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Thursday 29th of June 2017 |
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 |
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12-SEP-2016 :: Mirrors on the ceiling, The pink champagne on ice @TheStarKenya Africa |
Or to put it another way and to borrow the lyrics from the Eagles Hotel California: Mirrors on the ceiling, The pink champagne on ice And she said “We are all just prisoners here, of our own device” Last thing I remember, I was Running for the door I had to find the passage back To the place I was before “Relax,” said the night man, “We are programmed to receive. You can check-out any time you like, But you can never leave! “
What is clear is that we are at the fag-end of this party
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#Euro jumps >$1.14 @business 1.1429 Africa |
“It will take more than anonymous ECB sources to cool the desire to bet on the euro and dump the dollar,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “Many investors are tantalized by the prospect of key quarterly meetings in September producing no move from the Fed but a plan to wind down quantitative easing at the ECB.”
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Hannah and her Frisbee on the South Coast Africa |
The Personal life is a unique thing for each and every one of us 7b. Yesterday, my 11 Year Old Hannah [on the way to her drop off at 6.15am] was indicating that she was finding me very annoying with my questions which she felt were neither pertinent or worthy of her interest. And I said
''Darling Have you studied Freud?''
She says ''No! And is he another Pavlov? [She had complained about my always checking prices on my mobile Phone and I had explained that it was a Pavlovian reaction and that she should ask her Teacher about Pavlov]
I said ''Did You dream last night?''
She said ''Yes, It was a dream about a school trip and we were on a bus and someone kept taking my seat and it was very annoying''
I said ''See Transference!''
You had a bad dream and you have transferred your unhappiness onto me.
I feel very contrite about that single seriously diluted whiskey [Johnnie Walker Black] I was giving to my Father [at his frequent request]. However, Nishet informs me that things have stabilised and that his room is not as populated with [mostly long dead or very geographically distant] relatives. Having read a lot of the ''magic realist'' writers from Gabriel Garcia Marquez, Jorge Luis Borges, Salman Rushdie and Ben Okri amongst others, its a little like a Novel. Characters that are spirits, who re-appear at different intervals, non-linearity of time and then through all of this ''Noise'' [It is not ''Noise'' in fact because I know or knew all the personalities] there are so many signals. And then there are moments of extreme lucidity.
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UAE ambassador: "We do not promote the idea of press freedom" @MiddleEastEye Law & Politics |
An Emirati diplomat has justified demands that Qatar close Al Jazeera and other media organisations it "supports" by saying that the UAE does not back a free press.
His comments come as a senior UN official said that the demand represents a "serious threat to media freedom" and called on international governments to "not pursue" it.
Conclusions
See below why @AJENews and @AJArabic are in the crosshairs.
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15 AUG 11 :: Soft Power #Qatar and @AJENews @AJArabic Law & Politics |
What I want to look at is Aljazeera and how it is a preeminent example of soft power in this 21st century of ours. Soft power is the ability to obtain what one wants through co-option and attraction. It can be contrasted with ‘hard power’, that is the use of coercion and payment. Soft power can be wielded not just by states, but by all actors in international politics, such as NGOs or international institutions. The idea of attraction as a form of power dates back to ancient Chinese philosophers such as Lao Tzu in the 7th century BC. “Water is fluid, soft, and yielding. But water will wear away rock, which is rigid and cannot yield. As a rule, whatever is fluid, soft, and yielding will overcome whatever is rigid and hard. This is another paradox: what is soft is strong.” Lao Tzu. This idea was further developed by Joseph Nye of Harvard University in his 2004 book, Soft Power: The means to success in world politics and I happen to believe that Emir of Qatar is Nye and Lao Tzu’s very best student.
There are about 250,000 Qataris in a world of about seven billion souls. That’s considerably less than 0.1 per cent. They tell me Aljazeera is beamed into more than 200m households. Since Aljazeera started streaming their content direct onto my lap top (my better half calls it my love top and I told Nick Clark, who is a presenter at Aljazeera,
‘My wife has decided to kick you out of my bed at night.’ I take the lap top to bed when events are accelerating and I want to keep up) The numbers have spiked even further. The point I am making is this. You can have all the hard power you want but we live in an Information and Communications Century now and in the context of that new landscape, Aljazeera has delivered a spectacular return any way I care to measure it, for the Emir.
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The dollar shuddered to its lows for the year on Thursday International Trade |
The dollar shuddered to its lows for the year on Thursday as a drumbeat of hawkish comments from major central banks signalled the era of easy money might be coming to an end for more than just the United States.
Support for the dollar eroded as investors realised the U.S. Federal Reserve might not be the only game in town when it came to higher interest rates.
In Britain, Bank of England Governor Mark Carney surprised many by conceding a hike was likely to be needed as the economy came closer to running at full capacity.
The Bank of Canada went further, with two top policymakers suggesting they might tighten as early as July.
That followed comments earlier in the week from European Central Bank President Mario Draghi that stimulus might need to be toned down so it does not become more accommodative as the economy recovers.
ECB sources tried to hose down the talk but could not stop the euro hitting a one-year high against the U.S. dollar.
"If we want to know what the ECB is planning, we will choose a carefully scripted Draghi speech over anonymous sources every time," said Westpac currency strategist Sean Callow.
"Backed by the Eurozone's strong current account surplus and the contrast with a Fed which could pause on rate hikes for a while, the euro looks to be on target for $1.1500-1.1600."
On Thursday, the single currency had already pressed on to $1.1405 having climbed three percent in as many days.
The euro also surged to a 16-month top on the yen as investors doubt the Bank of Japan will be in any position to begin winding back its stimulus for a long time to come.
The Canadian dollar vaulted to C$1.3027, having enjoyed its biggest daily gain in three months, while sterling rebounded to $1.2961.
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U.S. production tumbled by 100,000 barrels a day last week, the most since early July, the Energy Information Administration said Wednesday Commodities |
The decline was likely driven by field maintenance in Alaska and the impact of tropical storm Cindy. Crude stockpiles unexpectedly expanded while gasoline inventories fell a second week.
West Texas Intermediate for August delivery was at $44.93 a barrel on the New York Mercantile Exchange, up 19 cents, at 11:28 a.m. in Hong Kong. Total volume traded was about 2 percent above the 100-day average. The contract gained 50 cents to $44.74 on Wednesday. Prices are down 7 percent this month.
Brent for August settlement, which expires Friday, gained 15 cents to $47.46 a barrel on the London-based ICE Futures Europe exchange. The contract added 66 cents, or 1.4 percent, to $47.31 on Wednesday. The global benchmark traded at a premium of $2.53 to WTI.
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All this bad news has left Kabila searching for friends. On Sunday in Pretoria, he found one Africa |
All this bad news has left Kabila searching for friends. On Sunday in Pretoria, he found one. Jacob Zuma rolled out the red carpet — both literally and metaphorically — for his fellow head of state. The relationship between the pair has always been unusually amicable and goes beyond the diplomatic.
“The relationship between Zuma and Kabila is the best Joseph has in the region. In fact, it’s more of a personal relationship than a state to state relationship,” said Claude Kabemba, director of the Southern Africa Resource Watch.
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Tanzanian Media Misrepresent the Dispute Between the Government and the World's Third Largest Gold Mining Company Global Voices Africa |
On June 14, John Magufuli, the president of Tanzania, met with John Thornton, the chairman of Barrick Gold—the world’s largest gold mining company—who had flown in from North America for the purpose. Reports of the meeting dominated the headlines in Tanzania for the next several days.
After the Magufuli-Thornton meeting, the president’s office released a video, shot on the steps of State House, in which the two men give their versions of what transpired during the meeting. To spare you the trouble of watching, here’s a summary: the president thanks Thornton for coming, and for agreeing to pay what is due. Thornton says his company was pleased to be able to enter into a dialogue to resolve the ongoing dispute, and would be happy to pay the rightful amount that was due.
The next day following the meeting, however, six Swahili papers portrayed the meeting as a big win for the president and for Tanzania, going well beyond even what the president himself said about the meeting. Some stated that Acacia/Barrick agreed to pay what is being demanded of them, or that they have admitted responsibility for wrongdoing, neither of which is reflected in the actual agreement reached.
The varying interpretations of the outcome of the meeting between Magufuli and Thornton by the Tanzanian media raises the question of whether these journalists and editors are aware they were potentially misleading the public; and if they did know, why were they doing so? Could it have anything to do with the law that allows the government to suspend Mawio so easily? Could they be worried that what happened to Mawio could happen to others as well?
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Samsung blazes a trail adapting for the African market FT Subscriber Africa |
Samsung has suffered a torrid 12 months including the recall last autumn of its fire-prone Galaxy Note 7 handset and the arrest of its acting head, Lee Jae-yong, on bribery allegations in February.
Even so, South Korea’s largest conglomerate has had a good run in Africa. It was named Africa’s most admired brand of 2016 by the annual Brand Africa 100 survey.
Samsung designs products specifically for African consumers under its “Built for Africa” strategy. “The African customer has different needs,” says Melissa Cook, managing director of African Sunrise Partners, a business research company. “Devices need to work in a harsher environment.” Samsung’s AddWash washing machines, for instance, are designed to minimise water use and withstand dips and surges in the power supply.
The South Korean manufacturer dominates the continent’s $15.5bn smartphone market, with a 42 per cent share of sales in 2016, according to technology researcher IDC. Samsung is also present in many African homes, offices, schools and hospitals with products such as air-conditioners, televisions, printers and refrigerators.
Samsung is not alone in adapting its products for the African market. “Unilever, Nestlé and GSK have been reducing packet sizes to meet the needs of African consumers,” says Sharat Dua, who manages the Magna Africa Fund at Charlemagne Capital.
In many African markets, poorer people might prefer to buy single sachets of items such as coffee or personal care products for smaller sums at a time.
Similarly, Coca-Cola has adapted its delivery service in the Moroccan city of Fes. As motor vehicles are prohibited, its drinks are delivered by donkey.
Such adaptations have helped global brands extend their domination of local markets across Africa, while indigenous African brands have shrunk in stature. Of Brand Africa’s top 100 brands last year, just 16 were African, compared with 23 in 2015.
These 16 brands, including Kenya’s Tusker beer and Nigerian industrial conglomerate Dangote, represented just 0.75 per cent of the total value of the top 100. MTN, the South African telecoms group, was previously Africa’s most admired brand but was unseated by Samsung last year following a scandal that saw MTN pay a fine of some $1bn to regulators in Nigeria.
Last year was difficult for many African companies. Hindered by the downturn in oil and commodity prices and exchange rate volatility, African economies grew at their slowest rates on average in more than 20 years, weakening consumer purchasing power.
Global companies were able to weather the storm. In Nigeria, for example, where recession and a questionable foreign exchange policy shackled local businesses, some international companies profited.
“Nestlé’s market share in Nigeria has gone up dramatically, while its competitors have disappeared,” says Oliver Bell, portfolio manager at T Rowe Price, the fund management company.
Economic headwinds have been exacerbated by structural challenges. “Two areas where we are lagging behind are in research and intellectual property,” says Thebe Ikalafeng, chairman of Brand Africa, a non-profit organisation that showcases African companies. In 2007, the African Union set a target of investing 1 per cent of GDP on research and development. Today only Kenya (0.8 per cent), Mali (0.7 per cent) and South Africa (0.7 per cent) come close. By contrast, South Korea’s investment rate of 4.3 per cent makes it the world leader in R&D spending.
In addition, Africa’s trademark activity — often a sign of companies investing in and building brands — in 2015 represented just 3 per cent of the global total, according to the World Intellectual Property Organisation.
African companies also struggle with access to credit and poor infrastructure, says Ramazan Yavuz, research manager at IDC.
Nevertheless, optimism is high on the continent, particularly for the prospects for technology and financial services.
One area of success has been the bypassing of traditional banking systems made possible by high penetration of mobile telephony on the continent, says Mr Dua of Charlemagne Capital. He describes M-Pesa, the Kenyan mobile money service, as “the classic African innovation story”. In 2015, about $28bn — equivalent to 44 per cent of Kenyan GDP — flowed through M-Pesa, which was used by more than 25m customers to send funds, access loans and purchase goods and services.
Rising smartphone ownership, mobile broadband usage and data traffic in Africa point to an attractive tech ecosystem. “We strongly believe that the technology sector in the region will continue to be a strong area of growth,” says Pule Taukobong, founding partner of CRE Venture Capital, which specialises in investing in sub-Saharan tech start-ups.
Samsung’s success in Africa has been down to the company’s ability to merge global technology with African knowledge. The same is true for M-Pesa, which, according to Mr Dua, was ahead of the rest of the world in using the mobile phone as a payment channel. “The innovation and technology on the continent is astounding,” says Ms Cook. “But companies have to take the lead.”
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"It's clear that the corn shortage was badly handled by government," said Emma Gordon, a senior analyst at Bath, England-based Verisk Maplecroft. Kenyan Economy |
“It feeds into disenchantment, into the corruption narrative. The timing for Jubilee is atrocious.”
People “are linking the high cost of living and food shortages to corruption,” Dismas Mokua, an independent political analyst in Nairobi, the capital, said by phone.
Opposition pledges to crack down on graft by dismantling cartels it alleges have “captured the state” strike a chord with voters who see the Jubilee Party as having presided over “massive corruption,” he said.
The government’s handling of the corn shortages has fed into “widely held perceptions of elite corruption within government” and may boost voter turnout, according to Verisk Maplecroft’s Gordon. More voter participation reduces the advantage of Kenyatta, who would benefit from low turnout in opposition strongholds, she said.
Kenyatta would get 48 percent of the vote versus Odinga’s 39 percent if elections were held now, according to an opinion poll by the Nairobi-based Star newspaper published Tuesday. Kenyatta won the 2013 election with 50.07 of the vote, when Odinga -- then running for the presidency for the third time -- received 43.3 percent.
“Kenyatta may still be ahead, but the question is can he get over the 50 percent mark,” Gordon said.
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African politics meets Chinese engineers: The Chinese-built Standard Gauge Railway Project in Kenya and East Africa Uwe Wissenbach and Yuan Wang Kenyan Economy |
This paper is the first detailed case study of a strategic government-contracted Chinese infrastructure project in Kenya. We cover the Financing process and the first stages of implementation. We provide an analysis of the project’s regional and national economic and political implications for Kenya and East Africa.
If confirmed, Rwanda and Uganda’s exit poses a challenge for Kenya as the cost-benefit calculation for the two mega-projects— the SGR and the pipeline—will change dramatically.
Our Field research was inspired by approaches used by Giese (2014) who argues that the “positionality of the local African actor is key for understanding the nature of Chinese-African interaction on the ground.”
THE SINGLE-TRACK, DIESEL-FUELED SGR was built by the Chinese Road and Bridge Corporation (CRBC) under a government-to-government agreement.32 It was financed largely through Chinese loans.33 The SGR is only one out of many Chinese-built infrastructure projects in Kenya, but it is by far the most strategic and politically salient investment. The colonial-era railway carries only 0.9 million tons of cargo annually from the Indian Ocean into land-locked cities in Kenya and Uganda, com- pared to the Mombasa port’s throughput of 22 million tons in 2013 at a snail’s pace, but it is expected to continue to operate. The new SGR, built mostly alongside the existing track, but without the winding bends, is meant to substantially increase cargo through- put by rail and to lower transport costs and time by as much as 60%.
THE NATIONAL AND LOCAL LEVELS of the Kenyan government di er considerably in their degree of interest and their approaches to the SGR project. At the national level, the controversies plaguing the SGR relate to the overall process of commissioning and contracting the railway, including the costs of opacity. For many observers, these costs suggest that national elites may have bene ted illicitly from the contracting process.
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World's Biggest Black-Tea Exporter Targets 20% Output Increase Kenyan Economy |
Kenya, the world’s biggest exporter of black tea, expects production of the leaves to rise by about 20 percent by the end of the decade, as farmers harvest from new bushes, according to the industry regulator.
Output is projected to jump to 500,000 metric tons in 2020 from a projected 412,000 tons this year, after a drought damaged plants in most growing areas, said Samuel Ogola, head of the Tea Directorate. The nation grew a record 473,000 tons in 2016, which earned the country 120 billion shillings ($1.16 billion) of export revenue.
“There is a lot of replanting of tea by farmers, which could see us hitting 500 million in no time, most probably by 2020,” Ogola said Tuesday in an interview in the capital, Nairobi. Farmers have been replacing old bushes with higher-yielding clones, he said.
The nation’s Export Promotion Council is “aggressively promoting” tea, alongside agro-processing, flowers, leather and textiles to boost exports. Kenya needs to increase shipments by 14 percent annually to help halve its trade deficit by 2030, according to Chief Executive Officer Peter Biwott.
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EABL Cautionary Statement Kenyan Economy |
On 23rd June 2017, the Board of Directors of East African Breweries Limited approved an investment in a new Brewery in Kisumu, Kenya at a cost of Kshs 15 billion. The investment is likely to spread over a period of 2 years prior to complete on. Modalities of funding for the project are still under deliberation and shall be communicated to the regulators and shareholders in due course. The shareholders of East African Breweries Limited and the public are advised to exercise cau on when dealing in shares of the Company.
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N.S.E Today |
The FX markets have seen some high-octane action over the last sessions. Central Bankers from Canada to the United Kingdom to the ECB have been talking tough and around the withdrawal of stimulus. The Euro pressed on to $1.1405 versus the Dollar and as clocked a +3% rally in 3 sessions, having climbed three percent in as many days. The Canadian dollar vaulted to C$1.3027, having enjoyed its biggest daily gain in three months, while sterling rebounded to just shy of 1.3000. The Trump Dollar has become a Chump Trade as the Dollar gets sold off across the board. Kenya announced it has suspended its early Oil export Plan. It was always a bit of a PR Stunt and with Oil below $50.00 a barrel, it would not have received any positive PR Traction and might even have created a negative feedback loop. The Nairobi All Share closed lower for the 2nd session and closed -0.71% at 153.22. The All Share has corrected -1.504% over 2 sessions and since closing at a 23 month high. I expect a deeper correction. The NSE20 Index closed -12.65 points lower at 3596.56. Equity Turnover clocked 765.803m but volume was concentrated in BAT, Safaricom and Equity.
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N.S.E Equities - Commercial & Services |
Safaricom shaved off -1.08% to close at 23.00 and traded 9.288m shares. Safaricom sits -2.127% below a record closing high set on 3 occasions this month and is expected to post Fresh all time highs in short order.
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N.S.E Equities - Finance & Investment |
Equity Bank firmed 25cents to close at 38.00 and traded 4.245m shares. Equity Bank is +26.66% through 2017.
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N.S.E Equities - Industrial & Allied |
EABL's announcement of a 15b shilling investment in Kisumu and the visit of its CEO Ivan Menezes to State House certainly captured mind-share. EABL issued a cautionary Note this morning which said
On 23rd June 2017, the Board of Directors of East African Breweries Limited approved an investment in a new Brewery in Kisumu, Kenya at a cost of Kshs 15 billion. The investment is likely to spread over a period of 2 years prior to completion.
Modalities of funding for the project are still under deliberation and shall be communicated to the regulators and shareholders in due course.
The 2nd part of this announcement caught People's attention. Counterintuitively, it speaks to EABL's muscle that they can announce a $150m investment without having to have locked up the funds.
EABL edged +0.39% higher to close at 260.00 on light volume of 8,300 shares. EABL is +6.55% through 2017.
BAT was the most actively traded share at the Exchange and traded 328,900 shares all at 802.00 -4.3%. BAT has been a significant Under-Performer in 2017 and is -11.77% through 2017.
KenGen continued to see profit-taking after a stellar run-up in 2017 and closed -4.76% at 8.00. KenGen is +37.93% through 2017.
Mumias Sugar rebounded +5.00% to close at 1.05 helped by the news that the GOK was set to disburse 500m to the Company next week.
Crown Paints rebounded +6.29% to close at 76.00. Its a thinly traded share and talk about a possible share Buy-Back has given the stock a lift. Crown Paints is +80.95% in 2017.
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