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Satchu's Rich Wrap-Up
Thursday 22nd of November 2018

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Macro Thoughts

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The city skyline looms over a lone giraffe walking in Nairobi National Park. @AFP

Kenya has 36% of Africa's giraffe population but numbers have
decreased by some 67% since the 1970’s due to poaching.  Giraffes are
now classified as “vulnerable" on the IUCN Red List

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"Our souls are made of water, Goethe says. So too, our bodies. There is a flow within us, rising and falling, unidirectional, to the heart. It's all haemodynamics." - J.M. Ledgard, Giraffe

“Our souls are made of water, Goethe says. So too, our bodies. There
is a flow within us, rising and falling, unidirectional, to the heart.
there is a flow without also. We circulate. We are drawn up, and we
fall back down to earth again. It's all haemodynamics.” ― J.M.
Ledgard, Giraffe

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John Allen Chau seemed to know that what he was about to do was extremely dangerous. @nytimes

Mr. Chau, an American thought to be in his 20s, was floating in a
kayak off a remote island in the Andaman Sea. He was about to set foot
on one of the most sealed-off parts of India, an island inhabited by a
small, enigmatic and highly isolated tribe whose members have killed
outsiders for simply stepping on their shore.
Fishermen warned him not to go. Few outsiders had ever been there. And
Indian government regulations clearly prohibited any interaction with
people on the island, called North Sentinel.
But Mr. Chau pushed ahead, setting off in his kayak, which he had
packed with a Bible. After that, it is a bit of a mystery what
But the police say one thing is clear: Mr. Chau did not survive.
On Wednesday, the Indian authorities said that Mr. Chau had been shot
with bows and arrows by tribesmen when he got on shore and that his
body was still on the island. Fishermen who helped take Mr. Chau to
North Sentinel told the police that they had seen tribesmen dragging
his body on the beach.

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Erdogan, MBS, Islamic leadership and the price of silence @asiatimesonline
Law & Politics

It was packaged as a stark, graphic message, echoing across Eurasia:
Presidents Erdogan and Putin, in a packed hall in Istanbul on Monday,
surrounded by notables, celebrating completion of the 930
kilometer-long offshore section of the TurkStream gas pipeline across
the bottom of the Black Sea.
This is no less than a key landmark in that fraught terrain I named
‘Pipelineistan’ in the early 2000s. It was built by Gazprom in only
two and a half years despite facing massive pressure from Washington,
which had already managed to derail TurkStream’s predecessor, South
TurkStream is projected as two lines, each capable of delivering 15.75
billion cubic meters of gas a year. The first will supply the Turkish
market. The second will run 180 km to Turkey’s western borderlands and
supply south and southeast Europe, with first deliveries expected by
the end of next year. Potential customers include Greece, Italy,
Bulgaria, Serbia and Hungary.
Call it the Gazprom double down. Nord Stream 1 and 2 supply northern
Europe while TurkStream supplies southern Europe. Pipelines are steel
umbilical cords. They represent liquid connectivity at its best while
conclusively decreasing risks of geopolitical friction.
Turkey is already being supplied by Russian gas via Blue Stream and
the Trans-Balkan pipeline. Significantly, Turkey is Gazprom’s second
largest export market after China.
Erdogan’s speech, strenuously emphasizing the benefits of Turkey’s
energy security, was played and replayed all across a rainy,
ultra-congested Istanbul. To witness this geopolitical and geoeconomic
breakthrough was particularly enlightening, as I was deep into
discussing Turkish geopolitics with members of the progressive Turkish
Even the opposition to what in Europe is routinely defined as
Erdogan’s brand of “Asian illiberalism” concedes Turkey-Russia trade
connectivity – in energy, in the military domain via the sale of the
S-400 missile system, in the building of nuclear power plants – has
been conducted with consummate skill by Erdogan, who is always careful
to send direct and indirect messages to Washington that Turkish
national interests will not be compromised.
Now juxtapose this developing entente cordiale between the Bear and
the (aspiring) Sultan with the gripping drama in Istanbul. Ibrahim
Karagul – never afraid to apply a Rabelais touch – is always useful as
a mirror reflecting the state of play of AKP circles around Erdogan.
For this political elite, a breakthrough in the Erdogan-conducted
“Death By a Thousand Leaks” is imminent, allegedly proving that
Mohammed bin Salman (MBS) directly gave the order for the killing and
slaying of Jamal Khashoggi.
The consensus among the AKP leadership – confirmed by independent Left
academics – is that the US-Israel-House of Saud-UAE axis is deep in
negotiations to extricate MBS from any culpability.
That includes key items in the hefty Erdogan “package” dangled to the
axis to essentially buy Ankara’s silence – an end of the Saudi
blockade on Qatar and the extradition of Fetullah Gulen, described
across the Turkish political spectrum as the leader of FETO (the
Fetullah Terrorist Organization).
The Kremlin and the Russian Foreign Ministry are very much aware that
the high-stakes game goes way beyond ‘Pulp Fiction’ in Istanbul and
the Astana peace process on Syria – carefully micro-managed by both
Putin and Erdogan alongside Iran’s Rouhani. The big prize is no less
than the leadership of the Islamic world.
There is nowhere better than a few stops in select landmarks of
Ottoman imperial power, or a lively conversation at Istanbul’s Old
Book Bazaar, to be reminded that this was the seat of the Islamic Umma
for centuries – a role usurped by those Arabian desert upstarts.
Alastair Cooke has captured with perfection the House of Saud’s close
involvement in the slaying of Khashoggi and how this raises questions
about Saudi Arabia’s status as “no more than an inept Custodian of
Mecca and Medina”. This is indeed splashed all over the –
Erdogan-aligned – Turkish media. And Cooke notes how this status
“would strip the Gulf of much of its significance and value to
My ongoing conversations with progressive, Kemalist Turkish academics
– yes, they are a minority – have unveiled a fascinating process. The
Erdogan machine has sensed a once-in-a-lifetime opportunity to
simultaneously bury the House of Saud’s shaky Islamic credibility
while solidifying Turkish neo-Ottomanism, but with an Ikhwan
And that’s the rationale behind Erdogan and Turkish media relentlessly
denouncing what is interpreted as a plot concocted by MBZ (MBS’s
puppet master), Tel Aviv and the Trump administration.
No one can possibly advance the endgame. But that carries the strong
possibility of a dominant, Erdogan-led Turkey all across the lands of
Islam, allied with Qatar and also with Iran. Plus all of the above
enjoying very close geopolitical and economic relations with Russia.
Expect major fireworks ahead.

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In fact, President Erdogan whose normal modus operandi is one of bluster and braggadaccio has played this macabre murder on Turkish soil with finesse and a little like Yehudi Menuhin played the violin.
Law & Politics

In fact, President Erdogan whose normal modus operandi is one of
bluster and braggadaccio has played this macabre murder on Turkish
soil with finesse and a little like Yehudi Menuhin played the violin.
It’s been a virtuoso performance from a geopo- litical perspective.
The drip-drip feed has meant closure has been all but impossible for
the House of Saud or is it the House of Salman? Erdogan’s rebound from
zero [you will recall the currency was crashing around his ears not
too long ago and he was in serious ‘’cold Turkey’’] to hero has been

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1395
Dollar Index 96.65
Japan Yen 113.02
Swiss Franc 0.9944
Pound 1.2784
Aussie 0.7252
India Rupee 71.165
South Korea Won 1129.84
Brazil Real 3.7967
Egypt Pound 17.9610
South Africa Rand 13.9567

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Gold 6 month INO 1226.90

Emerging Markets

Frontier Markets

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Ethiopia's New Leaders Are Clearing House @BBGAfrica

Ethiopia’s new leaders are clearing house as the nation’s political
transformation gathers pace. Among the targets: officials at a
military-linked conglomerate once in charge of building Africa’s
biggest hydro power plant, former spy chiefs and elites in the
gas-rich east.
Touting a crackdown on the “cancer” of corruption and rights abuses,
Prime Minister Abiy Ahmed has vowed to usher in greater accountability
and political freedom for the continent’s second-most populous nation.
His recent confrontation with military officers shows not everyone may
welcome the shakeup.
“Like in the security sector, a purge is being cascaded into the
regions,” said Musa Adem, an independent political analyst based in
Jijiga, the capital of Somali regional state in the east.
Dozens of current and former officials from the National Intelligence
& Security Service have been arrested this month on accusations
including torture, extrajudicial killings and running secret prisons
in the capital, Addis Ababa.
Also detained are dozens of officials from Metals & Engineering Corp.,
whose contract to build the $6.4 billion Grand Ethiopian Renaissance
Dam and power plant was revoked in August. The company’s
ex-director-general is accused of breaking United Nations arms
embargoes and misusing billions of dollars from the dam, sugar and
fertilizer projects. None of the arrested have been charged.
Abiy, who replaced Hailemariam Desalegn as premier in April after
three years of protests, is spearheading a redistribution of power
across Ethiopia, under the tight grip of the Ethiopian People’s
Revolutionary Democratic Front for a quarter-century and where the
army and economic interests have become deeply entwined.
There have been tensions with the military; about 250 officers marched
on Abiy’s office last month, dispersing after what state media said
was a pay dispute was resolved. The government later said army
“plotters” were being arrested, and Abiy told parliament that salary
grievances were “only a cover story.”
As he pledges multi-party democracy, Abiy’s also said the ruling
parties and government are separate entities, muddying the EPRDF’s
monopoly on power that stretches to Ethiopia’s remotest villages.
Change is already afoot in some of Ethiopia’s nine ethnically based
states, each ruled by a patchwork of entrenched ruling parties under
the federal coalition. There have been moves to replace the presidents
and ruling-party leaders of states such as Gambella and Harar, while
in Afar state this week, veteran party officials agreed to new
leadership taking over, according to Abiy’s office.
Recent events in Somali regional state, which borders war-torn
Somalia, show the challenges in store. Its new president, Mustafa
Omer, took office in August and vowed to dismantle a regime whose
brutality he’s compared to the mafia’s.
That’s pitted him against the ruling Ethiopian People’s Somali
Democratic Party, some of whose officials have been arrested or
removed from their posts for alleged plotting, Mustafa said in an
He took office in August, following violence along the boundary of
Somali and Oromia states that forced over a million people to flee.
Police are probing a mass grave containing about 200 bodies dating
from the bloodshed, while Mustafa’s predecessor, deposed by federal
troops, is awaiting trial for alleged abuses.
“Things are very much under control but we are lagging behind in terms
of quickly reforming the party,” according to Mustafa, who says his
new cabinet will steer decision-making and acting as a “firewall”
against the party’s involvement.

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Jose Eduardo Dos Santos called a press conference this afternoon to respond to Presidente Lourenco. He says the state coffers were not left empty when he left power. @zenaidamz
Law & Politics

Jose Eduardo Dos Santos called a press conference this afternoon to
respond to Presidente Lourenço. He says the state coffers were not
left empty when he left power. There were 15billion USD in there. He
did not take answers from media. More to follow.

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Zimbabwe Filling Stations Run Dry Due to Currency Shortages @BBGAfrica

Some filling stations in Zimbabwe’s capital have run out of gasoline
as the country deals with currency shortages, Transport Minister Joram
Gumbo said.
“When the foreign currency is eventually released, it takes some time
to arrange the transport logistics to deliver the fuel to affected
stations,” he said in a statement handed to reporters Wednesday in
Harare. “There are many competing demands on the available foreign
Finance Minister Mthuli Ncube is preparing to announce the 2019 budget
tomorrow while juggling a ballooning fiscal deficit, foreign-exchange
shortages that are fueling inflation, and an inability to raise
foreign loans because of $5.6 billion of debt arrears.
Zimbabwe last month signed a gasoline-supply agreement with a unit of
Trafigura Beheer BV and is in talks with Total Zimbabwe Ltd. and
others about securing more. The government accord with Sakunda
Holdings will help alleviate a shortage of fuel that’s led to queues
outside gas stations in Harare and other centers.

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Campaigning for critical election opens in crisis-wracked DR Congo @AFPAfrica [Kabila is in charge]

After two years of setbacks, broken promises and delays, the
Democratic Republic of Congo on Wednesday effectively opened the
starting gates for a crucial election that could alleviate -- or
perhaps worsen -- the decades-long crisis gripping the vast central
African nation.
"May the best person win," the head of the electoral board, Corneille
Nangaa, said, pre-empting the official start of campaigning by a day.
Voters on December 23 will choose a successor to outgoing President
Joseph Kabila, who has constitutionally remained in power as caretaker
leader even though his second and final elected term ended nearly two
years ago.
At stake in the vote is political stewardship of a mineral-rich
country that has never known a peaceful transition of power since
independence from Belgium in 1960.
Eastern DR Congo is ravaged by decades of inter-ethnic bloodshed and
militia violence, as well as a deadly Ebola outbreak, testing a large
UN peacekeeping mission.
Twenty-one candidates are registered by election officials to vie to
replace the 47-year-old Kabila, who has ruled since January 2001,
after his father, president Laurent-Desire Kabila, was assassinated.
Under international pressure against him seeking a third term, Kabila
threw his support behind a chosen successor, Emmanuel Ramazani
Shadary, in August.
Shadary is one of 15 Congolese individuals under European Union
sanctions, accused of human rights violations when he was interior
minister between December 2016 and early 2018.
One of Shadary's main rivals is Martin Fayulu, a little-known lawmaker
who earlier this month was named the joint candidate of several -- but
not all -- opposition parties that form a coalition in the parliament.
Fayulu was expected to arrive in the capital Kinshasa on Wednesday
from Europe to drive his campaign to take the presidential Palais de
la Nation.
Around half of DR Congo's population of 80 million are eligible to vote.

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African Eurobond Spreads Stretch Past 500 Basis Points @business's @PaulWallace123

The emerging-market rout is taking an especially heavy toll on African
government debt. Spreads on the continent’s sovereign Eurobonds have
widened to 506 basis points above U.S. Treasuries, the most in two
years. They’ve climbed 166 basis points in 2018, compared with the 101
average for emerging markets, according to JP Morgan Chase & Co.

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Zambia Holds Rate at 2014 Low as Inflation Pressure Persists @economics

Key Insights:
Inflation accelerated to an almost two-year-high of 8.3 percent in
October. The central bank’s projections show that growth in consumer
prices will remain outside the upper bound of the target range of 6
percent to 8 percent over the next year.
Foreign-exchange reserves declined to $1.63 billion at the end of
September, enough to cover 1.9 months of imports, from $1.73 billion
at end-August; the committee is concerned about the drop.
The southern African nation had its credit assessment cut deeper into
junk last month by Fitch Ratings Ltd., citing a widening budget gap
and a faster-than-expected increase in debt levels. The company
lowered its long-term foreign currency assessment to B-, with a
negative outlook.

USD/ZMW stability not assured: It still looks reasonable that USD/ZMW
might remain well-anchored in the near term, say 3 - 6 months.
However, there is a strong likelihood that the combination of a
persistent decline in FX reserves and the government’s mounting
external debt service requirements will push USD/ZMW higher in the
medium term. After all, besides interest expenditure, the government
is faced with debt amortisations amounting to some USD1.5bn next year.
Additionally, the disruption to agricultural production and exports
that might arise as a consequence of El Nino might not only undermine
agricultural exports but increase import requirements too. via Email

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.@stanbicug sees June 2019 close for $2.5 bln debt deal for Uganda's oil pipeline @ReutersAfrica

Uganda and Tanzania signed an agreement in May last year to jointly
develop a pipeline that has been described as the longest electrically
heated crude oil pipeline in the world.
Stanbic Uganda, a unit of South Africa’s Standard Bank Group, secured
the role of joint arranger and adviser together with Japan’s Sumitomo
Mitsui Banking Corp.
The pipeline will cost a total of $3.5 billion, with the balance
coming from shareholders in equity.
Patrick Mweheire, Stanbic’s CEO, said it had engaged in talks with
other lenders in Europe, Japan and China and that “they have all been
extremely positive”.
“People like the project ... the economics of the pipeline make a lot
of sense. I think we are looking at some time in June next year for
financial close,” he said in an interview.
Covering a distance of 1,445 km, the 24-inch diameter pipeline will
start near the oilfields in western Uganda and terminate at Tanzania’s
Indian Ocean seaport of Tanga.
Landlocked Uganda discovered crude oil reserves estimated at 6.5
billion barrels more than a decade ago.
France’s Total, owns the fields alongside China’s CNOOC and Britain’s Tullow.

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South Africa All Share Bloomberg -13.76% 2018

Dollar versus Rand 6 Month Chart INO 13.9567


Egypt Pound versus The Dollar 3 Month Chart INO 17.9610


Nigeria All Share Bloomberg -16.40% 2018


Ghana Stock Exchange Composite Index Bloomberg +0.64% 2018


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.@AfDB_Group Lends Kenya $268 Million to Complete Country's Biggest Dam @BBGAfrica
Kenyan Economy

The African Development Bank is lending Kenya an extra 235 million
euros ($267.7 million) to complete the country’s biggest dam.
The support for Thwake Dam in Kenya’s southeastern Makueni county
follows an initial loan of 76 million euros the bank gave to begin
construction in 2013, it said Wednesday in an emailed statement.
The first phase should be finished in December 2022 and supply water
to the semi-arid county and surrounding regions including Konza,
Kenya’s proposed “technology city,” the AfDB said.
When complete, Thwake will be able to store 681 million square meters
for uses including hydropower and irrigation.

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06-NOV-2018 :: The Shilling. @TheStarKenya
Kenyan Economy

The Central Bank reiterated its position on the Shilling’s value,
saying the currency reflects its true and fundamental value.
“Our calculations support the view that there is no fundamental
misalignment reflected in our exchange rate,” it said in an emailed
response to questions.
Today, if you scan Sub-Saharan Africa you will note many dual currency
regimes all of which are interfering with the free markets. Here in
Kenya, you can exchange your money at a 50 cents bid offer spread.
Sure, the Central Bank [and I rank their foreign exchange operations
as an ‘’Outlier’’ when you compare it to any other Central Bank on the
continent] probably smooths lumpiness but that is prudent and
 Key levels are from 2011 and are 105.00-107.00.

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@KenGenKenya slaps @KenyaPower with Sh1bn fine for payment delays @dailynation
Kenyan Economy

Kenya Electricity Generating Company (KenGen) has slapped Kenya Power
with a Sh1 billion penalty for flouting a 40-day window limit for
paying debts owed to it in the financial year ended June 2018.
“Interest income from Kenya Power relates to interest penalties
charged due to late payments invoices. Interest on late payments
accrues after 40 days,” says KenGen in its annual report released this
Kenya Power owed KenGen Sh21.88 billion as at the end of June 2018.
By the time KenGen was closing its books for the financial year ended
June, Sh13.71 billion due from Kenya Power had been outstanding for
more than 60 days while a further Sh694.63 million had remained unpaid
for over a year.
Of the Sh21.88 billion due to KenGen from Kenya Power, only Sh7.44
billion or 34 per cent had not breached the payment window as per the
agreement signed by the two State-owned corporations.
Kenya Power buys a mix of hydro, thermal, wind and
geothermal-generated electricity from KenGen and independent producers
for onward sale to homes and businesses.
KenGen then bills it every month for the power delivered.
KenGen currently sells its generated electric energy to a single
off-taker, Kenya Power, and recognises this as a business risk.
“This comes with the attendant risk of late or delayed payment for
electricity sales which could have adverse effects on KenGen’s flow of
revenue,” says KenGen.
The penalty raised the power generator’s finance income 2.5 times to
Sh3.34 billion.
KenGen says that it deploys a robust debt management programme for
increased collection of overdue amounts.
The firm reports in its post-balance sheet items that it received
Sh18.57 billion from Kenya Power after closure of its books, reducing
the trade receivables to 3.31 billion.
It adds that mitigating against revenue flow glitches calls for it to
deploy a robust debt management programme for increased collection of
overdue amounts even as it calls for the enactment of the Energy Bill
into law to give it an option of customers to sell to.
“This will allow entry of more players in the wholesale and retail of
electricity (business), thus giving KenGen an option to sell bulk
energy to multiple customers,” says KenGen.

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by Aly Khan Satchu (www.rich.co.ke)
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November 2018

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