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Sunday, 16 Jun 2019

Kenya banking sector is likely to see more mergers and acquisitions in the next two years

Insights Africa

Economic Outlook

Economic Outlook

  • Kenya banking sector is likely to see more mergers and acquisitions in the next two years as capital raising options diminish for smaller struggling lenders. In Kenya and Tanzania, the top five banks account for 46% and 55% of the sector assets respectively.
  • Women, youth and small business owners will get loans from the State at 6% interest under the new Biashara Kenya Fund that will receive 2 BN KES (19.4 MM USD) to start operations in 2019.
  • The Kenya National Bureau of Statistics (KNBS) has contracted two local universities; Jomo Kenyatta University of Agriculture and Technology (JKUAT) and Moi University to supply it with 164,700 digital tablets at a cost of 470.5 MM KES (4.56 MM USD) to conduct 2019's national population census.
  • Petrol prices have increased for the 5th month in row in a review that saw diesel and kerosene costs drop as new inflation tax wiped benefits of lower costs. The cost of petrol, mostly consumed by private cars, went up by 0.29 KES a liter to 115.39 KES (1.12 USD) in Nairobi.
  • Kenya will face a possible loss of the multi-billion-shilling Australian flower market after setting new set of rules that will be effective by September 1 requiring that all the horticultural produce exported to Australia to have zero levels of pests.
  • The World Bank has sanctioned a construction and general trade company based in South Sudan for 15 months over allegations of corruption while undertaking the Uganda Teacher and School Effectiveness Project.
  • The Centre for Trade Policy and Development (CTPD) reported that Zambia fiscal indiscipline is undermining the country's economic performance. Noting that Zambia economic growth has slowed down; foreign reserves have been rapidly decreasing while interest rates remain high limiting the growth of the private sector.
  • Zimbabwe inflation rate almost doubled in June 2019 reaching 175.7% compared to 97.9% in May 2019. Consequently, Prices increased by 39.3% in June 2019.
  • Tanzania and China agreed on restarting building the 10 BN USD Bagamoyo super port project which is a megaport in the Tanzanian town of Bagamoyo, which appeared to have been stopped by President John Magufuli.
Political Events

Political Events

  • African nations are headed for another round of tough negotiations as they seek common rules for their newly formed free trade area. To achieve its goal of boosting intra-regional trade, the African Continental Free Trade Area (AfCFTA) must craft rules of origin (RoO) that encourage imports from members while slowing orders from outside the bloc.
  • Zambia president has fired Finance Minister Margaret Mwanakatwe and appointed Central Bank deputy governor Bwalya Ng'andu to replace her.
Stock Market

Stock Market

  • The Zimbabwe Stock Exchange (ZSE) traded slightly up last week ended July 12 2019, as demand returned to the local bourse. This comes after Finance and Economic Development minister Professor Mthuli Ncube indicated that civil service salaries would be reviewed upwards, sparking fresh inflation fears.
  • Monthly bond turnover at the Nairobi Securities Exchange (NSE) increased to a six-year high of 69.8 BN KES (679.4 MM USD) in June, buoyed by a liquid market that saw investors turn to the secondary market in search of yields.
Companies Transactions

Companies Transactions

  • Sterling Capital has acquired a 20% stake in emerging markets private equity (PE) firm, Afvest, for an undisclosed value. Noting that Sterling reported that there was an opportunity for funding business with capital requirements of less than 50 MM KES (485,389 USD).
  • The Competition Authority of Kenya (CAK) has approved the formation of joint venture between Toyota Kenya parent firm CFAO and Michelin to sell tyres locally and in Uganda.
  • Kenya Commercial Bank (KCB) is launching 300 MM KES (2.9 MM USD) poultry farmer's empowerment project and offering it under the KCB's MobiGrow, a mobile-based platform which provides financial and non-financial services to smallholder farmers in Kenya and Rwanda.
  • Private equity (PE) firms, exiting East African investments, are enjoying dollar returns of up to 23%, underlining the attractiveness of the region for venture capital. PE activity in the region has grown significantly, with majority of those that entered the market at the beginning now exiting after achieving the normal six to eight-year investment cycle for such funds.
  • The Asian Fintech event bringing up to 5,000 delegates to Nairobi has received a financial boost with several corporates donating funds towards its sponsorship. Regional bank KCB Group donated 10 MM KES (97,077 USD) while telco Safaricom and Standard Chartered Bank donated 5 MM KES (48,538 USD) each.
  • A consortium led by General Electric and Power Construction Corporation of China was officially awarded a contract for the Batoka Gorge Hydro Electric Scheme, which involves building a 2400-megawatt power station on the border of Zambia and Zimbabwe.
  • IBC Solar, a global leader in photovoltaic (PV) systems and energy storage, is supporting Bavarian universities to create a pilot project for expanding the energy supply into rural areas of Namibia. The aim of the project "PROCEED" is to achieve a sustainable improvement in the energy supply based on renewable energy.
  • The Moroccan agency for sustainable energy (MASEN) has opened the first stage in a tender process to build, operate and maintain a 230-megawatt solar plant near the town of Midelt in the Atlas Mountains.


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