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The East African : Oct 31st 2015
56 OCTOBER 31 - NOVEMBER 6, 2015 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 3,868.83 -2.13% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 2,394.50 -0.27% USE All Share Index Uganda 1,822.00 0.44% RSE All Share Index Rwanda 133.62 -0.16% JSE All Share Index South Africa 53,700.81 -0.81% NGSE All Share Index 29,229.13 Nigeria -2.74% Fo≥eign telcos still not welcome in Ethiopia T he Ethiopian government has said it has no intention of allow- ing foreign telecoms operators in the country. The announcement is a major blow for big African telcos like Safaricom, Vodacom and MTN, who have been waiting in the wings for a piece of the country’s big telecommunication sector. The big companies have been looking for potential areas in Africa to expand their business, following the sharp increase in the number of mobile telephone owners on the continent over the past decade. A recent study by the US-based Pew Research Centre, confirmed the proliferation of mobile telephone use in sub-Saharan Africa. In 2002, the study says only one-tenth of the populations of Tanzania, Uganda, Kenya and Ghana owned a mobile phone. Things have since changed radically in all the four countries. “Unlike in the past, across the countries surveyed, roughly twothirds or more say they own a mobilephone. Ownership is especially high in South Africa and Nigeria, where about nine-in-ten have a mobile phone,” the study adds The seven countries surveyed were Ghana, Kenya, Nigeria, Senegal, South Africa, Tanzania and Uganda. Unfortunately for the big mobile telephone operators, an Ethiopian Three foreign firms are currently involved in infrastructure expansion of the country’s telecom sector. Picture: File government official speaking at the Economist Ethiopia Summit panel in Addis Ababa recently told participants that the country has no intention of opening its telecoms market to foreign operators. “The answer to your question, is Ethiopia planning to open the telecoms sector for foreign operators, is no,” said Andualem Admassie, CEO of the state monopoly, Ethio Telecom. Mr Admassie said the country has resisted opening up the sector to foreign companies because it needs to use the money to grow the economy. “We circulate the money in the economy. We don’t want to let in foreign operators and allow the profit from the sector to leave the country,” he said. Human-rights activists have long accused the Ethiopian government of failing to open up the sector out of fear of losing its grip of the information sector, an accusation the government official denied, saying the reason behind the decision was purely economic. Ethio Telecom’s profit has We don’t want to let in foreign operators and allow the profit from the sector to leave the country,” Mr Admassie, CEO Ethio Telecom reached 21.5 billion birr (around one billion dollars) in the 2014/15 budget year, up from 17.5 billion birr the previous year. There are currently 40 million mobile telephone subscribers in the country, and, according to the Ethio Telecom CEO, the country is now investing in both fibre and wireless technologies to improve Internet service in the country. Rafiah Ibrahim, head of Ericson’s Middle East and North East Africa division, predicted that mobile phone penetration in Ethiopia will grow rapidly, adding that every 10 per cent increase in mobile penetration will result in a one per cent increase in GDP growth. The Swedish telecommunications company is one of the three foreign companies currently engaged in the infrastructure expansion of Ethiopia’s telecom sector, worth $1.6 billion. The other two are Chinese companies Huawei and ZTE. KCB, Equity post double-digit p≥ofits f≥om ≥egional business KCB AND Equity Bank, with their huge regional presence, posted double-digit profit figures in the nine months to September 30, buoyed by improved performance of regional subsidiaries and decent growth in fee-based income. This is despite a difficult oper- ating environment that has seen interest rates hit record highs and regional currencies fade against the dollar. The two banks, which mostly focus on the mass and the small and SMEs market, are looking at transaction-based income, fees and commissions as key drivers of growth as interest income on loans and advances become more volatile. “Equity is diversifying away from the risky interest income to transaction income and fees and commissions. The growth of the bank is not dependent on Kenya but on the five economies in the region that have fairly stable macroeconomic conditions,” said James Mwangi, chief executive of the Equity Bank Group. The bank, which has subsidiaries in Rwanda, Uganda, Tanzania, South Sudan and DR Congo posted a 14 per cent growth in net profit to Ksh12.81 billion ($123.66 million), up from Ksh11.21 billion ($108.3 million) last year. KCB’s net profit for the nine months to September 30 grew 10 per cent to Ksh13.73 billion ($135 million) from Ksh12.48 billion in the same period ($123 milion) in the same period last year. Its regional business in Uganda, Rwanda, Tanzania, Burundi and South Sudan contributed 12 per cent Ksh1.64 billion ($15.84 million) of the profit compared with seven per cent Ksh873.6 million, ($8.43 million) in the same period last year. “We have seen the business show great resilience,” said Joshua Oigara, chief executive of the KCB Group. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories Co-op Bank seeks IFC financing THE CO-OPERATIVE Bank of Kenya has turned to the International Finance Corporation for long-term financing. The bank plans to use Ksh10.7 billion ($105 million) to grow its long-term lending and reach out to more customers in need of access to credit. All intentions are that IFC, which is part of the World Bank, will issue the money, providing a major boost to the bank’s finances. The terms, according to analysts, are friendly enough, given the fact that the loan has a maturity period of up to seven years and a twoyear grace period. “The project financing will enhance access to finance for SMEs… in Kenya, thereby increasing their growth and competitiveness and fostering economic development in the country,” the IFC said. The credit will consist of $60 million from IFC’s account with the remainder, $45 million coming from the corporation’s Managed Co-Lending Portfolio Programme (MCPP).
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