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Friday 15 May 2015 42 BUSINESS DAY THOMSON REUTERS Royal Marines lead migrants to safety on a landing craft of HMS Bulwark after their rescue from the Mediterranean between Italy and North Africa, May 13, 2015. REUTERS Kenya’s Equity Bank plans 10-nation Africa expansion •Expansion will be via acquisition or new operations DUNCAN MIRIRI Kenya’s Equity Bank plans to enter 10 more African countries in the next decade, in addition to the five it already serves, by building operations from scratch or acquiring existing lenders, its chief executive said on Wednesday. James Mwangi told Reuters the bank, Kenya’s largest by number of customers, had extended his contract by 10 years in April, to steer the expansion. During his first 10-year term as CEO, Mwangi turned a specialist in small loans with 600,000 customers in Kenya into a full-scale commercial bank with 10 million customers, now also Britain criticises EU over Mediterranean migrant plans NAVEEN THUKRAL Britain’s interior minister Theresa May on Wednesday criticised the EU’s approach to stemming the flow of migrants crossing the Mediterranean into Europe, saying that by not sending economic migrants back, the bloc was encouraging them to travel. International focus on the issue of migration into Europe has been sharpened by a series of disasters in the Mediterranean in operating in Uganda, Tanzania, Rwanda and South Sudan. He said the bank’s expansion strategy aimed at moving into Democratic Republic of Congo, Burundi, Zambia, Zimbabwe, Malawi, Mozambique, Botswana, Ghana and Nigeria. He also wants to enter Ethiopia, currently off limits to any foreign bank. “It involves seeking to raise the number of customers from 10 million to 100 million over the same period,” Mwangi said. Equity will consider acquisitions in Nigeria, Democratic Republic of Congo and Ethiopia, once it opens up, he said, adding it planned new operations in other markets. “Our best experiences which hundreds of migrants from North Africa have drowned after attempting to cross the sea in unsafe vessels. After briefing the United Nations Security Council on plans to deal with such migration, the EU’s foreign policy chief Federica Mogherini on Monday said no refugees or migrants intercepted at sea would be sent back against their will. Home Secretary May criticised Mogherini’s statement. have been on greenfields, so for the small countries we know greenfield it will be,” Mwangi said, referring to Equity’s experience of expanding in east Africa. For bigger markets, he said “sometimes you need an engine to scale as opposed to a greenfield.” With the exception of the move into Nigeria that may require a cash injection, the 10-nation expansion would be funded from operations, Mwangi said, citing Equity’s return on assets of 5.5 percent and return on equity of 31 percent last year. Equity has also committed to preserving its dividend policy of paying out 40 percent of available profit after tax even during the expansion, he said. The bank is testing a mo- “Such an approach would only act as an increased pull factor across the Mediterranean and encourage more people to put their lives at risk,” she wrote in an article in the Times newspaper. About 1,800 migrants have perished in the Mediterranean this year, the United Nations refugee agency said. Some 51,000 have entered Europe by sea, with 30,500 coming via Italy, fleeing war and poverty in Asia, Africa and the Middle bile phone-based banking service, Equitel, which it aims to formally launch in July and break even by September, he said. Equity has 768,000 active SIM card users after launching its network in partnership with telecoms operator Airtel Kenya, aiming to take on market heavyweight Safaricom’s M-Pesa service. Equitel users can transfer money, access credit and make payments by phone. It also offers typical mobile services of calls, text messages and Internet browsing. Equity leases Airtel’s telecoms infrastructure network, so it keeps all the revenue. “We have really focused on what we believe is the future infrastructure of banking,” Mwangi said. East. On Tuesday Britain said it would opt out of any EU plan to resettle refugees using country quotas, saying it preferred to focus its efforts on tackling people traffickers instead. “We must - and will - resist calls for the mandatory relocation or resettlement of migrants across Europe. Such an approach would only strengthen the incentives for criminal gangs to keep plying their evil trade,” May said Africa’s CEMAC bloc to move HQ back to Central African Republic NAVEEN THUKRAL Africa’s six-nation CEMAC economic bloc plans to move its headquarters back to Central African Republic’s capital Bangui this month, it said in a sign of confidence that a weekend peace deal will hold. Fighting between rival Christian “anti-balaka” militias and mostly Muslim Seleka rebels prompted CEMAC to move from Bangui to Gabon’s capital Libreville more than a year ago. A disarmament agreement signed at the weekend between rival armed groups seeks to draw a line under a two-year conflict that has Obama meets two Saudi princes after King sent regrets JEFF MASON U.S. President Barack Obama on Wednesday went out of his way to praise two of Saudi Arabia’s top leaders before meeting privately with them at the White House and played down the absence of King Salman, who pulled out of the visit last week. “The United States and Saudi Arabia have an extraordinary friendship and relationship that dates back to (President) Franklin Roosevelt,” Obama said at the start of the meeting with Saudi Arabia’s Crown Prince Mohammed bin Nayef and Deputy Crown Prince Mohammed bin Salman in the Oval Office. “We are continuing to build that relationship during a very challenging time,” he said. Obama said they would discuss how to build on a ceasefire in Yemen and work toward “an inclusive, legitimate government” in Saudi Arabia’s impoverished neighbor, where Iran-supported Houthi rebels have been under attack by a Saudi-led coalition. King Salman decided abruptly to skip the White House meeting and a summit of the Gulf Cooperation Council at the president’s Camp David retreat in Maryland outside Washington on Thursday. The White House has sought to counter perceptions that his absence was a snub that would undermine efforts to reassure the region Washington killed thousands of people. “Within a month, the government of the commission and essential services will be relocated to Bangui,” said Pierre Moussa, president of the CEMAC commission on Tuesday. CEMAC is made up of Cameroon, Central African Republic, Chad, Congo Republic, Equatorial Guinea and Gabon. Central African Republic, rich in gold and diamonds, has seen multiple coups and rebellions since independence from France in 1960. A transitional government led by President Catherine Samba-Panza plans to hold elections later this year. remains committed to its security against Iran. U.S. officials have said the right leaders were attending the summit, which they portrayed as a working meeting rather than a symbolic get-together. The Gulf Cooperation Council includes Saudi Arabia, Kuwait, Qatar, Bahrain, the United Arab Emirates (UAE) and Oman. The absence of many top Arab leaders, in addition to King Salman, is viewed as a reflection of frustration with Obama’s pursuit of a nuclear deal with Iran and a perceived U.S. failure to support opposition fighters in Syria. The president called Saudi Arabia a critical partner in the fight against Islamic State militants. Obama highlighted his interactions with his two guests. “On a personal level, my work and the U.S. government’s work with these two individuals ... on counterterrorism issues has been absolutely critical to maintaining stability in the region but also protecting the American people,” Obama said. Obama does not have private meetings on his public schedule with the leaders from the other countries, although a dinner is planned on Wednesday for the full group at the White House. Crown Prince bin Nayef said his country attached great importance to the “strategic and historic relationship” with the United States.
Friday 15 May 2015 BUSINESS DAY 43 THOMSON REUTERS U.S.’ Kerry to take tough approach in China over South China Sea DAVID BRUNNSTROM U.S. Secretary of State John Kerry will leave China “in absolutely no doubt” about Washington’s commitment to freedom of navigation and flight in the South China Sea when he visits Beijing this weekend, a senior State Department official said on Wednesday. Setting the scene for possibly contentious encounters with Chinese leaders, including President Xi Jinping, the official said Kerry would warn that China’s large scale land-reclamation work in contested waters could have negative consequences for regional stability - and for relations with the United States. On Tuesday a U.S. official said the Pentagon was considering sending military aircraft and ships to assert freedom of navigation around rapidly growing Chinese-made artificial islands in the disputed South China Sea. China’s Foreign Ministry responded by saying that Beijing was “extremely concerned” and demanded clarification of the remarks. The senior U.S. official said “the question about what the U.S Navy does or doesn’t do is one that the Chinese are free to pose” to Kerry in Beijing, where he is due on Saturday and Sunday for meetings with civilian and military leaders. Kerry’s trip is intended to prepare for the annual U.S.- China Strategic and Economic Dialogue scheduled to be held in Washington in June and Xi’s expected visit to Washington in September. But growing strategic rivalry rather than cooperation look set to dominate the talks. China’s Foreign Ministry spokeswoman Hua Chunying said on Wednesday that freedom of navigation did not mean that foreign military ships and aircraft can enter another country’s territorial waters or airspace at will. “We demand the relevant side talks and acts cautiously and does not take any actions that are risky or provocative to maintain regional peace and stability,” she said. The senior U.S. official dismissed the idea that constructing islands out of half-submerged reefs gave China any right to territorial claims. “YOU CAN’T BUILD SOVEREIGNTY” “Ultimately no matter how much sand China piles on top of a submerged reef or shoal ... it is not enhancing its territorial claim. You can’t build sovereignty,” he said. “He (Kerry) will leave his Chinese interlocutors in absolutely no doubt that the United States remains committed to maintaining freedom of navigation and to exercise our legitimate rights as pertaining to over flight and movement on the high seas.” He said Kerry would “reinforce ... the very negative consequences to China’s image and China’s relationship with its neighbors on regional stability and potentially on the U.S.- China relationship from their large-scale reclamation efforts and the behavior generally in the South China Sea.” Beijing claims sovereignty over most of the South China Sea, through which $5 trillion in shipborne trade passes every year. The Philippines, Vietnam, Malaysia, Taiwan and Brunei also have overlapping claims. Last month, the U.S. military commander for Asia, Admiral Samuel Locklear, said China could eventually deploy radar and missile systems on the islands it is building in the Spratly archipelago that could be used to enforce an exclusion zone should it move to declare one. The U.S. official who spoke on Tuesday said U.S. Defense Secretary Ash Carter had requested options that include sending aircraft and ships within 12 nautical miles (22 km) of the reefs China has been building up. U.S. President Barack Obama announced a strategic shift towards Asia in 2011 in response to growing Chinese power and influence, but critics have questioned his commitment to this “rebalance” given U.S. security distractions elsewhere in the world and stretched resources. News of the possibly tougher U.S. stance came as the key economic pillar of the rebalance suffered a blow at the hands of Obama’s Democrats in the U.S. Senate, who blocked debate on a bill that would have smoothed the path for a 12-nation Trans-Pacific Partnership (TPP) trade deal. Russian opposition leader Alexei Navalny (C) leaves a court after a hearing in Moscow, Russia, May 13, 2015. A Moscow court on Wednesday rejected a bid by law enforcement officials to have Kremlin critic Navalny jailed for violating the terms of his suspended fiveyear sentence on embezzlement charges. A judge ruled that any violations of his suspended sentence were not “systemic” and that he could remain at liberty. REUTERS Egypt media criticism of Sisi raises questions on allies’ support MICHAEL GEORGY Unprecedented media criticism of Egyptian President Abdel Fattah al-Sisi suggests he may no longer enjoy unquestioning support from the diverse groups that helped him to stage an army takeover two years ago. But diplomats and analysts say there is no immediate danger to Sisi’s presidency, and he may even by the victim of his own success in crushing Islamism and stabilising the economy. Egyptian newspapers have begun suggesting that Sisi is fallible. This would have been unthinkable when, as then army chief, he removed the Muslim Brotherhood from power in 2013. The criticism is guarded and often indirect. For instance, Al Watan has identified factors undermining SABMiller profit beats expectations, sees tough year ahead SABMiller reported full-year profit above analyst expectations as performance picked up in the latter half of the year, but said trading would continue to be tough in its new financial year. The maker of Peroni, Grolsch and other beers reported operating earnings fell 1 percent to $6.37 billion in the year ended March 31, above analysts’ average estimate of $6.23 billion, according to a consensus compiled Sisi, including corruption and nepotism. It has also alleged violations committed by the police. “There is probably no institutional reason for this limited push back in the Egyptian press. What it may show is yet more evidence that the power structures in Egypt are not as cohesive as everyone outside of the country seems to think,” said H.A. Hellyer, a specialist in Arab affairs at the Brookings Centre for Middle East Policy in Washington and the Royal United Services Institute in London. Sisi toppled Islamist President Mohamed Mursi after mass protests with the full backing of the generals, the “securocrats” of the intelligence services, top businessmen and most local media. He went on to become president at least partly by rallying them behind a crackdown on the Muslim Brotherhood, which he by the company. Net producer revenue fell 2 percent to $26.29 billion, also ahead of analysts’ estimates of $26.23 billion. Excluding the impact of currency fluctuations, revenue was up 5 percent and earnings before interest, tax and amortisation (EBITA) was up 6 percent, helped by price increases and cost cuts. The strong U.S. dollar reduced the value of international sales and profits and increased raw material costs declared a terrorist group that threatened Egypt’s existence. But his success in neutralising the Brotherhood and reducing the number of attacks staged by militants based in the Sinai means his diverse supporters, no longer so worried by the Islamist challenge, are re-directing their attention to their own interests. “This is less conspiracy, more normal bread-andbutter politics returning,” said one Western diplomat. “(It’s) a sign of Sisi’s success in dialling down the economic and security crisis, but (also) a sign of his weakness so far in managing the other power centres - securocrats, judges, bureaucrats and businessmen.” Autocrat Hosni Mubarak managed Egypt’s staggering political, economic and social problems for decades through his National Democratic Party until his overthrow in 2011. since commodities are often traded in the U.S. currency. SAB had already reported that worldwide beer volume was flat last year, with soft drink volume up 8 percent. Growth in Africa and Latin America was offset by weakness in North America and China, though China returned to growth during the last three months of the year. Looking ahead, the company said it expected the trading environment to stay challenging and that its busi- Sisi, however, has no allpowerful state entity to help him. “Sisi’s presidency is far more cohesive than any in the past four years - but not compared to Mubarak,” said Hellyer. FRICTION SEEN WITH BUSINESSMEN Businessmen who helped Mubarak to hold on to power for so long illustrate the complex problems Sisi faces. Some want him to accelerate reforms while others seek a return to Mubarak-era crony capitalism for personal gain. Security sources blamed powerful businessmen with links to the media for this week’s criticism. “The ongoing differences between Sisi and businessmen is the cause,” said one, adding that the company bosses opposed what they see as Sisi’s dependence on firms owned by the military and former intelligence officials for projects. ness would continue to be hit by currency volatility. “However, we are confident in our strategy to drive superior long-term growth,” the company said, without giving a specific forecast. “We’re giving a sense of confidence over the longer term but we’d rather avoid short term forecasts,” Chief Executive Alan Clark told reporters. “Things can shift so quickly in the short term that it’d just be too risky for me to give a forecast.”
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