Thursday, May 24, 2007

When i was away i caught up on a couple of books and DVDs(that i promised i would recommend).I would recommend them any time.The books can be found at, Book Point and Books First.Check prices at BookPoint and Bookfirst-Nakumatt before you order on AMAZON.But some books can only be found on AMAZON.Nu Metro has a weird book collection thats why it isn't here.

1.Winning Investment Habits of Warren Buffett and George Soros
Can be found at Amazon.These two guys are self-made billionaires-started with nothing and ended up US$1Billion plus.The advice boils down to this; Focus on what you are good at.Whatever you make live below your means.

2.Walking in Kenyatta Struggles
Interesting biography from the first black Governor at the Central Bank of Kenya-Duncan Ndegwa.The Ndegwa Commission of the 1970s that allowed civil servants to engage in private business, also recommended the setting up of the office of the Ombudsman.

The Ombudsman would receive complaints from the public about Civil servants.Civil Servants would also have to declare conflicts of interest.Imagine if these measures were implemented in the 70s, half the scams we've had would never have occurred.


The biography of John D Rockefeller Sr- the richest man to have ever lived.He was richer than Bill Gates even after factoring in inflation to equate the US$ then and now.
For all his wealth he had all the usual problems we all have ungrateful relatives,disappointing children and malicious rumor mongers.
This is one of the best biographies i have ever read.

1.MOBUTU-Le Roi du Zaire

Interesting documentary film capturing Mobutu's rise stay and eventual fall from power.His family ,opponents and friends are all here.
No actors just interviews and newsreels of Mobutu , Zaire and the world leaders of the time.The transformation from an idealistic young man to an old tired dictator is fascinating.

2. 24

Jack Bauer always seems to keep going and coming back just like the Energizer bunny.

3.Hustle-TV series
A group of lovable con artists.They pull DECI-like scams on their victims.Every episode is thrilling the plot leads the viewers down one path as Mickey and his pals lead the 'victim' down another.
Mickey is played in the first 2-3? seasons by that guy who was Joan's boyfriend(Brock) on girlfriends.
I think those guys who ask others to 'plant' a seed and quote some obscure bible verses, use it as a training video.

Couch Potato does great reviews on new and old favorites on TV and the big screen
Adventures of Nyangi
For the first time we have a kenyan video game.An enterprising Kenyan called Wesley and the rest of his team at Gwimgrafx Studios are the developers.I havent played it(My comp doesnt have 512MB RAM) but i saw it at Nu-Metro media store(The Junction).It retails at less than Ksh900.Compared to other PC Games in the Ksh3000-Ksh9000 range.
Buy it online here

He was also featured on Enterprise Kenya on KTN on 22ndMay.

I wish Wesley would do it in PS2(Playstation 2) format.Lots of Kenyans have Playstation consoles.A PS2 disc at sh.300 would have wider distribution.

It can now offer VOIP calls via wi-fi.I'm curious , would it work in Nairobi via KDN's butterfly network?
Kenyan Pundit says that the network is free for now(havent tried it)

Thursday, May 17, 2007


I am all for
Safaricom to have a partial listing abroad;either on the LSE(London Stock Exchange) or NYSE( New York Stock Exchange). The benefits of listing safaricom offshore are numerous, such as:
-A foreign listed stock will bring the Kenyan and East african market to the attention of investors in the Developed world and raise our profile as a country.South Africa,Egypt,Nigeria and even Malawi have their local companies like ABSA,Orascom Telecom,Telecom Egypt and United Bank for Africa-Nigeria are listed abroad.

-Investors will consider Kenya a serious and viable investment destination because by virtue of cross-listing our LOCAL COMPANY shares off-shore it means that we have locally based companies that can operate within World-class corporate Governance and Financial regulations. i.e. to cross-list on NYSE or LSE you have to adhere to UK or US listing standards.

-Cross-listing of Kenyan companies in the UK/US exchanges will provide foregn inestors and Kenyans in the diaspora a more efficient way to purchase Kenyan shares.It will probably be more liquid and efficient for them(Investors outside Kenya).

By the way lack of liquidity in our capital markets is what prevents some Foreign investors from entering them. -Cross listing will also enable local companies have more options for raising capital I am of the opinion that some Kenyan companies are large enough to cross-list abroad.For instance,KCB, First Chartered and Jubilee and Equity in the next couple of years.

How would the Sale of Safaricom shares offshore be done?

There are several methods of listing abroad.Some of the methods are:

Depository Receipts
These are negotiable finacial instruments that represent shares in a company.For instance, Vodafone PLC has Depository receipts(DR) that trade on the NYSE.the Ratio of DR to Ordinary Shares is 1:10 meaning that 1 DR represents 10 ordinary shares of Vodafone PLc.

In Safaricom's situation a block of shares in Safaricom(K) Ltd would be deposited with a local Custodian Bank which would act as an agent for the Depository Bank in London or New York Exchanges.

The Depository Bank would then issue Depository Receipts based on the Block of shares held on its behalf at the local Custodian Bank or Branch.
For example, if the shares deposited at the custodian Bank were 100,000,000(One hundred million shares) then Depository Receipts were issued in the DR:Ordinary share ratio of 1:10.
Each Depository receipt listed abroad would represent 10 ordinary shares in Safaricom(K) Ltd.
So 10 million DRs would be issued for listing on the NYSE
(Assuming the DRs are listed in the USA).
If 1 safaricom share on the NSE traded at sh35, with the US$/Ksh exchange rate at 1US$-Ksh70.One Safaricom DR would cost US$5 (1 DR is equal to 10 ordinary shares i.e. 35*10=350)

Direct Listing
Safaricom(K) Ltd could also have its primary listing on a foreign stock market e.g. LSE and the secondary listing on the NSE.The alternate could also be done- the primary listing can be on the NSE and the secondary one elsewhere.

SABMiller and Old Mutual Plc. have their primary listings on the LSE.
The drawback of having a primary listing on the LSE is that Safaricom would have to create a UK based PLc company to do this.
I favour listing on the LSE because the listing and compliance costs in the UK are lower than the USA.

I have deliberately over-simplified some explanations and left out some facts/explanations for the sake of clarity and to make the post accessible to people with a non-finacial background.

Saturday, May 12, 2007

I have blogged on a number of issues over the last 6 months.Some of them are now being debated in public ,other issues have melted into thin air and others are due to come up.
It turned out that the shareholder structure that we(you and i) hypothesised on this blog turned out to be true.The Guardian newspaper investigated Safaricom's shareholding structure and found the offshore parent of Mobitelea. has more on the saga here.

The Minister for Finance gazetted this ammendment and borrowers are soon to enjoy the benefits.

This is one Act that NEMA(National Environmental Management Authority) had to shelve.Inmplementing it would have been an enforcement nightmare .It would have requitred hundreds of Traffic police and NEMA inspectors to implement.It would also have taken out a lot of vehicles off the road.
Lack of adequate resources for enforcement are part of the problem with the new traffic rules.
I am sure it(NEMA Ammendment) will come back someday.

The report on which the MPAC post was based is now under scrutiny.Specifically the issue of whether we need a strong shillin or weak shilling.With the shilling at Ksh 67, you can be sure some exporters are crying.
I'm a weak Shilling proponent But most people are for a strong shilling.Their argument is that we import Oil , so a strong shilling will keep the cost down.Consequently,domestic inflation will also be lower as a result.
They forget that the largest component of domestic oil price is TAX.

Sunday, May 06, 2007

KQ 507
Condolences to all the family members and friends of the crew and passengers of flight KQ507.

A post for those who aren't interested in daily accounts of the NARC-Kenya and ODM soap operas.
Business Daily
Great concept, first daily business paper in the region, like the FT it has pink (or is it brown) paper. I have a soft spot for them(was once offered a position on the BD-Africa launch team, BUT was otherwise occupied and couldn’t take the gig)
I’m torn between the print and online version. The online is one of the best African business news sites. The daily paper is great but I tend to feel that they take one story and slice it into many slices in order to fill the daily content.
An example, is the shortage of Accountants story, they have carried it in various formats in several issues of the paper in the past two months.
No background interviews have been done on the story e.g. talking to Accounting firms and companies. Just sound bites from two, three people and ICPAK.

Business Daily also does lots of WSJ/Reuters wire stories that aren't relevant or you can get on Google news. Then the usual gripe about Nation Media Group newspapers- there are quite a number of spelling and grammatical mistakes in the paper.

The other gripe is that the FTSE London stocks list is never complete. Its always chopped off halfway. How can you look at FTSE stocks and NOT have SabMiller and Vodafone on the list?

They should try and do more business stories from Africa and Asia.Otherwise,you end up with a paper where 10% of the content is local and 90% can be pulled off Google.

Make it cheaper or increase the content. The FT has a heck of a lot of content ,I once had a subscription had to read part of the paper on weekends ,i couldn’t finish it in one morning(and work in the morning).
Take Bankeleles route- Add it as a Supplement in the Daily Nation and increase the price of the Daily Nation marginally.

Change editors

- i see the logic in sharing editorial control with the Daily Nation i.e. So that the stories DONT clash or conflict. Because some breaking news stories make sense to both papers. Someone has to decide which paper will carry what story.
But the Business Daily needs someone with business interest to pick the wire stories. So that they pick stories that can excite reader NOT just stories that can be picked off the net.

Daily Nation
Business news isn't as great as the EA Standard.

EA Standard
Balanced politics and business news, But NMG publications trump them in the quality of business news. The EA Standard has all the ingredients for better business journalism BUT they just cant seem to find the right recipe.

People who can only buy one paper (cant afford Business Daily)and need both business and politics buy this paper.

Kenya Times
The head of business news deserves a medal. In spite of having less resources than NMG and Standard, Kenya Times has good online content on its site. The articles also tend to be more incisive, with appropriate comments. If they got more resources, i think they can beat NMG at this game.

Business in Africa
The stories tend to have a South African slant, with a little bit from elsewhere. I find the articles academic with little value addition

The Times (UK)
Its one of the best papers around. I find it well balanced and an interesting read.You will find it engrossing even if you aren't white and believe you run the country(By country i mean the UK)

Good weeklies but Newsweek has a more international outlook. TIME is more American focused(news with an American perspective).

Articles that get you thinking,good to read. By the way they have a special subscription offer-valid until June.

Al Jazeera
News from a non-US/UK perspective. Interesting interviews of people like Gen Musharraff, Sheikh Aweys

Good for the programmes like Quest and the documentaries But with Google,RSS and other net news some of their news seems like internet feeds on your telly.

The better business news on television.

Business news is sufficient. The only problem is that the same stuff can be read in the next day's paper.

It has more extensive business news than NTV/KTN; the one of the problems is that we(Kenyan viewers) prefer to watch KTN,NTV and CITIZEN. The other is that they don’t display the market prices(NSE) properly.


Did anyone see the NAKUMATT advertisement(Daily Nation May 1,2007) in the paper?The advertisement warned Smart Card holders from disclosing their Bank account details to callers who pretended to be Nakumatt employees.It seems to be a crack in the smart card and receipts system that crooks want to exploit.

The crack
The Nakumatt till receipt indicates the following details at the bottom(if you use your SMART card):
-Name of smart card holder-Smart Points givenIf you pay by credit card/Debit card plus use your smart card, the following details will be on your till receipt
-Name of smart card holder-Smart Points given
-Full Debit/Credit card number BUT not the name on the Debit/Credit cardSo by getting hold of your receipt. Someone knows your name and the full number for your Credit/Debit card, But not your address or the CVW code of your card

What you didn't know
To use a Credit/Debit card online you DONT need to have the card physically present you just need to know the card number and its Card security code.

Card security code refers to the 3 digit numbers at the back of your credit/debit card that are on the signature strip. Take your card flip it over and look at the signature strip. You will see a series of numbers. Look for 3 digits that are together. Those three are the code.

Card companies developed this code to prevent people from using other peoples' cards online using stolen Credit/debit card information.The code forces you to physically have the card when carrying out the online transaction.Most online sites will ask you for this code in addition to the usual details when paying for an online transaction by card.

My theory
I think that someone must have found a way to obtain SMART card details. Then he calls card holders for the bank information/address and Card code.

How to protect yourself
-Destroy the portion of the receipt with your name and credit/debit card details
-Use slightly different details for your SMART card and other loyalty card programmes from your bank details. For example, put a fictitious date of birth on your loyalty programme applications. Use a different address for your Bank account and other applications.

-DONT give out your Bank Account details to anyone over the phone.-Watch your bank statements and report any suspicious transactions.

What Nakumatt should do
The counter till receipts shouldn’t display your full Credit/debit card numbers and your name. Part of the numbers should be obscured.This is what some supermarkets outside Kenya do in the UK do. Local ATMs also obscure part of your Credit card number (Pesa Point and NIC bank do so for Credit cards).

Other than the above.I am happy with the SMART card and will continue to use it.

Here are a few interesting links on the subject:

Here is a link to the Nakumatt notice on their site.