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Satchu's Rich Wrap-Up
Wednesday 31st of August 2016

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Melons are a thing with Babur. Hot, grumpy, and newly sober in Hindustan, he remembers the melons of Kabul:

How can one forget the pleasures of that country?  Especially when
abstaining from drinking, how can one allow oneself to forget a licit
pleasure like melons and grapes?  Recently a melon was brought, and as
I cut it and at it I was oddly affected.  I wept the whole time I was
eating it.

Early in his travels Babur, referencing a king from the Shahnama,
carves on a rock: “Like us many have spoken over this spring, but they
were gone in the twinkling of an eye./ We conquered the world with
bravery and might, but we did not take it with us to the grave.”

Babur did not take the world with him to the grave, but he left
himself in the world.  Truly it is a rare thing for a voice to call
across 500 years and greet you like a friend.

Political Reflections

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These men officially slay: Canadian PM Justin Trudeau, Mexican president Enrique Pena Nieto and US President Obama. Dream In Colors; @Tobiloba_O Jul 1
Law & Politics

Prime Minister Trudeau is simply outstanding at understanding c21st
Media and how to finesse it.

International Markets

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1142
Dollar Index 96.03
Japan Yen 103.21
Swiss Franc 0.9836
Pound 1.3128
Aussie 0.7510
India Rupee 66.985
South Korea Won 1115.77
Brazil Real 3.2381
Egypt Pound 8.8819
South Africa Rand 14.4948

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@AfDB_Group chief @akin_adesina warns Africa on international debt @FT

Akinwumi Adesina told the Financial Times that he expected the
downturn in Africa, which was triggered by the slump in commodity
prices and the slowdown in China, to last for up to another three

Africa was facing a debt “challenge” rather than crisis, he said, but
warned that “there has to be a lot more fiscal consolidation.”

The International Monetary Fund forecasts that sub-Saharan Africa’s
gross domestic product will grow at 1.6 per cent this year, a sharp
decline from 3.5 per cent in 2015, and well below the average of 5-7
per cent over the past decade.

African governments sold $12bn of eurobonds last year, compared with
about $26.5bn between 2006 and 2014, according to the African
Development Bank. The weakness of many African currencies has meant
debt service costs have soared in local currency terms, while several
commodity producers are battling foreign currency shortages.

Mr Adesina, who took over as the bank’s president in September last
year, said that expanding the tax base and improving the efficiency of
tax administration would be the easiest ways to boost public finances.

He said the tax-to-GDP ratio in sub-Saharan Africa was about 14.5 per
cent, compared with more than 30 per cent for most developed nations.

“So a lot more needs to be done to expand the tax base in Africa.
Today it’s about $500bn a year [for the region], which is much better
than it used to be, but we need to expand that.”

“Instead of African countries running off to raise a lot of eurobonds,
I think there’s huge amounts of capital available more locally that we
must tap for Africa’s development,” he said.

He added that borrowing should only be undertaken to finance projects
that enhance economic growth.

Mr Adesina said African pension funds had a pool of $334bn, sovereign
wealth funds $164bn and there was some $56bn of foreign direct
investment looking for bankable projects.

“For me, without energy Africa is going nowhere,” he said. “You can’t
have industries without energy and you can’t have growth without

Providing jobs for young people should be another urgent policy goal,
Mr Adesina warned, describing youth unemployment as the “number one
problem for Africa today”.

The International Labour Organisation said last year that long-term
youth unemployment in sub-Saharan Africa in 2014 was 48 per cent.

“Our growing population should be a positive if it’s well harnessed
but it’s right now looking like a time bomb because of the high level
of unemployment among the youth,” Mr Adesina said. “It could heighten
social, political and economic fragility for the continent.

“Young people, the future of Africa are jumping on rickety boats to
get to Europe just because the growth process has not been conducive
to great jobs in Africa.”

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Africa’s largest economies stall amid slumping commodity prices and
political infighting @economics
Biggest African Economies Stall on Politics, Commodity Slump

Africa’s two largest economies are stalling amid slumping commodity
prices and political infighting that’s hampering decision making.

A government report on Wednesday will probably show Nigeria contracted
for a second consecutive quarter in the three months through June as
the price and output of oil, its main source of revenue, were
squeezed. While South Africa may have avoided falling into a
recession, according to the median estimate of five economists
surveyed by Bloomberg, the continent’s most-industrialized economy
will not grow this year, the nation’s central bank said last month.

The global slump in commodity prices and weak demand from the
continent’s main export partners have hit Nigeria, Africa’s
second-largest oil producer, and South Africa, where mining produce
accounts for about half of export earnings, weighing on both
economies. A shortage of foreign currency in Nigeria after the central
bank held a currency peg for more than a year, curbed imports, further
limiting output, while political uncertainty in South Africa increased
in the last week.

“Both countries’ economies are on a declining path,” Manji Cheto,
senior vice president at Teneo Intelligence in London, said by phone.
“That’s being led by politics in South Africa, and government policies
that are reactive in Nigeria and might not work in the short term.”

Nigeria’s economy probably shrank 1.6 percent in the three months
through June, according to the median of 15 economist estimates
compiled by Bloomberg, following a 0.4 percent year-on-year
contraction in the first quarter. Gross domestic product may decline
by 1.8 percent for the year, according to the International Monetary

Nigeria delayed the approval of its record spending plans of 6.1
trillion naira ($19.4 billion) as President Muhammadu Buhari’s
administration haggled with lawmakers over budgetary allocations.
Militants have destroyed energy installations in the Niger River
delta, cutting the nation’s oil output to an almost three-decade low,
and further reducing earnings from an industry hit by a more than 50
percent drop in price since the middle of 2014. Nigeria relies on oil
for two-thirds of government revenue and 90 percent of
foreign-currency earnings.

“Both countries are adjusting to the decline in commodity prices,”
said Sizwe Nxedlana, chief economist at Johannesburg-based First
National Bank. “The nice thing about South Africa is that we are
significantly more diversified as an economy than Nigeria.”

Nigerian central bank Governor Godwin Emefiele increased borrowing
costs by 200 basis points last month to fight inflation that reached
16.5 percent in June and lure investors to help prop up the naira. The
currency has lost more than a third of its value against the dollar
since the central bank removed a currency peg on June 20.

While South Africa’s rand strengthened more than 10 percent against
the dollar between the start of the year and early August, helping the
economy to temporarily replace Nigeria as the continent’s largest in
dollar terms, the currency slumped more than 5 percent since reports a
week ago that Finance Minister Pravin Gordhan may be arrested.
Gordhan, 67, said on Aug. 24 his attorneys received a letter from the
Hawks, a special police unit, asking him to come to their office. He
did not comply with the request.

“It’s a foregone conclusion that Nigeria is in recession,” Cheto said.
“Revenue growth has been positive in South Africa, but if the
political situation deteriorates, it will show negatively in the

The naira was unchanged at 314.75 per dollar by 9:01a.m. on Lagos on
Tuesday. The rand strengthened 0.3 percent to 14.3682 per dollar.

While South Africa’s economy contracted the first quarter due to a
slump in farming and mining output, manufacturing, which accounts for
about 13 percent of GDP, expanded in the three months through June,
retail sales grew and business confidence improved. The trade account
and budget balance recorded surpluses in June as exports increased and
the government’s revenue collection rose. The nation’s statistics
office will release economic growth data for the second quarter on
Sept. 6.

The diversification of South Africa’s economy and strong consumer
spending could help it improve next year, according to Kevin Lings,
chief economist at Stanlib Asset Management.

“It’s going to be tougher for Nigeria to effect the recovery than for
South Africa,” Lings said. “It’s going to have to settle down the
extreme movements in the currency and encourage the private sector
more broadly.”

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S.African minister tells Eskom to release coal contracts report to Treasury

South African Public Enterprises Minister Lynne Brown said on Tuesday
she had asked state-owned power utility Eskom to immediately provide a
report required by the Treasury, which is investigating the utility's
coal contracts.

Brown said she was concerned a public row between the Treasury and
Eskom could lead to the utility being downgraded by credit rating

The Treasury on Monday accused Eskom executives of blocking the probe
of coal contracts between the utility and a company linked to the
wealthy Gupta family that is accused of holding undue political sway
over President Jacob Zuma.

The Sunday Times reported the Treasury's investigation had revealed
Eskom paid more than 130 million rand ($9 million) to Tegeta
Exploration & Resources Ltd., a mining company owned by the Gupta
family, for coal the power utility could not use.


Brian Molefe in the crosshairs

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IMF Says Mozambique Must Accept Audit to Restore Confidence

Mozambique’s government should take measures to restore confidence
with international partners by accepting an external forensic audit,
the outgoing International Monetary Fund representative said.

A group of 14 donors demanded in May an investigation by international
auditors on how loans to at least three Mozambique state-owned
companies were used before resumption of aid. The group suspended
budgetary support after the southern African nation revealed in April
that it had more than $1.4 billion in undisclosed debt.

“If the government proceeds with the international forensic audit, it
will be important to restore trust with donors,” IMF’s Alex Segura
told reporters in the capital, Maputo, late Monday.

An IMF team is expected in Maputo in September to assess the
government’s compliance with austerity measures agreed on during a
past visit in June, the government-run Noticias newspaper reported
earlier this month, citing Prime Minister Carlos do Rosario.

The IMF projects economic growth will slow to 4.5 percent this year
compared with 6.6 percent in 2015. The metical has weakened 34 percent
this year against the dollar, the second-worst performing currency in
Africa after the Nigerian naira, driving inflation to 20.7 percent in

The yield on Mozambique’s $727 million Eurobond due January 2023 shed
3 basis points to 17.11 percent on Tuesday, compared with a record
19.18 percent on June 27, when the IMF warned the nation’s public debt
was at a high risk of distress.

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Kenyan Economy

The potential for a U.S. rate increase and looming elections have
narrowed the window for a second international dollar bond issue by
East Africa’s most advanced economy, said International Monetary Fund
Country Representative Armando Morales.

Kenya must “get all the financing they need well ahead of elections”
due in a year, Morales said Aug. 27 in an interview in the capital,
Nairobi. Authorities also need to “analyze the Fed very carefully
before moving,” he said. The Kenyan Treasury should be prepared to act
on the sale “as soon as the markets allow.”

Kenya plans to borrow 462 billion shillings ($4.6 billion) from
external lenders this fiscal year to help plug a 9.3 percent budget
deficit. The country raised $2.82 billion in a debut Eurobond sale in
2014, and may issue new debt “if an opportunity presents itself,”
Treasury Secretary Henry Rotich said in June. President Uhuru Kenyatta
will seek a second term in office in August 2017.

The country has already arranged a $600 million loan from China and a
$1.5 billion stand-by facility from the IMF this year.

The fourth quarter of 2016 may be Kenya’s best opportunity for an
international sale of dollar debt, provided the Federal Reserve holds
off increasing rates until December, Jibran Qureishi, an economist at
Stanbic Holdings Plc, said Monday by phone from Nairobi.

A September rate increase by the Fed may push Kenya toward “much more
expensive funding,” with investors likely to seek yields exceeding 8
percent, Qureishi said. Yields on Kenya’s securities due 2024 fell 2
basis points to 7.12 percent in Nairobi on Tuesday.


This is an Optimal moment.

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Jubilee Holdings reports H1 16 EPS +4.95% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           470.00
Total Shares Issued:          59895000.00
Market Capitalization:        28,150,650,000
EPS:             42.7
PE:                 11.007

H1 Gross earned premium 13.624931b vs. 12.094921b +12.650%
H1 Reinsurance [5.269488b] vs. [4.674688b] +12.724%
H1 Net earned premium 8.355443b vs. 7.420233b +12.604%
H1 Claims and policyholder’s benefits payable [7.484882b] vs.
[6.167019b] +21.370%
H1 Commission paid [1.670716b] vs. [1.623381b] +2.916%
H1 Management Expenses [1.911607b] vs. [1.667013b] +14.673%
H1 Investment income 3.451855b vs. 2.651368b +30.191%
H1 Net fair value loss through profit or loss [364.908m] vs.
[124.651m] -192.744%
H1 Operating profit 1.371007b vs. 1.233736b +11.126%
H1 Share of results of associates 601.767m vs. 582.990m +3.221%
H1 Group profit before income tax 1.972774b vs. 1.789578b +10.237%
H1 Net profit 1.578735b vs. 1.468638b +7.497%
H1 Total other comprehensive income [354.689m] vs. [449.585m] -21.107%
H1 Total comprehensive income 1.224046b vs. 1.019053b +20.116%
EPS 21.2 vs. 20.2 +4.950%
Total equity 21.228070b vs. 17.235920b +23.163%
Total assets 87.567452b vs. 81.023155b +8.077%
Cash and cash equivalents at the end of the period 9.554014b vs.
13.228172b -27.775%
Dividend per share 1.00 vs. 1.00 –


Strong well managed with 9.55b in cash on the balance sheet.

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Sanlam Kenya reports H1 16 EPS [-0.89cents] Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           35.50
Total Shares Issued:          144000000.00
Market Capitalization:        5,112,000,000
EPS:             -0.43
PE:                 -82.558

H1 Gross written premium 2.639297b vs. 2.594647b +1.721%
H1 Outward reinsurance premium [200.884m] vs. [209.164m] -3.959%
H1 Net written premium 2.438413b vs. 2.385483b +2.219%
H1 Total income 3.616845b vs. 3.563330b +1.502%
H1 Gross benefits and claims paid [1.883908b] vs. [1.570386b] +19.965%
H1 Net change in contract liabilities [765.969m] vs. [542.484m] +41.197%
H1 Net claims and policy holders benefits [2.620053b] vs. [2.083221b] +25.769%
H1 Total benefits, claims and other expenses [3.761571b] vs.
[3.151631b] +19.353%
H1 [Loss]/ profit before share of profit of an associate [144.726m]
vs. 411.699m -135.153%
H1 [Loss]/ profit before tax [144.727m] vs. 411.699m -135.154%
H1 [Loss]/ profit for the year after tax [128.369m] vs. 263.963m -148.631%
H1 [Loss]/ profit attributable to equity holders of the parent
[128.500m] vs. 267.243m -148.084%
EPS [0.89] vs. 1.86 -147.849%
Total assets 27.994882b vs. 27.077022b +3.390%
Cash resources at the end of the year 3.533967b vs. 4.655231b -24.086%
No interim dividend

Company Commentary

The Group recorded a loss before tax of -145m for the six months ended
30th June 2016, compared to a profit of 412m for the same period in
This is mainly attributable to lower income from property sales,
marked-to-marketfair value losses on equity investments, an increase
in expenses related to the implementation of the new Group strategy
and negative persistency experience in the life book.
Portfolio earnings increased by 98% from 607m to 1.2b in 2016.


Tidying up and working through the digestion Phase.

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Trans-Century reports H1 16 EPS +330.093% Earnings here
Kenyan Economy

Par Value:
Closing Price:           5.45
Total Shares Issued:          280284476.00
Market Capitalization:        1,527,550,394
EPS:             -7.09
PE:                 -0.769

H1 Turnover 4.139670b vs. 5.205064b -20.468%
H1 Profit from operations 1.758367b vs. 240.321m +631.674%
H1 Net finance costs [202.106m] vs. [496.955m] -59.331%
H1 Profit/ [Loss] before income tax 1.191052b vs. [646.341m] +284.276%
H1 Profit/ [Loss] for the period 1.313850b vs. [676.131m] +294.319%
EPS 4.97 vs. [2.16] +330.093%
Cash and cash equivalent at 30th June [408.343m]

Company Commentary

Group's Earnings were positively impacted by
1. the recognition of write back on convertible bond following the
successful resolution in March 2016
2. Lower interest costs due to reduced non-trading debt
3. FX Gain following the recovery of regional currencies against the US Dollar.

The Outlook remains positive
growing order book in our Power Division and a strong pipeline of
Engineering projects.



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

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