The Economics Of Equity vs. Safaricom

safequityThe battle between Equity Bank and Safaricom seem to just have started. Even after the CAK approved the issuing of the slim SIM cards by Equity Bank for a trial period of one year, the parliamentary committee on Energy, Information and Communication on Wednesday differed with them and requested for a technical audit to be done first before the commercialization of the project.

It appears that Equity Bank has the regulator’s backing whereas Safaricom is lobbying through parliament. Whoever wins this battle is yet to be determined as the tag-of-war continues to take new shape everyday. However, the economic implications of the same can easily be forecasted.

In the event that Equity Bank gets its wishes granted and the roll out of the slim SIM cards is successful, the bank will see its top line (read revenues) increase. With efficient management of its costs, the bank will also experience a growing bottom line (read profits). As investor sit and watch the top and bottom line expand, their appetite for Equity Bank shares will be aroused and as they demand more of it, its share price will shove up.

Things will not be bright for Safaricom in this case as it loses its customers to Equity Bank on the money transfer business line (Mpesa). Both its top line and bottom lines will shrink significantly bearing in mind that Mpesa contributes about 36% of its total revenues. The investors watching this stock will opt to shift their money to other investment vehicles or better still to other growing stocks in the market. The obvious outcome of this shift will be a decline in Safaricom’s share price and this goes down together with its shareholders’ wealth.

In my opinion, the one year trial period is too long and Equity Bank will do all it can to make sure that it registers as many clients as possible to the new slim SIM card within the given time frame. Once numbers are large enough, the project will be too big to terminate for any “minor” errors that might be noticed during the trial period. Simply put, once Equity Bank launches the slim SIM card registration, the project will be as good as sealed into perpetuity and Safaricom will have to look for other innovative ways of combating the threat and maintain its revenue growth trajectory.

However, the two companies are not the only players in their industries. The threat will be felt by other banking sector and telecommunication sector players who will in return come up with counter measures to secure their market shares and profitability. It therefore means the battle is wider than it appears with only the two leading players representing their various sectors in the just began corporate war.

For investors, its time to go back to your financial planner and take a strategic position before its too late. Remember, you make money when buying and not when selling!

 

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Agenda 2063: The Africa We Want!

agenda 2063The Voices of the African People:

The people of Africa and her Diaspora, united in diversity , young and old, men and women, from all walks of life, deeply conscious of their history, express their deep appreciation to all generations of Pan Africanists. In particular, to the founders of the Organization of African Unity for having bequeathed an Africa Free from slavery, colonialism and apartheid.

Echo the Pan African call that Africa must unite in order to realize its Renaissance. Present Generations are confident that the destiny of Africa is in their hands, and that we must act now to shape the future we want. Fifty years after the first thirty three (33) independent African states gathered in Addis Ababa on 25th May 1963 to form the Organization of African Unity, we  are looking ahead towards the next fifty years.

We reviewed past plans and commitments, and pledge to take into account the lessons as we implement Agenda 2063. These include putting mobilization of the people and their ownership of the continental programmes at the core; the principle of self reliance and Africa financing its own development; the importance of capable, inclusive and accountable states and the institutions at all levels and in all spheres, the importance of Regional Economic Communities as building blocks for continental unity and holding ourselves and our governments and institutions accountable for results.

We rededicated ourselves to the enduring Pan African vision of “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena”.

Africa Aspirations for 2063:

Our united voices paint a picture of what we desire for ourselves, for future generations and the continent.

The aspirations reflect our desire for shared prosperity and well being, for unity and integration, for a continent of free citizens and expanded horizons, where the full potential of women and youth are realized, and with freedom from fear, disease and want.

Africa is self-confident in its identity, heritage, culture and shared values, and as a strong, united and influential partner on the global stage, making its contribution to peace, human progress and welfare. In short a different and better Africa.

We are confident that Africa has the capacity to realize her full potential in development, culture and peace and to establish flourishing and prosperous societies.

We thus commit to act together towards achieving the following aspirations:

  1. A prosperous Africa based on inclusive growth and sustainable development.
  2. An integrated continent, politically united and based on the ideals of Pan Africanism and the vision of Africa Renaissance.
  3. An Africa of good governance, democracy, respect for human rights, justice and the rule of law.
  4. A peaceful and secure Africa.
  5. An Africa with a strong cultural identity, common heritage, values and ethics.
  6. An Africa where development is people-driven, unleashing the potential of its women and youth.
  7. Africa as a strong united and influential global player and partner.

Read more here…Agenda 2063

The Economic Week – (Sept 14th – 20th)

econ indThe week saw a lot of activity at the Nairobi Securities Exchange with the NSE share index going up further and closing at an all time high of 5307.52 points on Friday. The NSE share also continued with its upward rally to close at Ksh. 25.

Some shares listed at the exchange also had a vibrant week with Equity, Britam and Jubilee insurance leading the pack in hitting their all time highs too within the week and closing on Friday at Ksh. 57.00, 34.00 and 425.00 respectively. Centum also continued with its upward rally and closed the week at Ksh. 70.50.

At the Forex market, the shilling stabilized after the Central Bank of Kenya intervened and sold the dollars for two days. The shilling closed the week exchanging at the rate of Ksh. 88.94 against the dollar, Ksh. 146.59 against the sterling pound and Ksh. 114.87 against the euro.

In the same week, CBK reported that it had bought the bulk of the Eurobonds from Treasury, thus pushing its foreign currency reserves to an all time high of $ 7.4 billion (Ksh. 653 billion); an equivalent of 4.85 moths of import cover.

Key Rates:

The inflation rate and the Central Bank rate remained unchanged at 8.36% and 8.5% respectively. The 91 days treasury bill rate stood at 8.63% while the REPO and interbank lending rates stood at 8.32% and 7.80% respectively.

CBK Discount Window lending rate stood at 14.5% while the KBBR remained unchanged at 9.13%. The average savings and deposit rates stood at 1.33% and 6.91% respectively while the lending rate for commercial banks stood at an average of 16.91%.

In the international front, Alibaba listed at the NYSE on Thursday at $68 per share but it saw a price surge to $92.70. More than 100 million shares were sold within minutes after the debut signifying the high appetite investors have for the stock which is in China’s e-commerce sector.

Hope you had a nice week and you made money at the capital markets, Forex markets, real estate and any other place where you have put your money. Have an enterprising week ahead.

What is Pan-Africanism?

pan africanismAfter attending a 3 days African Union Youth Consultations Forum this week, my perception of Pan-Africanism was illuminated and the Pan-Africanism spirit rekindled in me. Different People defined Pan-Africanism differently.

My definition of Pan-Africanism is: The integration of our African cultures and economic systems for improved trade, maximum utilization of our resources for our own benefit, protection of our heritage and claiming of our rightful position in global economic platforms based on our demographic and economic strength.

What is you definition of Pan-Africanism?

Sustainable Development Goals (SDGs) Outlined

The UN SDGs proposal is ready:

sdgsdThe Millennium Development Goals will expire in 2015. Since June 2012 at the UN conference on Sustainable Development (Rio + 20), governments have agreed to develop new goals called Sustainable Development Goals (SDGS).

The United Nations open working group on Sustainable Development Goals has finished its work and 17 new goals have been agreed upon.

The proposal for the new Sustainable Development Goals has now been submitted to the United Nations General Assembly for consideration. The intention is that the post 2015 Development agenda, of which the new SDGs are a key part, will be adopted during the regular session of the United Nations General Assembly in Sept 2015.

There are the 17 Sustainable Development Goals:

1. End poverty in all its forms everywhere
2. End hunger, achieve food security and improved nutrition, and promote sustainable agriculture
3. Ensure healthy lives and promote well-being for all at all ages
4. Ensure inclusive and equitable quality education and promote life-long learning opportunities for all
5. Achieve gender equality and empower all women and girls
6. Ensure availability and sustainable management of water and sanitation for all
7. Ensure access to affordable, reliable, sustainable, and modern energy for all
8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
10. Reduce inequality within and among countries
11. Make cities and human settlements inclusive, safe, resilient and sustainable
12. Ensure sustainable consumption and production patterns
13. Take urgent action to combat climate change and its impacts (in line with the United Nations Framework Convention on Climate Change)
14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
17. Strengthen the means of implementation and revitalize the global partnership for sustainable develop

Check them out at Ascent

Silencing Guns In Africa by 2020!

gunnyToday I happened to be among the 20 youth leaders in Kenya sitting in the SKIKA NATIONAL YOUTH CONSULTATIONS forum to deliberate on the solutions to silencing guns in Africa and bringing sustainable peace to Africa through democratic governance processes.

Among the major issues discussed was unemployment and underemployment as a cause for conflict in Africa and in particular resource conflicts. The other sub-topic was on radicalization and extremism amongst the African youths. Finally, we deliberated on Ethnicity and Identity Conflict in the African context.

My finding from a thorough analysis of the three sub-topics was that they all had a link to economic empowerment of the youths specifically.

The unemployed and underemployed youths need to be empowered economically through employment and full employment in this case. The marginalized youths and those frustrated in poverty too need to be empowered economically so that they do not end up in extremist terror groupings.

And finally, the major spring for negative ethnicity is in the either real or perceived inequitable resource allocation, with some communities appearing to be or actually being favored in resource allocation. This fuels ethnic hatred and people fight each other more-so during elections in a bid to gain control of the resources for their communities through political power. It therefore emerged that if all communities were empowered economically and we had equitable resource distribution, then we would silence guns in Africa.

And that is when I realized how ‪#‎entrepreneurship‬ is a powerful tool in empowering the youths economically and help in silencing guns in Africa, strengthening democratic governance and maintaining sustainable peace in Africa. #dgtrends #skika

Think about that!

Economic Briefs – Kenya

econ indInflation rate for the month of August jumped up to 8.36% from 7.67%. Inflation has been on an upward trajectory in the past 6 months a trend that could get the monetary policy makers worried. The next move could be formulation and execution of a counters strategy to curb the inflation rate from going beyond the set economically accommodative limits.

The Monetary Policy Committee (MPC) in its last sitting maintained the central bank rate (CBR) at 8.5%. This happened despite the rise in inflation figures in the month of August.

The shilling is exchanging against the dollar at levels above ksh. 88 per dollar and has maintained above that level in the past weeks. Analysts believe that due to the end month demand for the dollar to make payments for imports and the long-term infrastructure projects in the country; the shilling will remain in the ksh. 88 – ksh. 90 range within the next few weeks or months.

The NSE 20 share index has maintained above the 5000 point in the past weeks and it hit its all-time high of 5163 points on Tuesday this week. This is being buoyed by the aggressive participation of foreign investors on the blue chip counters and their increasing interest in other less vibrant stocks.

The Kenya Bankers Reference Rate (KBRR) maintained at 9.13% with most banks adding a premium of between 3% – 6% to it in arriving at their final lending rates in the past month. A discussion on reducing the cost of credit is ongoing within the banking sector and we hope to get good feedback ultimately.