Business Monthly - December 2014

Your Unique African Study Address 

The Nelson Mandela Metropolitan University, born from the merger between the University of Port Elizabeth, the Port Elizabeth 

The Nelson Mandela Metropolitan University, born from the merger between the University of Port Elizabeth, the Port Elizabeth 

Technikon and Vista University, offers students the best theory and practice from entry certificate level right through to doctoral 

Technikon and Vista University, offers students the best theory and practice from entry certificate level right through to doctoral 

research. 

research. 

NMMU 

NMMU 

is the 

is 

biggest 

the biggest 

tertiary 

tertiary 

institution 

institution 

in the 

in the 

Eastern 

Eastern 

Cape 

Cape 

Province, 

Province, 

with 

with 

over 

over 

25 

25 

000 

000 

students 

students 

enrolled 

enrolled 

on 

on 

six 

six 

different 

different 

campuses. 

campuses. 

Our Our programmes programmes are recognized are recognized and and accredited accredited by the by the relevant relevant professional professional bodies bodies locally locally and, and, in in many many cases, cases, internationally. 

internationally. 

The university The university has has already already established established itself itself as a as leader a leader in fields in fields such such as automotive as automotive engineering, engineering, ecology, ecology, marine marine studies, studies, 

community community health, health, the built the built environment, environment, art art and and design, design, accounting accounting and and auditing, auditing, education education and and IT, IT, and and offers offers students students an an even even 

wider wider choice choice of stimulating of stimulating programmes programmes opening opening up a up variety a variety of career of career opportunities. 

opportunities. 

Our Our students students can can already already be found be found working working around around the the globe. globe. 

international.nmmu.ac.za 

.com/NMMUInternationalOffice 

.com/NMMUInternational 

PO Box PO 77000, Box 77000, Nelson Nelson Mandela Mandela Metropolitan Metropolitan University, University, Port Port Elizabeth, Elizabeth, 6031, 6031, South South Africa Africa | Tel: | Tel: +27 +27 (0) 41 (0) 504 41 504 2161, 2161, Fax: Fax: +27 +27 (0) (0) 41 504 41 504 2771, 2771, E-mail: E-mail: international@nmmu.ac.za 

Unique culture: 

Unique culture: 

Our highest priority is to promote academic excellence 

through Our highest varied priority curricula, is to the promote standard academic of teaching excellence throughout 

all through faculties, varied and curricula, through innovative the standard and of applied teaching research throughout for 

social all faculties, and economic and through development. innovative and applied research for 

social and economic development. 

Why choose NMMU? 

Why choose NMMU? 

• The cost of living in Port Elizabeth is significantly lower 

• against The cost national of living and in Port international Elizabeth is benchmarks significantly lower 

• Quality against education national and that international matches that benchmarks of the UK, USA, 

• Canada Quality and education Australia that for matches a third of that the of cost the UK, USA, 

• The Canada main and campus Australia is situated for a third on a of nature the cost reserve within 

• walking The main distance campus of is the situated beachfront 

a nature reserve within 

• The walking NMMU distance a fully of comprehensive the beachfront university 

• 

• 

Students 

The NMMU 

come 

is a 

to 

fully 

the 

comprehensive 

NMMU from 60 

university 

different countries 

• 

across 

Students 

the 

come 

world, 

to 

making 

the NMMU 

it the 

from 

most 

60 

diverse 

different 

university 

countries 

in 

South 

across 

Africa 

the world, making it the most diverse university in 

South Africa 

• The success of the NMMU’s career-focused programmes 

• The success of the NMMU’s career-focused programmes 

lies in the hands-on involvement of industry and business 

lies in the hands-on involvement of industry and business 

experts 

experts 

Faculties: (7 Faculties and over 130 career fields) 

Faculties: (7 Faculties and over 130 career fields) 

Faculty of Arts: 

Faculty • School of Arts: of Music, Art and Design 

• School of Music, Architecture Art and Design 

• School of Architecture 

Language, Media and Culture 

• School of Language, Governmental Media and and Social Culture Sciences 

• School of Governmental and Social Sciences 

Faculty of Business & Economic Sciences: 

Faculty • School of Business of Accounting & Economic Sciences: 

• School of Accounting Economics, Development and Tourism 

• School of Economics, Industrial Psychology Development and and Human Tourism Resources 

• School of Industrial Management Psychology Sciences and Human Resources 

• School Business of School Management Sciences 

• Business George Campus School (Accounting, Business Management, 

• George Economics, Campus Management, 

(Accounting, 

Marketing, 

Business 

Tourism 

Management, 

Management) 

Economics, Management, Marketing, Tourism Management) 

Faculty of Education: 

Faculty 

• School 

of Education: 

for Initial Teacher Education 

• 

School 

School 

for 

for 

Initial 

Continuing 

Teacher 

Professional 

Education 

Development 

School for Continuing Professional Development 

• School for Education Research and Engagement 

• School for Education Research and Engagement 

Faculty of Engineering, the Built Environment and 

Faculty of Engineering, the Built Environment and 

Information Technology: 

Information Technology: 

• School of Engineering 

School of Engineering 

• School of the Built Environment 

School of the Built Environment 

• School of Information and Communication Technology 

School of Information and Communication Technology 

Faculty of Health Sciences 

Faculty of Health Sciences 

• School of Behavioural Sciences 

School of Behavioural Sciences 

• School of Clinical Care Sciences 

School of Clinical Care Sciences 

• School of Lifestyle Sciences 

School of Lifestyle Sciences 

• School of Medicinal Sciences 

School of Medicinal Sciences 

Faculty 

Faculty 

of 

of 

Law 

Law 

• 

Department 

Department 

of 

of 

Private 

Private 

Law 

Law 

• Department Department of of Mercantile Mercantile Law Law 

• Department of of Criminal Criminal and and Procedural Procedural Law Law 

• Department of of Public Law Law 

Faculty of Science 

• School of Biomolecular & Chemical Sciences 

• School of Computer Science, Mathematics, Physics 

and Statistics 

• School of Environmental Sciences 

• George Campus (School of of Natural Resource Management)

Entrance requirements: 

The NMMU actively seeks to enroll international students that 

reflect the broad diversity of global cultural, linguistic, racial, 

socio-economic and educational backgrounds. To achieve 

this, the NMMU seeks to enrich the diversity of its student 

body through a process of internationalisation by drawing 

students from SADC and other African countries, as well as 

from the wider international community. 

In reaching a decision on admission, the NMMU makes 

use of an admissions process that is fair and transparent, 

and employs admissions criteria and measures that are as 

appropriate and valid as possible. 

For admission criteria please go to the following web links: 

Undergraduate: 

http://international.nmmu.ac.za/Application-and-Admissions/ 

Apply-for-Undergraduate-Studies 

Postgraduate: 

http://international.nmmu.ac.za/Application-and-Admissions/ 

Apply-for-Postgraduate-Studies 

Accommodation: 

The University has accommodation especially earmarked for 

international students’ on-campus, as well as off-campus. 

Study and Work in South Africa 

International students are allowed to work part-time for 20 

hours a week while studying in South Africa. 

Tuition Fees: 

NMMU tuition fees starts from $1,900 depending on the 

programme of study. This is by far lower than what is 

obtainable in other first class universities in Africa, Europe, 

Asia and America; offering first class learning, teaching and 

accommodation facilities. 

Readers Voice 

Kenya Needs a Debt Equity Swap 

World Bank president Jim Yong Kim 

and United Nations secretary-general 

Ban Ki-Moon visited the country at a 

time when there is growing concern in 

Kenya that the ballooning public service 

debts are obstacles to development in 

most counties. Currently, most Counties 

in Kenya spend up to 75 percent of 

their revenues in debt repayments leaving 

them with little or no cash at all for 

productive expenditures on education, 

health, water and sanitation, among others. 

This scenario replays in East Africa 

where most countries are struggling to 

unchoke their economies from debt. 

Over the years our bilateral debts and 

multilateral debts have grown. This is 

why Kenya has acknowledged the donations 

with the lender of last resort on 

cross – conditionality. 

According to the United Nations 

Charter, service to the common good 

and promotion of solidarity is to ensure 

promotion of socio-economic justice 

through a preferential option for the 

poor. I was therefore suprsied the World 

Bank gave $8.3 billion in donationsto 

be redirected into development sectors. 

I had anticipated a refinancing model 

that gives debt-holders an equity investment 

in exchange of cancellation of 

debts. Kenya is in a state where her 

Counties are struggling from a grip of 

turf of wars amongst legislators. Some 

have even proposed amendments do 

away with 35 counties. Opposition and 

Council of Governors are pushing for 

amendment in the name of smooth governance. 

The MPs on the other hand want to cut 

our the number of nominated county 

assemblies (MCAs) and nominated 

women MPs. Besides, they suppose 

all judges of the Supreme Court should 

work on a part-time basis. To belabor, 

the national assembly Speaker, Justin 

Muturi has delivered the petition for 

MPs to begin deliberations. 

It is outrageous and defies the logic 

of devolution and would take us back 

to a consitittuon of old, as opposed 

towards decentralization of power, goods 

and services to the people of Kenya. 

Already, there are fears that the public 

service debt could become unsustainable 

for Kenya. They endorsed a document 

bent on promote democratic and 

accountable systems of government, and 

demands to be fortified with equitable 

distribution of the national resources. 

Anything contrary is heedless. 

Now, the Council of Governors have 

drafted a Bill to push for fresh changes 

in the law and are fighting for a 3.4 billion 

in kitty, to cement their control in 

actualizing the make devolution process. 

It means therefore that any sustained 

effort either by way of executive or legislative 

decree to demean devolution, 

will be met by resistance from the governors, 

the intelligentsia public and the 

who subscribe to devolution principle of 

equality. 

Does it mean that all public policy analysts 

and pundits in government and the 

private sector fell short of exploring the 

future implications cost of running the 

devolved units when the constitutional 

amendments was subjected to public 

plebiscite? 

May be, Yes, or No. If MPs through representative 

democracy want to invoke 

their delegated authority to amend the 

law, they must go back to the very people 

who endorsed the legislations. Short 

of that, the MPs will court trouble as 

people begin to feel the cascading effects 

of the devolved units, albeit to minimum 

standard. 

By Kepher Otieno 

The writer kepher43@gmail.com is 

a consulting Editor and Bureau Chief, 

East African Digest. 

Letters 

For further enquiries: 

Tel: +27 (0) 41 504 2161 

E-mail: international@nmmu.ac.za 

PO Box 77000, Nelson Mandela Metropolitan University, 

Port Elizabeth, 6031, South Africa 

international.nmmu.ac.za 

2 Business Monthly | december 2014-JANUARY 2015 

Readers’ Voices 

We would like to invite your views and opinions on this edition of Business Monthly, on the economy, and on business. We are also seeking columnists, 

with a view on real business issues as they are lived and experienced. Please send your letters to info@media7groupkenya.com 

Hobie Beach, Nelson Mandela Bay - Port Elizabeth (NMMU Main building in far background) 

Business Monthly | december 2014-JANUARY 2015 3

news feature: 

BANKING: 

guest forum 

Safaricom’s next big goldmine 

While M-Pesa remains a high priority area for Safaricom, its significance 

to Safaricom’s long-term profitability is closely rivaled by data. Industry 

statistics show that it controls about 75 percent of the mobile data market. 

DECEMBER 2014 - JANUARY 2015, Vol. 09 No 91 

• 20 

Banks’ profit 

machine delivers 

despite slight 

setback for 

some lenders 

What Kenyan banks lack in assets, they 

compensate for in solid and consistent 

• 12 Culture of money vs. Cult of money 

returns for investor 

• 64 

• 52 

NEWS 

6 Media 7 Publisher/ceo wins Nelson 

Mandela award 

reader’s forum 

8 Africa’s bane: Teething issues have 

been identified, forging solutions is 

now the focus. 

sector report: 

Used car dealers have newer challengers 

Kenya is following in the footsteps of South Africa and 

Morocco, Africa’s two biggest vehicle manufacturers. This 

could greatly benefit new car dealers in the country by 

allowing them to lower their prices. 

• 24 

sector report 

48 Diaspora remittances sparks a 

dramatic uptick in international 

cash transfer 

52 Kenya’s silent victory in top 100 

African banks rankings 

56 Price undercutting and fraud take 

toll on insurers 

guest column 

62 Budgeting and Funding your SME 

in 2015 

NEWS FEATURE 

motoring 

guest forum 

10 Climate smart agriculture 

stands us a chance of 

achieving food production 

to meet global food demands. 

12 Banks’ profit machine delivers 

despite slight setback for some 

lenders 

COMMENTARY 

16 Africa has been paying a price 

and her leadership dancing 

naked in the world square 

COVER STORY 

24 Safaricom’s next big goldmine 

NEWS FEATURE 

24 Used car dealers are on an 

ambitious offensive. They want 

to extend their reach beyond 

thrifty households. 

SECTOR REPORT 

SPECIAL REPORT: 

The GMO debate is rekindled 

In 2012, the Kenyan government imposed 

a blanket ban on the importation of 

Genetically Modified Organisms (GMOs). 

This ban was primarily informed by the 

findings of a research conducted by French 

scientists that linked GMO products to 

cancer. The study was however recanted 

on grounds that it did not follow the 

internationally accepted standards of 

undertaking research. 

• 42 

60 The 2015 Nissan Murano 

64 Culture of money vs. Cult of 

money 

opinion 

66 Can chasing a dream ruin a 

career? 

LAST WORD 

68 WRC TV audience rises by 35 per 

cent in 2014 

30 Why Safaricom’s Sh30 bn 

infrastructure overhaul is timely 

34 Government monopoly over 

foundation seeds should cede, 

opened to the private sector. 

38 Exploring new sources of 

energy beyond rainfall in Kenya 

has been magnified. 

COUNTRY FOCUS: 

Africa’s quest to feed itself lies within 

We must set higher targets for ourselves in this quest for Africa 

to feed itself. We must not get complacent, for the voices of 

millions of malnourished children must spur us to action. No 

African child must ever go hungry. 

• 34 

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4 Business Monthly | december 2014-JANUARY 2015 Business Monthly | december 2014-JANUARY 2015 5

NEWS 

EXCELLENCE RECOGNISED 

Media 7 Publisher/ceo 

wins Nelson Mandela award 

By Xolisa Phillip 

The Nelson Mandela Metropolitan 

University (NMMU) recently feted 

some of its top students and alumni 

at a glittering ceremony in Port 

Elizabeth, South Africa, writes Xolisa 

Phillip for Times Media. 

NMMU presented Rising Star, Special and 

Achiever awards to an array of graduates in 

diverse fields, from architecture and sports, to 

business, pharmacy and NGO sector. 

Among the award recipients is Kenya’s 

magazine publisher and marketing guru, Dr. 

Hanningtone Gaya, who received the NMMU 

Alumni Special Award for 2014 in recogni- 

tion for his outstanding contribution in his 

specialized field of study, bridging the discourse 

between Marketing of Services and Strategic 

Management, by extending the resource-basedview(RBV) 

theory, for his distinguished service 

to his home country and in recognition of exemplary 

work as an NMMU Ambassador. 

Those who received the NMMU Alumni 

awards in the picture included, from left, Dr. 

Amber Andersson, Dr. Hanningtone Gaya, 

Nomkhita Mona, Baxolile Mabinya, Nicholas 

Hafner, Deon Schoeman, Tracy Cheetham and 

Garret Barnwell. 

Dr. Hanningtone Gaya is the first and the 

only graduate to receive the NMMU award form 

outside South Africa. 

6 Business Monthly | december 2014-JANUARY 2015

STATE OF AFRICA 

Readers Forum 

By Kepher Otieno 

The recent African Union 

(AU) meeting in Nairobi is 

a pointer to fresh and sustained 

commitment by the 

leaders to promote regional 

homogeneity. Coming at a time when 

many think that African countries 

have been collectively subordinated 

to a worldwide ‘market totalitarianism,’ 

there is need to chat new 

development cause. Fresh ideas and 

relentless pursuit of economic liberalization 

would lead to political 

liberation and ultimately advance 

democratic polity in the region. 

The AU leaders should be zealous 

to address the socio-economic 

and political challenges that impede 

the region’s stability. So far, the 

teething issues have been identified. 

Forging solutions is now the focus. 

politics: 

It is important that our leaders 

direct their energy to improve 

our economies. For many years 

our economies have been dependant 

on Foreign aid. How do we fly 

out of this quandary? The solution 

lies in the private hands. Arguably, 

an economy that places productive 

property in private hands invariably 

The political elites have 

imposed unprecedented 

power of a few 

awesomely wealthy and 

powerful individuals over 

the masses, engulfed in 

poverty. 

Consumptive 

Africa’s bane 

So far, the teething issues 

have been identified. Forging 

solutions is now the focus. 

confers great wealth and privilege on 

owners at the expense of the masses. 

Today, economic globalization 

has unleashed productive forces 

throughout the world leading to 

expansion of markets and insertion 

of technology in the processes of production. 

Now, the people of Africa 

want to see a new culture where the 

law of nature and wealth meets the 

needs of all humanity as opposed to 

select few financial oligarchs. This 

can only be achieved through a productive 

economy where there is an 

‘ecological’ balance between productive 

and consumptive politics. 

It is unfortunate that apart from 

a few African countries that have 

been making sustained effort to push 

for productive economies, others are 

still held hostage by consumptive 

politics. Each electioneering year, 

new political parties that are soon 

disbanded after the elections are 

formed. It raises suspicion on their 

motive. This is making it difficult 

to implement some of the long term 

visions targeting economic prosperity. 

Policy makers are even hard put 

to modify political party manifesto 

visions each time a new administration 

comes in. This is because each 

administration wants to act their 

way. The sticky situation is to blame 

for the delayed implementation of 

sound and sustainable macro-economic 

policies aimed at improving 

the socio-economic living standards 

of the African people. 

The political elites have imposed 

unprecedented power of a few awesomely 

wealthy and powerful individuals 

over the masses - precisely, 

(hoi polloi), engulfed in poverty. 

Uneven development long linked 

with capitalist expansion is probably 

the most discernible trademark 

of globalization and regionalization 

in its modern-day form. This is not 

the way we want to go. We want an 

egalitarian civilization. While it may 

not be possible to achieve it in the 

short run, the processes to achieve 

the goal in the long run must be 

pursued. 

Although, the accelerated globalization 

of the world economy has 

particularly had a pessimistic impact 

on African states, we must begin 

to think of the way forward to our 

economic autonomy. It is good news 

to hear that countries like Kenya, 

Uganda and Botswana are emerging 

as the next economic frontiers and 

are challenging old stereotypes. 

Capital, particularly financial 

capital, now flows freely across borders 

with devastating consequences 

for the so-called emerging economies. 

Thus states in Africa have 

increasingly come under pressure 

to conform to the new demands of 

the regionalization processes and 

cross cultural global homogeneity. 

It is important 

that our 

leaders direct 

their energy to 

improve our 

economies. 

Then again, the increasing the new 

divisions have been between those 

countries and regions which can 

adapt to the new way of economic 

survival. This has further engendered 

competition between the weaker 

countries for investments, foreign 

direct Investment (FDI) and other 

resources especially in East Africa. 

But which is the way out? I 

looked at some African cartoon, 

placed in The African Executive 

journal, and I was so amused. The 

caption captured it all. It was a 

homo sapiens-like image overloaded 

with African debts. The homo sapiens 

was wondering where to seek 

refuge - as a fortress of defence to 

save the continent from its bloated 

debts. The Cartoon reminded me 

that the Brettonwoods institutions 

should cancel debts for the Third 

World countries. 

NGOs like Jubilee 2000 have 

been fighting for all the debts choking 

African Countries to be written 

off. The voice must be loud until we 

hear the IMF and World Bank say: 

“Africa - we are cancelling 30 percent 

of your debts this fiscal year.” It 

sounds a tall order! But it can work. 

But this should come with tightened 

austerity measures to insulate 

the financial management from the 

pangs of the financial oligarch lest 

they take advantage to make fortunes. 

All these developments can be 

realized if there is improved peace 

and conducive atmosphere to do 

business. Africa no longer wants to 

feel ‘lethargic’ in the supranational 

arena. 

The writer can be reached on 

kepher43@gmail.com 


AGRICULTURE 

News Feature 

It is scientifically well established 

that, by and large, we 

are what we eat. It is not every 

food that is nutritious for the 

balanced development of the 

human body. As a matter of fact, 

obesity levels are increasing worldwide. 

This problem led the World 

Health Organization (WHO) to formally 

recognize it as a global epidemic 

in 1997. 

In 2014, a study published 

in Lancet, the highly respected 

British medical journal, estimated 

that the number of overweight adults 

in the world was 2.1 billion in 2013, 

as compared with 857 million in 

1980. Furthermore, it is established 

that 2% of the world population 

is currently “chronically malnourished” 

and that 5 million children die 

yearly from “causes related to lack 

of nutrition.” Also, today, 2 billion 

people are suffering from hidden 

hunger i.e. Most get enough calories 

from food but not enough vitamins 

and minerals. This is why there is 

the strong call for nutrition-sensitive 

diets. Again, the science is that 

without adequate vitamins and 

minerals, women risk death during 

childbirth, and children risk stunted 

development with low IQs. 

Unfortunately, in the face of 

these challenges to the quality of 

the foods we eat, the world is facing 

a rapidly-increasing population. The 

world population is projected to top 

the 9 billion mark by mid-century. 

The population of Africa alone is 

expected to double to about 2 billion 

by 2050. Estimates are that world 

food production has to be increased 

by 70% over current levels to meet 

global food demands by mid-century. 

Faced with these daunting challenges, 

humanity should use agriculture 

and food systems to provide 

the nutritious diets needed for 

rounded development of the human 

body. 

Agriculture is both a victim 

and a culprit when it comes 

Preening our 

breadbasket 

The world population is projected to top the 9 billion mark by midcentury. 

Africa’s population alone is expected to double to about 2 

billion by 2050. Estimates are that world food production has to be 

increased by 70% over current levels to meet global food demands. 

Climate smart agriculture stands us a chance of achieving this. 

to Climate Change. It is learnt 

that agriculture contributes about 

14% of the greenhouse gas emissions 

which cause climate change, 

and also that the deforestation 

and land degradation that are 

associated with uninformed agricultural 

and other practices, also 

cause an additional 17% of the 

increased greenhouse gases in the 

atmosphere. However, Agriculture 

is now under sustained threat from 

Climate Change and hence the call 

for Climate-Smart Agriculture. 

Climate-Smart Agriculture is an 

efficient and effective intervention 

for achieving food productivity and 

security objectives and development 

goals at the same time, even 

as the world struggles to contain the 

effects of Climate Change. It is being 

advocated for a number of reasons. 

Firstly, it is to ensure that agricultural 

production and productivity 

are enhanced for food security 

and income-sustainability. Secondly, 

it is to boost resilience of livelihoods 

and ecosystems. And thirdly, it is to 

mitigate agriculture’s contribution to 

global warming. 

In practicing Climate-Smart 

Agriculture, the agricultural sector 

stands to capture synergies that 

exist among activities to develop 

more productive food systems, and 

improve natural resource management. 

However, it must be noted that 

achieving the four dimensions of food 

security which are: availability of; 

and access to food; utilization of 

food for adequate nutrition; and 

stability of food supply, must be the 

overall goal of food production and 

distribution systems. 

If food is taken to ensure 

nourishment, and agriculture is 

perceived to provide the food that 

humanity needs, then, the fundamental 

purpose of agricultural 

systems is to ensure proper nutritional 

outcomes. Therefore the time 

has come for Agriculture not only 

to be climate-smart, but also to be 

nutrition-smart. A scientist of the 

International Food Policy Research 

Institute in Washington, D.C. is 

quoted to have written recently 

that: “Agriculture must become 

nutrition-smart. 

Nutrition-sensitivity is not 

enough. Our basic food systems have 

to be optimized to provide the 

greatest amount of nutrients per 

square foot that can be produced 

sustainably, especially in the face of 

climate change.” He continues that; 

“We need to shift away from excessive 

reliance on mono-cropped 

calories by also investing in diverse 

food systems that integrate staple 

cereals and grains with other types 

of nourishing food.” 

Thus, the agricultural sector and 

food systems face a massive double 

challenge today: 

Our basic 

food 

systems 

have to be 

optimized 

to provide 

the 

greatest 

amount of 

nutrients 

per square 

foot that 

can be 

produced. 

a) Feeding the world sustainably, 

b) Feeding it a healthy and 

nutrient-rich diet in the face of 

changing climatic conditions. 

In Africa, where hunger and malnutrition 

levels are highest, recent 

research has shown that we can 

develop and deliver staple cereals 

and root crops that have 

both higher yields and higher 

levels of micronutrients. With 

the help of Science and Technology, 

work is underway to improve production 

and availability of nutrientrich 

legumes, fruits, vegetables, fish 

and livestock. 

Fortunately, under the auspices 

of institutions such as FAO, IFPRI, 

CAADP and other research outfits 

in various organizations such as 

AGRA and universities, research 

into plant breeding is being intensified 

to produce seeds and tubers 

rich in essential nutrients for 

farmers to plant. For instance, on 

the African continent now, enriched 

sweet potato is fast gaining prevalence. 

Further, it is reported that 

since last year, the first high-yielding 

rice varieties in Bangladesh 

that are rich in zinc have been made 

available to farmers… and that in 

the case of zinc rice, there will 

soon be varieties that can provide 

up to 80 percent of an adult woman’s 

or child’s daily zinc needs – 35% 

more than ordinary rice varieties. 

In pursuit of Nutrition-Smart 

Agriculture, policy should be directed 

to encourage plant-breeders to 

work with nutritionists to determine 

the nutrient levels that 

must be bred into new seed varieties 

to have a measurable impact 

on improving nutrition and public 

health. 

In the face of Climate Change, 

Agriculture has to be many steps 

ahead of the curve. The conjunction 

of Climate-Smart and Nutrition- 

Smart Agriculture underpins sustainable 

food systems for improved 

quality of life of mankind. 

Realizing this synergy calls for 

purposeful investments which cannot 

be realized without sustained 

public policy that will empower the 

private sector to enhance agriculture 

at all levels, including plantationlevel, 

commercial and smallholder 

agriculture. 

This should include policies 

on extension advice, enriched 

soils, improved seedlings, efficient 

irrigation systems, mechanization, 

marketing information, credit availability, 

the use of ICT, and information 

on nutrition science on how to 

prepare food so as not to destroy the 

nutrients in food. 

Given the urgency and importance 

of the realization of these 

two objectives - Climate-Smart 

Agriculture and Nutrition-Smart 

Agriculture - sustained communication 

to inform and educate the peoples 

of the world is crucial, especially 

in the developing parts. 

By H.E. John Kufuor , Former President 

of the Republic of Ghana 


BANKING 

News Feature 

Banks’ profit machine delivers despite 

While each bank had its own tale to tell, the common 

challenge that they all had to grapple with was the decline in 

interest rate margins during the first nine months of the year. 

Earning reports for individual 

banks in the nine 

months ended September 

2014 show that commercial 

banks’ profit machine 

is faithfully delivering. Kenya 

Commercial Bank, Equity Bank 

and Co-operative Bank, all of which 

had released earnings for the nine 

months ended September 2014 by 

the time of going to press, posted a 

cumulative profit of Sh29.98 billion. 

KCB grew its net profit for the 

nine months leading to September 

by 15.4 percent to Sh12.48 billion, 

retaining its position as the most 

profitable bank in Kenya. The lender, 

which is the biggest bank in East 

and Central Africa by assets, grew its 

loan book over the nine month period 

to Sh264.3 billion from Sh225.7 

billion in the year ago period, a 17 

percent increase. 

Equity Bank, which announced 

that it had 9.2 million customers, 

also posted a tremendous increase 

in net profit during the nine months 

leading to September. Equity, which 

retained its position as the largest 

lender in Kenya by customer base, 

announced that its net profit had 

increased to Sh11.2 billion during 

the period, up 26 percent year-onyear 

from Sh8.9 billion in the yearago 

period. This uptick in profit not 

only fits neatly into Equity Bank’s 

iconic growth narrative, but it is 

also serves as an indication that the 

bank’s threat to KCB’s position as 

Kenya’s most profitable bank has 

intensified. 

Unlike Equity Bank and KCB, 

Co-operative Bank did not bring 

its investors good tidings during its 

earnings release for the nine months 

ended September. Co-operative 

recorded a 9 percent slip in net profit 

during the period. The lender’s net 

earnings in the period stood at Sh6.3 

billion compared with Sh6.9 billion 

in the year-ago quarter. While there 

were a range of factors to blame, 

Co-operative Bank predominantly 

took out the blame on the taxman. 

“The single largest contributor to 

reduced post-tax earnings is tax”, 

Co-op Bank officials told BDAfrica. 

com, a business website owned by 

Nation Media Group. Co-op Bank’s 

tax bill increased from Sh1.97 billion 

in September 2013 to Sh2.82 

billion in 2014, a 43 percent jump. 

The 43 percent increase in tax was 

not attributable to a proportionate 

increase in taxable earnings, but 

rather an increase in the tax rate. 

The bank no longer pays a subsidized 

20 percent tax. Co-op Bank 

started paying the standard 30 percent 

corporate tax rate this financial 

year after the expiration of the 

bank’s five year tax holiday that had 

seen it enjoy subsidized rates of 20 

percent after its 2008 IPO. 

Falling interest rate margins 

While each bank had its own tale 

to tell, the common challenge that 

they all had to grapple with was the 

decline in interest rate margins during 

the first nine months of the year. 

This decline was largely a result of 

two separate developments. First off, 

the Central Bank of Kenya (CBK) 

faithfully maintained its benchmark 

lending rate at 8.5 percent dur- 

ing the period. And second, policy 

makers, including Deputy President 

William Ruto, placed unrelenting 

pressure on commercial banks to 

lower their lending rates. 

Average commercial bank lending 

rates stood at 16.6 percent in 

Unlike Equity 

Bank and KCB, 

Co-operative Bank 

did not bring its 

investors good 

tidings during its 

earnings release 

for the nine 

months ended 

September. 

slight setback for some lenders 

the nine month period leading to 

September, 2014, down from 17.4 

percent over the same period in 

2013. This is according to the CBK. 

The effect is that commercial lending 

rates have reduced against a backdrop 

of an unchanged benchmark 

rate. This has led to a decline in 

interest rate margins. 

When the margin between lending 

rates and deposit rates falls, 

it effectively means that a lender 

makes less interest income per unit 

loan. 

To confront this challenge, KCB 

has taken a unique approach. The 

lender is broadening the composition 

of its earnings mix in order 

to reduce dependence on interest 

earnings and grow other promising 

segments. It has compounded its 

efforts in its investment banking 

arm, KCB Capital. Similarly, the 

lender has also intensified efforts in 

KCB Bancassurance, the arm that 

allows it to act as a channel for 

insurance firms looking to sell their 

product offerings through banks. 

“Kenya revenue was boosted by new 

business, KCB Capital and KCB 

Bancassurance,” said KCB Chief 

Executive, Joshua Oigara, during 

the bank’s earnings release for the 

nine month period ended September, 

2014. 

When the margin between 

lending rates and deposit rates 

falls, it effectively means that a 

lender makes less interest income 

per unit loan. 

Moving into the future, KCB 

Bancassurance is expected to feature 

more strongly in the bank’s 

earnings mix. This is because KCB 

Bancassurance is well positioned to 

gain tremendously from insurance 

companies’ increased use of banks 

as their distribution channels. Banks 

not only have a wide footprint that 

allows insurance companies to better 

penetrate the market, but lenders 

can easily bundle insurance products 

with traditional bank products. As 

an example, banks now require borrowers 

to take life covers when they 

apply for personal loans. Similarly, 

they have also stated the need for 

borrowers to insure their businesses 

as a requisite for the provision of 

working capital. This allows insurance 

products to ride on the typically 

higher demand for bank products 

such as loans, leading to higher 

sales for insurance firms. With this 

in mind, it is highly conceivable that 

insurance companies will continue 

channeling more of their products 

through banks, brightening the prospects 

for KCB Bancassurance. 

Equity Bank, on the other 

hand, has taken a slightly different 

approach in mitigating the decline in 

interest margins. Although the bank 

also has other profitable business 

segments away from the loan business, 

it is primarily focusing on issuing 

a higher volume of loans. This 

was clearly apparent in the explosive 

growth in the bank’s loan book in 

the period ended September. Equity 

Bank’s loan book expanded to 

Sh206.6 billion in September, 2014, 

from Sh158.5 billion in September, 

2013. This high sales volume model 

allowed Equity Bank to grow its 

overall interest income, despite the 

decline in profit margin per unit 

loan. The bank’s total interest 


BANKING 

News Feature 

income rose 10.5 percent to Sh26 

billion in the nine months to September. 

Equity Bank is however not depending 

solely on a high sales volume model. 

This is plausibly because the model has 

its restrictions—the extent to which 

you can sell your products is limited 

by the size of the market. In view of 

this, the bank is aggressively pursuing 

means of growing earnings from commission 

and fees in the retail banking 

segment, an area where it enjoys 

the largest presence among its peers. 

“Equity’s revenues from other fees and 

commissions … appear to be growing 

faster than the fees and commissions 

income on loans and advances, which 

has been a traditional income driver for 

commercial banks,” the lender’s CEO 

James Mwangi said during the earnings 

report. 

To realize even more business in 

the retail segment, Equity is exploring 

means of further deepening its involvement 

with SMEs, which form a crucial 

component of the retail banking segment. 

The bank was able to negotiate 

a Sh13.1 billion loan from the African 

Development Bank (AfDB) for onward 

lending to small and medium sized 

enterprises. “It will enhance SME access 

to finance, therefore, contributing to 

their growth and development and will 

contribute to helping Kenya further its 

growth and development aspirations,” 

AfDB said in a statement. These funds 

will not only be crucial in expanding 

Equity Bank’s loan book, but they will 

also open up more avenues for fees and 

commissions income from the huge 

number SME customers who will benefit 

from the fund. 

Equity Bank also has its own set of 

unique challenges. The bank is still in the 

infancy stages of rolling out a SIM-based 

mobile money solution that is poised 

to give Safaricom’s M-Pesa a run for its 

money. 

Individual challenges 

Despite the shared challenge of falling 

interest margins, each bank seems 

to be dealing with its own unique 

challenges. Co-operative Bank, as earlier 

mentioned, now has to deal with a 

higher tax bill. This means that it will 

need to explore cost cutting measures 

such as new technology or staff restructuring 

if it wants to revert to its previous 

growth trajectory. 

KCB, on the other hand, experienced 

difficulty in its regional business 

during the nine month period leading 

to September. South Sudan in particular 

posed more of a headache than 

any other regional unit. The protracted 

conflict between President Silva Kiir’s 

government troops and rebels loyal to 

Dr. Riek Machar has greatly strained 

KCB’s business in the region. The contribution 

of South Sudan to profit was 

Sh1.11 billion at the end of September, 

2014, representing 6.3 percent of the 

bank’s overall gross profit. In comparison, 

the earnings from the South Sudan 

subsidiary stood at Sh1.32 billion, or 

8.7 percent of the bank’s total gross 

profit in September, 2014. 

While speaking at the earnings 

release, KCB’s Oigara pointed out that 

political unrest in South Sudan had 

caused the closure of three branches 

in Marakal, Bentiu and Upper Nile, 

adding that the branches would remain 

closed for the moment. Despite the continued 

conflict in South Sudan, readers 

of Business Monthly are well aware that 

we have previously keyed out South 

Sudan as a potential high growth area 

for KCB—once a peace agreement is 

inked. This assessment, it appears, is 

shared by KCB’s Oigara. “In South 

Sudan, we are excited about the peace 

agreement that has been signed, and it 

should work out positively for our business 

going forward,” Mr. Oigara said. 

In this respect, KCB softened the blow 

of closing three branches in conflict 

hit areas of South Sudan by opening 

two new ones in Juba on November 5, 

2014. South Sudan is expected to be 

highly profitable for KCB as asset values 

and demand for loans are expected 

to increase astronomically during peace 

time. 

Equity Bank also has its own set of 

unique challenges. The bank is still in 

the infancy stages of rolling out a SIMbased 

mobile money solution that is 

poised to give Safaricom’s M-Pesa a run 

for its money. As historical anecdotes 

can attest, the rollout of Equity Bank’s 

slim SIM, which can be overlaid on 

other SIM cards, has been nothing short 

of challenging. While Equity has been 

able to circumvent all the challenges, 

including drawn out parliamentary 

hearings, it remains to be seen how the 

bank will position itself in the lucrative 

mobile payments segment. 

14 Business Monthly | december 2014-JANUARY 2015 Business Monthly | december 2014 15

AFRICA 

Commentary 

As a native African, and one who 

has lived in US now for more 

than 25 years, I have been fortunate 

to expose myself to various 

aspects of life and believe that 

nothing is deficient in the make up or creation 

of a black person be they Africans or 

African-Americans. 

God is not a partial creator, therefore, 

anywhere he endowed life, He has 

left resources lying in wait, to enable life 

and enhance living. We have to allow 

necessity to be the driver and mother of 

invention. But if the human factor abuses 

the resources or inadvertently allows 

them to lie in wait, they pay a price. 

Africa has been paying a price and her 

leadership dancing naked in the world 

square as they run around like little boys 

Rethinking Africa’s 

engagement with the world 

Africa has been paying a price and her leadership dancing 

naked in the world square as they run around like little boys 

and girls, looking for candies in the backyard of others. Why? 

and girls, looking for candies in the backyard 

of others. Why? 

How Africans conduct their business 

among themselves and others, is all learnt 

and often hoisted as the way to go. The 

human being, a competitive animal, once 

together will seek to dominate, manipulate 

and control anyone they feel they can run 

circles around. Therefore, Africans and 

their scattered cousins and off-springs 

worldwide, should get off SLAVERY and 

COLONIALISM aftermaths and behave 

like they just found themselves. 

I intend to write a book that challenges 

Africans and African-Americans. The book 

will not be out to blame anyone else for 

our situation. My mom warned me in 

unmistakable terms that should she 

ever see me BEG anyone for what 

she knew I am capable of doing or 

can do, she would cut off my hands 

and take consolation that I have 

no hands. According to her, even 

a snake, without hands and legs, 

moves dangerously and swiftly. It is a 

lesson that no four walls of a formal 

institution could impact better. That 

message has stuck with me forever. 

We may not have everything 

--that is how God wants it. We are 

called by necessity to device means 

to collaborate and engage each other 

for better outcome. But stooping, 

looking inferior or running after 

anyone especially persons or ethnicity 

that already have preconceived 

impressions that Africans are inferior, 

is like playing to the hands of 

someone ready to crush one. We 

must let others know, the paste may 

have favoured them, but today, going 

forward is ours and is dictated by 

desires based on our rules. It is how 

the world rolls --set your agenda and 

look for partners. If none shows up, 

go do it yourself and take all credit. 

Be a “Nike” - Just Do It. 

Sub-Saharan Africa should 

never have devalued its currencies or 

agreed to financial conditions that 

makes her look weak or inferior. 

There is no rule that says Africa has 

to be poor or dependent. If there is 

one, Africans should reverse it and 

say they are entitled to as much as 

anyone else – No APOLOGIES. 

Put aside annoying degrees 

and all that foreign assigned senses 

of arrival which do nothing except 

make the holder feel good. MBA 

can be a Minor Business Account or 

Major Business Account, depending 

on the holder. Just like having PhD 

without PHD – Passion-Hard-work- 

Determination, is more a permanent 

head damage than anything 

else. Having such degrees does not 

make one a great business person 

or leader. Of all the US presidents, 

George W. Bush #43, is the only one 

to have MBA, and he did not become 

US president because of that degree. 

Africans must step forward, head 

high and demand to be respected or 

never respect anyone who does not 

respect you. It is a golden rule and 

should never be lowered for anyone. 

When US President Richard 

Nixon in the late 60s to early 70s 

literally took US out of the bullion 

standards which set the Dollar rise 

as store of wealth for the world, 

Nixon was shooting blanks both 

by design and default. The Dollar, a 

currency that is less than 200 years 

old, surpassed the Pound. It is never 

how long one has been around but 

how well and determined they want 

to exact influence that makes others 

take notice. The miracle of the Dollar 

is not hidden and it is all man-created. 

God did not wire US its money; 

it’s earned and printed just like any 

other currency. That being the case, 

why is it that when sub-Saharan 

Africa earn theirs, it is worthless 

and when they print theirs, it is like 

water under the bridge? My answer: 

The leadership is weak and lacks the 

determination to defer and decline 

Nigeria’s nonoil/gas 

trade 

as reported 

recently, for 

first quarter 

2014, is about 

$330m – 

N5.5tr, and 

assuming that 

the number 

holds true for 

the remaining 

3 quarters, 

it can only 

expect $1.2b. 

outside prescriptions that often end 

up worsening the situation. 

Read ‘Constitution Money’, ‘Den 

of Thieves’ to see how money as a 

tool of global instrument is used to 

run over unsuspecting nations, and 

a few people in New York Stock 

Exchange can make everyone in the 

world have a heart attack as stocks 

are manipulated. The Six Functions 

of Money does not change with geography. 

What changes is the attitude 

of the legal tender holder and how 

confident they are in making others 

believe in their currency. I leave 

you with this – ‘were the world to 

TRADE in one currency,’ immigration 

would almost cease and the 

western economies would hit structural 

shock that they would never 

recover from. That being the case, 

they will resist currency harmonization 

and equalization. But nations 

that feel they have been dealt wrong 

hands in trade and investment need 

not back down. 

Were Nigeria for instance, to 

regain the Naira versus Dollar 

exchange rate of mid-80s and harmonize 

the interest rate on borrowed 

money such that it is in the lower 


AFRICA 

Commentary 

single digits, Nigeria’s economy 

would rank among 10 

Top Economies in the world. 

With that comes prestige and influence. 

It is long overdue for a successful 

black nation in the world, 

and Nigeria holds that key given 

its size population and a latent 

citizenry that is seen/perceived as 

‘smart’ and educated but right now, 

in doldrums as its domestic leadership 

is engulfed running after one 

foreign interest or the other. That 

ought to stop. But since Nigeria is a 

lame giant and a single commodity 

nation – literally, depending on what 

in economics is called ‘Unearned 

Income’ --oil/gas, it is a joke of 

the world especially being the most 

populous black nation but has no 

clout worthy of mention. 

Nigeria’s population is half that 

of US, but her annual federal government 

budget source of spending for 

the entire nation is less than $40b, a 

figure that most global corporations 

make monthly. Altogether, it is hard 

to see corresponding budgets from 

Nigeria’s corporations that match 

this single source. Nigeria’s states 

depend on the federal government 

budget for up to 75% of their spending, 

as majority of them merely 

generate small amounts, and as 

such are unable to supplement with 

internal sources. Money is never 

enough-- it is the attitude to money 

and its ability to be stretched that 

creates impact. 

Nigeria’s non-oil/gas trade as 

reported recently, for first quarter 

2014, is about $330m – N5.5tr, and 

assuming that the number holds 

true for the remaining 3 quarters, it 

can only expect $1.2b. Again, this 

is nothing to be proud of given a 

population of 165m people. As goes 

Nigeria’s federal government budget, 

so goes the states-- an uncomfortable 

constitutional relationship 

that strangulates and chokes each 

other. Despite Nigeria ‘jumping up 

and down’ as the giant of Africa, its 

Nigeria annual revenue from oil 

is less than $50b and mid-2000 

was the first time Nigeria ever 

made significant revenue from oil, 

reaching about $70b. 

annual revenue from oil is less than 

$50b and mid-2000 was the first 

time Nigeria ever made significant 

revenue from oil, reaching about 

$70b. I have a record of Nigeria’s oil 

revenues since 1975. 

When Africa was colonized, 

the currency value was the same 

in the colonial masters’ home as 

well as the colonies. But once independence 

was gained, the colonial 

masters sought ways to teach the 

former colonies lessons. Currency 

Devaluation became a tool of international 

relations, politics and trade. 

Sub-Saharan Africa may want to 

create monetary and currency zones; 

no more than 4, to handle the wild 

and wide exchange rates between 

nations and the hard currencies of 

Pound, Dollar and Euro. If that 

happens and they enhance trade 

among themselves, which currently 

stands at mere 15%, they will see an 

increase in the development and stability 

of their economies. They need 

not borrow from outside sources 

except if they have to. Right now, 

they borrow excessively. That is why 

their foreign reserve is never at level 

to stabilize the local currency or 

enhance growth. Couple that with 

interest rates on borrowed money 

that runs in high double digits and 

loans that are hardly on amortization 

schedule, and one has a recipe 

for disastrous and fluid economic 

outcome. Again, the Six Functions of 

Money, holds true in all geography. 

What makes money useful and a 

utility for economic development is 

the legal environment that creates its 

acceptance as a legal tender. 

Lome Convention, should be 

done away with, so as many other 

agreements that Africa naively 

signed at heels of independence or 

during cold war. These agreements 

favor foreign control and dominance 

over development in Africa. Why? 

By Ejike E. Okpa 

Dallas, Texas 

eokpa@airmail.net 


DATA 

Cover Story 

Safaricom’s next 

big goldmine 

While M-Pesa remains a high 

priority area for Safaricom, its 

significance to Safaricom’s longterm 

profitability is closely rivaled 

by data. Safaricom’s half-year 

earnings reports show that 

mobile data revenue contributed 

Sh6.5 billion to the telco’s top 

line, a 52.94 percent increase 

from Sh4.25 billion in the yearago 

period. 

Safaricom posted a record 

Sh21.1 billion pre-tax profit 

in the six month period 

ended September 30, 2014, 

a tremendous 33 percent 

increase over what it earned in the first 

half of fiscal 2013. Interestingly, the 

astronomical increase in Safaricom’s 

half-year profits is not nearly as profound 

as the telco’s strategic shift to 

data. To assess the implications that 

this strategic shift to data will have 

on Safaricom’s long-term profitability, 

Business Monthly’s Lennox Yieke 

not only drew inferences from known 

cases in developed telecom markets 

around the world, but also sought the 

views of well placed industry experts. 

He compiled this extensive report. 

Earnings mix rapidly changing 

Although there has been an 

invariable increase in Safaricom’s 

overall earnings over the past fiscal 

periods, the composition of 

these earnings has rapidly changed. 

Growth in voice revenue, an area that 

has historically featured strongly in 

Safaricom’s earnings narrative, has 

flattened out in recent years. In the 

six months leading to September, 

2014, for instance, Safaricom’s voice 

revenue grew marginally to Sh43.67 

billion, a 6 percent increase from 

Sh41.04 billion in the year-ago period. 

In comparison, overall non voice 

revenue, which collectively includes 

SMS, data and M-Pesa, grew 26.6 

percent to Sh31.9 billion over the 

same period. 

M-Pesa revenue grew 24.72 percent 

from Sh12.5 billion in the first 

half of fiscal 2013 to Sh15.59 billion 

in the period ended September. 

This growth is staged against the 

backdrop of increased competition 

in mobile payments that has been 

inspired by the recent wave of new 

entries such as Equity Bank. In this 

regard, Safaricom has doubled down 

its bet on M-Pesa. As an example, 

it overhauled its Lipa Na M-Pesa 

service to facilitate the issuance of 

physical receipts in public service 

vehicles, a condition spelled out by 

regulators as a requisite for the 

participation in the cashless fare 

program. Accordingly, Safaricom 

received the green light from the 

Central Bank of Kenya in September, 

2014, to act as a cashless fare service 

provider. This means that M-Pesa 

can now derive more earnings from 

the public service vehicles sector. 

While M-Pesa remains a high 

priority area for Safaricom, its significance 

to Safaricom’s long-term 

profitability is closely rivaled by 

data. Safaricom’s half-year earnings 

reports show that mobile data revenue 

contributed Sh6.5 billion to 

the telco’s top line, a 52.94 percent 

increase from Sh4.25 billion in the 

year-ago period. The fact that data 

is the fastest growing segment in 

Safaricom has inspired an informed 

change in strategy. 

Pillar of future growth 

It has now become sufficiently 

apparent that Safaricom will continue 

to direct an avalanche of resources 

and time toward data in coming 

years, signaling that the segment 

has become a core strategic area for 

the firm. While speaking at the halfyear 

earnings investor briefing on 

November 4 2014, Safaricom’s CEO 

Bob Collymore, said that mobile 

data would continue to be the company’s 

“key pillar of future growth.” 

Safaricom presently has a gigantic 

share of the mobile data market. 

Industry statistics as at June 2014 

showed that Safaricom controlled 

75.60 percent of the mobile data 

market. To further corner this fastgrowing 

market, Safaricom is actively 

upgrading its capacity to present 

faster internet speeds to consumers. 

This, the telco believes, will serve as 

a great appeal to customers, and reel 

in more internet subscribers to its 

network. 

Mr. Collymore observed that 

Safaricom would deliver high speed 

wireless internet from its fourth 

generation network technology in a 

year’s time. This move means that 

the telecom has backed out of the 

government sanctioned national 4G 

joint venture network that has been 

tabled for the past two years. “We 

have decided to go it alone because 

we are not seeing the feasibility of a 

joint network that the government 

has been talking about for the past 

two years,” said Bob Collymore. 

Safaricom will get additional frequency 

as part of the Sh14.9 billion 

security communications contract 

that it inked with the government. 

The firm will use part of this additional 

frequency to rollout 4G internet 

for its commercial customers, 

allowing it to grow data’s contribution 

to its earnings mix. 

Lucrative opportunities 

Industry experts believe that the 

opportunity in data is much bigger 

than previously imagined. “The 

opportunities in data should not be 

viewed within the limited context 

of mobile data usage,” remarked 

Mr. Albert Mukiria, a software specialist 

and computer science lecturer 

at Egerton University. “There 

are many other emerging areas that 

present lucrative opportunities in 

data,” explained Mukiria, who spoke 

exclusively to Business monthly. The 

Southampton University, UK, alumni 

believes that Safaricom can exploit 

emerging opportunities in areas such 

as telemedicine. Telemedicine is the 

use of tools such as video conferencing 

and mobile applications to facilitate 

access to healthcare services by 

patients in remote areas. 

Mukiria’s view of telemedicine as 

a potential goldmine for Safaricom 

is informed by Google’s recent entry 

into the segment. Google recently 

announced that it was testing 

a service which directs users who 

check medical symptoms online to 

a video call with a doctor. “When 

you’re searching for basic health 

information — from conditions like 

insomnia or food poisoning — our 

goal is provide you with the most 

helpful information available. We’re 

trying this new feature (online video 

calls to doctors) to see if it’s useful 

to people,” read a statement by 

Google published on internationally 

renowned tech blog, Gizmodo. 

Although Google’s product 

Safaricom 

presently has 

a gigantic 

share of 

the mobile 

data market. 

Industry 

statistics as 

at June 2014 

showed that 

Safaricom 

controlled 

75.60 percent 

of the mobile 

data market. 


DATA 

Cover Story 

trial is currently limited in scope, 

covering only California and Massachusetts 

(U.S), its success will accelerate the growth 

of its ‘Helpouts’ feature, a concept established 

in November, 2013, that seeks to 

create a marketplace where experts such 

as doctors, chefs and teachers can be contacted 

by users who want specific concerns 

addressed. 

The support of Google in telemedicine 

through the Helpouts feature will be critical 

in the trend’s eventual adoption in markets 

such as Africa, Mukiria observed. “A 

growing body of anecdotal evidence exists 

that strongly links the success of technological 

trends in developing markets such 

as Africa to the support of (these) trends 

by bigwigs such as Google, Microsoft and 

Apple,” he ventured. 

Safaricom’s lucrative opportunity in 

telemedicine will derive from its ability to 

provide fast internet that facilitates video 

conferencing between patients and doctors, 

Mukiria said. “Given that an overwhelming 

majority of Kenyans can’t physically 

access healthcare, telemedicine could be 

an insanely huge opportunity for telecoms 

(such as Safaricom) that facilitate 

the linkage between patients and medics,” 

remarked Mukiria. 

Mukiria’s observation couldn’t be 

any clearer. Dr. Emily Obwaka of Dactari 

Health Ltd. has been advocating for the 

use of the firm’s Afya Telemedicine application, 

which she believes is the answer 

to inaccessible quality healthcare. In a 

feature first published on Nation Media 

Group’s Business Daily, Obwaka said that 

telemedicine was the future of medicine. 

“Telemedicine is the future of medicine 

because it provides you with access to quality 

healthcare at a distance with the use of 

video conferencing and peripheral diagnostic 

tools that a doctor would normally use 

in person,” she was quoted to say. 

Just like Mukiria, Dr. Obwaka was 

quick to note that the success of telemedicine 

depended on “a stable internet connection 

during video conferencing.” Stable 

video conferencing, Mukiria observed, can 

be facilitated by fast 4G internet, which 

Safaricom is developing. “Safaricom’s early 

lead over its competitors in rolling out 

4G means that it will be able to feature 

strongly in Kenya’s telemedicine revolution, 

allowing it to rake in billions in fees 

from the medics who will be aggressively 

establishing new access channels 

with previously inaccessible patients,” he 

concluded. 

Pairing old routines 

Historical case studies point to a strong 

tendency for industries to pair old routines 

with new technologies. “But when you 

pair old routines with new technologies in 

today’s digital age, the need to have fast 

internet connection always emerges,” said 

Mr. Keith White, who Business Monthly 

also pressed for views on the story. 

Mr. White is an American serial entrepreneur 

with a slew of stints in media 

and digital marketing, including licensing 

movies that were distributed across 

top tier stations such as CBS, NBC, ABC 

and Fox. White, who has previously been 

responsible for the digital marketing of 

Sony’s A-list artists, such as Shakira, Marc 

Anthony, Jennifer Lopez and others, countrywide 

in the Dominican Republic, recently 

founded Trak Pay, a mobile payments 

firm that deals in e-commerce in Brazil 

and the U.S. 

Based on his rich experience in digital 

marketing, as well as his development of 

Trak Pay, White told Business Monthly 

that fast internet access “is currently central 

to the adoption of most new concepts 

in the digital world such as e-commerce”. 

“Having fast internet connections is 

paramount in almost any digital field 

you look at today,” he said. “This means 

that the network carrier that is able to 

provide the fastest internet connection 

speeds is likely to make all the money in 

today’s market landscape,” commented Mr. 

White. He further gave the example of 

Trak Pay to reinforce his argument. “Trak 

Pay, for instance, allows merchants to use 

short videos and photos to accelerate their 

selling efforts over mobile networks. For 

this to happen, you need sufficient video 

streaming capacity, both for the merchant 

and the buyer” explained the Trak Pay 

CEO, whose firm received an award in 

2013 from the Bill and Melinda Gates 

Owing to ICT, the level of human 

involvement in the capital market 

has greatly decreased over the years, 

explained Dr. Onyuma, who is also 

the director of finance at private 

investment firm, SIAM Investments. 

“The image that pops in the mind 

of most people when they imagine a 

Foundation for its role in strengthening 

financial inclusion. 

Based on Mr. White’s assessment, 

Safaricom’s early lead in the rollout of 4G 

internet over its competitors in Kenya is 

likely to attract a lot of internet subscriptions 

and partnerships, especially from the 

growing number of e-commerce firms in 

Kenya who are banking on fast internet 

connections to improve their offerings. 

This could considerably grow data’s contribution 

to Safaricom’s earnings. 

Value of one millisecond 

Despite the seemingly immediate 

opportunities in data that areas such as 

trading floor is that of a multitude of 

traders milling around in conspicuously 

color-coded jackets. 

Although the picture is dated, 

the reality it depicts is quickly fading 

into oblivion,” he said in an exclusive 

interview with Business Monthly. 

“ICT has greatly reduced the level 

e-commerce and health present for 

telecom firms, one observer believes 

that there is nowhere where the 

opportunity in data will be more 

profound in the long-term such as 

the capital markets. 

Dr. Samuel Onyuma, an accounting 

and finance lecturer at Laikipia 

University who has authored a multitude 

of scholarly papers as well as 

opinion pieces on reputable publications 

such as Business Daily, said 

that the integration of ICT into the 

capital markets is a great opportunity 

for telecom firms which can 

provide high speed data connections. 

Owing to 

ICT, the level 

of human 

involvement 

in the capital 

market 

has greatly 

decreased 

over the 

years. 

-Dr. Samuel 

Onyuma, 

Director of 

finance, SIAM 

Investments. 

of human involvement in the capital 

markets,” he explained. 

“As ICT’s role in the capital markets 

increases, so will brokers’ ability 

to make more trades per unit time,” 

Dr. Onyuma ventured. This will not 

only increase the revenue that brokers 

raise from fees, but it will also 

increase the overall level of liquidity 

in the market, he explained. 

Owing to the increased income 

derived from faster communication, 

brokers will be willing to pay a premium 

to the telecommunication firm 

that offers the fastest communication, 

Dr. Onyuma explained. 

This means that Safaricom, 

which has taken the lead 

in rolling out high speed 

4G technology, is likely to 

attract a lot of brokers. 

“The firm that will be able 

to position itself as the preferred 

telecommunications 

partner in the capital markets 

value chain will be in for a 

windfall like no other,” explained 

Dr. Onyuma. 

Dr. Onyuma further explained to 

the writer that the pertinence of telcos 

in Kenya’s capital markets would 

be magnified when Kenya’s plans to 

set up a futures market come into 

greater focus. This is because the 

ability to take advantage of the 

price discrepancies between futures 

contracts and the present prices of 

securities is highly dependent on 

the speed with which a trader can 

execute their electronic trades. This 

speed is determined by the telecommunications 

firm providing the data 

services. 

“The futures market is the 

only place where one millisecond 

is far more valuable than it is to a 

sprinter in a hotly contested 100 

meter Olympic race,” remarked 

Dr. Onyuma. This figure of speech 

couldn’t be any more fitting. 

Michael Lewis, a renowned 

American financial journalist and 

novelist, in his controversial bestseller 

Flash Boys explained how futures 

traders and arbitragers known as 

‘high frequency traders’ used high 

speed communications to exploit 

the volatility in prices of securities 

on Wall Street. Lewis’s book lends 

credence to the saying that time is 

money as it shows how high speed 

communications help traders’ computer 

software to detect changes 

in prices milliseconds before the 

general market does, and how these 

software make buy or sell calls to 

the benefit of the trader based on 

this ‘prior price knowledge advantage’. 

Considering the billions of dollars 

that Wall Street firms make in 

high speed trading, Lewis explained 

that it was justifiable for them to 

pay a usuriously high premium 

to the telecom firm that provided 

the fastest data connection speeds. 

Some brokerage firms, Lewis illustrated, 

even spent more than $300 

million boring through mountains 

and under rivers to (sh24 billion) 

build private communications networks 

that were blindingly faster 

than what existing telcos could provide. 

While Lewis’s book was meant 

to question the ethics underlying 

high frequency trading, it inadvertently 

highlighted the great opportunity 

for telecom firms which can 

provide high data speeds in the 

capital markets. 

Even though Kenya’s capital 

markets are not as developed when 

compared to the U.S., the increasingly 

high pace at which the market 

is integrating with ICT, as well as 

the prospect of a futures market in 

the near term, suggests that trading 

firms will soon start paying a fat 

premium for high speed data connections. 

Safaricom’s big head start 

in high speed 4G technology, and 

the fact that it has made data a central 

part of its long-term strategy, 

is therefore likely to pay off handsomely 

in this regard. 


USED CARS 

News Feature 

Used car dealers 

dominate but future 

certain to change 

New data shows that 

Kenya’s total vehicles 

sales in the first 

six months of 2014 

increased to a record 

43,360 units, a 23 percent uptick 

from 35,246 units in the first half of 

2013. The new data further shows 

that used cars accounted for 34,445 

units (79.4 percent) of overall vehicle 

sales in the first half of 2014, a 

19 percent year over year increase. 

Interestingly, this didn’t come as a 

surprise for sector analysts. Used 

car sales generally account for 80 

to 90 percent of total vehicle sales 

in the Kenyan market, as represented 

in historical industry data as 

far back as 2009. But as Business 

Monthly discovers, this may change; 

maybe not now, but in the foreseeable 

future. 

An overwhelming proportion of 

Used car dealers are on an 

ambitious offensive. They want to 

extend their reach beyond thrifty 

households to include cash laden 

county governments on their list of 

top customers. 

order. “The governors as chief executives 

of counties are not bound by 

policies of national government,” said 

Munyori in past media statements. 

It remains to be seen whether the 

central government can persuade the 

autonomous county governments to 

adopt similar standards that would 

limit them to relatively expensive 

new cars. The gaping price differential 

between new cars and used 

cars may, however, may act as an 

incentive for other county governments 

to consider the latter in future 

car purchases, observers say. This is 

because of the increased pressure on 

the national government to reduce 

nonessential spending. This pressure 

is not only coming from the electorate, 

which is clamoring for development 

projects, but also from the 

International Monetary Fund, which 

in its recent Africa Pulse report identified 

Kenya as one of the key African 

governments faced with the challenge 

of a rising budget deficit. This 

suggests that the resulting austere 

policy that will be crafted to reduce 

the deficit will encourage counties to 

continue striking bargains with used 

car dealers. Continued deals between 

used car dealers and county governments 

will serve to the detriment 

of new car dealers, igniting a fierce 

turf war. 

While free market principles 

generally encourage competition, 

there are strong signs that 

the blistering rivalry between used 

car dealers and the new car rivals 

has escalated to worrying levels. In 

July, 2014, used car dealers accused 

their new car rivals of supplying 

the Kenya Revenue Authority (KRA) 

with inflated CRSPs (current retail 

selling price) of models used by the 

taxman to compute tax. This, the 

used car dealers argued, led to a 

higher tax burden for second-hand 

car dealers. “The CRSP (current 

retail selling price) of some models 

are significantly higher than what 

one actually pays at local showused 

cars sales come from households 

and small businesses, industry 

data shows. Households and 

small enterprises generally prefer 

lower prices, explaining why used 

car dealers have cornered this market 

segment. New car dealers, on the 

other hand, mainly target wealthy 

individuals, big corporations and the 

government, all of whom can pay a 

premium. While most used car dealers 

specialize with utility vehicles, 

new car dealers have in recent years 

diversified into the public transport, 

trade and construction sectors. This 

was reflected in the first half of 2014 

when buses and trucks accounted 

for more than 90 percent of all units 

sold by new dealers. 

Used cars dealers have greatly 

benefited from the stability in interest 

rates over the past year. The 

Central Bank of Kenya (CBK) has 

held its benchmark lending rate at 

8.5 percent since May 2013, leading 

to relative stability in commercial 

banks’ interest rates. This is important 

for used car sales because most 

individuals use personal loans to 

purchase cars. Loans to households 

stood at Sh442.9 billion in June, 

2014, accounting for a quarter of the 

Sh1.7 trillion banking sector loan 

book at the time. 

Drawn out battle 

Used car dealers are on an ambitious 

offensive. They want to extend 

their reach beyond thrifty households 

to include cash laden county 

governments on their list of top customers. 

A number of counties led by 

Machakos County bought over 400 

second hand cars in the first quarter 

of 2014, opening a new chapter 

in government vehicle procurement. 

This did not sit well with new 

car dealers, who view government 

customers as their undisputed preserve. 

Consequently, new car dealers 

expressed strong concerns over the 

matter. 

Through their industry lobby, 

Kenya Motor Industry Association, 

new car dealers said that counties 

should follow the same procedures 

as the central government when buying 

cars. The central government and 

its agencies only buy vehicles from 

a list of pre-qualified dealers who 

sell models approved by the State’s 

Mechanical Department. Charles 

Munyori, the secretary-general for 

the used car dealers lobby, Kenya 

Auto Bazaar Association, however 

said that the county governments’ 

decision to buy used cars was in 

While free market principles 

generally encourage competition, 

there are strong signs that the 

blistering rivalry between used car 

dealers and the new car rivals has 

escalated to worrying levels. 



CARS 

News Feature 

rooms,” said Charles Munyori 

of the used car dealers lobby. “This 

is unfair and unnecessarily raises 

costs for used car dealers and their 

customers,” he added. New car dealers 

however denied the allegations. 

Notwithstanding, these kinds of allegations 

strongly suggest that the 

rivalry between the two camps has 

the potential to develop into a drawn 

out battle, especially considering 

that used car dealers have closed in 

on new car dealers’ traditional markets 

such as government customers. 

Fighting back 

New car dealers have however 

not taken kindly to the increased 

prescence of used car dealers in key 

market segments such as government 

customers. Accordingly, new 

car dealers have capitalized on the 

government’s new appetite for leasing 

as opposed to purchasing. In the 

past one year, the government has 

moved to lease over 2,000 units in 

multi-billion-shilling contracts. This 

has greatly served to the benefit of 

new car dealers. In fact, one of the 

key beneficiaries of the leasing contracts 

has been Toyota, which won a 

Sh3 billion tender in 2013 to supply 

1,100 vehicles to the police service 

and another Sh1 billion tender 

in September, 2014, to supply 500 

vehicles to the same institution. 

As government customers continue 

to give leasing contracts priority 

over purchases, it is conceivable 

that new car dealers will record 

modest gains in market share in the 

coming years. Data released by the 

industry lobby for new car dealers 

relating to the first nine months of 

the year indicate that the impact 

of lease contracts on new car sales 

has already kicked in. New cars 

sales rose 30 percent year-on-year in 

the first nine months of the year to 

13,060 units, up from 10,042 units 

in 2013. There was no corresponding 

data on the sales for used cars for the 

first nine months of 2014 by the time 

Kenya is 

following in 

the footsteps 

of South Africa 

and Morocco, 

Africa’s two 

biggest vehicle 

manufacturers. 

of going to press. Notwithstanding, 

experts argue that leases will help 

new car dealers to post record sales 

and gain modest market share relative 

to their used car counterparts by 

the end of the year. This projection is 

informed by the fact that at 13,060 

units, new car sales for the first three 

quarters of 2014 comprised 90 percent 

of overall new vehicle sales for 

the whole of 2013. 

Silent market forces 

Even as the rivalry between new 

and used car dealers rages on, there 

are some silent yet powerful market 

forces acting in the backdrop that 

could change Kenya’s auto landscape 

immensely in the coming 

years. These changes, if not anticipated, 

could have serious implications 

on used car dealers while turning 

the tide in favor of their new car 

rivals. 

There is a strong possibility that 

new car dealers will be able to 

lower their prices significantly in the 

future, allowing them to price at a 

level slightly higher though within 

the range of similar used car models. 

“Price is used car dealers’ key competitive 

advantage over their new car 

rivals,” remarked Dr. Hanningtone 

Gaya, Media 7 Group publisher and 

a veteran motoring columnist. “If 

they (used car dealers) lose their 

competitive advantage, it is hard 

to imagine how they will survive,” 

added Dr. Gaya, who is also the first 

African fellow of The Institute of The 

Motor Industry UK. “There is no 

conceivable reason why one would 

buy a second hand car while they 

can get a new car of the same model 

at a reasonably small premium,” he 

ventured. 

Kenya is following in the footsteps 

of South Africa and Morocco, 

Africa’s two biggest vehicle manufacturers. 

This could greatly benefit 

new car dealers in the country by 

allowing them to lower their prices. 

The core reason why South Africa 

and Morocco are notably successful 

in domestic vehicle manufacturing 

and domestic new vehicle sales is 

that besides a strong local market, 

they have access to attractive 

export markets like Europe. The 

high and consistent demand in these 

exports markets compel Moroccan 

and South African firms to operate 

at a level of output that attracts huge 

economies of scale. These cost savings 

translate into relatively lower 

retail prices for new car dealers in 

the country, allowing them to compete 

more aggressively with used car 

dealers. 

The core reason why South Africa and Morocco 

are notably successful in domestic vehicle 

manufacturing and domestic new vehicle sales 

is that besides a strong local market, they have 

access to attractive export markets like Europe. 

For South Africa and Morocco’s 

auto industries to be where they 

are, the two countries were compelled 

to overhaul their port facilities. 

Both countries have excellent 

port facilities, including dedicated 

vehicle terminals at Durban in South 

Africa and Tanger Med in Morroco. 

The ultramodern port facilities allow 

for faster processing of vehicles for 

export. Accordingly, a 2012 World 

Bank study found that with the 

exception of Durban, cargo spent an 

average of 20 days in African ports, 

compared with three to four days in 

most other international ports. 

The Moroccan and South African 

auto industries also lobby their governments 

strongly and successfully. 

The Moroccan government, as an 

example, offers automotive investors 

in the country a corporate tax 

exemption for the first five years 

plus up to 10 percent of the total 

cost of developing manufacturing 

capacity. It also provides training 

programs for workers in the industry. 


CARS 

News Feature 

Although the Kenyan 

auto market isn’t at the same level 

as South Africa or Morocco, the 

pace at which is heading there is 

worth writing home about. To start 

with, Kenyan vehicle assemblers 

have been able to lobby the government 

to present tax incentives for 

local assemblers. Consequently, the 

25 percent duty on imported cars 

does not apply to local assemblers 

who import vehicle parts, known 

as completely knocked down units. 

This has made local assembly much 

cheaper than importing new cars, 

providing new car dealers who buy 

locally assembled units some flexibility 

in pricing; though not big 

enough to match used car dealer 

prices. Notwithstanding, the tax 

incentive has increased the level of 

local assembly, indicating its positive 

impact. Data from the Kenya 

National Bureau of Statistics shows 

that 52.7 percent of new cars sold 

in 2013 were locally assembled, up 

from 47.3 percent in 2012. 

Kenya is also overhauling its 

ports. Presently, the Mombasa Port 

is in the process of being expanded 

to accommodate higher capacity of 

goods. Construction of another Port 

in Lamu has also begun. Although 

the expansion of ports will take time, 

it will be the ultimate game changer 

that will allow the local auto industry 

to access attractive export markets. 

When this happens, local assemblers 

will be able to attract reasonable 

economies of scale, allowing them to 

pass on the savings to new car dealers 

in the domestic market. 

As far as skills for workers in 

the auto industry go, the government 

plans to set up 60 vocational 

training sectors in all the counties. 

Through Uwezo Fund, the government 

has also partnered with Toyota 

Tsusho, Toyota Kenya’s parent company, 

to establish a Nairobi-based 

academy where young Kenyans will 

be trained on job skills relevant to 

the auto industry and other specialized 

areas. “The short courses 

will include training on earthmoving 

machinery, accounting, entrepreneurship 

and car maintenance, 

among others,” said Toyota Kenya 

Chairman, Dennis Awori, during the 

launch of the academy in mid 2014. 

New strategies 

As things slowly fall into place, 

Kenya will become increasingly 

attractive to vehicle manufacturers. 

The tax incentives, active improvement 

of technical skills, cheaper 

labor and most importantly, development 

of export facilities at the 

ports will attract vehicle manufacturers 

not only targeting the domestic 

market, but other far-off export 

markets. Already, General Motors 

East Africa, which assembles its 

vehicles in Kenya, exports its units 

to the broader East African market. 

Ultimately, local assemblers in 

As things 

slowly fall into 

place, Kenya 

will become 

increasingly 

attractive 

to vehicle 

manufacturers. 

Kenya will be able to work at 

a level of cost efficiency akin to 

South Africa and Morocco. This 

will greatly change the dynamics 

in the market, allowing domestic 

new car dealers who source locally 

assembled units to compete on a 

price basis with their second-hand 

rivals. 

In light of the impending changes 

in Kenya’s auto industry, used car 

dealers need to start crafting new 

strategies. Their current gigantic 

market share should not cloud their 

assessment of the future; a future 

which new car dealers will be able 

to compete on a price basis. There 

will probably be a need for used car 

dealers to merge in order to achieve 

economies of scale. Alternatively, 

they can also introduce attractive 

financing schemes. Although the 

tide of change is still far off, it is not 

too early to prepare. 


SAFARICOM 

Company Focus 

Although Safaricom’s exercise 

will primarily focus on congested 

urban areas, efforts will also be 

directed toward setting up bases 

in the remaining 9 percent of the 

country where the firm does not 

have coverage. 

Why Safaricom’s 

Sh30 bn infrastructure 

overhaul is timely 

Safaricom, which in 2014 

displaced East Africa 

Breweries Ltd as East 

Africa’s biggest firm by 

market value, will invest 

Sh30 billion in an ongoing infrastructure 

expansion program that will 

extend into early 2015. Safaricom 

chief executive, Mr. Bob Collymore, 

said that the fresh capital expenditure 

will focus on improving capacity, 

especially in congested urban areas. 

This, as Business Monthly discovered, 

will help the company iron out its 

online and talking less to each other 

on mobile phones, a mid-year report 

by the CA shows. This is reflective of 

the increased internet connectivity 

in the country, which has increased 

stratospherically in recent years. “It is 

expected that the data/internet market 

will maintain an upward trend in 

the coming periods,” read a section of 

the CA report. 

The CA’s observation on the continued 

uptick in internet penetration 

is corroborated by internet provider, 

Liquid Telecom, in a recently 

released report titled “Lifting barriers 

to internet development in Africa.” 

While making a presentation on the 

report, Liquid Telecoms Kenya CEO, 

Ben Roberts, said that Kenya had 

now joined Johannesburg as one of 

Africa’s two regional internet hubs. 

“Kenya has achieved a confluence 

of infrastructure and provision that 

has positioned it with the highest 

growth in internet take-up compared 

to income per capita in Africa,” 

remarked Roberts. Despite Kenya’s 

growing prominence in internet connectivity 

in Africa, there is still wide 

scope for growth. Data from the CA 

relating to 2014 shows that internet 

connectivity in the country stands at 

52.3 percent, signaling the vast room 

for future growth. 

Being acutely aware of the opporquality 

of service issues while at the 

same time place it in a unique position 

to capitalize on emerging opportunities 

in the telecoms sector. 

Although Safaricom’s exercise 

will primarily focus on congested 

urban areas, efforts will also be 

directed toward setting up bases 

in the remaining 9 percent of the 

country where the firm does not have 

coverage. This is according to statements 

from Bob Collymore, who 

added that the aim was to connect 

Kenya fully. 

Quality concerns 

Safaricom’s Sh 30 bn infrastructure 

expansion exercise comes 

on the heels of the completion of 

the YuMobile buyout, which gave 

Safaricom ownership and control 

of YuMobile’s infrastructure. 

Accordingly, Safaricom is now 

expected to meet the Communication 

Authority of Kenya’s (CA) annually 

reviewed quality of service standards, 

which it previously failed to 

meet due to strained infrastructure. 

In 2013, for instance, Safaricom had 

a score of 50 percent, which was a 

far cry from CA’s required 80 percent 

score. The CA’s score is based 

on eight indicators, including speech 

quality, completed calls, call success 

rates and call drop rates. 

If it is any consolation for 

Safaricom, all the other telcos also 

failed to meet the CA’s quality of 

service standards in 2013. Airtel 

and YuMobile (which had in 2013 

not been acquired) both scored 50 

percent, just like Safaricom. Telkom 

Kenya (Orange) pulled ahead of its 

peers with 62.5 percent, which notwithstanding 

was still considerably 

lower than CA’s 80 percent threshold. 

In light of Safaricom’s failure to 

meet CA’s quality of service standards 

in 2013, as well as the preceding 

four years, the telecom firm 

came under unprecedented pressure 

not just from the regulator, but from 

the Consumer Federation of Kenya 

(Cofek). As represented in press 

statements on its website, Cofek 

pressed Safaricom relentlessly on the 

quality of service issue, asking the 

telecom firm why “drastic consumer 

action” should not be taken against 

it. In response to this sustained pressure, 

Safaricom penned a letter dated 

August 7th 2013 to Cofek Secretary 

General, Mr. Stephen Mutoro, stating 

that it would continue investing 

“significant resources” to improve its 

quality of service. 

Interestingly, Safaricom has kept 

its word a year after it wrote a letter 

to the consumer lobby group saying 

that it would continue allocating 

resources to improve its quality of 

service. The telecom firm continues 

to channel more money than 

any of its peers into infrastructure 

expansion projects—the Sh30 bn 

upgrade and YuMobile buyout are 

fitting cases in point. The Sh 30bn 

infrastructure upgrade, for instance, 

is expected to reduce the number of 

dropped calls on the network and 

enhance overall quality of service. 

New opportunities 

While Safaricom’s current infrastructure 

upgrades are meant to 

improve quality of service for its 

customers, they also serve a unique 

strategic purpose. Increased capacity 

will allow Safaricom to capitalize on 

the emerging opportunities in data. 

Kenyans are chatting more 

The telecom 

firm continues 

to channel 

more money 

than any of 

its peers into 

infrastructure 

expansion 

projects— 

the Sh30 bn 

upgrade and 

YuMobile 

buyout are 

fitting cases in 

point. 

tunities in data, Safaricom has compounded 

its efforts in the segment. 

As a central part of its Sh30 bn 

expansion program, the telecom firm 

will convert its 2G base stations to 

the much faster 3G base stations. 

“Over the last year we have seen a 

lot of growth in data and voice traffic, 

which necessitates us to better 

our infrastructure,” said Safaricom’s 

Collymore in statements relating to 

the Sh30 bn infrastructure expansion 

program. “We need to continually 

invigorate the network in 

order to meet the changing demands 

from our subscribers,” he added. 

Safaricom will also improve the 3G 

networks in cities and other urban 

areas where consumption of data 

services is highest. The 3G stations 

will form the base on which the telco 

can further upgrade to 4G, the next 

generation of technology that offers 

even faster internet connections. 

By focusing on improving data 

services, Safaricom will be able to 

grow non-voice revenues dramatically 

in coming years, allowing it 

to preserve and grow its margins in 

the face of a continually changing 

telecoms landscape. 

Spin off benefits 

The growing internet access in 

Kenya provides strong tailwinds 


SAFARICOM 

Company Focus 

The telecom 

firm continues 

to channel 

more money 

than any of 

its peers into 

infrastructure 

expansion 

projects— 

the Sh30 bn 

upgrade and 

YuMobile 

buyout are 

fitting cases in 

point. 

for the continued expansion of 

e-commerce, an area where 

Safaricom can derive reasonable 

earnings through its M-Pesa payments 

platform. This is an attractive 

spin off benefit of Safaricom’s infrastructure 

expansion plan that the 

telco will be characteristically keen 

to capitalize on. 

The amount of money moved 

through online shops was central 

in placing Kenya among the three 

most aggressive economies in Africa, 

after Nigeria and South Africa, a 

2013 study by multinational professional 

service firm, PwC, shows. This 

signals the growth of e-commerce 

in the country. Deepened internet 

access will continue fanning growth 

in e-commerce, explaining why a 

host of companies have now joined 

the fray. Business Daily’s Knowledge 

Series, The Edge, in October, 17, 

2014 identified at least sixteen 

well established reputable e-commerce 

websites that had set shop in 

Kenya at the time of the publication. 

Among other e-commerce websites, 

the Nation Media Group publication 

identified OLX, which is owned by 

South Africa’s Naspers and Rupu, 

which is owned by Ringier, a Swiss 

media conglomerate. The prescence 

of well established foreign e-commerce 

firms in Kenya represents the 

bright prospects in the country’s fast 

growing e-commerce market. 

Although increased internet penetration 

has played an instrumental 

role in facilitating the growth of 

e-commerce in Kenya, there have 

been many hurdles that have undermined 

growth in the sector. Key 

among these hurdles has been delivering 

online orders in a country 

with strained infrastructure and 

poor addressing systems. Despite 

this seemingly huge goliath of a 

challenge, most e-commerce firms 

remain undeterred in their quest 

to carve out a slice of the market, 

hinting that the profits in the sector 

outweigh the cost of circumventing 

the mammoth challenges. Online 

firm, Kilimall, as an illustration, is 

exploring drone delivery services in 

Nairobi as a means of circumventing 

the issue of poor infrastructure. 

Drones are unmanned aerial vehicles 

that are controlled either autonomously 

by onboard computers or 

through remote control by a pilot in 

a remote location. “We are currently 

engaging the Kenya Civil Aviation 

Authority and will also be talking to 

the Ministry of Defence,” remarked 

Kariuki Maina, Kilimall marketing 

manager. Although approval may 

still be far-off owing to the intense 

safety and security considerations 

that generally go into approving 

drones, Kilimall’s out of the box 

thinking strongly suggests that the 

prospects in Kenya’s e-commerce 

sector are too bright to ignore. This 

intimates that e-commerce’s market 

value will witness astronomical 

upward revisions in coming years. 

The CA estimates that the current 

value of e-commerce in Kenya is 

Sh4.3 billion, compared with South 

Africa’s Sh54 billion, Egypt’s Sh17 

billion and Morocco’s Sh9.6 billion. 

Although the current total market 

value of e-commerce in Kenya pales 

in comparison to what Safaricom 

derives from its primary market 

segments such as voice and SMS, 

e-commerce is still a high priority 

area for the firm. When the Kenyan 

e-commerce market value is viewed 

in the context of what advanced 

markets such as South Africa are 

worth, it is clearly evident that there 

is still wide scope for future growth 

in the Kenyan market. 

Safaricom’s continued infrastructure 

expansion to support 

increased internet penetration will 

therefore not only serve to increase 

the firm’s data revenue, but it will 

also present a platform for the telco 

to pursue greater opportunities in 

payments in East Africa include airtime, 

which comprises 46 percent of 

e-commerce business, mobile phones 

and accessories (30 percent), bills 

(10 percent), clothing (5 percent) 

and food (2 percent). Safaricom 

facilitates transactions in all these 

areas, especially in airtime and bills 

where it users rely on its sim-based 

M-Pesa application, and in mobile 

phones and accessories sales where 

it has a web-based marketplace that 

accepts M-Pesa. 

This couldn’t be timed any better 

in light of the recent entry of formidable 

rivals into the payments market 

such as Equity Bank. The bank, 

which is Kenya’s biggest lender by 

customer base, recently rolled out a 

SIM-based payments solution that 

experts argue will give Safaricom’s 

M-Pesa a run for its money. 


NIGERIA 

Country Focus 

Today, seven of the ten fastest 

growing economies in 

the world are in Africa. But 

the growth is not inclusive. 

Growth is important, but 

nobody eats GDP. Africa’s rural economies 

harbour the greatest share of 

those being left behind or excluded. 

We must ensure that Africa grows in 

a way that lifts hundreds of millions 

out of poverty. Because the majority 

of our people are in the rural areas, 

we must make sure that the nature 

of the new growth in Africa is one 

that opens up the rural economy. A 

totally revived rural economy must 

become the new economy of Africa. 

We must end the era of prodigal 

economics, where Africa ignores 

its own agricultural potential and 

turns itself into a net food importing 

region, spending a whopping $35 

billion on food imports annually. Yet, 

65% of all available arable land to 

feed the 9 billion people in the world 

by 2050 lies in Africa. 

It was this belief that led Kofi 

Annan, as United Nations Secretary 

General in 2004 to call for a uniquely 

African green revolution, which 

inspired all of us. He knew that 

Africa has potential in agriculture, 

and like the visionary late Dr. 

Norman Borlaug, he threw a challenge 

to all of us right here, in Addis 

Ababa on July 5, 2004 to achieve 

this green revolution. 

Much has been achieved since 

we started and the journey is full 

of emerging shoots of successes. 

From the rolling hills of Rwanda 

to the highlands of Ethiopia, the 

southern Tanzania, Ghana, Mali, 

Mozambique, Matoke fields in 

Uganda and the diverse ecologies of 

vast lands of Nigeria, fields of hope 

with bumper harvests are rising. 

I am inspired by the level of partnerships 

for change that have been 

built over the years – an alliance of 

farmers, researchers, political leaders, 

private sector and philanthropic 

organizations, all with one goal 

Africa’s quest to 

feed itself lies within 

We must set higher targets for ourselves in this quest for Africa to feed itself. 

We must not get complacent, for the voices of millions of malnourished children 

must spur us to action. No African child must ever go hungry. 

and one mission: turn Africa into a 

breadbasket for the world. 

We must set higher targets for 

ourselves in this quest for Africa to 

feed itself. We must not get complacent, 

for the voices of millions of 

malnourished children must spur us 

to action. No African child must ever 

go hungry. 

To achieve our goal, we must set 

a new vision for agricultural transformation, 

inspired by the political 

leadership of African leaders and the 

African Union. As it was during the 

days of apartheid, Africans united 

together, our leaders inspired us 

and our friends supported us. Africa 

must feed itself and all Africans 

must arise. This new vision must be 

one that sees agriculture as a business 

not as a development program. 

The new vision must be focused on 

governments enabling the private 

sector. We must focus sharply on 

raising private sector investments in 

agriculture. 

This new vision for transforming 

Africa’s agriculture is what I 

Our new rice policy has attracted 

$1.6 billion of private sector investments, 

and we expect that Nigeria 

will become a net exporter of rice, 

just like Thailand or India, within 

the next four years. Such is the 

power of science and technology 

when matched with strong supportive 

policy support instruments to 

drive impacts at scale. 

As a result national food production 

increased by an additional 

21 million MT between 2012 and 

2014, surpassing the set target of 20 

million MT set for 2015. Nigeria met 

its MDG Goal One on hunger and 

extreme poverty two years ahead 

of the 2015 United Nations target. 

Nigeria’s food import bill declined 

from $6.9 billion in 2009 to $4.35 

billion in December 2013 and continues 

to decline. Such is the power 

of agricultural transformations when 

there exists strong political will and 

supportive policies. 

But we need more than bountiful 

harvests. We must create markets 

for farm produce. Much is being 

achieved, as commodity exchanges 

are expanding across the continent, 

from South Africa, Ethiopia, 

Rwanda, Kenya, Nigeria, as well as 

warehouse receipt systems. 

We must add value to all our 

farm produce. There is nothing like 

a low value crop. In Nigeria we have 

embarked on a major effort to use 

cassava flour to substitute for wheat 

flour in bread and confectionaries. 

Today, 35 bakeries have shifted 

to the composite cassava-wheat 

flour, including the largest supermarket 

chains in Africa; Shop Rite 

and Spar. By substituting 20% cassava 

flour, Nigeria will save over $ 

1 billion annually and unlock new 

economic opportunities for cassava 

farmers and processors. 

Nestle is using millet to produce 

top end breakfast cereals, while in 

Kenya, Uganda and Nigeria sorghum 

is used by the brewercall 

“government-enabled privatesector 

led agricultural transformation 

agenda.” Under this new vision, 

governments must become innovators 

just like the private sector and 

develop innovative policies and institutions 

that will expand opportunities 

for the private sector, especially 

farmers who themselves form the 

largest private sector. 

African governments must boldly 

support their farmers. They must 

also ensure that input markets work 

for farmers. Some may argue that 

supporting farmers in Africa via subsidies 

is not sustainable. I argue that 

poverty is not sustainable. Africa 

cannot become a museum of poverty. 

Poverty is not tradable and is 

not an industry, so Africa must not 

grow poverty. What is important is 

to develop ways of effectively targeting 

support to reach farmers, while 

ensuring that the private sector, not 

the government, delivers farm inputs 

to farmers. 

This is what we did in Nigeria. 

When I took office as Minister of 

Agriculture in 2011, we ended four 

decades of fertilizer sector corruption 

within 90 days and with it the 

era of government buying and distributing 

seeds and fertilizers, and 

replaced it with a private sectordriven 

system. 

The role of government shifted 

to providing targeted farm support 

directly to farmers for seeds 

and fertilizers via electronic coupons 

on mobile phones or “e-wallets”. 

Between 2012 and 2014, a 

total of 14 million farmers received 

their subsidized farm inputs using 

electronic vouchers on their mobile 

phones to directly pay private sector 

input retailers. 

To enable the private sector seed 

companies to develop and thrive, we 

ended government monopoly over 

foundation seeds and opened it all 

up to the private sector. My dear 

friend and colleague, Joe Devries 

To enable 

the private 

sector seed 

companies 

to develop 

and thrive, 

we ended 

government 

monopoly 

over 

foundation 

seeds and 

opened it 

all up to 

the private 

sector. 

and his team at AGRA helped us to 

strengthen the capacity of our seed 

companies. Spurred by the demand 

for seed through the e-wallet system, 

the number of seed companies in 

Nigeria rose from 5 to 80 within 

three years. 

One of the local seed companies, 

Maslaha Seeds has become a 

pride of the nation, increasing its 

seed production from 14,800 MT 

in 2011 to about 150,000 MT by 

2013. I always knew that with me as 

Minister in Nigeria and support of 

my friend Joe Devries, we could do 

amazing things. 

Nowhere is the impact of these 

policies more evident than in our 

drive to become self-sufficient in rice. 

Between 2012 and 2014, 6 million 

rice farmers were reached with the 

improved rice varieties. Total cumulative 

cultivated rice area rose by 2 

million hectares. National paddy rice 

production rose by an additional 7 

million MT. 


NIGERIA 

Country Focus 

ies to replace malt, and in Ghana 

and Mozambique cassava beer has become 

popular from SAB Miller. 

We must unlock new sources of financing 

for agriculture. With rapid economic 

growth in Africa, the pool of funds in the 

private sector is expanding and dwarfs 

public funds. 

Pension funds, sovereign wealth funds, 

equity markets and bond markets all offer 

great opportunities to deploy financing for 

development of agriculture infrastructure, 

roads, rails and ports and irrigation. We 

must leverage these to access long term 

financing for agriculture. To do so, we must 

de-risk the financial value chains. 

Africa is succeeding in doing this using 

innovative financing tools, AGRA successfully 

leveraged banks in Kenya, Tanzania, 

Uganda, Ghana and Mozambique to lend 

over $100 million to small farmers and 


In Nigeria, we designed the risk sharing 

facility for the Central Bank of Nigeria, 

which leveraged $3.5 billion of lending 

from the balance sheets of banks to agriculture 

value chains. In all these cases, the 

default rates by farmers and agribusinesses 

has been less than 2-3%, and in the case of 

Africa is succeeding 

in doing this using 

innovative financing 

tools, AGRA successfully 

leveraged banks in 

Kenya, Tanzania, Uganda, 

Ghana and Mozambique 

to lend over $100 million 

to small farmers and 


Nigeria it has been 0% for the past three 

years. Farmers should be provided with 

affordable single-digit interest rates to further 

spur growth across Africa rural areas. 

To achieve Africa’s goal of being a 

global powerhouse in agriculture, governments 

must enable the private sector to 

drive mechanization of agriculture. Talk to 

anyone about agriculture in Africa and they 

will paint a picture of farmers – mainly 

women – with hoes and cutlasses. We must 

face the fact: hoes and cutlasses are outdated 

technologies. They simply connote 

suffering. The time has come to rapidly 

mechanize Africa’s agriculture. 

President Jonathan launched in 

November a $340 million farm mechanization 

policy to take hoes and cutlasses 

into the museums and replace them with 

affordable and appropriate modern farm 

machinery. 

The government will enable the private 

sector tractor manufacturers and service 

operators to establish 1,200 Agricultural 

Equipment Hiring Enterprises across the 

country. Government will provide mechanization 

grants to farmers on their mobile 

phones, which they will use to access 

mechanization services from private sector 

mechanization service operators. 

To reach farmers at scale, major attention 

should be put to revamping agriculture 

extension systems across the continent. The 

use of mobile phones for e-extension and 

farmer-help line centres that link researchers 

and farmers in real time should be 

promoted. 

mAdvances in rapid soil testing such 

as the Soil Doctors developed at Columbia 

University, which allows rapid diagnosis 

of soil nutrient problems within minutes, 

should be promoted across Africa to support 

sustainable agriculture. Young agricul- 

ture graduates can become mobile 

extension agents servicing the needs 

of farmers. 

We must address the rapidly 

ageing population of farmers in 

Africa. With average age of farmers 

at 60 years in many countries, and 

with the youth migrating into urban 

areas, Africa faces the risk of having 

no farmers left within 20 years. We 

must avoid this “ageing farmer crisis’ 

and take decisive policy steps to get 

the youth into agriculture. 

That is why in Nigeria we 

have set the deliberate policy to 

establish the Youth Employment in 

Agriculture Program with the goal 

of developing 750,000 new cadres of 

young commercial farmers and agribusiness 

entrepreneurs over the next 

five years. They will be supported 

with access to technical and business 

skills, access to land and affordable 

finance and market development 

support systems. We must also make 

agriculture exciting for the youth. 

The “Do Agric – It pays” initiative 

of African musicians, inspired 

by the development-focused Irish 

Pop Star, Bono, is already getting 

the youth to see agriculture as a 

viable business. If well supported, I 

believe the future young millionaires 

of Africa will come out of agriculture. 

Yes, Do Agric – It pays! 

Many of these should be women, 

so we must pay greater attention to 

the needs of women farmers, who 

form the majority of farmers, but 

are marginalized and lack access 

to labour saving farm equipment, 

extension, finance, and secure land 

rights. African women farmers have 

waited too long. Now, we must arise 

and embark on bold Africa-wide policy 

interventions to end this marginalization. 

Words will not be enough, 

only actions will count. 

To start, we must adopt an affirmative 

finance action for women 

across Africa, requiring that at least 

30% of all loans by finance institutions 

go to women farmers and 

President 

Jonathan 

launched in 

November 

a $340 

million farm 

mechanization 

policy to take 

hoes and 

cutlasses into 

the museums 

and replace 

them with 

affordable and 

appropriate 

modern farm 

machinery. 

women agribusinesses. Evidence 

shows that women rarely default. 

Nothing pays better than investing 

in women. 

But the gains we have made in 

the past few years are being challenged 

by climate change. Greater 

public funding for research will be 

needed to develop heat, drought and 

flood tolerant crops, forages that can 

cope with heat stress, animals with 

high stress tolerance levels, as well 

as improving adaptation for farmers. 

Improved land and water management 

will become even more 

important, as well as the use of agroecological 

approaches. It is imperative 

for governments, researchers 

and the wider development community 

to build resilience into agricultural 

value chains. Public policies 

should support farmers to take 

up crop and livestock insurance, as 

these are beyond the reach of many 

poor farmers. We must not abandon 

farmers in the face of climate change. 

Despite gains being made in the 

transformation of agriculture, Africa 

still faces a huge challenge with malnutrition. 

While our cities are getting 

face lifts with modern infrastructure, 

we are not investing in “grey matter 

infrastructure”. The picture is not 

pretty as 26% of all malnourished 

children in developing countries are 

in Africa. We must broaden the green 

revolution agenda to include nutrition. 

We should aggressively promote 

food fortification, bio-fortification, 

school feeding programs and 

provision of multi-nutrient powers 

to mothers. 

We must set a new agenda to 

develop effective public-private partnerships 

that will end malnutrition 

in Africa. Today, over 80% of the high 

energy foods used in Africa are from 

Asia and Europe. But all it takes to 

develop these high energy foods are 

sorghum, maize and soybeans, all 

of which are produced abundantly 

now in Africa. To address this, a 

Partnership for High Energy Foods 

in Africa is being developed, spearheaded 

by public and private sector 

within Africa. 

Today, let us strengthen the 

power of partnerships. From the 

inspiring work of AGRA, Africa 

Union’s New Vision for Agriculture, 

Grow Africa, New Alliance for Food 

and Nutrition, there is new momentum 

behind agriculture in Africa. 

We have reached the tipping point. 

Now we must ensure that we deliver 

greater impacts for African agriculture 

through government-enabled 

private sector-led agricultural transformation. 

I have every confidence that, 

together, we will feed Africa. I cast 

my mind back to the days of apartheid 

struggle, as bold leaders chanted 

“Amandla” (power) and the people 

responded “Ngawethu” (power to the 

people). 

Today, as we drive the green revolution 

for Africa, the same slogan 

applies, except the power now is the 

power to innovate, to drive change, 

develop and scale up appropriate 

technologies, transform institutions 

and make Africa the continent of 

our dreams: full of prosperity and 

inclusive growth for hundreds of 

millions of people. You are the leaders 

than can make this happen. Then 

all of Africa’s farmers will respond 

to your shout of “Amandla” with 

“Ngawethu”! 

By Dr. Akinwumi Adesina, Honourable 

Minister of Agriculture of Nigeria 


ENERGY 

Sector Feature 

Olkaria’s new plant to 

steam 140mw into the economy 

For an extended period 

now, Kenyan manufacturers’ 

appeals for cheaper electricity 

have been as consistent 

and resounding as the 

archetypical African MP’s plea 

for a higher salary. 

Aa day after jetting in 

from a high profile business 

summit in Kigali, 

Rwanda, President 

Uhuru Kenyatta officially 

commissioned a new power plant 

at the Olkaria IV power plant. 

The 52 year old leader was visibly 

excited as he toured the Naivashabased 

geothermal power plant, his 

broad smile expressing his exuberance 

more accurately than words 

could describe. The president’s contagious 

felicity was inspired by the 

fact that he had not only commissioned 

the world’s biggest geothermal 

plant, but that the plant presents 

an avalanche of economic benefits 

for Kenya. Business Monthly 

identified these benefits, describing 

how they will help power the country’s 

economy. 

While commissioning the 

140mw plant in Olkaria Naivasha, 

President Uhuru Kenyatta said 

the cost of power in Kenya would 

decline by 30 percent within the 

October-November time period. 

Costs, he explained, would decline 

as a function of increased power 

supply. He also added that the 

when his government commissions 

yet another 140mw plant in 

Olkaria in the month of December, 

costs will decline even further by a 

staggering 50 percent. This, he said, 

was in line with the goal to increase 

power production to 5,000mw by 

2017. “We are committed to increasing 

power production to 5,000mw 

by 2017, and also make sure that 

the cost of living comes down,” 

remarked a sprightly Kenyatta. The 

president’s stance was corroborated 

by statements from Energy Cabinet 

Secretary, Davis Chir Chir, who also 

added that power production had 

risen from 1,600mw to 2,350mw 

under the Kenyatta Administration. 

Manufacturers win 

For an extended period now, 

Kenyan manufacturers’ appeals for 

cheaper electricity have been as consistent 

and resounding as the archetypical 

African MP’s plea for a higher 

salary. The only big disappointment 

is that unlike MPs, Kenyan 

manufacturers’ pleas have not been 

heard fast enough. This has imposed 

serious implications on the sector. 

Kenya Association of Manufacturers 

(KAM) chief executive, Betty Maina, 

has expressed concerns over the 

high cost of electricity repeatedly in 

addresses to the media. “The current 

high power tariffs are already having 

a negative impact on the country’s 

manufacturing sector,” Maina said 

in previous media statements. “This 

is in turn hurting our competitiveness 

in the international market, as 

locally produced products are priced 

higher than those produced by competing 

countries,” added Maina, who 

represents over 9,000 manufactures 

at the helm of the KAM. 

High energy costs have not only 

severely constrained Kenyan manufacturer’s 

ability to compete, but 

have hamstrung Kenya’s progression 

on the World Bank’s ease of 

doing business survey. Data from 

the World Bank’s ease of doing 

business report shows that Kenya 

scored overall position 106 in the 

2010/11 rankings, position 109 in 

the 2011/12 rankings, position 121 

in 2012/13 rankings and position 

129 in 2013/2014 rankings. 

Kenya’s decline in ease of doing 

business linked to high cost of energy 

While the World Bank reports 

identified a number of factors as 

contributors to Kenya’s decline for 

four years straight in the ease of 

doing business survey, the high cost 

of energy was repeatedly keyed out 

as a notorious contributor. The additional 

140mw that Olkaria IV promises 

should, however, help address 

the problem of high cost of electricity. 

This will be welcome news for 

manufacturers, who use up close to 

60 percent of the energy produced 

in the country, according to government 

reports. 

Year Global Position Number of positions dropped 

2010/11 106 — 

2011/12 109 3 

2012/13 121 12 

2013/14 129 8 

The decision to broaden Kenya’s 

energy mix to include a higher composition 

of geothermal sources is 

also benefits manufacturers. Kenyan 

manufacturers regularly lament that 

the issue is not just the cost of electricity, 

but the ability to receive it 

consistently without outages. “One 

would rather have expensive but 

consistent and reliable power, than 

rationing which will result in massive 

losses as a result of non- productivity,” 

said KAM’s Maina. 

Geothermal sources enable 

Kenya to reduce dependence on 

hydroelectric power, which is subject 

to the vagaries of rain patterns. In 

the past, erratic rain patterns have 

led to serious shortfalls in electricity 

supply, leading to rationing and terrifyingly 

high utility bills for manufacturers 

and businesses. Worse still, 

erratic rain patterns are expected to 

persist, if not get worse, according 

to a 2014 African Agriculture Status 

Report. The report, which was 

recently released in Addis Ababa, 

Ethiopia, says that the pace and 

severity of climate change in Africa 

will increase. This observation is 

shared by the Intergovernmental 

Panel on Climate Change (IPCC), 

which expects rainfall in East Africa 

over the next several years to be 

more erratic and sporadic, despite 

a slight increase in overall volume. 

With the projected increase 

in erratic rain patterns, the need 

to explore new sources of energy 

beyond rainfall in Kenya will be 

magnified. The expansion of geothermal 

sources in Olkaria is therefore 

welcome news as it will allow 

the government to supply energy 

consistently even in the face of unexpected 

changes in rain patterns that 

may affect hydroelectric power generation. 

Lingering concern 

While manufacturers are generally 

elated by the prospect of cheaper 

energy, some critics argue that 

With the 

projected 

increase in 

erratic rain 

patterns, 

the need 

to explore 

new sources 

of energy 

beyond 

rainfall in 

Kenya will be 

magnified. 


ENERGY 

Sector Feature 

there is a lingering concern that 

needs to be addressed. According to 

critics, the government is overambitious 

in its plan to expand power 

production to 5,000mw by 2017. 

This capacity, they argue, could leave 

the country with more energy than 

it needs. This has fanned fears that 

the surplus energy could end up 

going to waste; a fear that is further 

compounded by the fact that KAM 

admits that the country’s current 

manufacturing base cannot take up 

all the new electricity expected to 

come on board. “We need new industries 

in the country to ensure the 

5000MW of energy are utilized,” 

ventured KAM’s Betty Maina. 

Key stakeholders in the energy 

sector have however taken preemptive 

measures to ensure that surplus 

energy does not go to waste. 

The Kenya Electricity Generating 

Company (KenGen), Geothermal 

Development Company (GDC), 

Kenya Power and Lighting Company 

(KPLC) and other sector stakeholders 

have designed a web portal where 

manufacturers and other large and 

medium sized consumers can provide 

the government with information 

relating to their energy needs. 

In a press release on the company 

website, KPLC managing director, 

Dr. Ben Chumo, said the web portal 

will help the sector gauge electricity 

requirements for medium and large 

power consumers who are either 

planning to invest or are already 

operating in the country. This program 

will help the energy sector to 

project the level of demand before 

it produces electricity, limiting the 

possibility of wastage. “The project 

(demand forecasting) is important 

to ensure that the power generated 

does not go to waste,” said Betty 

Maina 

Based on statements from 

President Kenyatta, it appears that 

analysts should take comfort rather 

than concern in the fact that Kenya’s 

energy sector will be able to produce 

higher output of power. According 

to President Kenyatta, the ability 

to produce more power is vital in 

increasing Kenya’s appeal as a low 

cost destination for investors. An 

influx of investors will help reverse 

the soaring levels of unemployment, 

especially among the youth. 

“We expect more investors in the 

country and also more job opportunities 

for our youths, following 

the commissioning of this project,” 

remarked President Kenyatta while 

in Olkaria, Naivasha. Coupled with 

reforms in the judicial sector, as 

well as improvements in infrastructure, 

cheaper electricity will increase 

Kenya’s luster among investors, 

attracting them in droves. 

Trickle down 

The government has already 

started preparing the workforce for 

the influx of investments in manufacturing. 

It is establishing vocational 

training facilities to increase the 

number of workers with specialized 

skills. The Ministry of Education 

announced in August, 2014, that 

it had selected 60 constituencies 

where new technical institutes would 

be built, strongly suggesting that 

the government is anticipating and 

preparing for increased investments 

The benefits 

of lower 

electricity 

costs will also 

trickle down 

to the folks 

of the bottom 

of pyramid 

through lower 

utility bills 

and a general 

decline in the 

cost of living. 

in manufacturing brought about by 

incentives such as cheaper and reliable 

power. 

The benefits of lower electricity 

costs will also trickle down to 

the folks of the bottom of pyramid 

through lower utility bills and a 

general decline in the cost of living. 

The high cost of living notoriously 

and consistently features in Kenya’s 

list of grievances like a perpetual 

troublemaker in a primary school 

class prefect’s list of noisemakers. 

A slew of polls and reports strongly 

corroborate this observation, including 

one released by Ipsos Synovate in 

March, 2014 where a staggering 50 

percent of respondents identified the 

high cost of living as their greatest 

concern. “Cost of living continues as 

the main issue that worries Kenyans 

the most with 50 per cent mentioning 

it when asked to identify whatever 

they feel the most serious issue 

is in the country as a whole,” said 

Ipsos Synovate while releasing its 

poll. The high cost of living in Kenya 

is strongly linked to the high cost of 

energy. This is because energy costs 

account for up to 40 percent of the 

production expenses of manufacturers 

in Kenya, according to KAM’s 

Betty Maina. 

As manufacturers and businesses 

enjoy lower cost of energy, it is 

expected that a portion of the saved 

costs will be passed down to consumers 

in the form of lower product 

prices. This will include a decline 

in the price of basics such a maize 

flour and sugar, which are usually 

inflated by high energy costs during 

processing. “Take my word that the 

cost of goods will come down and 

this will lead to a lower cost of living 

for all Kenyans,” said President 

Kenyatta while speaking after commissioning 

Olkaria IV in Naivasha. 

“What you are seeing is not a story, 

it is facts that are happening,” added 

the Deputy President, William Ruto, 

who also talked to the media at the 

commissioning of Olkaria IV. 


FOOD 

Special Report 

The GMO debate 

rolls in again 

In 2012, the Kenyan government imposed a blanket ban on the importation of Genetically 

Modified Organisms (GMOs). This ban was primarily informed by the findings of a research 

conducted by French scientists that linked GMO products to cancer. The study was however 

recanted on grounds that it did not follow the internationally accepted standards of 

undertaking research. Despite the recantation of the study, the ban has still not been lifted. 

This has invited sharp criticism from biotechnology companies. Now, major higher learning 

institutions in the country have joined the fray, arguing that biotechnology offers the country 

the best way out of malnutrition and hunger. Despite the increased advocacy for lifting the 

GMO ban, a formidable cohort of anti-GMO lobbyists are still strongly opposed to GMOs. 

Interestingly, both proponents and opponents of GMO present powerfully persuasive 

arguments. But who is right? Business Monthly’s Lennox Yieke reports. 

On October 3, 2014, top 

Kenyan scientists from 

leading public universities 

told a parliamentary 

committee that the 

controversial ban on importation 

and consumption of GM products 

needed to be urgently lifted in order 

to address food security issues. 

The scientists hailed from Egerton 

University, Kenyatta University, 

University of Nairobi and the Jomo 

Kenyatta University of Science 

and Technology. Led by Egerton 

University vice chancellor, Professor 

James Tuitoek, the university dons 

said that the methods used to produce 

GM crops were safe. “We know 

that there have been controversies 

surrounding consumption of GM 

foods from various pressure groups 

but we can assure you that there is 

nothing sinister in the work we do,” 

remarked Professor Tuitoek. 

Besides outlining the GM product 

ban’s negative effect on food 

security, the team of university scientists 

also told legislators that it was 

ironical that the same government 

that was funding their GM-centered 

research projects was limiting the 

use of the findings of their research 

work. “We were given Sh18 million 

to develop new varieties of sweet 

potatoes and we are using transgenic 

maize and cassava. It is not 

right for the same government to 

ban the use of the same products,” 

remarked Dr. Richard Oduor of 

Kenyatta University while addressing 

Members of Parliament at the 

parliamentary committee. 

Despite the apparent endorsement 

of GM crops by top university 

researchers in the country, 

MPs expressed concerns that the 

scientists who initially advised then 

Public Health Minister, Beth Mugo, 

on the ban held a divergent view— 

that GMOs were unsafe. “You are all 

scientists but you cannot agree on 

this very important issue. We cannot 

ask the government to lift the ban if 

you can’t convince us of the safety 

of the GMOs,” said Mumias East 

On October 3, 2014, top Kenyan 

scientists from leading public universities 

told a parliamentary committee 

that the controversial ban 

on importation and consumption of 

GM products needed to be urgently 

lifted in order to address food 

security issues. The scientists hailed 

from Egerton University, Kenyatta 

University, University of Nairobi 

and the Jomo Kenyatta University 

of Science and Technology. Led by 

Egerton University vice chancellor, 

Professor James Tuitoek, the university 

dons said that the methods 

used to produce GM crops were safe. 

“We know that there have been controversies 

surrounding consumption 

of GM foods from various pressure 

groups but we can assure you that 

there is nothing sinister in the work 

we do,” remarked Professor Tuitoek. 

Besides outlining the GM product 

ban’s negative effect on food 

security, the team of university scientists 

also told legislators that it was 

ironical that the same government 

that was funding their GM-centered 

research projects was limiting the 

use of the findings of their research 

work. “We were given Sh18 million 

to develop new varieties of sweet 

potatoes and we are using transgenic 

maize and cassava. It is not 

right for the same government to 

ban the use of the same products,” 

remarked Dr. Richard Oduor of 

Kenyatta University while addressing 

Members of Parliament at the 

parliamentary committee. 

Despite the apparent endorsement 

of GM crops by top university 

researchers in the country, 

MPs expressed concerns that the 

scientists who initially advised then 

Public Health Minister, Beth Mugo, 

on the ban held a divergent view— 

that GMOs were unsafe. “You are all 

scientists but you cannot agree on 

this very important issue. We cannot 

ask the government to lift the 

ban if you can’t convince us of the 

safety of the GMOs,” said Mumias 

East MP, Benjamin Washiali. The 

sharp division between researchers 

on the safety of GMO products is not 

isolated to Kenya, but is a reflection 

of the current pull and push between 

GMO supporters and opponents in 

the global sphere. 

On the global level, leading 

biotechnology company, Monsanto, 

has routinely dismissed criticism on 

the safety of GMO products. Hugh 

Grant, CEO of Monsanto, told financial 

media outlet, Bloomberg News, 

in a 2013 interview that opponents 

of genetically-engineered crops 

could afford to choose what kind of 

food they wanted to buy and weren’t 

concerned with the needs of the rest 

of the world. Grant’s adver- 

On the global 

level, leading 

biotechnology 

company, 

Monsanto, 

has routinely 

dismissed 

criticism on the 

safety of GMO 

products 



FOOD 

Special Report 

sarial tone is clearly indicative 

that the GMO debate has become a 

bare-knuckle fight, suggesting that 

the stakes are probably higher than 

publicly understood. 

Cash Crop 

There is arguably no area that 

the GMO debate has fiercely raged 

on, both globally and domestically, 

such as cotton. The cash crop is a 

high stakes area as it is a primary 

feedstock for the fashion industry, 

an industry estimated at $1.5 trillion 

globally. The irresistible financial 

incentive of featuring in the 

value chain of the lucrative fashion 

industry has pushed biotechnology 

companies to strongly advocate 

for the adoption of GM cotton. 

This has perhaps been best represented 

in Monsanto’s spirited push 

for Bt-cotton in African countries, 

including Kenya. 

Bt-cotton has been touted by 

Monsanto as a good option for farmers 

since it has an inbuilt mechanism 

to get rid of bollworm, a notorious 

pest that unfailingly attacks cotton. 

This means that farmers who use 

Bt-cotton reduce overuse of pesticides 

and in turn lower the economic 

and environmental costs of cotton 

farming. 

Poor quality of seeds and high 

costs of pesticides have been repeatedly 

identified as leading causes 

of the dramatic decline of Kenya’s 

cotton sector. This is a view carried 

by the Food and Agricultural 

Organization (FAO). In a 2012 

report, FAO argues that poor quality 

seed is partly responsible for 

the decline in Kenya’s cotton sector. 

FAO’s view is corroborated by 

the Cotton Development Authority, 

which also identifies high cost of pesticides 

as a primary reason for the 

decline in the country’s cotton sector. 

Reports show that Kenya produced 

an excess of 38,000 tons of cotton 

in the 1980s. In 2010, however, the 

tonnage had declined to just 11,000, 

signaling the sharp drop in output 

in the sector. The FAO report, titled 

Analysis of incentives and disincentives 

for cotton in Kenya, shows 

that the country has an estimated 

384,500 hectares of land available 

for cotton production, but only 10 

percent is utilized. 

Adopting Bt-cotton, which 

promises higher seed quality and 

lower pesticide use, is thereby seen 

as a necessary step to reverse the 

troubled fortunes of cotton farmers 

in Kenya, at least when viewed 

from the perspective of GM crop 

supporters. 

Populist route 

Calls to lift the GMO ban and 

introduce Bt-cotton conveniently 

play into populist calls for job creation 

in Kenya. This is because the 

Bt-cotton debate is staged against 

the backdrop of the highly possible 

extension of the Africa Growth and 

Opportunity Act (Agoa), a piece of 

legislation in the US that allows 

duty free entry of over 6000 categories 

of African goods into the 

US market, key among them textiles. 

Agoa, which is set to expire 

in September 30, 2015, may be 

extended. At least this is what 

policy makers across Africa and 

the US expect, including Kenya’s 

Adan Mohammed, the Cabinet 

Secretary for Industrialization and 

Enterprise Development. “In principle, 

the extension has been agreed,” 

Anti-GMO 

activists in 

Kenya fear that 

if GM cotton 

is introduced, 

monopolistic 

tendencies 

among big seed 

companies will 

brew, leading to 

the overpricing 

of seeds and 

consequent 

indebtedness 

and misery of 

Kenyan cotton 

farmers. 

remarked Mohammed at the historic 

US-Africa Summit that was held in 

August, 2014 in Washington D.C. 

If Agoa is extended, which is 

almost certain, Kenya’s textile sector 

will receive a lifeline. This will bring 

the cotton sector into greater focus, 

making it easier for proponents of 

Bt-cotton to argue out their case. 

Kenya has already started setting 

the stage for a textile city in Athi 

River. This initiative, the ministry 

of Industrialization and Enterprise 

says, will attract at least 100 textile 

investment firms and create more 

than 200,000 sustainable textile jobs 

by December 2016. If proponents of 

Bt-cotton are able to structure their 

arguments along the lines of their 

role in making sure that these textile 

jobs are created, then they will be 

able to present a uniquely strong 

case. This is because their advocacy 

for lifting the GMO ban will be cleverly 

tied into to the nation-wide call 

for job creation, allowing the pro- 

GMO activists to mobilize sufficient 

public support to sway legislatures 

into heeding their calls. 

Extensive tests have shown that 

Bt-cotton is indeed resistant to bollworm, 

validating claims that it reduces 

the need for pesticides. Charles 

Waturu, one of the lead scientists 

on Bt Cotton at Kenya Agricultural 

Research Institute (Kari), said that if 

Bt-Cotton was brought to market it 

would reduce the need for pesticides 

from about twelve times to three 

times. Waturu, who was quoted on 

The East African, a Nation Media 

Group publication, added that Kari’s 

laboratory and field trials for Bt 

Cotton were successful and that the 

National Biosafety Authority was 

impressed with the findings. 

While tests, reports and the 

existence of convenient populist 

arguments such as the potential 

for job creation reinforce the 

calls of Bt-cotton proponents to lift 

the GMO ban, the biggest concern 

for Bt-cotton opponents has been 

El Salvador 

Ecuador 

Peru 

Bolivia 

the monopoly that lifting the ban 

will give seed companies. In South 

Africa, where Bt-cotton was introduced 

in the harvest year spanning 

1997 and 1998, concerns over 

exorbitant seed prices—the effect 

of monopoly—have been repeatedly 

raised. A study by the International 

Food Policy Research Institute indicates 

that South African farmers 

increased yields as a result of using 

Bt-cotton rather than conventional 

seeds. The study also said that the 

farmers spent less on insecticides, 

arguing that the overall impact 

of using Bt-cotton was favorable, 

despite it being markedly expensive 

than regular seeds. 

Debt trap 

According to some anti-GMO 

activists, the assertion that the 

Ireland 

France 

Spain 

Portugal 

Switzerland 

Slovenia 

Italy 

Austria 

Senegal 

Czech Republic 

Bosnia & Herzegovina 

Cameroon 

Slovakia 

Brasil 

Hungary 

Croatia 

Greece 

Romania 

GMO labelling across the world 

Lithuana 

Poland 

Sweden 

Germany 

Norway 

Netherlands 

Luxembourg 

Belgium 

United Kingdom 

Iceland 

Mali 

economic gain derived from using 

Bt-cotton offsets the comparatively 

higher cost of buying the seeds is 

false. This class of anti-GMO lobbyists 

sees the seeds as a racket, saying 

that once farmers have been hooked 

onto the cultivation of GM-cotton, 

the seed companies leverage on 

their giant monopolies and swiftly 

respond by increasing the price of 

the seeds unconscionably. Since the 

farmers cannot switch seeds, they 

pay the high prices. This leads many 

cotton farmers into debt, making 

GM crop opponents to equate the 

seeds to ‘debt traps.’ This criticism 

has been notoriously rife in India, 

where Bt-cotton varieties predominantly 

owned by Monsanto have 

been planted since 1998. 

Famous Indian environmental 

activist, Dr Vandana Shiva, argues 

Finland 

Estonia 

Lativa 

Belarus 

Ukraine 

Turkey 

Jordan 

Ethiopia 

Kenya 

Mauritius 

South Africa 

GMO Labeling required 

No GMO Labeling required 

India 

Saudi Arabia 

Kazakhstan 

Sri Lanka 

Russia 

China 

Singapore 

Thailand 

Australia 

that before Monsanto’s entry into 

the Indian market, local seeds cost 

farmers between 5 rupees and 10 

rupees (around Ksh7 to Ksh15) a 

kilo. Upon entry, however, Monsanto 

ensured a monopoly and hiked prices 

to 1,600 rupees (around Ksh2325) 

for a package of 450 grams, said Dr. 

Shiva on her official website. 

Japan 

South Korea 

Taiwan 

Vietnam 

Indonesia 

New Zealand 

This class of anti-GMO lobbyists 

see the seeds as a racket, saying 

that once farmers have been 

hooked onto the cultivation of 

GM-cotton, they pay high prices 

as the seed companies leverage 

on their giant monopolies. 


ICT 

Sector Report 

“After Bt-cotton was allowed 

into the market, Monsanto started 

to strengthen its monopoly through 

‘seed replacement,’ in which the company 

would swap out farmers’ seeds 

with their own,” wrote Dr. Shiva, who 

is also a recipient of several awards 

including the 1993 United Nations 

Environmental Program’s (UNEP) 

Global 500 Roll of Honor. The activist 

claims that the high cost GM cotton 

seeds lead Indian farmers in the 

cotton belt into debt, and when they 

see no escape, they commit suicide. 

Dr. Shiva wrote this in an article that 

was published on her official website 

on August 26, 2014. Shiva’s article 

challenged an article on The New 

Yorker, saying that The New Yorker 

journalist made deliberate attempts 

to “skew reality” with regard to GM 

crops. 

Although suicide among farmers 

in India has been around for 

an extended period, the alarming 

increase in suicide rates in the recent 

past among farmers in India’s cotton 

belt have been strongly linked 

to the mountain of debt that they 

accrue when buying expensive GM 

seeds. This saddening predicament 

has inspired a documentary titled, 

‘The Cotton Film: Dirty White Gold.’ 

The documentary, which is directed 

by The Guardian’s Leah Borromeo, 

113 

A US based 

organization 

that advocates 

for safe food, 

water and 

fish, says 

that it found 

926 US State 

Department 

cables from 

113 countries 

discussing 

biotechnology 

and GM crops. 

captures the anguishing story of 

India’s cotton farmers. Borromeo, 

a journalist and film maker who 

previously worked as deputy foreign 

editor at Sky News, reveals that the 

average Indian farmer makes £16.20 

(Ksh2183) a month and spends 

£24.30 (Ksh3491) on inputs such 

as seeds. To cover this huge deficit, 

Indian farmers, including cotton 

farmers, turn to avaricious money 

lenders. These Indian money lenders 

are portrayed in the documentary 

as being so mean that they would 

make ‘Shylock’ (a fictional character 

in William Shakespeare’s Merchant 

of Venice who notoriously took a 

pound of flesh as collateral from his 

loan defaulters) look like a saint. 

The Indian loan sharks pursue their 

debts aggressively to a point where 

their borrowers see suicide as a 

better option. Borromeo’s documentary 

estimates that twenty six Indian 

farmers commit suicide each day due 

to debt. 

Even after the borrowers commit 

suicide, these moneylenders do 

not write off the debt and harass the 

deceased farmers’ bereaved widows 

and relatives to a point of exhaustion, 

Borromeo’s documentary 

shows. 

Anti-GMO activists in Kenya 

fear that if GM cotton is introduced, 

monopolistic tendencies among big 

seed companies will brew, leading 

to the overpricing of seeds and consequent 

indebtedness and misery of 

Kenyan cotton farmers. This theory 

is not farfetched. The existence of 

little known about laws in Kenya 

that suspiciously safeguard the 

monopolies of big seed companies 

fan fears that the Indian situation 

could be duplicated in Kenya if the 

East African country’s GMO ban 

is lifted. The Crop Act, which was 

passed by the Kenyan parliament 

in January 2013, criminalizes traditional 

seed production and sharing. 

The Act only recognizes registered 

seed dealers and gives powers to 

crop inspectors to enter people’s 

land without a warrant and seize 

‘unregistered seeds’. Moreover, any 

resistance to inspectors by farmers 

warrants a fine of Sh2 million or a 

prison term of three years, or both. 

The unique advantage that the 

Crop Act gives to biotech companies, 

while simultaneously meting 

out unjustifiably harsh penalties to 

dissident farmers, almost suggests 

that the Act was put in place to purposely 

and selfishly serve the interest 

of biotech companies above all 

else. Compelling evidence exists indicating 

that big biotech companies, 

along with foreign governments, 

have lobbied African governments 

before to pass laws that are progenetic 

engineering. 

Food &Water Watch, a US based 

organization that advocates for safe 

food, water and fish, says that it 

found 926 US State Department 

cables from 113 countries between 

2005 and 2009 discussing biotechnology 

and GM crops. The campaigns 

targeted media, legislators, 

farmers, NGOs and the public. 

Wikileaks, the notorious online 

whistle blowing website, also said 

that the US State Department had 

previously lobbied African governments 

to adopt pro-genetically engineering 

policies. 


AGRICULTURE 

ICT 

Sector Report 

Leading telecoms firm, 

Safaricom, now handles 

slightly over 4 percent of 

all cash remitted to Kenya 

from foreign countries, new 

Central Bank of Kenya (CBK) data 

shows. The CBK data, which includes 

remittances up until August, 2014, 

shows that Safaricom’s M-Pesa 

beat 34 commercial banks in terms 

of volumes of remittances. This is 

undoubtedly a commendable feat, 

considering Safaricom ventured into 

the cross-border cash remittances 

segment barely five years ago. 

International M-Pesa cash transfers 

totaled $38.03 million (around 

Sh3.4 billion) between January and 

August 2014, CBK data shows. 

Based on this, M-Pesa is presently 

the 11th biggest international 

cash transfer platform in Kenya in 

terms of market share. Interestingly, 

M-Pesa’s increasingly pertinent role 

in the international cash transfer 

business is staged against the backdrop 

of a dramatic uptick in Diaspora 

remittances to the motherland. CBK 

data indicates that Kenya received 

Diaspora remittances worth $128.8 

million (around Sh11.4 billion) in 

August 2014, up 20.34 percent 

from $107 million (around Sh9.5 

billion) from August 2013. This 

tremendous year-on-year increase 

in remittances in the month of 

August strongly reflects the general 

trend over the past decade. 

Safaricom is thereby 

increasing its market share in 

the international cash transfer 

business at a uniquely opportune 

time. This is because telco 

firm’s spirited push in the international 

cash transfer business puts 

it in a position to derive reasonable 

earnings from this rapidly expanding 

market segment. 

Despite the laudable gains in 

market share, CBK data shows that 

Safaricom has only been receiving 

inward remittances from Europe. 

This is attributable to the deal 

Africa’s mobile money 

warms up to intern’l 

cash transfers 

Diaspora remittances sparks a dramatic uptick, in a market tested 

and verfied by mobile transactions across different industries. 

Telcos in Kenya are closing in taking position on the a global front. 

the telco inked with 

Western Union in March 

2011. While Europe is 

unquestionably a strong market, 

Safaricom needs to draw in 

remittances from other markets if it 

wants to sustain and grow its market 

share. Between July and May 2014, 

inflows from Europe into Kenya aver- 

aged 27 percent of overall inflows, 

CBK data shows. In contrast, inflows 

from North America averaged 

46percent, while the rest of world 

accounted for around 26 percent of 

inflows over the same period. Along 

with this, Safaricom has taken active 

steps to ensure that it taps into to the 

colossal volumes of remittances from 

North America and other destinations 

in the rest of the world such as 

India and the Middle East. 

Safaricom recently signed partnership 

deals with Australia-based 

mHITs, British firm SkyForex, 

PostFinance of Switzerland, 

London-based provider Xendpay 

and Mapex to offer direct cash transfers 

to M-Pesa customers abroad. 

The Westlands-based telecom firm 

also has existing deals with Xpress 

Money, Skrill and WorldRemit and 

has plans to secure a deal with 

MoneyGram before the end of the 

year. These partnerships will allow 

Safaricom to tap into remittances 

outside Europe by giving M-Pesa 

a presence in North America, 

Australia, the Middle East and Asia; 

Diversification 

Although the income that 

Safaricom derives from international 

cash transfers pales in comparison 

to what it makes domestically, the 

telecom firm’s sustained effort in 

international cash transfers is part of 

its wider bid to diversify its sources 

of income. This approach has been 

inspired by the increasingly aggressive 

competition in the domestic 

market, especially in the area of 

payments. 

Africa has transformed into a 

battleground for mobile payments 

firms. Both new and existing players 

are jostling for position in the continent’s 

rapidly expanding mobile 

payments segment, multiple reports 

show. This, experts say, is a clear representation 

of the prospects that the 

African mobile money market presents. 

“There have been multiple players 

entering this space,” said David 

Kleiman, a Nepal-based consultant 

with PHB Development, as quoted 

on the Wall Street Journal. “Many 

mobile network operators have tried 

to make offerings—Vodafone, MTN, 

Orange and Airtel are the big ones— 

but increasingly even the mobile 

virtual network operators are offering 

their own services, competing not 

only with the larger operators but 

the banks as well,” added Kleiman, 

who has over 15 years experience on 

mobile payments in Africa and Asia. 

Expectedly, most of the interest 

in Africa’s mobile money segment 

is originating from Kenya. This is 

primarily because Kenya is widely 

considered to be the first real success 

story for mobile money in Africa. 

The mobile money concept has not 

only been used to facilitate payments 

in multiple unrelated industries 

across Kenya, but the the number of 

transactions in the country is comparatively 

higher than other African 

Remittances have significantly increased since 2005; Source: CBK website 

Expectedly, most of the interest in Africa’s mobile money 

segment is originating from Kenya. This is primarily because 

Kenya is widely considered to be the first real success story 

for mobile money in Africa. 

markets. Reports in mid-July from 

the Central Bank of Kenya (CBK) 

indicate that Kenyans are transacting 

Sh6.2 billion daily through 

mobile phones. This is a commendable 

rise from an average of Sh5.2 

billion last year. 

What is further more attractive 

about Kenya is the fact that despite 

the apparent deep penetration of 

mobile payments, there is still wide 

scope for future growth. “There is a 

lot of excitement about new competition 

coming into the market but 

you have to view it in the context 

that the market is still 98 percent 

cash ( or 2 percent cashless),” said 

Safaricom CEO, Bob Collymore, 

while addressing investors at the 

company’s full year 2013 earnings 

report announced in May, 2014. 

All these factors have inspired a 

wave of new entries into the Kenyan 

mobile payments market. It is now 

no longer news that Equity Bank 


ICT 

Sector Report 

has taken a plunge into the mobile 

payments and telecoms segment. There are 

now clear signs that the bank will successfully 

launch its new solution, which uses 

specially designed thin SIMs that can be 

stuck over existing SIM cards for interoperability. 

Equity Bank, which is Kenya’s 

biggest bank by customer base, got the 

green light from regulators for its thin 

SIM cards following a protracted debate 

over the cards’ security. Taisys, the Taiwanbased 

tech firm charged with supplying 

Equity’s thin SIMs, had already delivered 

its first batch in early October, indicating 

that Equity’s launch is imminent. “The 

ultra-thin SIM cards are already delivered 

to Kenya but it is up to the bank to 

decide when to launch,” Cecilia Cheng, sales 

and marketing representative at Taisys, 

told Nation Media Group’s Business Daily. 

“Taisys is bound by a confidentiality clause 

so I cannot discuss the number of SIM 

cards we sent over,” added the sales and 

marketing representative. 

These developments, along with the 

expressed interest of Vietnam-based Viettel 

for a stake in Orange, have compelled 

Safaricom to diversify its sources of income. 

This is seen as a necessary step in order to 

offset any declines in income that may be 

prompted by the disruptive effect that new 

market entries will have on the current 

market share structure. Along with this, it 

is highly likely that Safaricom will sustain 

its spirited push in the international cash 

transfers business. 

Ultimate determinant 

Safaricom’s growing success in international 

cash transfers is a strong representation 

of the pervasiveness of the 

mobile cash concept. Mobile payments 

are now not just being used to facilitate 

domestic and international cash transfers, 

but also to support various businesses 

across the country. The matatu sector, for 

instance, is currently in the process of digitizing 

fare payments. “Most matatu Saccos 

have made progress in acquiring cashlite 

systems,” remarked Mr. Lee Kinyanjui, 

Chairman of the National Transport and 

Safety Authority (NTSA). The opportunity 

in the matatu sector has already attracted 

As mobile payments 

continue to cut across 

many more industries 

in Kenya, the ultimate 

determinant, will be the 

ability to manage the 

inevitable increase in 

volumes of transactions. 

Equity Bank, KCB Bank, Cooperative Bank 

and mobile money provider, Tangaza Pesa. 

As mobile payments continue to cut 

across many more industries in Kenya, the 

ultimate determinant, not just for Safaricom, 

but the market in general, will be the ability 

to manage the inevitable increase in volumes 

of transactions. The ability to manage these 

transactions will largely be pegged on the 

capacity of each provider’s existing infrastructure. 

Amid all the excitement over new market 

entrants, existing market players are 

aggressively exploring ways of expanding 

their infrastructure to match the projected 

increase in volumes of mobile payments 

transactions. Safaricom, for instance, 

plans to relocate its M-pesa servers from 

Germany to Kenya. The servers have been 

in Germany for the past 8 years. Hosting 

the servers locally is expected to minimize 

service outages that occur whenever the 

undersea fiber optic cable linking Kenya to 

Germany is damaged. 

Equity Bank has also booked space to 

build a Sh3 billion electronic data center at 

Konza Technology City. This is according 

to announcements made in late May, 2014, 

by the Konza Technopolis Development 

Authority (KOTDA), which is spearheading 

the development of Konza city. Equity 

Bank currently stores its electronic information 

at its data centers in Upper Hill. 

It has also leased back-up space at East 

African Data Center along Mombasa Road. 

Equity Bank’s planned Sh3 billion electronic 

data center at Konza City will give 

the bank the extra capacity to handle the 

new body of transactions created by its 

mobile money solution. Equity Bank has 

also leased some of Airtel’s unused network 

infrastructure under the mobile virtual 

network operator (MVNO) agreement. This 

will allow the bank to support the initial 

roll out of its mobile payments, voice and 

data services. 


BANKING 

Sector Report 

Kenya’s silent 

victory in top 

100 African 

banks rankings 

What Kenyan banks lack in assets, they 

compensate for in solid and consistent returns 

for investors. 

African Business, an IC 

publication, released its 

iconic annual rankings for 

Africa’s top 100 banks for 

2014 in October. The list 

of top lenders was largely dominated 

by South African, Nigerian and 

North African banks, reflecting the 

uneven economic landscape in the 

continent. Only seven of Kenya’s 43 

commercial banks made it to the list. 

But as further investigation reveals, 

Kenya was a bigger, albeit silent, 

winner, despite its low representation 

in the top 100 list. The country’s 

banking sector has the continent’s 

crown jewels, as far as investors are 

concerned. 

African Business’s rankings were 

based on metrics such as tier 1 capital 

and assets. The pan-African busi- 

ness magazine reported that South 

Africa’s Standard Bank Group was 

the largest bank in the continent 

with assets valued at a mindboggling 

$161.5 billion. Collectively, South 

African banks bagged five spots out 

of the top ten, leaving one position 

to a Nigerian bank and the other 

four to North African banks. Kenya 

Commercial Bank (KCB), the largest 

bank in Kenya by assets, came in 

at position 44 overall, a slight drop 

from position 43 in the 2013 African 

Business rankings. The Kenyan bank 

that followed KCB was Equity Bank, 

which maintained position 54 as 

compared with 2013. 

Investor’s paradise 

What Kenyan banks lack in 

assets, they compensate for in solid 

and consistent returns for investors. 

High profit margins in the Kenyan 

banking sector, revealed by CBK 

mid-year data at Sh71 billion in the 

first six months of the year alone, are 

giving investors strong returns. The 

Financial Times’ (FT) latest listing of 

the world’s top 1,000 banks shows 

that Equity Bank is Africa’s lender 

with the highest return on assets. 

“For the second year running, 

Kenya’s Equity Bank made the highest 

return on assets in the continent, 

generating a rate of 6.84 per cent,” 

read the FT report. KCB came in 

third overall in Africa, generating a 

rate of return of 5.14 percent. Return 

on assets is an indication of how well 

a firm’s management is utilizing its 

assets to generate the highest possible 

level of income. 

We have raised Sh4 

billion but we also 

have debt partners 

such as the European 

Investment Bank, the 

International Finance 

Corporation and 

other international 

lenders who have 

been supporting us 

over the years - 

Mr. John Mwara. 

Faulu Kenya 

managing director 

AB 2014 AB 2013 Bank 

Capital Assets 

Rank Rank 

($M) ($M) 

44 43 KCB 567 4,521 

54 54 Equity Bank 443 3,213 

68 69 Cooperative Bank of Kenya 312 2,675 

69 67 Standard Chartered Bank of Kenya 312 2,549 

75 73 Barclays Bank of Kenya 286 2,391 

87 New I &M Bank Limited 223 1,635 

88 86 Diamond Trust Bank Kenya 220 1,926 

Data Source: African Business Magazine 

The thrilling rates of return in 

Kenya’s banking sector are largely 

a function of the tremendous leap in 

access to banking. Sustained efforts 

by banks to broaden the channels 

of accessing retail customers have 

greatly increased financial access in 

Kenya, allowing banks to increase 

the size of their addressable markets. 

The development of new channels 

in Kenya’s banking sector has been 

facilitated by the use of technological 

platforms such as mobiles and 

internet. 

Accenture, a New York Stock 

Exchange listed multinational management 

consulting firm, observed in 

a previous report that Equity Bank 

used mobile branches in rural communities 

to enhance inclusion. “Bank 

representatives go to the community, 

setting up booths in markets and 

similar locations, delivering group 

discussions and financial training,” 

read a section of Accenture’s report, 

titled; “At the tipping point: Financial 

services in Africa comes of age” 

Besides using mobile branches 

and technological platforms, Kenyan 

banks are now courting the concept 

of agency banking. Agency banking 

not only allows services to reach the 

grass roots, but it presents opportunities 

for members of the community 

to gain economically by acting 

as agents. Major commercial banks, 

including KCB, Equity Bank and 

Cooperative, currently embrace the 

agency model. Microfinance banks 

have also espoused the model, signaling 

its effectiveness in mobilizing 

deposits. Faulu Kenya, a deposit taking 

microfinance institution recently 

raised Sh4 billion for its expansion 

programming, which will partly 

be achieved through the introduction 

of an agency system. “We have 

raised Sh4 billion but we also have 

debt partners such as the European 

Investment Bank, the International 

Finance Corporation and other international 

lenders who have been supporting 

us over the years,” said Faulu 

Kenya managing director Mr. John 

Mwara. 

Fanning into the region 

The upside of increased retail 

banking penetration in Kenya is 

that more Kenyans now have access 

to financial services such as credit 

and advice. On the flipside, however, 

banks have had to grapple 

with increased competition. The 

increase in the addressable market 

in Kenya’s banking sector has 

naturally prompted a corresponding 

outburst in competition between 

commercial banks. 

To effectively handle the increasingly 

heated competition, a growing 

body of Kenyan banks have 


BANKING 

Sector Report 

The growing importance 

of the real estate sector 

to the broader economy 

is not only captured by 

the growing tide of firms 

pursuing real estate 

projects, but by moves 

made by the country’s 

top deal makers. 

fanned out across the region and 

established outfits in neighboring countries. 

KCB, as an example, has branches 

in Juba, South Sudan, among other 

neighboring countries. The Kenyan lender 

has performed surprisingly well in South 

Sudan, despite the atrocious conflict that 

has dragged on for almost a year in the 

young nation. “Today, KCB South Sudan 

enjoys 50 percent of the market share and 

we are very optimistic going forward that 

South Sudan will flourish and thrive economically,” 

said KCB in a statement during 

its half-year earnings report. KCB’s South 

Sudanese subsidiary accounted for 7.1 percent 

of the bank’s overall earnings in the 

first six months of the year. 

Equity Bank also has a regional presence, 

including a branch in Juba and 

Kampala, Uganda. Despite recent challenges 

in Uganda, Equity Bank’s cross 

border investments persist. Diamond Trust 

Bank, which has grown tremendously in 

the past several years, also raised Sh3.63 

billion in July to finance its regional expansion 

plan which may see establish a presence 

in either Madagascar, South Sudan 

or Democratic Republic of Congo. “In the 

next two to three years, we are going to be 

in one of those countries. The determining 

factor of where we are going to be will be 

determined by what makes economic sense 

to the peoples of those countries,” remarked 

Abdul Samji, Diamond Trust chairman, in 

media statements. 

Perhaps the greatest indication of 

how Kenyan banks are using cross-border 

investments to guard against the uncertainties 

of heightened competition in the 

domestic market is Cooperative Bank’s 

plans to set up shop in Ethiopia. Unlike 

other markets in the region, Ethiopia places 

characteristically strict restrictions on 

foreign investment in its financial sector. 

In an interview with The East African, 

adviser to the State Minister for Industry 

in Ethiopia, Mr. Ahmed Nuru, said that 

Ethiopia’s financial sector was only open 

to domestic investors. “In view of the past 

global financial crisis, I think we are taking 

the right path, being cautious on how to 

open up this sector,” remarked Mr. Nuru, 

strongly suggesting that the future prospect 

of foreign participation in the country’s 

financial sector would be accompanied by 

heavy regulation. Despite this obvious disincentive, 

Cooperative Bank remains firmly 

steadfast in its bid for Ethiopia. “Our South 

Sudan subsidiary, which started operations 

in September, 2013, is on the verge of breaking 

even and contributing positively to our 

profitability this year. Ethiopia and Uganda 

remain our new frontiers,” Gideon Muriuki, 

Co-op Kenya’s managing director, said in a 

statement. 

Chasing new opportunities 

The interesting observation is that the 

quest for stronger growth by Kenyan banks 

is not just reflected in the regional expansion 

drive, but the search for new opportunities 

within the Kenyan market. Real 

estate has emerged as a key opportunity 

for banks. After the Kenya National Bureau 

of Statistics (KNBS) updated the base year 

used in calculating the country’s GDP from 

the previous 2001 to 2009 (rebasing), it 

was revealed that real estate’s contribution 

to the overall economy had dramatically 

increased. The updated accounts indicate 

that the real estate sector now accounts for 

10.6 percent of the economy, up from 4.9 

percent under previous estimates. 

The growing importance of the 

real estate sector to the broader 

economy is not only captured by 

the growing tide of firms pursuing 

real estate projects, but by moves 

made by the country’s top deal makers. 

Billionaire investor, Naushad 

Merali, recently made headlines after 

it emerged that he was divesting 

some of his long-held interests in his 

vast business empire. What however 

stood out was the conspicuous omission 

of real estate interests in his 

divestments. In Sameer Africa, where 

Merali owns a 72.15 percent stake, 

the real estate arm has been left out 

of the recent proposed buyout deal 

where Merali will cede50 percent of 

Sameer’s tire division to a strategic 

partner from Asia. This move speaks 

volumes about the billionaire’s confidence 

in the ability of the real estate 

sector to deliver solid returns. 

It is not just the country’s top 

deal makers that have issued a vote 

of confidence in the real estate sector. 

Banks that previously avoided 

participation in real estate have now 

joined the party, indicating that there 

is tidy sum to be made by lenders in 

the sector. Barclays Bank will now 

start participating in the sector after 

years of avoiding it over perceived 

risks. Besides real estate, there are 

other promising sectors that will 

define future activity for Barclays 

Bank and the broader banking sector. 

The nascent oil and gas sector, 

where Barclays Bank said it will be 

seeking lending opportunities, also 

offers opportunities for the banking 

sector. 

Although lucrative financing 

opportunities in Kenya’s oil and 

gas sector will probably avail themselves 

further down the road, recent 

developments strongly suggest that 

this will happen sooner rather than 

later. Tullow Oil, the firm that discovered 

oil in Turkana, is upbeat 

about the future. “Continued success 

in appraisal of the Ngamia and 

Amosing fields reinforces our belief 

that the South Lokichar basin holds 

very considerable potential which 

we hope to replicate in additional 

basins,” remarked Angus McCoss, 

the firm’s exploration director, in 

media statements. 

The CBK is 

however 

mulling over 

increasing 

bank’s 

minimum 

share 

requirements 

past the 

current Sh1 

billion. 

Regulatory change 

In as much as the oil and gas sector 

presents opportunities for Kenyan 

banks, there will be need for regulatory 

adjustments before local banks 

can fully enjoy the spoils of the sector. 

The size of a loan taken out by 

a single borrower in the oil and gas 

sector typically ranges in the billions 

of shillings. 

CBK stipulations however do not 

allow banks to lend more than 25 

percent of their core capital to a single 

borrower. To put this into perspective, 

KCB, the biggest bank by capital, has 

a core capital of Sh52 billion. KCB 

(and by logic no other Kenyan bank) 

can therefore not lend more than 

Sh13 billion to a single borrower. 

The CBK is however mulling over 

increasing bank’s minimum share 

requirements past the current Sh1 

billion. This will not only allow local 

banks to participate in the oil and 

gas sector, but allow them to snap 

up financing opportunities in other 

capital intensive sectors such as infrastructure 

and energy. “The sh1 billion 

minimum capital requirements may 

actually constrain financing potential 

of some large banks. 

The CBK may consider raising 

this minimum capital requirement to 

make the industry move to the level 

of Egypt, Angola, Nigeria and South 

Africa,” read a section of the Financial 

Sector Stability Report released by 

the CBK in September, 2014. 

If the CBK makes a policy change 

and upwardly adjusts minimum capital 

requirements, financing opportunities 

in lucrative capital intensive 

segments such as oil and gas, energy 

and infrastructure will be easier to 

access for local banks—but only for 

banks that can convince shareholders 

to inject extra capital. Banks that cannot 

solicit extra funds from investors 

may be compelled to merge or remain 

locked out of key opportunities. This 

prospect sets the stage for a lot of 

interesting developments in the country’s 

banking sector going forward. 


INSURANCE 

Sector Report 

Recently released data 

from the Insurance 

Regulatory Authority 

(IRA) shows that 14 

general insurance firms 

made a collective underwriting loss 

of Sh480.2 million in the first six 

months of 2014. The IRA observed 

that the loss making general insurers, 

which included bigwigs such 

as Resolution, CIC and AAR, were 

afflicted by increased cases of price 

undercutting and fraud. 

Although the IRA did not provide 

data for the 14 firms for a 

comparative period in 2013, the 

Sh480.2 million losses reported in 

the first half of 2014 accurately 

highlighted the challenges in the 

insurance sector. “One of the challenges 

is that products must be 

priced adequately, failure to which 

claims outstrip incomes and you 

end up with a loss,” said Mr. Justus 

Mutiga, the Association of Kenya 

Insurance (AKI) chairman. Mr. 

Mutiga, who was speaking at the 

AKI offices in an October 29, 2014, 

Price undercutting and 

fraud take toll on insurers 

Medical insurance hahas slipped back into a coma, after 

reemerging as the segments most vulnerable to fraud. A 

report by the Insurance Regulatory Authority (IRA) also 

shows that 14 general insurance firms made a collective 

underwriting loss of Sh480.2 million in the first half of 

this year. 

press conference, also added that 

insurers had to contend with “payment 

and management of claims to 

ensure they (claims) are genuine and 

not inflated.” 

Back into a coma 

The AKI 2013 report showed 

that medical insurance returned a 

profit of Sh119 million in 2013 

after continually making underwriting 

losses attributable to fraud since 

records started being kept five years 

ago. Despite the slight recovery in 

2013, medical insurance has slipped 

back into a coma, figuratively speaking. 

In its report relating to the first 

half of 2014, the IRA observed that 

medical insurance had reemerged 

as one of the segments most vulnerable 

to fraud, reversing the slight 

improvements in 2013. 

Resolution, which mainly offers 

medical insurance, posted the largest 

underwriting loss of Sh116.3 million 

during the first six months of 2014, 

signaling the hazardous impact of 

fraud on insurers exposed to medical 

insurance. AAR, which also has sizeable 

interests in medical insurance, 

incurred a sh48.4 million loss. CIC 

Insurance was also not spared. The 

Nairobi Securities Exchange listed 

firm slipped Sh75.8 million into 

the red largely due to difficulties in 

medical insurance. 

The notoriously stubborn problem 

of fraudulent claims in medical 

insurance has compelled some insurers 

to adopt biometric identification 

cards to bar impersonators. This 

has been accompanied by a tighter 

control on services accessed by policyholders 

at certain hospitals. 

The increase in fraudulent 

claims in medical insurance is staged 

against the backdrop of persistent 

appeals by insurers urging the IRA 

to rein in fraud. Accordingly, the IRA 

partnered with the Kenya Police in 

2012 to launch the Insurance Fraud 

Investigation Unit, a body charged 

with investigating fraud within the 

industry. 

Although the Insurance Fraud 

Investigation Unit has achieved several 

milestones, including unearthing 

a fraudulent scheme involving fake 

insurance stickers by public service 

vehicles, it still has a lot more to do. 

Industry records as recent as 2012 

show that an estimated 40 percent 

of all claims paid by insurance companies 

in Kenya are fraudulent. A fitting 

example that contextualizes the 

relationship between these damning 

statistics and the saddening reality 

on the ground is the peculiar case of 

one Ezekiel Ochieng. 

In an elaborate racket to fraudulently 

relieve Pan-African Insurance 

of Sh1 million in life insurance, Mr. 

Ochieng was accused by Pan African 

Insurance of faking his own death on 

September 24th 2013. The suspect 

allegedly forged police documents 

to show that he had died in a road 

accident along the Kisumu Highway. 

Before he could get away with it, 

Pan African Insurance was able to 

zero in on him through independent 

investigations. As portrayed in 

NTV’s Sheila Sendeyo’s video report 

detailing the court proceedings of 

the case, a besieged Mr. Ochieng 

desperately tried to cover his face 

from the piercing glares of cameras, 

a foible that is depressingly typical of 

most apprehended suspects. 

Advanced measures 

Just like Pan African Insurance, 

which sanctioned independent investigations 

to locate Mr. Ochieng, other 

insurers, too, have resolved to internal 

measures to curb fraud. CIC 

Insurance, as an example, has hired 

a team of medical personnel to probe 

fraudulent claims in medical insurance. 

Earlier in 2014, CIC Insurance 

hired Dr Edward Rukwaro, a former 

CEO of the Mediheal Group 

of Hospitals, to help turnaround 

the insurer’s medical division, which 

Although the 

Insurance Fraud 

Investigation 

Unit has 

achieved 

several 

milestones, 

including 

unearthing 

a fraudulent 

scheme 

involving fake 

insurance 

stickers by 

public service 

vehicles, it still 

has a lot more 

to do. 

in 2013 made a loss of Sh293.8 

million. “The company is bleeding 

heavily because of fraudulent claims 

and we believe Dr Rukwaro, who 

has experience in both the medical 

and insurance fields, will help 

oversee a quick turnaround in this 

business,” said Mr. Nelson Kuria, 

chief executive of CIC Insurance. Dr. 

Rukwaro will also be backed by a 

team of nurses who will help scrutinize 

patient’s claims. 

CIC Insurance’s need to involve 

qualified medics in assessing claims 

is informed by the fact that fraud in 

medical insurance is not only emanating 

from the insured, but also 

from hospitals. “Some hospitals take 

patients through unnecessary expensive 

procedures once they go for 

simple check-ups,” said Mr. Kuria. 

Dr. Rukwaro’s team, being acutely 

aware of the ins and outs of hospital 

operations, will be able to pinpoint 

these unnecessarily long procedures, 

saving costs for CIC Insurance. “At 

times, it takes a medical doctor 

to understand the language used 

in claims and even detect fraudulent 

cases,” said CIC’s Mr. Kuria. 

The move by CIC Insurance to hire 

medics was lauded by Association 

of Kenya Insurance chief executive, 

Tom Gichuhi, who remarked that 

CIC Insurance was set to benefit 

from having a medical doctor check 

claims. “It is not common for insurers 

to hire medical doctors to head 

their medical departments,” Mr. 

Gichuhi ventured. “Doctors would, 

for instance, better understand 

invoices containing medicine they 

have knowledge of,” he added. 

Warnings 

Besides fraud, price undercutting 

is also emerging as a serious 

problem for Kenyan insurers. This 

predicament is reflected in the huge 

reduction in the industry’s overall 

profits (excluding life insurers) during 

the first half of 2014. The IRA 

report shows that the overall 


INSURANCE 

Sector Report 

industry, excluding 

life insurers, posted 

an underwriting profit of 

Sh1.2 billion in the first six 

months of 2014, down significantly 

from Sh2.1 billion in the 

same period a year earlier. 

The decline in insurers’ 2014 

half year profits as compared with 

2013 reflects the shrinking profitability 

of firms due to price undercutting. 

Some of the firms which 

made a loss during the 2014 half 

year period include Phoenix East 

Africa Assurance at Sh61.1 million, 

Gateway (Sh40.5 million), First 

Assurance (Sh38.7 million), Cannon 

(Sh36.4 million), Takaful (Sh21.2 

million), Directline (Sh13.1 million) 

and Saham Assurance (Sh5.5 million). 

In this regard, insurers have 

placed sustained pressure on the 

IRA to address the matter of price 

undercutting. Consequently, the 

regulator has issued stern warnings 

to insurers accused of price 

undercutting. The IRA in August 

directed Corporate Insurance, First 

Assurance and Monarch Insurance 

to stop charging lower than the 

approved minimum premiums for 

insurance policies, warning that failure 

to adhere to the directive would 

attract disciplinary action. 

Although it remains to be seen 

whether the law’s precise stroke of 

retribution will befall firms suspected 

of instigating price wars, industry 

observers are positive that the situation 

will correct itself in the longrun. 

This outlook is informed by the 

Insurance Amendment Bill, 2013, 

which among other things, calls for 

higher capitalization of insurance 

firms. The requirement for higher 

capitalization will naturally compel 

smaller insurers who have weaker 

Although the Insurance Fraud 

Investigation Unit has cracked the 

whip and unearthed a fraudulent 

scheme involving fake insurance 

stickers by public service vehicles, 

it still has a lot more to do. 

financial bases to capitulate to takeover 

demands by their larger counterparts. 

The Kenyan insurance scene has 

seen a wave expansion by insurers 

eager to meet capital requirements 

and increase market share in readiness 

of the Insurance Amendment 

Bill 2013. UAP and CIC Insurance, 

for instance, have both turned to 

the NSE this year to solicit funds 

for their ambitious expansion plans. 

Market leader, Jubilee Insurance, 

is also courting various expansion 

strategies. Although Jubilee has not 

disclosed the specifics of its expansion 

plans, it maintained in its annual 

general meeting that it was actively 

seeking mergers and acquisitions. 

“We are looking for mergers and 

acquisitions and are already in talks 

with several companies. We want 

quality companies not just in Kenya, 

but in East Africa and internationally. 

Jubilee has 

funding for this,” 

said Nizar Juma, 

Jubilee Holdings 

Chairman, during 

the firm’s annual 

general meeting. 

As insurance 

firms try to adjust to 

higher capital requirements, 

the need to merge will 

become more profound, reducing 

the number of firms in the industry. 

This will naturally be accompanied 

by a reduction in price undercutting 

owing to firms’ ability to leverage 

on their huge capital bases to adopt 

stable pricing regimes. 

Some industry observers like former 

Ecobank CEO, Arnold Ekpe, 

believe that stakeholders should 

lobby for what he described as 

‘arranged marriages’ between insurers. 

“There is a definite need for 

‘arranged marriages’ to facilitate the 

mergers and acquisitions in order 

to build scale within the insurance 

industry,” said Mr. Ekpe. 

Despite the seemingly myriad 

challenges, Kenya’s insurance sector 

is still growing satisfactorily. The 

AKI observes that in 2013, the country’s 

insurance sector grew at the 

second fastest rate globally after 

Jordan. Kenya’s insurance penetration—a 

ratio of premiums collected 

against a country’s GDP—stood at 

3.4 percent in 2013, up from 3.1 

percent in 2012, the AKI report 

shows. In comparison, developed 

markets such as UK and Japan had 

penetrations of 11.5 percent each 

in 2013. The US had 7.5 percent 

penetration over the same period. 

If the Kenyan insurance sector can 

address challenges such as fraud and 

price undercutting, it can sustain its 

high growth rate and achieve higher 

insurance penetration rates, sector 

analysts say. 

58 Business Monthly | december 2014-JANUARY 2015 Business Monthly | OCTOBER 2014 59

MURANO 

Motoring 

Over the years, Nissan has bounced from 

radically weird (Juke) to very conservative 

(Sentra), to outright dull (Versa) to 

outrageous (GT-R), lacking a unifying theme 

to identify the brand other than the logo). 

Paul Williams reviews their latest model, 

designed to look like a concept car, 

The 2015 Nissan Murano 

The 2T015 Nissan Murano 

isn’t some kind of concept 

SUV. It is the production 

version of the 2015 Nissan 

Murano, which Nissan 

executives say is designed to look 

like a concept vehicle put into production. 

Okay, then. Mission accomplished! 

Indications are that this design 

will inspire future Nissan vehicles 

– or at least, the cars and CUVs 

– which is especially interesting 

because for quite a while, it’s been 

hard to pin down exactly what a 

Nissan looks like. Over the years, 

Nissan has bounced from radically 

weird (Juke) to very conservative 

(Sentra), to outright dull (Versa) to 

outrageous (GT-R), lacking a unifying 

theme to identify the brand 

(other than the logo). Nissan executives 

explained that this was actually 

strength, enabling Nissan to offer 

a range of very distinctive vehicles 

appealing to different buyers with 

different needs. That the Juke was 

completely unlike the Sentra, for 

instance, was therefore seen as a 

positive attribute. 

Lately, attitudes have changed, 

and with the all-new 2015 Nissan 

Murano we’re told that its distinctive 

design will indeed be a precursor 

of future Nissan vehicles. The 

third generation Murano revealed 

at the New York Show, therefore, 

“expresses a new Nissan design 

direction – including its ‘V-motion’ 

front end, LED boomerang lights 

originally introduced on the Nissan 

370Z and the unique ‘floating’ roof,” 

according to Nissan. It’s the shape 

of things to come, a good tagline, 

nonetheless. 

The Murano is the right vehicle 

to get this ball rolling. When first 

introduced it created something of 

a stir in the SUV and nascent CUV 

segments, arguably influencing other 

manufacturers to move away from 

traditional boxy SUV styling and 

into more aerodynamic and appealing 

forms. 

While the original Murano – 

introduced in 2002 as a 2003 model 

– used elegant Italian glass as a 

design theme along with Spanish 

styling flourishes, the 2015 Murano 

is about futuristic transportation, 

according to Nissan. The shapely 

exterior, influenced by the company’s 

Resonance Concept, is carried 

through to the interior, which 

is designed to create “an engaging 

social lounge feel,” that features a 

lower-height instrument panel, wide 

centre console and Zero Gravity 

front and outboard rear seating,” the 

latter inspired by NASA. 

An important difference between 

Canadian and US Murano models 

is that for Canada, an eight-inch 

colour display with multi-touch control, 

NissanConnect, navigation and 

mobile apps are standard equipment. 

While some other companies 

are moving to four-cylinder power, 

Murano remains a V6 vehicle, it’s 

3.5-litre DOHC engine mated to 

a CVT “automatic” transmission. 

Optimized for fuel efficiency, and 

boasting a 0.31 coefficient of drag, 

Murano features a lower grille shutter, 

front and rear spoilers, rear tire 

deflectors, rear suspension fairings 

and an optimized fuel tank design. 

The drivetrain in combination with 

the aerodynamic exterior is expected 

to reduce fuel consumption by up to 

20 percent. For 2015, front-wheel 

drive returns to the Murano as an 

option to the all-wheel-drive system. 

Rear cargo area dimensions are 

increased by approximately 84 millimetres 

in width and 50 mm in 

length, while the rear lift gate is 

reshaped to more easily permit loading 

and unloading cargo. In combination, 

these modifications add 

113 L of cargo capacity to Murano. 

Usefully, the split rear seat can be 

controlled from the cargo area for 

added convenience. 

Safety technologies continue to 

be a strong suit of the Nissan brand, 

with many advanced systems both 

standard and available. The new 

Murano uses up to four on-board 

cameras and three radar systems to 

inform a range of safety technologies 

such as Moving Object Detection 

(MOD), Blind Spot Warning (BSW), 

Predictive Forward Collision Warning 

(PFCW) and Forward Emergency 

Braking. The new Cross Traffic Alert 

(CTA) system utilizes radar to detect 

a moving vehicle behind the Murano 

approaching from either side of 

the parking space. This enables the 

driver to better see curbs, shopping 

carts and strollers, for example, via 

COMPETITORS 

Ford Edge 

Jeep G. Cherokee 

VW Touareg 

onscreen images, visual notification 

and warning chimes. 

Available convenience features 

include the Around View Monitor, 

eight-way power driver’s seat with 

power lumbar support, SiriusXM 

Radio (SiriusXM required, sold 

separately), Nissan Intelligent Key 

with Push Button Ignition, iPod 

interface, 11-speaker Bose premium 

audio system, and Bluetooth handsfree 

phone system. A heated steering 

wheel is also available. 

Available audio systems include 

an advanced Bose design with 11 

speakers (including dual subwoofers), 

and SiriusXM Satellite Radio. 

Other interior features include: standard 

dual-zone automatic temperature 

control and Nissan Intelligent 

Key with push-button ignition, along 

with available leather-appointed 

seating, heated steering wheel, steering 

wheel position memory, driver’s 

seat and outside mirror memory, 

power folding rear seats and remote 

engine start with intelligent climate 

control. 

The panoramic moonroof has a 

40 percent longer sliding length and 

a 29 percent larger opening than the 

previous generation design. Nissan 

suggests it will be among the largest 

moonroofs in the segment. 

It is indeed a striking vehicle, 

and will be easily recognizable on 

the road. According to Nissan, the 

Murano “symbolizes Nissan’s designled 

product and brand renaissance.” 

“In the past three years, Nissan 

has completely transformed its product 

portfolio, grown global volume 

by more than one million units, 

strengthened the brand to being the 

fastest-growing automaker on the 

Interbrand Top 100, resulting in the 

shake-up of entire auto industry segments,” 

said Andy Palmer, Nissan’s 

Chief Planning Officer and Executive 

Vice President. “Murano helped create 

a new segment, and the latest 

version, debuting today, redefines 

that segment.” 


FUNDING 

Guest Column 

Budgeting and Funding 

your SME in 2015 

It is important that your business should be in the right place at the 

marketplace. In addition, growing the customer base as quickly as possible 

and maintaining momentum are crucial. 

Last month, I had an interesting 

conversation with 

a group of consultants in 

Strategy and Finance. It 

was not a surprise that most 

of them have had to change their tact 

because the market dynamics are 

changing. 

Less than a month is left before 

the end of the year. As most SMEs 

budget for next year, top on their 

budgeting agenda will be meeting 

the funding gap. If you cannot manage 

your operations with what you 

have, you need someone to walk you 

through the fundraising process. If 

you don’t want to walk with a consultant, 

I challenge you to run the 

business with your reserves. 

Think about it. You’ve built a 

perfect operation, you are making 

money, and you know how much 

you need. Having all that is just 

part of what you need. Even important, 

putting all this into perspective 

counts more especially if you have 

seek a financier. While pondering 

over this, note that the investor you 

are presenting your ideas to have 

more investment choices and wants 

to invest in solid ideas. Yours is just 

one of them. 

It is important that your business 

should be in the right place at 

the marketplace. In addition, growing 

the customer base as quickly as 

possible and maintaining momentum 

are crucial. Considering the 

scarcity of capital, anything beyond 

these two is waste of time unless it’s 

a capital expenditure. 

Consultants come at a cost, and 

it is very unlikely that anyone will 

work for you before a down payment. 

Consultants are worth the 

money in terms of developing the 

right framework and market entry 

strategy. A killer to your funding 

request will be requesting heavy 

salaries for the founder. The entrepreneur 

should be prepared to put in 

time to show commitment for which 

they get the reward from future cash 

flows; and not using the investor’s 

funds to line their pockets. 

While acquiring customers is a 

costly affair, it still remains a critical 

consideration by investors. If the 

strategy is just to spend money for 

the sake of spending, it might be 

the time to revisit your strategy. 

Estimate how much return you will 

make from your marketing budget. 

It earns you more confidence if you 

can demonstrate your critical thinking 

and your understanding of the 

marketing and advertising budget 

While 

acquiring 

customers is 

a costly affair, 

it still remains 

a critical 

consideration 

by investors. 

you have set aside. 

I warned a client against using 

TV for a media campaign on a new 

product he had launched in the 

market. Adamantly, the client spent 

over Kshs. 18 million on a campaign 

that lasted close to a month. 

The 30 second clip was funny and 

got people talking. The marketing 

interns did not slow down on their 

distribution of product flyers on the 

road side. Sales did not gradually 

increase; but one could easily tell 

from the sales numbers that any 

increase was almost proportionate 

to the few people who could read the 

flyers and make a phone call to the 

office. The flyers had only cost a few 

hundred thousand Kenya shillings 

as opposed to the TV campaign that 

cost Kshs. 18million. 

I have learnt it the hard way 

that an office, furniture, coffee bars 

and other overheads are the least 

important consideration for an SME. 

If you have many years of operation 

with an attractive retainer from 

key clients that is guaranteed to go 

on for many years, then you might 

need all these. Otherwise, you are 

better off without them. A modest 

operation on a modest budget does 

best. Priority should be getting your 

product to the market, and gaining 

traction to sustain revenues for as 

long as possible. 

Once all these things are checked 

in your budget for next year, you 

need to counter-check everything 

else from legal to accounting to the 

mere basics like janitorial and utilities. 

You don’t want to be the CEO 

headmaster in your own company, or 

the CEO who has to fight too many 

legal battles. 

I have met entrepreneurs who 

have wild dreams about great websites, 

leather seats, latest laptops 

and phones they wish to buy. I insist 

that what entrepreneurs need most 

is the drive and persistence to make 

it happen. 

As you finalize your budget for 

2015, make sure that it focuses on 

the key revenue drivers. Depending 

on the sector you are operating in, it 

may not be a very good year due to 

systemic challenges that could keep 

our growth at minimum. Minimize 

the spending on items that the company 

may carry-forward. 

The writer Michael Musau is an 

independent consultant and can be 

reached at michaelmusau@gmail.com 


MONEY 

Guest Forum 

Culture of money vs. Cult of money 

There is the Culture of 

Money and there is the Cult 

of Money. In the former, 

there is jubilation and celebration 

while in the latter, 

there is influence, wealth and power 

to decide who gets what, when and 

where. Many Black folks are caught 

up in the Culture of Money. That is 

why many of them struggle and state 

that they want to be ‘Millionaires’ 

before a certain age. 

Many people in their lifetime 

are millionaires. If one has consistently 

earned $40,000 annually, 

over 25 years, they are millionaires 

without knowing it. So what about 

millionaires? It is never about the 

amount of money but the attitude 

to MONEY. 

On October 17 this year, Dennis 

Kimbro, a professor at Clark Atlanta 

University, was Keynote speaker 

at the Dallas Black Chamber of 

Commerce 88th Gala. Kimbro rolled 

out stats on black millionaires – that 

there are about 35,000 of them 

or so in US. Out of the US black 

population of nearly 42 million; do 

the maths: it stands at a ratio 1 to 

1,200 black folks. That does not 

really tell anything as many of the 

so called millionaires do not have a 

payroll of the people they employ or 

pay regularly. So the impact is negligible. 

He did not connect on how to 

build and nurture wealth except the 

usual who has what and how they 

made it, including pastors. I threw 

up listening. 

Any time a people associate 

their preachers, pastors and priests 

as Millionaires (black folks inadvertently 

and unconsciously do this) 

they are victims of undue fleecing 

and exploitation. True men and 

women of God must influence people 

to rise from their bondage. The clergies 

reward must be in heaven but 

Church 

buildings 

are never 

accounted for 

in measure 

of taxable 

asset that 

yield revenue 

to enhance 

an economic 

case. 


for us Black folks with undue sense 

of depravation, we want it here and 

now, and if selling hope makes it, 

why not. 

In Economic 101, assuming 

many read and understood that, 

there is never mention of churches 

and pastors and priests as role model 

for wealth building or building block 

to sustain an economic base. Church 

buildings are never accounted for 

in measure of taxable asset that 

yield revenue to enhance an economic 

case. It is a passive asset. But 

that is where black folks celebrate 

their arrival and collective investment. 

Why black folks equate and 

celebrate their elected and pastoral 

class with money, beats me cold. 

In my years associating with 

DBCC, the oldest African-American 

Chamber of Commerce in US, no 

Black millionaire or business has 

stepped up to underwrite the chamber’s 

annual luncheon or gala or 

endow its Educational foundation. 

When St. Philip’s Community 

School, Dallas located at 1600 

Pennsylvania Ave had a recognition 

event last month, a white couple 

were honoured for their outstanding 

contribution to the school. My ques- 

tion with all the noise about Black 

millionaires, the measure of community 

service and presence still elude 

our community in areas of: 

No black owned bank in US 

1. has deposit base of $1b 

In Dallas DFW where some of 

2. the mega churches exist with 

pastors associated with their millions 

instead of spiritual content, 

none of the churches were built by 

black contractors 

No grocery story worthy of 

3. mention and reputation is 

owned by black business 

No retail or shopping centre 

4. in black neighbourhood can 

stand and attract Grade A class asset 

valuation to be funded by pension 

fund, especially municipal employees 

backed and supported fund, majority 

of its subscribers – black employees 

No company and corporation 

5. in US owned by black has solid 

500 employees with majority being 

blacks 

Dallas Paul Quinn College 

6. struggling in both enrolment 

and finances is saved by white Dallas 

folks who give money 

You can add to the list. You 

got the picture. So where are the 

black millionaires and their generosity? 

If others are rescuing us and 

our institutions, should we celebrate 

ours whose only disposition is nice 

house in the suburb and depreciating 

investments in automobiles? 

In summary, we must get away 

from the Culture of Money mentality 

- often Consumer Wealth - that 

affords the present holder a nice 

home and cars but can hardly survive 

a generation once the holder 

passes on. I welcome seasoned counter 

and challenge. 

The Ejik E. Okpa II 

Dallas, Texas 

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rough country roads to inner city lanes or paths.

CAREER 

Opinion 

ends and became part of every weekend 

escapade. I worked hard with 

the reports, got a promotion and 

worked even longer hours. I enjoyed 

every bit of it. 

Towards the end of the third 

year, reality checked in; I was making 

money but wasn’t living my 

dream. I was chasing someone else’s 

dream instead. Disappointed, I felt 

as if I was letting the lecturers who 

had taught me that I should take 

risks down. I had been taught to 

dream big and do big things. I 

wanted to own the bank, make it 

bigger and make lots of money. On 

paper it was possible and I wanted 

to venture out. 

As ambition would have it, I 

resigned and opted to start my own 

company. That’s where the drama 

began. I found a sexy name for 

my company and luckily, recruiting 

clientele was quite easy; riding on 

a bubble at the backdrop of a recovering 

economy; just after President 

Moi lost an election after 24 years 

in power. I did great analyst reports 

The pains of being a 

young entrepreneur in the 

limelight bit harder. Friends 

thought I was doing well 

because I had big clients-- 

but ‘good clients’ don’t 

always pay well. 

Can chasing a dream 

ruin a career? 

and articles for major newspapers. 

The more they got published, the 

more clients I got. My business grew 

fast and I hired a big team of advisers, 

a large office and consultants to 

keep my house in order. 

While I was making money, 

spending it and ‘getting famous,’ the 

global financial crisis struck suddenly. 

This came hot on the heels 

of Kenya’s elections that went bad 

in 2008. I had no savings at all but 

I was credit worthy. I borrowed 

without keeping tabs on how much 

until it fell out of place. The crisis bit 

harder. I sent my employees, including 

myself home. 

Being a good entrepreneur, persistence 

had taught me to ‘hang-in 

there’ as long as possible. Two years 

later, I rebounded and learnt to do 

While I was making money, 

spending it and ‘getting famous,’ 

the global financial crisis struck 

suddenly. 

things differently. While it worked 

out just fine, I had ignored the fact 

that in as much as the economy 

had improved, the corporate finance 

sector had changed. The investment 

banks had swallowed all the clients, 

and the ordinary Kenyan, who had 

started having an appeal for third 

party opinion before investing had 

developed cold feet and reverted 

back to traditional investments 

(land, property, etc.) 

The pains of being a young 

entrepreneur in the limelight bit 

harder. Friends thought I was doing 

well because I had big clients-- but 

‘good clients’ don’t always pay well. 

I started pulling out of the social 

scene because more time was spent 

either working on the deals or looking 

for more deals.I stopped showing 

up for functions to avoid being made 

to feel great while I was struggling. 

“Oh, we saw you in the papers, 

great job,” Someone would say. 

“Mr. X told us the great 

job you did for him,” 

another person 

would say. 

Such was 

the common 

talk 

that I 

chose to 

run away 

from. Once 

in a while, 

one good client 

could show 

up and pay well. 

The following weeks 

or months would elapse 

without such clients. In the 

end, I concluded that consulting 

business wasn’t easy and I 

needed people with the energy 

to ‘walk with me’ through the 

operations. 

I was lucky to have found 

the partners that I was looking 

When we are growing 

up, our parents teach 

us to ‘work hard, get 

good grades, graduate 

with first class, and 

find a well-paying job.’ I was a good 

student, straight from high school to 

university and that qualified me for 

all the above. Three plus years at the 

university and I graduated. Like most 

middle class families in Kenya do, my 

parents came for my Finance degree 

graduation, cheered when I received 

my ‘powers to read and write’ and 

invited all their friends over for the 

after-party. 

Just before I graduated, I had 

secured a job with a bank. I was 

excited by the fact that I was spending 

12 hours punching numbers 

in Excel sheets, trying models and 

different formulas; drawing graphs 

and using all the finance jargon I 

had learnt in school. Just like the 

creation story, I’d always look at 

everything and feel satisfied that ‘it 

was good.’ 

I loved the challenge, enjoyed 

time with friends, had fun all weekfor 

but the perceived blessing turned 

out to be the worst nightmare of 

my life. Due to ownership battles, I 

chose to let go of my 7 years of hard 

work and ‘move on.’ Fortunately, 

‘moving on’ had become a political 

cliché after the 2013 elections. 

Laughable as it may seem, I handed 

in a resignation and left my company 

and landed a good job at the World 

Bank. 

I did not want to go back to 

consulting but another blunder during 

the transition got me pairing up 

with another entrepreneur; another 

situation gone bad, luckily too soon 

to pick up the pieces and ‘keep moving 

on.’ I have arbitration issues to 

deal with that though unnecessary, 

are just a common thing that most 

entrepreneurs ignore every day. 

Before quitting that job to chase 

your dream, please ensure that you 

have stayed 

long enough to secure 

business from your employer. 

That requires you to have won 

the confidence of the board 

who can easily vouch that big 

account for you. 

Even with a good amount of 

savings, I am convinced that had I 

worked longer (at least 5 years), I’d 

have made more sound decisions 

relating to my career and dreams. 

Some people argue that with good 

savings, it is possible to survive 

through turbulent times and emerge 

strong. It is true but shouldn’t a 

good business model survive such 

turbulence? If there was a wise decision 

I should have made, it would 

be walking out when the markets 

were a mess and starting a different 

operation. 

Family support comes in handy. 

But you should not be the pain in 

the family because of your struggling 

enterprise. Chances are that 

they need you more than you need 

them. If it’s not working, then you’re 

better off not dragging them into the 

trouble. 

On a more consoling note, 

we all peg success on 

Young entrepreneurs 

out there, not 

everyone is meant to 

be on the Forbes 

list. What we see 

glittering out 

there is not 

necessarily 

gold. If it 

is not 

worki 

n g 

out as you’d 

wish, it probably 

won’t ever 

work. Get rid of it, 

dust off and move 

on to something else 

that works- perhaps that 

salary at the end of the 

month. 

The writer Michael Musau is an 

independent consultant and can be 

reached at michaelmusau@gmail.com 

Being a good 

entrepreneur, 

persistence 

had taught 

me to ‘hangin 

there’ 

as long as 

possible. 


XXXXXXXXXXX 

RALLY AUDIENCE 

Xxxxxxxxxx 

WRC TV audience rises 

by 35 per cent in 2014 

New figures issued 

by sports marketing 

research company 

Repucom for the first 10 

rounds of the championship, 

up to and including Coates Hire 

Rally Australia, show a large rise in 

both audience and broadcast time 

compared with 2013. 

Total audience across the 10 

rallies rose by 35 per cent to 581.81 

million viewers, while broadcast 

time increased by 70 per cent to 

7275 hours. 

Most regions saw notable audience 

increases in comparison to 

2013, including Central and South 

America (+ 155 per cent) and 

Europe (+ 34 per cent). 

Rallye Monte-Carlo netted the 

largest audience to date with 86.75 

million viewers tuning in, while 

Neste Oil Rally Finland achieved 

the highest broadcast time with 880 

hours. 

In the third quarter, Neste Oil 

Rally Finland was watched on TV 

by an additional 30 million fans 

compared with 2013, ADAC Rallye 

Deutschland gained an extra 22 million 

viewers and Coates Hire Rally 

Australia brought in 18 million more 

people than last year. 

WRC Promoter managing director 

Oliver Ciesla said the upward 

trend was ‘hugely encouraging’ and 

maintained the excellent progress 

in growing WRC’s media audience 

across all platforms. 

“Increased broadcast hours confirm 

broadcasters’ appreciation of 

the WRC programmes we produce 

and demonstrate we’re meeting the 

demand for live sport in HD format,” 

he said. 

“The figures show our emphasis 

to deliver live stages at regular times, 

such as the Power Stage at midday 

on a Sunday and Thursday evening 

city stages, are welcomed by viewers 

and attract new fans,” he added. 

About WRC Promoter GmbH 

WRC Promoter GmbH is a joint company of 

Red Bull Media House and the sportsman 

media holding. It is responsible for all 

commercial aspects of the FIA World Rally 

Championship, including broadcast formats, 

TV production and the marketing of global 

media and sponsorship rights. The Promoter 

also has responsibility to increase the field of 

participants and to propose the venues that 

form the FIA WRC calendar. 

The World Rally Championship is the FIA’s 

premium rally series. WRC showcases 

authentic motorsport, high performance 

cars and the world’s best drivers competing 

in dramatic surroundings ranging from the 

ice and snow of Scandinavia to the stifling 

heat of Sardinia. Established in its current 

format in 1973, WRC participants battle for 

the drivers’ and manufacturers’ world titles 

at rallies spanning 13 countries and four 

continents. More information can be found at 

www.wrc.com and www.wrcplus.com. 

“ In my business, long-term 

commitment is a must” 

– Tabitha Karanja, CEO of Keroche Breweries 

With Business Banking you have a partner who 

understands your needs to help your business 

to prosper. 

When it comes to growing your business, you need a partner who is as committed 

as you. So when we provide asset financing, we’re making a commitment to help 

ensure your plans are fulfilled, right to the very end. Because we realise that when 

your business succeeds, our business succeeds. 

Call us on 020 390 0000 to have a Business Relationship Manager come and 

meet with you. 


Barclays Bank of Kenya is regulated by Central Bank of Kenya

Hobie Beach, Nelson Mandela Bay - Port Elizabeth (NMMU Main building in far background)

Business Monthly - December 2014

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