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Monday 18th of April 2016 |
Morning, Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 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 http://www.rich.co.ke
Macro Thoughts |
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"Mack the Knife" or "The Ballad of Mack the Knife", originally "Die Moritat von Mackie Messer" Africa |
"Mack the Knife" or "The Ballad of Mack the Knife", originally "Die Moritat von Mackie Messer", is a song composed by Kurt Weill with lyrics by Bertolt Brecht for their music drama Die Dreigroschenoper, or, as it is known in English, The Threepenny Opera. It premiered in Berlin in 1928 at the Theater am Schiffbauerdamm. The song has become a popular standard recorded by many artists, including a US and UK number one hit for Bobby Darin in 1959.
Und der Haifisch, der hat Zähne, Und die trägt er im Gesicht. Und Macheath, der hat ein Messer, Doch das Messer sieht man nicht.
And the shark, it has teeth, And it wears them in the face. And Macheath, he has a knife, But the knife can't be seen.
“In the dark times Will there also be singing? Yes, there will also be singing. About the dark times.” ― Bertolt Brecht
“It is easier to rob by setting up a bank than by holding up a bank clerk.”― Bertolt Brecht
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The following script is from "28 Pages" which aired on April 10, 2016. Law & Politics |
In 10 days, President Obama will visit Saudi Arabia at a time of deep mistrust between the two allies, and lingering doubts about the Saudi commitment to fighting violent Islamic extremism.
It also comes at a time when the White House and intelligence officials are reviewing whether to declassify one of the country's most sensitive documents -- known as the "28 pages." They have to do with 9/11 and the possible existence of a Saudi support network for the hijackers while they were in the U.S.
Conclusions
The Facts as presented are unbelievable as were the facts as presented around the assassination of President JFK.
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The Once and Future Superpower Why China Won't Overtake the united states Foreign Affairs Africa |
After two and a half decades, is the United States’ run as the world’s sole superpower coming to an end? Many say yes, seeing a rising China ready to catch up to or even surpass the United States in the near future. By many measures, after all, China’s economy is on track to become the world’s biggest, and even if its growth slows, it will still outpace that of the United States for many years. Its coffers overflowing, Beijing has used its new wealth to attract friends, deter enemies, modernize its military, and aggressively assert sovereignty claims in its periphery. For many, therefore, the question is not whether China will become a superpower but just how soon.
Despite China’s ascent, the United States’ superpower position is more secure than recent commentary would have one believe—so secure, in fact, that the chief threat to the world’s preeminent power arguably lies within.
Conclusions
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Currency Markets at a Glance WSJ World Currencies |
Euro 1.1282 Dollar Index 94.71 Japan Yen 108.06 The yen rose 0.7 percent. U.S. Treasury Secretary Jack Lew on Friday called foreign-exchange market moves “orderly” -- a signal that the U.S. doesn’t view yen-selling intervention as warranted. Swiss Franc 0.9675 Pound 1.4164 Aussie 0.7667 The Australian dollar dropped 0.7 percent to 76.70 U.S. cents as of 12:55 p.m. Tokyo time, set for the largest decline since April 7. India Rupee 66.627 South Korea Won 1150.49 Brazil Real 3.5321 Egypt Pound 8.8838 South Africa Rand 14.6533
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Transcript of African Department Press Briefing Washington, D.C. April 15, 2016 @IMFNews Africa |
PROCEEDINGS MR. KANYEGIRIRE: Thanks for making the time to come to this briefing on the African Department here at the IMF. And we'll start with some opening remarks from the Director of the African Department. It's Madame Antoinette Sayeh -- after which, we shall take some questions. Please keep the questions brief and precise. I'll invite Antoinette now to make her opening remarks.
MS. SAYEH: Good morning, and welcome to everyone. Before I start, just to say that, there's certainly an opportunity to learn a lot more about some of our reflections on sub-Saharan Africa, in the form of a seminar that we are having at 11:30. That's called "Sub-Saharan Africa: Just a Rough Patch?" It will be 11:30 to 1:00 -- not too long after this exchange. And it's going to be at the Jack Morton Auditorium at George Washington University. So, I hope those of you who are able to take advantage of that opportunity to hear more, not just from ourselves but from a panel, a very good panel, with African authorities represented in that panel. So, before I invite your questions, let me make a few remarks on the region's current economic performance and outlook, and our assessment of how countries might go about addressing the challenges they are currently facing.
After an extended period of strong economic growth, sub-Saharan Africa is set to experience a second difficult year. Growth for the region, as a whole, fell to 3.5 percent in 2015, which was the lowest level in some 15 years. And we project growth to be even slower this year, at about three percent, about half of what has been customary over the last decade, and barely above population growth. Indeed, both last year and this year, GDP per capita growth will be below one percent -- something that has not happened since the late 1990s.
To be sure, growth across the region is not uniformly affected. And many countries continue to register robust growth, including in per-capita income. Most oil importers are generally faring quite well, with growth in excess of five percent or even higher rate in countries such as Côte d’Ivoire, Kenya, and Senegal -- and in many low-income countries. In most of these countries, growth is being supported by ongoing infrastructure investment efforts and strong private consumption.
First, the sharp drop in commodity prices has put many of the larger sub-Saharan African economies under severe strain. While oil prices have recovered somewhat, compared to the beginning of the year, they are still more than 60 percent below their 2013 peak levels. And this is truly a shock of unprecedented magnitude. As a result, oil exporters, such as Nigeria and Angola, but also most of the CEMAC countries continue to face particularly difficult economic conditions. We forecast growth to slow further for the group of the region's oil exporters in 2016, to 2.5 percent from as much as 6 percent in 2014. Non-energy commodity exporters, such as Ghana, South Africa, and Zambia, have also been hurt by the decline in commodity prices.
Second, for most of the region's frontier markets, external financing conditions have tightened substantially, compared to the period until mid-2014, when they enjoyed ample access to global liquidity. Third, several Southern and Eastern African countries, including Ethiopia, Malawi, and Zimbabwe, are suffering from a severe drought that is putting millions of people at risk of food insecurity. All this notwithstanding, let me stress that, in our view, medium-term growth prospects remain favorable. True, the immediate outlook for many sub-Saharan African countries unfortunately remains difficult and clouded by downside risk, but beyond these current challenges, the drivers of growth at play domestically over the last decade generally continue to be in place. In particular, the much-improved business environment and favorable demographics should play a supportive role in the coming years. But to reap this strong medium-term potential, a substantial policy reset is critical in many countries of the region. And the reset is urgent, as the policy response to-date has generally been insufficient. In commodity-exporting countries, fiscal and foreign reserves are depleting rapidly, and financing is constrained. Consequently, commodity exporters should respond to the lower export earnings and budgetary revenues promptly and robustly, to prevent a disorderly adjustment. As revenue from the extractive sector is likely durably reduced, many affected countries critically need to contain fiscal deficits and build a sustainable tax base from the rest of the economy. For countries outside monetary unions, exchange rate flexibility as part of a wider macroeconomic policy package should also be part of the first line of defense. Given the substantially tighter external financing environment, market access countries in which fiscal and current account deficits have been elevated over the last few years will also need to adjust their fiscal policies. Such readjustment would help to rebuild scarce buffers and mitigate vulnerabilities, should external conditions worsen further. Some of these measures may dampen economic growth and activity in the short term, but they are essential to prevent a possibly sharper and more disruptive adjustment in the future if decisive action is not taken now. With a policy reset, we believe that countries in the region will be well-positioned to reap the substantial economic potential that lies ahead. Let me stop here and mention that our semiannual Regional Economic Outlook for Sub-Saharan Africa, which deals with the issues I just mentioned and other critical topics, will be published on May 3. The launch events will take place in Kampala and Abidjan. Finally, I would like to close by providing an update on Mozambique, given recent press reports about the existence of new loan transactions associated with the security and defense sectors. We have received confirmation this week from the authorities of the existence of a large amount of borrowing that had not previously been disclosed to the IMF. The undisclosed borrowing exceeds $1 billion and significantly changes our assessment of Mozambique's macroeconomic outlook. We are currently ascertaining, in cooperation with the authorities, the facts regarding this borrowing. We have advised the authorities that any undisclosed debt-related transactions, irrespective of their purpose, need to be reported transparently and publicly. Such disclosure is essential to ensure full accountability of the government to its citizens and Parliament, allow an accurate assessment of the previously undisclosed debt on the macroeconomic outlook, and assess the impact of these possible transactions on the IMF-supported arrangements with Mozambique. The mission that was scheduled to initiate discussions next week for reviews of Mozambique's arrangements under the policy support instrument and standby credit facility has been cancelled, pending a full disclosure and assessment of the facts. Thank you very much for your attention. Let me now open the floor to your questions.
MR. KANYEGIRIRE: Thank you very much, Antoinette. So, we have about 35 minutes left. It's a full room again. Keep the questions precise. Mention your name and media house. We shall start from my right on the side.
QUESTIONER: Thank you very much. I am interested in the Portuguese speaking countries in Africa. Angola has made a formal request to the IMF to start discussions on the Extended Fund Facility – can you please elaborate about this three year economic program. And going back to Mozambique, it is a country that depends on external dollars to keep up with its domestic budget so on this new secret loan isn’t it affecting the countries international credibility and are you happy with explanations that Mozambique has given to you in the past few days?
MS. SAYEH: Thank you very much. For the first question on Angola, of course, this is one of the economies that has been hit very badly by the oil price shock, with Angola depending on 95 percent of its exports on oil and 70 percent of government revenues. It is a very difficult time for Angola. The Angolans have pursued efforts to adjust to that shock. There is still more work to be done, of course, given the magnitude of this shock, but some efforts have been encouraging and indeed they have very recently in March made a formal request to the IMF for a three year program under the extended fund financing facility. We are in the process of beginning discussions with them on a possible program that would be supported by that facility in the context of the Spring Meetings, of course, with the delegation here we have had some discussions and we expect to follow that up with a mission to Angola to further discuss the details of that program. It is still too early to say what the details would be because we have just started that, but we certainly expect to follow up fairly quickly on those discussions. On Mozambique, certainly this is a very major development that we are still seeking to fully understand and that all of Mozambique’s partners I am sure are eager also to understand and to appreciate the impact the macroeconomic impact of this considerable volume of debt, and how that impacts their ability to continue to provide their planned financing to Mozambique. We have certainly had discussions with the Minister here who has, as I said in my opening remarks, confirmed to us that borrowing and has also promised to give us additional information so that we have all the facts we need to make our assessment. So on that basis I certainly am comfortable with waiting to get the promised information from the Minister and then to pursue our assessment of the overall impact both on the macroeconomic prospects for Mozambique and for what next steps our relationship will have.
And you'll see in the Article IV Report, that we discussed that in some detail, given the fact that those restrictions are at odds with Nigeria's commitments as an IMF member country in terms of exchange restrictions. So we hope that those restrictions can be eliminated, and that Nigeria can move to a more flexible management of exchange rates. On the monetary policy side also, we have seen a recent increase in the policy rate. That is encouraging in terms of looking at an overall package for adjusting to the shock. It is not simply fiscal policy on its own, or monetary policy on its own, or exchange rate policy on its own, but a combination of those as a coherent package, and that is in addition to structural reforms that Nigeria needs to take forward to adjust appropriately to the shock in a way that promotes growth, and inclusive growth. QUESTIONER: Could you tell us? Did the Mozambicans give you any indication, where this billion dollars came from, and where it went? MS. SAYEH: As I said before, we are still ascertaining all of the information, and still waiting to receive more information from Mozambique on the nature of this borrowing, and the use of that borrowing. We certainly have learned from the Mozambicans that that borrowing came from two sources, and as you saw this was also reported in The Wall Street Journal, and in other sources. One of those sources was Credit Suisse, and the other was VTB Bank, the Russian bank. So, that’s what we know today, and we expect that we will learn more about the nature of the borrowing, and eventually HIA was used as well. We don’t have more details on that.
QUESTIONER: I would like to find out if borrowing externally will be the best option for Zambia to meet against the economic shocks arising from the falling corporate prices and what are the possibilities of Zambia not falling into another death trap if we continue borrowing?
MS. SAYEH: I hear your concern in that question and we certainly have our own concerns about borrowing and too much borrowing. Zambia of course borrowed on the issued sovereign bonds at high rates. The proceeds of those bonds were used to finance some infrastructure, but also to cover the regular budget deficit including current expenditure and in light of the expense of that financing that was certainly not the best use of very expensive financing. And our advice to the Zambians has been to really quickly work to put in place measures to reign in the huge fiscal deficit that is underpinning that borrowing and to adjust its spending pattern which is heavily driven also by current spending including the wage bill and to really work towards containing the deficit with a view to reducing its borrowing requirements. That is the only way to reduce the borrowing requirements – to contain the deficit and to make sure that the deficit that you may need to carry forward for development purposes are used to the best possible needs with high quality investments.
QUESTIONER: What is the general growth rate for sub-Saharan Africa in 2016?
MS. SAYEH: Okay, I did say in my introductory statement that in 2015, our estimate of growth was only 3.5 percent, and that we expected growth will be only some 3 percent this year, 2016.
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IMF Suspends Lending to Mozambique WSJ Africa |
WASHINGTON—The International Monetary Fund said on Friday it has suspended lending to Mozambique after determining that the African country had violated terms of its borrowing arrangement with the IMF by failing to disclose more than $1 billion in other loans.
The IMF said it had stopped a $55 million loan disbursement to Mozambique after it became aware of the unreported loans made by Credit Suisse Group AG and VTB Group of Russia.
The IMF approved in December a $283 million rescue loan package for Mozambique. The agreement with the IMF requires the southern African country to fully disclose all borrowings and to meet regularly with the multilateral agency to provide updates on its progress.
A Credit Suisse spokesman declined to comment. VTB and Mozambique officials couldn’t be immediately reached to comment.
The IMF’s announcement could cause some investors to steer clear of the country. Many rely heavily on information from the IMF when deciding whether or not to invest in developing countries such as Mozambique.
Antoinette Sayeh, director of the IMF’s Africa department, said the organization investigated Mozambique’s borrowing after an April 3 report in The Wall Street Journal, which detailed how Mozambique borrowed hundreds of millions of dollars through previously undisclosed loans from the banks.
The report revealed that investors who voted last month to exchange existing bonds due 2020 for longer-term bonds weren’t told about the additional borrowing at the time of the vote. The price of Mozambique’s new 10.5% bonds due 2023 fell to 87.50 cents on the dollar from 90.50 cents on the dollar after the IMF announced the loan suspension, an investor said.
“The undisclosed borrowing exceeds $1 billion and significantly changes our assessment of Mozambique’s macroeconomic outlook,” Ms. Sayeh said in Washington, D.C., at a Friday news conference for the IMF’s spring meetings. “We are currently ascertaining in cooperation with the authorities, the facts regarding this borrowing.”
IMF Managing Director Christine Lagarde said at the meetings Thursday that if the agency learns of corruption, it stops lending.
“We want this hanky-panky business to go away,” Ms. Lagarde said.
The loans made by Credit Suisse and other lenders starting in 2013 materially affect the value of Mozambique’s bonds, investors say. The undisclosed debt, in addition to the $850 million in bonds sold in 2013 for tuna fishing that was largely also used for military spending, represent a significant addition to the $6 billion in national debt reported at the end of 2012.
Investors said they wouldn’t have purchased the bonds in the first place if they had known about the additional loans, which also were used for military equipment.
Following a December report from Mozambique, the IMF said it had immediately made a $117.9 million disbursement to stabilize the country, augment its reserves and help reduce poverty.
The IMF cited debt management among its chief concerns in Mozambique.
“A vigorous debt management strategy will be crucial to address the challenges of significant infrastructure gaps at a time when debt vulnerabilities have been rising,” the IMF said in its report.
Conclusions
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China and Africa A despot's guide to foreign aid Want more cash? Vote with China at the @UN Economist Africa |
AidData, a project based at the College of William and Mary in Virginia, keeps a huge database on official aid flows. Its number-crunching shows how much China appears to reward African countries that vote with it. The relationship is not a simple one (see chart), according to Brad Parks, a director of the organisation. China gives proportionally more money to poorer countries, for instance. But by and large countries that support China do better. AidData reckons that if African countries voted with China an extra 10% of the time, they would get an 86% bump in official aid on average. If Rwanda, for instance, were to cast its ballot alongside China 93% of the time (instead of its current 67%), its aid from China could jump by 289%.
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As one seasoned investor puts it: "Nigeria, with help from South Africa, is killing the African story." FT Africa |
This week, China has offered help with a currency swap, and the promise of $6bn in infrastructure loans. The terms of these deals are not yet clear. But they could go some way towards plugging an $11bn budget deficit. The danger is that, together with the modest recent rise in oil prices, China’s help will encourage Mr Buhari to defer the tough decisions once again.
The president wants to eliminate the wasteful patronage on which venal elites have thrived and create an economy more dynamic in creating jobs for the masses. These are laudable long-term aims for which his government has yet to articulate a convincing strategy. In the meantime, however, the short term is pressing. No economy can survive without fuel, electricity or foreign exchange
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PZ Cussons Pays 70% Premium for Dollars in Nigeria on Shortage Africa |
PZ Cussons Plc said it is paying as much as 70 percent more than the official rate for dollars in Nigeria as central-bank trading restrictions reduce availability of foreign currency in Africa’s biggest economy.
“Whilst the official naira exchange rate continues to be stable, a lack of availability at that rate is resulting in the majority of dollars being purchased at a premium of 50-70 percent,” the Manchester-based maker of Imperial Leather soap said in a trading update on Thursday. “The resultant cost impact is being managed through changes to relative pricing in an environment where trading conditions remain challenging. The situation in Nigeria remains extremely fluid.”
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Narcotics in Africa An emerging drug market @Economist Africa |
IN THE early morning at a bar in Nairobi, Kenya’s capital, electronic beats pump from a DJ on a stage. Shielded from the autumn rains under tarpaulins, a substantial crowd, mostly of young Kenyans but with several European and American expats, dances. Outside the women’s toilets, attendants turn their eyes away—in exchange for a tip—as groups of young people go in together and then wander out, wiping their noses.
The drug scene is not entirely new to Nairobi. “There has been cocaine here since I was 14 years old,” says one young Kenyan woman, who works for an e-commerce firm and is now 26. But whereas in the geriatric West recreational drug use is falling and many night clubs are closing, in Africa’s capitals it appears to be growing, both among the new middle class and the poor. Drug-use surveys are rare in Africa, but governments are worried.
Africans have consumed drugs for decades, if not centuries. Cannabis is grown and toked across the continent: the UN estimates that roughly 7.5% of African adults smoke weed in a typical year, almost double the global figure of 3.9%. In Somalia and Ethiopia, many men chew vast amounts of qat, a leaf with mild amphetamine properties, (much to the irritation of their wives).
The more recent spread of harder drugs such as heroin and cocaine is driven by the expansion of Africa as a transit route for chemicals on their way to Europe. Cocaine is smuggled from South America to West Africa by boat or small plane. In some small countries, the trade is huge. In Guinea-Bissau, Colombian drug dealers are alleged to have funded the re-election campaign of President João Bernardo Vieira in 2005. Mostly, the product is then smuggled out to Europe by land, sea or air. But much is sold locally, too. Cocaine-snorting in West Africa is now thought to be as common as in Europe.
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18-APR-2016 Chase Bank and the Story of the 3 Wise Monkeys Mizaru, Kikazaru and Iwazaru @TheStarKenya Kenyan Economy |
The situation in the Banking Sector remain fluid and fast-moving. The Central Bank Governor held a Presser Friday and I have relied on @DannMwangi for the following Tweets from that Presser.
NJOROGE: If we had to move forward past the tipping point into the new normal, this had to happen NJOROGE: If auditors see large differences in a banks books, they are required by law to report to CBK. Chase Bank's auditors did that NJOROGE: People were having less confidence in their bank's, and the 'storm' was waiting for Monday when bank doors would be open to erupt. NJOROGE: The announcement of CBK's new funding facility calmed the storm and it was visible when we looked at the numbers on Monday NJOROGE: It's not a loan, not a credit, not a bail-out. It's the CBK that decides when to come in [No Bank apparently has drawn down on the Facility yet] NJOROGE: Insider lending calls to question the governance of the institution. A bank is not a 'mama mboga'. NJOROGE: Five suitors lined up to buy Chase Bank, CBK says [CBK is probably going to have to go the route of a ''Good Bank Bad Bank'' in order to effect the Sale]
Chase Bank was the 11th largest at the time it was placed into receivership on April 7, shortly after announcing restated earnings with a qualified audit opinion [Deloitte] which was deliberately miniaturised in the restated Earnings Release. Mr Kabui said in his statement to the police that the so-called insider loans were assets held in Chase Iman’s joint ventures financed under Musharakah. The Pertinent Question to ask Mr. Kabui and his Board is when these assets were classified as ''Musharakah'' The entire Tale [that has been spun] took me back to the Story of The three wise monkeys. Together they embody the proverbial principle "see no evil, hear no evil, speak no evil" The three monkeys are Mizaru, covering his eyes, who sees no evil; Kikazaru, covering his ears, who hears no evil; and Iwazaru, covering his mouth, who speaks no evil.
You have to ask yourself
What is the duty of a Board? Was there a functioning Board at Chase Bank or even at Imperial Bank? Or Just a Mizaru, Kikazaru and Iwazaru? Where was the Credit Committee? Dishing out 84.96% of your Core Capital on an unsecured basis to an Insider has to surely pass through some kind of process? Because if it didn't then as Patrick Njoroge said Chase Bank was a ''mama mboga'' and not a Bank. Where was the Internal Audit Division?
“It’s cases of rot at the top and abuse of privilege,” Kato Mukuru, head of equity research at Exotic told Bloomberg. “It’s not a crisis, it’s a governance issue.”
The Truth is that the last line of Defence is the External Auditor. And Deloitte are to be commended for calling a Spade a Spade. The calculation has entirely changed for Audit Companies the world over. KPMG threw the Guptas over because of the reputational risk. Deloitte could not put their name to a ''cockamamie'' [ridiculous, pointless, or nonsensical: full of wild schemes and cockamamie ideas] story.
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Chase Bank staff risk Sh600m invested in a cash call last year @BD_Africa Kenyan Economy |
Disclosures carried in a credit rating note of the bank by Global Credit Rating company (GCR) last year showed the bank raised Sh600 million through expanding its employee share ownership plan (Esop) around the time it was carrying out a rights issue which raised Sh1.6 billion.
On top, the workers whose jobs could be on the line have to contend with their savings being locked up in the previously fast-growing financier. Any takeover is likely dilute the current shareholders.
In case a company in administration eventually gets liquidated, ordinary shareholders are usually the last to get compensated after statutory bodies, regular creditors, preferential shareholders and in the case of banks, depositors.
“The bank has since raised a further Sh1.6 billion via a rights issue concluded in June 2015, plus Sh0.6 billion from an increase in the Esop,” GCR said in the rating note. The bank needed the rating for its bond and other fund raising.
Chase has been closed since April 7 after Central Bank of Kenya (CBK) moved in and appointed a receiver manager after customers made a run on the bank leaving it facing liquidity problems.
The bank had on April 6 issued restated financial results showing it had under-reported insider loans by a Sh8 billion, and in the process had not received an endorsement of its financials by its auditor Deloitte & Touche.
The GCR note showed that the Esop held 429.621 shares before the additional investment was made, representing 4.3 per cent of the lender’s total shareholding. This holding ranked the employees eighth in the lender’s shareholding structure.
The bank’s biggest shareholders include Amethis Finance, German fund DEG, European Investment Bank and Zurich-based asset management firm Responsibility Participations AG.
The fact that the bank’s shares do not trade on any over-the-counter platform and it is not listed on the securities exchange makes it difficult to establish the number of shares the employees got for their Sh600 million investment or previous shares.
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