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  • Issue No:IFB1/2021/018
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Airtel Uganda is racing against time to list 20 percent of its shares on the Uganda Securities Exchange (USE) before a June 30 deadline, even as players wonder if the market is ready for another initial public offering so soon after MTN Uganda suffered an under-subscription late last year.

MTN Uganda’s market value has plunged weeks after it started trading but Uganda Capital Markets Authority (CMA) Chief Executive Keith Kalyegira said the two telecoms have different fundamentals.

Kalyegira told The EastAfrican that consultations to list Airtel Uganda shares on the bourse have started, but he added that “inquiries with Airtel are not formal,” which means the second-largest telecommunication company in Uganda is yet to submit its draft prospectus for scrutiny.

Stockbrokers in Kampala have intimated that it is in the interest of the CMA to facilitate Airtel Uganda’s listing as it will expedite categorisation of the Uganda bourse as a frontier market in the Morgan Stanley Capital International (MSCI) index.

In Africa, the Nairobi Securities Exchange, the Stock Exchange of Mauritius and the Nigerian Stock Exchange are among bourses that fall in the frontier category of MSCI.

Growth ambitionOn several occasions, Kalyegira has maintained that the frontier market status puts Uganda on the radar of large institutional investors that currently ignore smaller and less liquid exchanges.

Kalyegira said the USE needs at least two companies with a net worth of $700 million on its listing and the telecom sector is betting on Airtel’s listing, although he maintains its value is unknown.

The Uganda National Broadband Policy (2018) compels telecoms to float 20 percent of their shares on the Uganda Securities Exchange. Airtel’s National Telecom Operators (NTO) Licence became effective July 1, 2020.

The challenge, however, is that MTN stock performance has been disappointing to both old and new investors. Its Uganda share price has plunged to a 10 percent low, devaluing the company by more than $134.45 million.

Uganda capital market players attribute the plunge to retail investors who rushed to liquidate their holding to raise cash, specifically to pay school fees. Schools in Uganda reopened this month after a two-year pandemic break when family incomes have been disrupted.“Retail investors will do anything to get cash to pay school fees,” said William William J. Nyakatura, managing partner Kimsman Advisory.

At least 998,150 shares were traded on January 10, the day schools reopened, the highest ever recorded on the MTN counter.Trading data shows that the stock is trading below the […]

Jane Karuku, EABL Group chief executive. PHOTO | FILE | NMG East African Breweries Plc (EABL) more than doubled its net profit to Sh8.7 billion in the half-year ended December, helped by increased sales on the reopening of bars and pubs.

The company had made a net profit of Sh3.7 billion a year earlier. The performance saw the brewer return to paying dividends, declaring an interim payout of Sh3.7 per share or an aggregate of Sh2.96 billion.

EABL suspended dividends after the economic crisis and closure of bars eroded its earnings in the wake of the Covid-19 pandemic. The company last paid an interim dividend of Sh3 per share for the half year ended December 2019.

The new proposed payout will be made on April 27 to shareholders who will be on the register as of February 28. More Nairobi Securities Exchange -listed firms that had suspended dividends in the Covid era are expected to resume cash distributions.

They include Equity Group and Absa Bank Kenya which have said they will return to paying dividends after recording strong recovery in their earnings ahead of the close of their financial year ended December.

EABL profit growth was helped by higher net sales which increased 23.4 percent to Sh54.8 billion from Sh44.4 billion.

“Across the region, we have seen an easing of Covid-19 restrictions contributing to a more favourable trading environment, as consumers return to pubs and bars,” the brewer said in a statement. “The broader economic rebound across East Africa continues to strengthen consumer demand across all our product categories, supporting our overall performance.”

In Kenya, EABL’s biggest market, restrictions on bars and pubs’ operating hours were removed in October last year.

The move helped increase net sales in the local market by 27 percent, the company said. Net sales in Uganda and Tanzania on the other hand rose 18 percent and 15 percent respectively.

EABL said its capital expenditure increased 51 percent to Sh6.2 billion in the half year ended December as it responded to rising consumer demand.

The cash was spent on capacity expansion in Tanzania and Uganda. The company’s net debt declined to Sh34.7 billion from Sh40.7 billion a year earlier, helped by a restructuring of borrowings and improved profitability.The company raised Sh11 billion through a corporate bond and used the proceeds to invest in its operations and retire other borrowings. EABL’s managing director Jane Karuku said the company is cautiously optimistic about the short-term economic outlook.“The […]

KBA Chairman John Gachora, former chairman and KCB Group MD Joshua Oigara and CEO Habil Olaka during the KBA Annual General Meeting Bankers are piling pressure on the Central Bank of Kenya to adopt risk-based lending arguing this will unlock credit to the private sector.

The Kenya Banker’s Association says the model if introduced will also solve short to medium term inflationary threats.

It said the current lending model has resulted in a build-up in liquidity in the banking system and this will continue unless the pricing framework is changed to fully reflect the market risk.

"With the credit risk remaining elevated on the back of a protracted uncertainty and a gradual recovery in household and business earnings – as the effects of the pandemic continue to bite, the incentives for the banking sector to grow private sector loans remain low," KBA says in a research note.

The lenders’ lobby said that risk based loan pricing would see a sharper growth in credit to segments perceived risker such the micro and small-medium enterprises.

Under risk-based pricing, lenders offer different consumers different interest rates or other loan terms based on the estimated risk for each borrower.

Kenya has been working on a risk-based loan pricing model since repealing the interest capping law in 2019. Lenders are said to have complained to IMF officials during their recent visit about CBK’s hesitation in approving the model

Last week, a banking sector outlook by Renaissance Capital showed that while CBK has approved the risk-based pricing templates of two small banks, it is yet to authorise templates for top-tier lenders.

This even as the sector battles high non-performing loans brought about by the Covid-19 pandemic and is desperate for a raise on interest margins to save their bottom lines ahead of elections.

The approval of the loan pricing was one of the key expectations as the Monetary Policy Committee sat yesterday.

While lenders are counting on it, financial experts are pessimistic.Last year, investment experts at EFG Hermes cautioned against adopting risk-based lending, arguing it provides loopholes for the exploitation of borrowers.”Although charging borrowers based on their credit history is democratic, stronger modalities must be put in place to ensure fairness,” EFG experts said.Similar views were shared by IMF in mid-2019 when it warned against replacing the interest capping law with risk-based pricing.In a My 2019 paper on the effects of interest controls, with Kenya as a case study the international lender suggested a ceiling […]

An Emirates Airlines plane. The UAE has lifted a ban on entry of travellers from Kenya and Tanzania. PHOTO | FILE | NMG Travellers from Kenya and Tanzania will be allowed entry into Dubai from Saturday after the United Arabs Emirates (UAE) lifted a ban it had imposed on all inbound and transit passenger flights since last year.

On Thursday, Kenya Civil Aviation Authority (KCAA) director-general Gilbert Kibe told the Business Daily that the ban on Kenya was lifted on Wednesday night, offering a major relief to hundreds of travellers between the two destinations.

UAE barred entry of flights from Kenya on December 20, 2021, after establishing that travellers from Nairobi were testing positive for Covid-19 on arrival in the Middle East country despite presenting negative test results.

However, the ban did not affect cargo flights by carriers like Kenya Airways (KQ) and Emirates Airlines.

“United Arabs Emirates has lifted a suspension it had imposed on Kenyan flights,” said Mr Kibe on Thursday without giving more details.

The UAE government also announced the resumption of entry for passengers from Ethiopia, Nigeria, Congo, South Africa, Botswana, Eswatini, Lesotho, Mozambique, Namibia and Zimbabwe from January 29.

However, passengers from Uganda, Ghana, and Rwanda will be subjected to strict entry requirements into Dubai.

Passengers from the three countries will be required to present negative Covid-19 PCR test certificates with QR codes for tests conducted at an approved facility no more than 48 hours before departure and at the airport within six hours before the flight. They are also required to undertake a PCR test upon arrival.

Read: Kenya lifts ban on flights from Dubai

Dubai is opening its borders to Kenya days after Nairobi lifted a retaliatory ban on all inbound and transit passenger flights from the Middle East nation it had imposed two weeks ago.

Mr Kibe said the fake Covid-19 tests scheme involved a racket of private medical testing centres that colluded with travellers to issue negative PCR results to aid their travel.The Ministry of Health has launched investigations to bring to book health officials involved in the shoddy deal that has cost Kenya millions of shillings in lost passenger revenues.

Airtel Uganda is racing against time to list 20 percent of its shares on the Uganda Securities Exchange (USE) before a June 30 deadline, even as players wonder if the market is ready for another initial public offering so soon after MTN Uganda suffered an under-subscription late last year. PHOTO | COURTESY Airtel Uganda is racing against time to list 20 percent of its shares on the Uganda Securities Exchange (USE) before a June 30 deadline, even as players wonder if the market is ready for another initial public offering so soon after MTN Uganda suffered an under-subscription late last year.

MTN Uganda’s market value has plunged weeks after it started trading but Uganda Capital Markets Authority (CMA) Chief Executive Keith Kalyegira said the two telecoms have different fundamentals.

Kalyegira told The EastAfrican that consultations to list Airtel Uganda shares on the bourse have started, but he added that “inquiries with Airtel are not formal,” which means the second-largest telecommunication company in Uganda is yet to submit its draft prospectus for scrutiny.

Stockbrokers in Kampala have intimated that it is in the interest of the CMA to facilitate Airtel Uganda’s listing as it will expedite categorisation of the Uganda bourse as a frontier market in the Morgan Stanley Capital International (MSCI) index.

In Africa, the Nairobi Securities Exchange, the Stock Exchange of Mauritius and the Nigerian Stock Exchange are among bourses that fall in the frontier category of MSCI. Growth ambition

On several occasions, Kalyegira has maintained that the frontier market status puts Uganda on the radar of large institutional investors that currently ignore smaller and less liquid exchanges.

Kalyegira said the USE needs at least two companies with a net worth of $700 million on its listing and the telecom sector is betting on Airtel’s listing, although he maintains its value is unknown.

The Uganda National Broadband Policy (2018) compels telecoms to float 20 percent of their shares on the Uganda Securities Exchange. Airtel’s National Telecom Operators (NTO) Licence became effective July 1, 2020.

The challenge, however, is that MTN stock performance has been disappointing to both old and new investors. Its Uganda share price has plunged to a 10 percent low, devaluing the company by more than $134.45 million.

Uganda capital market players attribute the plunge to retail investors who rushed to liquidate their holding to raise cash, specifically to pay school fees. Schools in Uganda reopened this month after a two-year pandemic break when […]

An Emirates Airlines plane. Kenya and UAE have been embroiled in a feud over a mutual flight ban. PHOTO | FILE | NMG Kenya says it will consider allowing Emirati aircraft only after negotiations with the United Arab Emirates (UAE) to reopen their airspace on Kenyan flights.

The two countries have been embroiled in a feud over a mutual flight ban that Dubai began, citing Covid-19 infections, before Nairobi paid back in the same coin.

Kenya’s Foreign Affairs Cabinet Secretary Raychelle Omamo said the two sides were holding discussions on the matter but there were no certainties on when flights could resume.

“We are working together to reach an understanding on how we can return to normalcy,” she told a press conference at her offices on Friday.

“I have no white smoke to report today but I want to tell you that we are active on the matter and it is our hope that we will reach an understanding that will enable them to open up their flight paths and for us to do the same. It is a matter that is under discussion.”

When the UAE imposed a flight ban late last year, it cited Kenya’s then rising Covid-19 cases, which had seen the country report an infection rate of as high as 30 per cent. Forged PCR certificates

There were also complaints about forged PCR certificates among travellers from Kenya, some of whom ended up testing positive on arrival. Now, the positivity rate has dropped to below 10 per cent and some of Kenya’s neighbours, like Uganda and Rwanda, who had been on the UAE red list, have since been dropped.

Last week, Kenya extended the ban after the UAE retained Nairobi on the list of those whose flights will not be allowed.

Both countries had daily flights to Dubai and Abu Dhabi, and sometimes Sharjah, frequented by travellers seeking to connect to other parts of the world or into Africa.

The ban means passengers who had planned to fly through the UAE have had to reroute their itineraries.

An Emirates Airlines plane. FILE PHOTO | NMG Travellers from Dubai will be allowed into the country from today after Kenya lifted a ban it had imposed on all inbound and transit passenger flights from the Middle East nation two weeks ago.

The move come days after Kenya’s Foreign Affairs Cabinet Secretary Raychelle Omamo said the two sides were holding discussions on the matter but there were no certainties on when flights could resume.

“We are working together to reach an understanding on how we can return to normalcy,” she told a press conference at her offices on Friday.

“I have no white smoke to report today but I want to tell you that we are active on the matter and it is our hope that we will reach an understanding that will enable them to open up their flight paths and for us to do the same. It is a matter that is under discussion.”

Kenya Civil Aviation Authority (KCAA) director-general Gilbert Kibe told The EastAfrican on that the ban was lifted Monday midnight, offering a major relief to hundreds of travellers between the two destinations.

Kenya had suspended all inbound and transit passenger flights from the United Arabs Emirates (UAE) on January 10 in retaliation against a move by Dubai to ban all passenger flights from Kenya over fake Covid-19 tests.

The ban did not however affect cargo flights that are normally flown by carriers such as Kenya Airways (KQ) and Emirates airline from UEA into Kenya.

“Kenya shall do a NOTAM lifting the suspension of flights to and from UAE from midnight tonight (Monday),’’ said Mr Kibe.

The ban came a few days after UAE extended the Kenya flight ban after it established that travellers from Nairobi were testing positive for Covid-19 after arrival in the Middle East nation, despite carrying negative test results.

Mr Kibe said the scheme involved a racket of private medical testing centres that colluded with travellers to issue fake Covid-19 PCR results to aid their travel.

The Ministry of Health has however launched investigations into the matter with a view to bringing to book health officials who were involved in the shoddy deal that has now coasted Kenya millions of shillings in lost passenger revenues.The directive came as a blow to KQ, which had seen an increase in bookings on this route due to the ongoing Dubai Expo 2020 exhibition.The Dubai-based carrier connects the bulk of the continent’s travellers to the […]

Long distance trucks on the Eldoret-Webuye highway, joining the long queue from Malaba border before proceeding to Uganda. PHOTO | JARED NYATAYA | NMG Kenya and Uganda have introduced new measures to expedite the clearance of goods still stuck at Malaba border posts after weeks of protests by truck drivers over Covid-19 testing. Although the Uganda authorities suspended the testing, the 70km traffic jam created by the drivers’ strike has taken more than a week to clear.

More measures were needed to speed up the clearing of trucks as Ugandans struggled over the last one week to get fuel, whose price has increased tremendously.

Hundreds of trucks have been cleared at the border, but for a border post such as Malaba which clears over 1,000 trucks daily, it is still a tall order to clear the thousands of trucks still on the queue.

In Uganda, Prime Minister Robinah Nabbanja suspended the weighing of cargo by the Uganda National Roads Authority. Uganda has also diverted empty trucks and those carrying empty cargo containers to Lwakhakha border post, about 50km north of Malaba. Kenya has also diverted some cargo to Busia to decongest Malaba where a four-week impasse saw long lines of trucks packed on the Kenyan side.

Abel Kagumire, Commissioner for Customs at Uganda Revenue Authority, said the measure has reduced congestion at Malaba One border post.

“[On Sunday] we cleared 54 trucks. Today (Monday) by midday, we had cleared 22 Ugandan and transit trucks to DR Congo, Rwanda, Burundi and South Sudan,” he said.

Addressing talks organised by Trademark East Africa and the East African Business Council at the border town, Mr Kagumire said, “By Wednesday, there will be no backlog.”

The Chief executive East African Business Council, John Bosco Kalisa, proposed preferential treatment of goods produced within the region.

“Create green lanes for goods produced within EAC to boost intra EAC trade,” he said.

“Intra-EAC trade in comparison to other regional blocks is still below 20 percent and this has partly been attributed to the various non-tariff barriers, inadequate product diversification, restrictions and competition from products originating from outside the East African bloc.”

With financial woes compounded by Covid-19 economic hardships, it is likely many more airlines will go under.

Two of the continent’s biggest carriers – South African Airways and Kenya Airways – are under financial stress.

Africa has 357 airlines, the top 10 of which carried more than 60 percent of traffic. This reflects the fact that many carriers on the continent are very small: some have as few as two aircraft.

Between them, the airlines carried 95 million passengers in 2019, according to Routes, an online source of information on route announcements.

Airlines operating on the continent face particular challenges.

Firstly, the industry has to contend with huge disparities in economic and air transport development. There is also an uneven distribution of international air passenger traffic across regions and within countries.

The traffic is predominantly centered in a few hubs in North, East and South Africa; and in the large and medium-sized cities.

Other challenges include high costs of operation, market protectionism as well as safety and security concerns.

There are very few profitable African airlines. In 2020, only Ethiopian Airlines made a profit in the continent. And with financial woes compounded by Covid-19 economic hardships, it is likely many more airlines will go under.

Two of the continent’s biggest carriers – South African Airways and Kenya Airways – are under financial stress. Both have made significant losses over the past few years and lost market share and destinations to competition.

South African Airways came close to being wound up, but for its part, Kenyan Airways reported losses of Sh36.2 billion ($333 million) for the 2020 financial year.In November, the two national airlines signed a Strategic Partnership Framework, formalising their plan to set up a pan-African airline in 2023.In my view, the partnership will only succeed if certain conditions are met. The two most important ones are that, firstly, there must be strong national and political agreement and will. But, secondly, the tie-up must be driven by the private sector.My recent research on Air Afrique’s (an airline that was mainly owned by many West African) failures found that the airline was doomed by conflicting national objectives and some of the 11 participating countries were unhappy with what they called a subordinate role. The case for a partnership A range of academic studies show that alliances affect the production costs of participating airlines through economies of scale (by means of joint operations of air and ground services), increased […]

Kenya Power building in Nairobi CBD. File

Kenya Power, and electricity in general, has become an ubiquitous component of today’s living to an extent it is difficult to fathom that, slightly over a century ago, none of it existed in Kenya.

The company, which was formerly christened Kenya Power and Lighting Company (KPLC), has in the recent years drawn criticism from customers following its monopolistic structures and skyrocketing charges.

So little is, however, known of the two men who came together, from their generator ventures, to create the dominant power distribution company. According to Kenya Power history books, the first ever inkling of street lights hit the Coastal town of Mombasa in 1875, when the second Sultan of Zanzibar, Sayyid Barghash bin Said Al-Busaid, bought a generator to light up his palace as well as the streets neighbouring it. Mr Clement Hertzel who founded Nairobi Electric Power and Lighting Syndicate. TwitterKenya Power The generator was later purchased by Harrali Esmailjee Jeevanjee in 1908, who transferred it for use in the then Mombasa Electric Power and Lighting Company. Jevanjee was a wealthy merchant located in Mombasa.

At around the same time, another Engineer known as Clement Hertzel, who had arrived in East Africa via South Africa, had set up the Nairobi Power and Lighting Syndicate and had been given the right to supply electricity to Nairobi, which was just a district at the time.

Hertzel had a storied rise in Nairobi since arriving in 1904. In 1905, he formed the Nairobi Power and Lighting Syndicate company alongside Charles Udall as Chief Engineer and R.C. Bayldon as the Managing Director.

The company then built a Hydro-electric generation facility on Ruiru River and in 1908, it started supplying power to various neighbourhoods in Nairobi.

A dozen years later, the two companies joined forces, in 1922, under the East African Power and Lighting Company (EAP&L) which then pursued expansion drives into Uganda as well as Tanganyika.

In 1932, the company acquired a controlling interest in the Tanganyika Electricity Supply Company Limited (TANESCO) and four years later, it also made its entry into Uganda after acquiring the necessary licenses.

In 1948, the Ugandan government, however, established their own power distribution board known as The Uganda Electricity Board (UEB) after the landlocked country began the construction of Owen Falls Dam.

After the Dam’s completion, Kenya then created the Kenya Power Company (KPC), which was under EAP&L to help transmit the power from Uganda […]