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The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke |
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Africa |
Tim is huge - perhaps the world’s biggest #elephant. He roams around a 100 km² area inside and outside Amboseli National Park. To be in his company and to be this close is an exhilarating and primeval experience.
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@Aiww What's in a Name? Africa |
A name is the first and final marker of individual rights, one fixed part of the ever-changing human world. A name is the most basic characteristic of our human rights: No matter how poor or how rich, all living people have a name, and it is endowed with good wishes, the expectant blessings of kindness and virtue.
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North Korea has warned the US about using "pressure and military threats" against it as the two countries prepare for a historic summit. Law & Politics |
A Foreign Ministry official said the US was deliberately provoking the North by suggesting sanctions will not be lifted until it gives up nuclear weapons. US President Donald Trump and North Korean leader Kim Jong-un are due to meet in the next few weeks. It will be the first ever meeting between the two countries' leaders. "The US is deliberately provoking [North Korea] at the time when the situation on the Korean peninsula is moving toward peace and reconciliation thanks to the historic north-south summit and the Panmunjom Declaration," the statement said. Donald Trump says he will maintain a tough stance on North Korea "This act cannot be construed otherwise than a dangerous attempt to ruin the hard-won atmosphere of dialogue and bring the situation back to square one. "It would not be conducive to addressing the issue if the US miscalculates the peace-loving intention of [North Korea] as a sign of 'weakness' and continues to pursue its pressure and military threats against the latter." Mr Trump has said he will maintain sanctions and other pressure on the North and suggested that his tough stance has helped facilitate reconciliation.
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The president is "as committed to regime change as we are," Giuliani said @haaretzcom Law & Politics |
The president is "as committed to regime change as we are," Giuliani said in his address. Giuliani predicted that Trump will withdraw the United States from the 2015 deal with Iran. "With Secretary of State Mike Pompeo on his right side, and National Security Adviser John Bolton on his left side, what do you think is going to happen to that agreement?" Giuliani asked with a grin.
Trump must decide by May 12 whether to recertify Iran's compliance with the nuclear deal or to reimpose nuclear-related sanctions. He has stated in recent weeks that the deal is a "disaster" and that it never should have been signed. European leaders such as French President Emmanuel Macron and German Chancellor Angela Merkel have lobbied him not to withdraw from the agreement.
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28-OCT-2013 @BarackObama and @HassanRouhani The Two Husseins Law & Politics |
THE recent rapprochement between President Barack Obama and Iran’s Hassan Rouhani has certainly snapped a losing sequence in US-Iran relations that goes all the way back to the Iranian revolution in 1979 when Ayatollah Khomeini overthrew Mohammad Reza Pahlavi, the Shah of Iran. The Shah was the second and last monarch of the House of Pahlavi and otherwise known as the peacock throne. Hussein [Barack Hussein Obama] and Hassan [Rouhani] share the same name as did Prophet Muhammed’s revered grandsons. Those who pursue the study of anthroponymy [personal names] especially in the Islamic World probably view this as very fortuitous.
I was wandering around the Hirshhorn Gallery in Washington last year and I came across this from the Chinese artist Ai Weiwei:
What’s in a name?
A name is the first and final marker of individual rights, one fixed part of the ever-changing human world. A name is the most basic characteristic of our human rights: No matter how poor or how rich, all living people have a name, and it is endowed with good wishes, the expectant blessings of kindness and virtue.
Hussein and Hassan are going to cut through a great deal of interference. In this situation, there are powerful vested interests fully invested in the status quo. If the pax Americana in the Middle East were a three legged stool with the US the most important leg, then Israel and Saudi Arabia are the other two legs of that stool. Neither Riyadh nor Tel Aviv are aligned with President Obama’s Iranian rapprochement and Saudi Arabia in particular has become increasingly forthright and is even threatening its own pivot and away from the US.
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16-APR-2018 :: War Drums Putin cornered like a Rat in Syria - What happens next? @TheStarKenya Law & Politics |
In his book from 2000, Putin briefly tells a story of the first time he learned “the meaning of the word cornered.”
There, on that stair landing, I got a quick and lasting lesson in the meaning of the word cornered. Tere were hordes of rats in the front entryway. My friends and I used to chase them around with sticks. Once I spotted a huge rat and pursued it down the hall until I drove it into a corner. It had nowhere to run. Suddenly it lashed around and threw itself at me. I was surprised and frightened. Now the rat was chasing me. It jumped across the landing and down the stairs.
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Few companies are immune to the forces of creative destruction. Our corporate longevity forecast of S&P 500 companies anticipates average tenure on the list growing shorter and shorter over the next decade. International Trade |
The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027 (Chart 1). Record private equity activity, a robust M&A market, and the growth of startups with billion-dollar valuations are leading indicators of future turbulence. A gale force warning to leaders: at the current churn rate, about half of S&P 500 companies will be replaced over the next ten years. Retailers were especially hit hard by disruptive forces, and there are strong signs of restructuring in financial services, healthcare, energy, travel, and real estate. The turbulence points to the need for companies to embrace a dual transformation, to focus on changing customer needs, and other strategic interventions.
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.@Nestle and @Starbucks bring together the world's most iconic coffee brands. International Trade |
Nestlé today announced an agreement granting the company perpetual rights to market Starbucks consumer and foodservice products globally, outside of the company’s coffee shops. This transaction provides Nestlé with a strong platform for continued growth in North America with leadership positions in the premium roast and ground and portioned coffee businesses. It also allows Nestlé to capture exciting new growth opportunities in the rest of the world with Starbucks premium products. As a complete provider of coffee solutions, Nestlé will accelerate growth in out-of-home channels. The two companies will work closely together on innovation and go-to-market strategies to bring the best coffee to customers around the world. "This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestlé,” said Kevin Johnson, president and ceo, Starbucks. "This historic deal is part of our ongoing efforts to focus and evolve our business to meet the changing consumer needs, and we are proud to work alongside a company that is committed to our shared values.” “This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” said Mark Schneider, CEO, Nestlé. "With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner. Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world." As part of this transaction, Starbucks will receive an up-front cash payment of USD 7.15 billion for a business which generated annual sales of USD 2 billion. The transaction does not include the transfer of any fixed assets, which facilitates a smooth and efficient integration. Nestlé expects this business to contribute positively to its earnings per share and organic growth targets as from 2019. Nestlé’s ongoing share-buyback program will remain unchanged.
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07-MAY-2018 :: Africa Calling Africa |
Of course, Africa is not a Country, in fact the Continent is seriously non-linear, booms and busts quite often occur simultaneously. However, what is clear is that the demographic surge, the overwhelming nature of the numbers of this ''Born Free'' generation [Despite beliefs that Millennials make up a large portion of the African population, they are less than 30% of this population according to the 2017 estimates by the Africa Development Bank. Africans aged 15 and below make up 41% of the continent’s population. Those below 19 years old are at 51%. - Geopoll] is creating a more homogenous African. The Arrival of the Information Century, which started with the mobile Phone, then the mobile internet triggered a process of binding Africans closer to their Fellow Africans. Once upon a time, when I was a Young boy, we had one of the few landlines in Mombasa, that was my connection to the World. Today, I and millions like me know what is happening in real time across this massive Continent of ours practically in real time. What has occurred in the last two decades is surely a revolution, a revolution whose velocity continues to gather speed and when you look at the graph [which started at practically zero] its a little dizzying and I would like to write a book about it at some point.
My favourite Economist is a gentleman called Joseph Alois Schumpeter who said
Creative destruction, describes the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one."
According to a Report by Innosight [H/T @Schuldensuehner], The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027.
I imagine one of my more jaded and hard-bitten Africa Hands muttering
''Look here Aly-Khan, Africa plus ça change, plus c'est la même chose''
And I would respond
''Look here Buddy, stop dreaming. The Change is here, its already happened''
Take a look at the Banks. This is a Darwinian moment, surely. The most important role at this moment is surely that of Artificial Intelligence. I have yet to see any Bank speak to this in any Investor Briefing, meaningfully. Look at the Retail Sector. Globally the Retail Sector has been completely disrupted. I have to believe, that retail disruption has already reached our African shores. If You want an example of retail disruption just take a look at Kenya. At moments of disruption, there is always a great deal of debris scattered all over the place. My commute is along the Kiambu road [which was once a quaint little used road into Coffee growing Country] but today has morphed into a crazy ''Mad Max'' World where buses careering along the wrong side of the road in a red dust cloud is something the Commuter has to consider as a relatively regular phenomena and as I peer through the dust, one thing I am sure about is that E-Commerce is coming and its coming bigly and a lot of these freshly minted Malls [some just a couple of kilometres from another] are headed for Ozymandias
''My name is Ozymandias, King of Kings; Look on my Works, ye Mighty, and despair! Nothing beside remains. Round the decay Of that colossal Wreck, boundless and bare The lone and level sands stretch far away.”
Let me loop now to Safaricom, which will be reporting its FY Earnings Wednesday morning. I don't need to remind you of Safaricom's centrality to the fortunes of the Nairobi Securities Exchange. Safaricom has a market Cap of $11.2b about 43% of the total market Cap of the Securities Exchange. Therefore, this is the Big Beast of Earnings Releases at the Nairobi Securities Exchange. After hitting a record high on April 5th, Safaricom corrected -20.00% through Friday morning. Citibank were surely the Catalyst with a sceptical Earnings perspective. Safaricom provided every Kenyan with an Entry Ticket into the c21st. Jack Ma last year posed the question when asked about the Infrastructure Gap,
''But what is the most important Infrastructure of them all? Its the information Superhighway and yours is fast.''
Safaricom is a Need not a Want. Buy the Dip, add to the position if we react lower on the results. Safaricom has built the Superhighway. Everyone else is still playing the tarmacking Game. You know what I mean. The roads around Westlands are the best example.
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After 20 years, can Ethiopia and Eritrea ever reconcile? @NewStatesman's @martinplaut Africa |
erupted between Ethiopia and Eritrea on 6 May 1998 was unlike any the continent had seen since the Second World War. This was no slaughter between troops and rebels mainly armed with Kalashnikovs and machetes. This was a full-blown conflict using everything from heavy artillery and trench warfare to ariel combat involving modern aircraft. No-one knows the numbers dead and wounded, but estimate as many as 100,000 were killed. Some put the figures even higher.
The outcome of the war hangs like a dark cloud over the whole region. The Algiers Peace Agreement, signed on 18 June 2000 was meant to end the conflict. It was a Rolls Royce of an agreement, brokered by the international community. Prisoners were exchanged, compensation paid for losses on both sides and a UN peacekeeping force was despatched to patrol the border.
Both sides were required to abide by the findings of a Boundary Commission which would define where the border lay. This was duly completed, only for Ethiopia to insist that further discussions be held. This Eritrea refused – as it had every right to do. Instead of peace, relations between the two countries have been frozen for the past 20 years. The border is sealed and tens of thousands of troops face each other over the barren frontier.
The result? Eritrea hosts Ethiopian rebel movements, who attempt from time to time to overthrow the government in Addis Ababa. Ethiopia does much the same, in reverse. But the Eritrean government went further, training and supplying Islamist rebels of al-Shabab in Somalia. It was aggressive intervention across the region that resulted in the United Nations imposing sanctions on Eritrea in 2009, which remain in force.
Ethiopia too has suffered. Its natural outlets to the sea, the Eritrean ports of Massawa and Assab are unavailable and Ethiopia has had to develop a convoluted transport network via Djibouti get its goods to the outside world. Communities on both sides of the border have been divided; unable to reach the lands they once tilled and neighbours they once married. It is a tragedy all round.
On the surface Eritrea is far more stable. In reality there is deep anger among its citizens. The country’s youth are trapped in a permanent system of conscription that can be extended indefinitely. Rather than spend years, if not decades, manning trenches along the Ethiopian border tens of thousands have fled into exile.
This suits Eritrean President Isaias Afwerki, an absolute ruler, who brooks no opposition. The no-war, no-peace confrontation with Ethiopia has provided the perfect excuse for permanently keeping the lid on Eritrean democracy. There are few incentives for him to make concessions to resolve the situation with Addis Ababa.
Only a dramatic gesture from Ethiopia, reinforced by a promise that UN sanctions will be lifted and closer economic and possibly even military ties with Washington might end this stalemate.
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Dollar Squeeze Spells More Pain for World's Worst Currency @business Africa |
The world’s worst-performing currency in 2018 is on the slide again.
Angola devalued the kwanza in January and then kept it fairly stable in the following two months. But the central bank in Africa’s second-biggest oil producer is loosening its grip again, dropping the currency 3.7 percent against the dollar last week and 2.2 percent this week. That’s brought this year’s loss to 27 percent.
The devaluation has gone some way to easing concerns of investors, who have also been impressed by reforms under new President Joao Lourenco: on Wednesday, they placed $9 billion of orders for $3 billion of Eurobonds sold by the government. The country is also benefiting from Brent crude’s 11 percent rise since the end of 2017 to almost $74 a barrel.
But that’s not been enough to end a shortage of dollars, which is crippling importers, and it hasn’t offset a fall in oil production. Angola pumped 1.5 million barrels a day in April, the least since the beginning of 2014, according to data compiled by Bloomberg.
The foreign-exchange squeeze remains “substantial” and is reflected by the kwanza’s black-market rate, Standard Chartered Plc analysts including Samir Gadio and Eva Murigu said in a note this week. The kwanza trades at 420 against the greenback on the streets of the capital, Luanda, almost 45 percent weaker than its official rate of 230.
Increasing bearishness toward emerging markets doesn’t help, either. Developing-nation currencies have slumped for five weeks running as the dollar strengthens and U.S. bond yields rise. Turkey’s lira and Argentina’s peso have been hammered this week, though they’re still outperforming the kwanza so far this year.
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.@EurasiaGroup Sees Zambia Default Risk Rising as @IMFNews Loan Talks Stall @business Africa |
Zambia’s currency extended its decline to a four-month low against the dollar and its Eurobond yields soared as loan talks with the International Monetary Fund stalled amid concern the country is under-reporting its external debt.
The kwacha weakened 0.8 percent to 10.034 per dollar Friday, bringing its decline in the past two weeks to 5.9 percent. Yields on $1.25 billion of 2027 Eurobonds climbed 12 basis points to 9.43 percent, the highest since December 2016. The yield has surged 246 basis points from a record low in January.
Here are some of Eurasia’s views on Zambia:
“External debt is likely higher than the official $8.7 billion figure; a planned review of the situation has been delayed and the results may not be made public” “The risk of default is low in 2018, but will increase substantially in 2019 and 2020 absent a concerted effort to cut spending” and an IMF program “President Edgar Lungu’s cash-strapped government has resisted the IMF’s calls to rein in spending. Lungu will probably continue to borrow and spend in the lead up to the election” in 2021 Debt figures “will likely be revised upward after the Finance Ministry completes its debt sustainability analysis,” expected in June “Nonetheless, this is not a Mozambique-style ‘hidden debt’ situation;” rather a “breakdown” of the debt-tracking process as individual ministries and parastals secured project financing “Rising copper prices will provide a small cushion in the short term, but the government remains highly vulnerable to external shocks such as a slump in commodity prices or a drought that dents hydropower production and in turn hurts the mining sector”
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.@VivoEnergy Bet on African Fuel Yields London's Biggest IP0 of 2018 @business Africa |
Vivo Energy Plc’s bet on fuel demand growth in Africa has earned it a market value of almost 2 billion pounds ($2.7 billion) in London’s largest initial public offering this year.
Backed by the world’s biggest independent oil trader Vitol Group and private-equity firm Helios Investment Partners, Vivo sells fuels and lubricants across the continent from Morocco to Mozambique. The company expects demand for its products to grow between 3 percent and 4 percent annually, said Chief Executive Officer Christian Chammas.
“The investor meetings have shown fantastic African interest because of the consumer growth,” Chammas said in a phone interview on Friday. Shares of Vivo climbed 4.6 percent to close at 172.50 pence in preliminary trading in London before it officially makes its debut on the exchange next week.
Vivo’s market value also makes it the largest listing of an African-focused business since 2005, according to a spokesman for the London Stock Exchange.
Established in 2011 by Vitol and Helios, the company operates under the Shell brand at about 1,800 service stations in over 15 countries in Africa. Following its acquisition of Engen, it will expand to a total of 24 nations on the continent, Chammas said. Vivo posted adjusted net income of $171 million last year, up 57 percent from 2016.
The IPO reduces Vitol’s stake in the fuel retailer to 40 percent from 55 percent previously, Chammas said. Helios will own about 30 percent, down from 44 percent. The company expects to start trading in London and Johannesburg on May 10 and join the FTSE 250 index by September, he said.
“Investors don’t give companies from frontier markets the benefit of the doubt,” said Miguel Azevedo, head of investment banking at Citigroup Inc. for the Middle East, most of Africa and Portugal. "You have to tick all the boxes, story, management team, government, right listing location and especially accurate pricing."
With other African companies also planning listings, there could be more money raised from African IPOs this year than in any since the global financial crisis, Azevedo said. JPMorgan Chase & Co., Credit Suisse Group AG and Citigroup were global coordinators for Vivo’s IPO.
Helios, an Africa-focused private equity firm with $3.5 billion of assets under management, said it’s keen to remain a shareholder for the foreseeable future, even after the six month lock-up period when it can’t sell further stock.
As much as 30.5 percent of Vivo’s equity is being sold for 165 pence a share. The company had guided on April 23 for a range of 155 pence to 180 pence. After Vitol and Helios, the largest shareholders will be Capital Group with 4.2 percent of issued capital and Fidelity International Ltd. with about 3 percent, Chammas said.
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Unilever credit initiative aims to drive Africa revenues FT Kenyan Economy |
Francis Magambo could not be happier. Sales of Unilever products at his Magson supermarket — a 35-square-metre, dimly lit shop in the Tassia district of Nairobi — have risen 40 per cent to Ks21,000 ($207) a week since January. He expects them to rise at least another 50 per cent in the next three months.
The surge is not the result of a boycott of Unilever competitors or new-found wealth by residents in a neighbourhood where few roads are paved and many sewers are open streams.
Mr Magambo has joined a project launched by the consumer goods company to help the tens of thousands of small and medium-sized businesses in Kenya sell its products, from margarine to washing detergent.
With most traders not having bank accounts let alone a formal credit history, Unilever is using big data to unlock their hitherto extremely restricted access to credit, and thus expand its own sales.
Bruno Witvoet, president of Unilever Africa, said the project, called “Jaza Duka”, or “Fill the Kiosks” in Swahili, highlighted the need to “look at different models” to succeed in sub-Saharan Africa, where most retail trade is through the informal sector.
Informal traders account for just over 50% of retail sales for Unilever in Kenya
“To grow our business means developing volume,” he said. “And that means increasing coverage of traditional traders. But the cost of financing for these people is a real hurdle, it’s crippling many economies.”
Other multinationals, including Procter & Gamble and East African Breweries, majority owned by Diageo, have started similar, but smaller, initiatives with 4G Capital, a Nairobi-based microfinance institution.
Cash flow and access to credit are my crises. This has given me both because I don’t have to pay cash to increase my stock
Unilever uses its traders’ purchasing history to determine whether they qualify for loans and the maximum credit available. Traders are given 17 days to repay the loans interest free.
It has partnered with Kenya Commercial Bank, east Africa’s biggest lender by assets, and Mastercard, the payments company, to provide the finance and technology respectively.
Under Jaza Duka, the money is loaned to Unilever’s distributors which supply the traders who then repay KCB directly, usually via a mobile money platform.
The year-long pilot has involved 800 traders in and around Nairobi. The scheme will be rolled out to 35,000 retailers nationwide this month and then internationally. Mr Witvoet said Tanzania and Nigeria are among the countries being considered.
Joshua Oigara, KCB’s chief executive, said the 97 per cent repayment rate among Jaza Duka traders highlighted how banks needed toadopt alternative methods of doing business.
, so we have to move away from the old model of know your customer,” he said. “Sometimes we don’t know them but the data show that theycan be trusted. It’s the ability to analyse the data that we are collecting and linking to the customer’s behaviour which is the reason for our success.”
Deepak Dave, a Nairobi-based risk management expert, said that if the scheme succeeded there would be myriad benefits.
“For Unilever, if this can work with KCB it should work with other banks as well, and the informal sector is being incentivised to formalise and professionalise so they can fall into the basket of trusted buyers,” he said. “As they formalise the country benefits because they become taxpayers.”
The project is also likely to bolster Unilever’s reputation in Kenya, which suffered after former Unilever Tea Kenya employees tried to sue the company for alleged inadequate protection during election-related ethnic unrest in 2007. Hearings on whether the case can proceed in London were held in the UK Court of Appeal last week.
Mr Magambo said Jaza Duka had “transformed” his business. “Cash flow and access to credit are my crises,” he added. “This has given me both because I don’t have to pay cash to increase my stock.”
He said profits could rise as much as 10 per cent as the additional Unilever stock triggers additional sales of other products.
Mohona Dey, Unilever’s manager for the project, admitted some traders are reluctant to participate. “There’s a local suspicion of banks in general and some [traders] have said if it seems too good to be true then it probably is and so ‘what’s the catch?’,” she said. “And we say there isn’t one.”
Amasi Muriuki, who owns a kiosk in Tissa, is one such retailer. “My sales fell a lot last year during the political crisis,” she said, referring to Kenya’s disputed presidential elections. “I don’t want to take on extra stock yet. And I don’t want loans either.”
Mr Witvoet recognised it would take time for the initiative to significantly affect Unilever’s Kenyan business — where informal traders account for just over 50 per cent of retail sales — let alone the broader African business, for which it does not break out revenues.
“In Africa you’re bound to have a big vision,” he said. “But don’t believe you’re going to deliver the big vision in a couple of years; you really have to understand how you’re going to develop the various steps to get there.”
In Tissa, Agnes Katulu was excited about obtaining her first loan — that enabled her to increase her Unilever stock by 50 per cent. “I will sell it all, I know my customers,” she said. “This will help me so much.”
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Kenya's Java House aims to spread wings under Abraaj Kenyan Economy |
Kenyan casual dining and coffee chain Java House Africa, bought last year by private equity firm Abraaj, plans to double outlet numbers in its domestic market over the next two years before expanding in East Africa and beyond.
The company plans to open 25 new restaurants in Uganda and a dozen in Rwanda over the next five years, Chief Executive Paul Smith said in an interview with Reuters on Thursday.
Java is also considering entering Nigeria, either as a wholly foreign owned enterprise or in a joint venture, and is looking at franchise opportunities in South Africa, said former Costa Coffee executive Smith
Java, which was opened by an American as a single Nairobi coffee shop in 1999, has grown into a 65-outlet chain employing 2,200 people, including in Rwanda and Uganda.
Its sale last year by Emerging Capital Partners (ECP) drew attention to strong private equity interest in East Africa’s consumer sector. ECP reportedly received more than 10 bids. Abraaj declined to say how much it paid.
A city of more than four million people, Nairobi is home to a growing middle class and large expatriate population. It is the Africa headquarters of U.S. multinationals from Coca-Cola to General Electric.
Java competes with global brands including KFC and Subway, as well as smaller foreign-owned local chains such as Artcaffe.
Nine months since the takeover, Java is performing beyond expectations and the aim to grow by several multiples within five years is on track, said Abraaj’s East Africa managing director Ashish Patel.
“For us Java House is not an East African story. It is an international story. I’m pretty certain we’ll get there in the next couple of years,” he said.
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