on April 7, gathered pace as the lender’s chairman and group managing director resigned shortly after announcing restated earnings with a qualified audit opinion. Imperial Bank Ltd. was seized by regulators in October amid claims of fraud that company executives deny. In August, Dubai Bank Kenya Ltd. collapsed after it breached daily cash-reserve-ratio requirements.
“A few more banks may well suffer similar internal problems,” Ashbourne said. “We do not believe that a wide spread crisis is likely.”
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Relief for motorists as petrol price drops to six-year low Kenyan Economy |
The price of petrol has dropped to a six-year low of Sh80.71 per litre in Nairobi, offering a big relief to motorists. Petrol will retail at Sh4.87 per litre less for the next one month, the Energy Regulatory Commission (ERC) announced yesterday. This is the sixth drop in a row in the ERC’s monthly reviews and the lowest pump price since December 2010 when the energy regulator started controlling the cost of fuel.
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