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The East African : Aug 18th 2014
52 AUGUST 16-22,2014 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 5,042.90 0.78% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 2,434.25 2.36% USE All Share Index Uganda 1,764.00 -1.18% RSE All Share Index Rwanda 144.03 -0.88% JSE All Share Index South Africa 51,436.82 1.61% NGSE All Share Index 41,420.96 Nigeria -2.76% KWFT to sell 25pc stake to Eu≥opean funds T he Kenya Women’s Finance Trust (KWFT), a microfi- nance provider, is to sell a 25 per cent stake to two international development institutions in a move that is designed to bring the lender’s shareholding in line with regulatory requirements. Sources told The Eastafri- can that KWFT will create new shares — adding up to a quarter of the institution’s share capital — that are expected to be taken up by Rural Impulse Fund, a Luxembourg-based firm, and NMI AS from Norway. Earlier this month, Ken- yan Women Holdings — the largest shareholder in KWFT — appointed NIC Capital as the transaction adviser for the planned sale of its shares, saying it would release more details next month. NIC managing director Mau- rice Opiyo expects the sale structure to be finalised within a month whereupon the price per share will be set. KWH has gradually been re- ducing its stake in the microlender. Earlier in the year it sold a 25 per cent stake to two strategic investors to comply with the Central Bank of Kenya ownership rules. The regulator only allows Is MVNO a value add o≥ game change≥? Jennifer Riria (left), Kenya Women’s Finance Trust chief executive officer, and the company’s chairperson Grace Madoka address a press conference. Picture: File banks and other financial institutions to own more than 25 per cent stake in deposit-taking microfinance (DTM) institutions. “The National Treasury prescribes the microfinance banks to be subject to the cash reserve ratio.” Kenya Women Holdings is a non-profit organisation. CBK gave non-banking institutions up to four years to comply with the new laws that came into effect in 2006. The entry of the two over- seas investors would be a boost for the lender, which has seen its capital come under pressure from new Central Bank regulations. Treasury Secretary Henry Rotich said in a Kenya Gazette notice dated July 15 that DTMs should reserve 5.25 per cent of their deposits at the Central Bank. “In the exercise of the powers conferred by section 38(6) of the Central Bank of Kenya Act, the Cabinet Secretary for the National Treasury prescribes for purposes of section 38 the microfinance banks set out in the schedule below to be subject to the cash reserve ratio,” said Mr Rotich. IFC to set up $24m ≥elief food facto≥y in Rwanda THE IFC, the private sector investment arm of the World Bank, is to invest $24 million in a new Rwanda-based food manufacturing company. IFC will take up a 10 per cent stake in a proposed special purpose investment company (SPC) that will own 90 per cent of the proposed factory, with the remaining 10 per cent held by the Rwandan government. Two undisclosed multinationals will own 70 per cent of the SPC. “The project involves a $20 mil- lion loan and $4 million equity investment by IFC to support the construction and operation of a 45,000 tonne per year processing plant in Rwanda for fortified cereals to treat child malnutrition,” disclosures by the IFC show. Based on the IMF equity injection and the loan, the project will involve at least $60 million in investment. Work on the factory, to be situated 120km northeast of Kigali, is expected to start next month. The plant will be set up on land contributed by the government and could be operational in one and a half years. According to the documents, the factory will source maize and soya bean from co-operatives societies in Rwanda. The company will seek to build take advantage of the volatility in commodity prices to accumulate stocks. “The 10,000 tonnes storage ca- pacity buffer will allow the project to take advantage of low prices at the harvest period,” said the investment firm. According to the IFC, 80 per cent of the finished products will be sold to the World Food Programme for distribution in South Sudan, Uganda and Burundi. The WFP has committed to purchase the products. “The remaining 20 per cent of product will be sold on the open market,” said the IFC. 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 IS KENYA Airways’ proposed entry into the MVNO more of a value add or is it a prospective game changer for the airline? AIB Capital, the Nairobi-based advisory company, says it is a value add. For one, according to a report by Communications Authority of Kenya (CAK), 41.38 million roaming minutes were recorded in 2013. Assuming KQ’s strategy targets roaming and offers competitive prices at Ksh3-4, the 41 million minutes can be converted to a market of Ksh124 million ($1.4 million) - Ksh165 million ($1.8 million) — a drop in the bucket, compared with its total annual revenue of well over a billion dollars. This is assuming they manage to capture the whole market. Thereafter, KQ is expected to pay a charge to Airtel for using their infrastructure or some form of revenue sharing structure. In light of this data, the MVNO strategy looks more about customer satisfaction than profits.
Aug 25th 2014
Aug 11th 2014