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Strikes unlikely to curb Kenya tea output

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Several weeks of strikes by tea pickers in Kenya’s biggest estates in June and July are unlikely to disrupt production enough to warrant a change to the forecast for the year, the agriculture industry regulator said on Thursday.

Tea pickers were awarded a 30 percent pay increase by a court in June but went on strike when tea estate owners refused to pay, saying it would drive up costs and deter investment.

Tens of thousands of pickers in the major growing regions of Nandi and Kericho went on strike in protest. Pickers have since returned to work after the Labour Ministry brokered a deal allowing the award to be implemented in two phases.

The East African nation, the world’s No. 1 exporter of black tea, expects output to jump to as much as 450 million kg this year, thanks to good rainfall, from 399 million in 2015. Tea is one of Kenya’s top foreign-exchange earners.

“There is no change to the output forecast,” Alfred Busolo, acting director-general of the Agricultural, Fisheries and Food Authority told Reuters, adding that the impact of the stoppages was “minimal”.

The government is working to remove numerous levies and taxes on the tea industry to make its exports more competitive.

The labour stoppages had mainly affected big tea estates in the Rift Valley region, which account for 40 percent of production. The rest comes from small-scale farms.

 

 

(Reporting by Duncan Miriri; Editing by Edmund Blair and Dale Hudson)

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Catherine Mahugu: Inspiring Women in Kenyan Tech

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Catherine Mahugu

Catherine Mahugu is a tech innovator from Kenya who has built an empire on socially beneficial projects and connectivity.

Catherine Mahugu is leading the way in the Kenyan tech industry. Currently working from San Francisco for her e-commerce accessories business which connects consumers and local African manufacturers, she has made waves across the tech, IT and retail worlds. She credits her early interest in science and technology to her engineer father and at just 27, she has achieved a great deal in these industries.

Early life

Mahugu graduated from the University of Nairobi with a bachelor’s degree in Computer Science. From an early age she broke the mold, favoring entrepreneurial projects over “corporate” roles that she considered to be the “safe option.” Her first projects were collaborations with her student colleagues at university, such as a mobile application that helps rural water vendors connect with customers by advertising their location and prices.

Combining her degree, enterprising spirit and intimate knowledge of the regional issues affecting her native Kenya, Mahugu has been at the forefront of creating many projects that benefit local people. Her first official foray into the tech world was with KamataKab, a mobile solution that uses GPS to locate taxis in the area, an option to contact and then a rating system to rate the taxi’s service for other users to utilize. Although this was the overall winner at the Garage4Kenya awards in 2011, Mahugu knows that this app was a little too ahead of its time; it didn’t meet the recent successes of Uber and Easy Taxi today. This hasn’t fazed Mahugu however, and she feels that the experience showed her that innovation was a viable career route and that her ideas had traction in the tech world.

Innovation, Innovation, Innovation

The building blocks to her latest enterprise can be seen in her next project, SasaAfrica. This provided the foundations for Soko, launching an app that allowed merchants to connect with customers using only their mobile phones. The idea for the projects came from a chance meeting with the two other founders while in Nairobi. They all believed in a future for mobile phone technology to help African enterprises. With the percentage of mobile phone usage up to 90% in some parts of Africa, they realized that is was an obvious global solution to connectivity issues between consumers and vendors. After seeing many predominantly female artisans at local markets struggling to sell their ware to a limited customer base, they decided to launch a global marketplace that these vendors could access, in which they could accept orders and then organize distribution.

soko artisans

Profiles of the artisans on the ShopSoko.com website

Now based in California, the company helps over 1,000 artisans sell their products to a global community. After joining the Soko network, users see their yearly income increasing by a massive 400% on average. They now operate in over 40 countries and plan to expand to reach vendors in Mexico and India. Mahugu is committed to overcoming the challenges that many Africans face. They were confronted with supply issues from vendors, caused by problems such as inconsistency of electricity, so they are adapting their business model to include trusted, shared spaces where artisans can create and collaborate.

Mahugu knows the struggle many women face coming from traditional backgrounds, having less access to education, and to the outside world. She is committed to rebalancing gender inequalities and believes that “when one woman helps another, amazing things can happen.” She is a role model to young women, particularly in the tech-world. When she was expanding her business, and receiving no applications from women for the technology roles, she realized something had to be done to appeal to women like herself. She explained that the gender imbalance in the tech industry was “a harsh reality that dawned on me, and that we still need more women in technology and collaboratively need to promote this awareness.” Social enterprise and IT seem to be a winning combination for Mahugu, and her commitment to social justice and interest in empowering other women in the tech-world make her a person worth keeping an eye on.

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Kenya Airways says full-year pretax loss narrows 12%

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NAIROBI (Reuters) – Kenya Airways Ltd narrowed its pretax loss by 12.2 percent to 26.1 billion shillings ($257 million) in the year to end-March, it said on Thursday.

The carrier, which is part-owned by Air France KLM, has been reducing its fleet, selling land and cutting jobs to recover from losses caused by a slump in tourism and the cost of renewing its fleet.

Finance director Dick Murianki said the airline, which says it ferries 11,500 passengers a day, reduced its operating loss by 75 percent.

Gross profit rose 42 percent and the operating loss shrank to 4.1 billion shillings.

“We have taxied and we are aligned for take-off,” he told an investor briefing.

Passengers numbers rose to 4.23 million from 4.18 million as the proportion of occupied seats, the “cabin factor”, rose 5 percent to 68.3 percent.

However, a firmer dollar against the shilling during the year, higher financing costs and fuel hedging losses offset the impact of higher revenue, the airline said.

Chief Executive Mbuvi Ngunze said they were raising funds to support the airline’s recovery. He did not give details.

He said the main risk facing the carrier was uncertainty around Kenya’s presidential election, set for August 2017.

The airline’s shares fell 10 percent to 4.25 shillings midway through the session, after the results were released.

 

($1 = 101.4000 Kenyan shillings)

 

(Reporting by Duncan Miriri; Editing by Ruth Pitchford)

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Kenya’s new vehicle sales plunge 30% in first half

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NAIROBI (Reuters) – The number of new vehicles sold in Kenya dropped 30.2 percent in the first six months of this year from the same period last year mainly due to high lending rates.

Most buyers of new vehicles, like light commercial trucks, rely on asset financing facilities by banks and interest rates were as high as 24 percent during the period.

The east African nation’s car market is dominated by low-priced second-hand imports from countries such as Japan, but investors monitor new car sales to gauge the health of the economy.

Vehicle assemblers, including GM, sold 6,946 cars in the period, down from 9,953 in the first half of last year, The Kenya Vehicle Manufacturers Association said.

Sales were not expected to pick up soon due to political uncertainty over an election set for next August and a new 20 percent excise duty on new vehicles imposed by the Treasury last month, the association said.

 

(Reporting by Duncan Miriri; Editing by Elaine Hardcastle)

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From Tragedy to Tech Triumph: Mubarak Muyika

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Mubarak Muyika

The remarkable story of Mubarak Muyika and his burgeoning tech empire.

The tech scene is exploding across Africa as ambitious young entrepreneurs are changing the face of the continent. Kenyans have been at the vanguard of the action in recent years. One individual currently making big waves is Mubarak Muyika, a dynamic 22 year old with a colorful past.

Muyika was born in Western Province, Kenya. His father was a prominent civil servant and his mother was a high school teacher. Unfortunately, his young life was marked by tragedy: his father passed away when he was two years old. Then, when he was ten, his mother died and the young orphan was taken in by his mother’s sister and her husband.

Great Beginnings

It has long been observed that tragedy seemingly makes, or breaks an individual. In Muyika’s case, it was most certainly the former. He was known as a sharp and gifted student and it was in the early days of high school that his tech-entrepreneurial promise first blossomed.

Aged 16, Muyika developed the “enhanced petrol tracker.” The tracking database was designed to mitigate government mismanagement of oil resources by more efficiently cataloguing oil tanker movements, oil flow and demand. The project was incredibly well received. He was recognized as the best student in the computer exhibit category at the annual Kenya Students Congress on Science and Technology.

His adoptive parents were the owners of a book publishing and distribution company, Acrodile Publishers. Mubarak realized that the web presence provided by their current website manager was substandard and expensive, bottlenecking the company’s productivity. He taught himself PhP, Java and HTML and built a highly functional website for the business.

Business Blossoms

On the back of his newly earned skills, Mubarak launched his first business, Hype Century Technologies and Investments LTD. The company offered website designation, management, domain reselling and hosting services. He enlisted the help of two friends and the business quickly began to take off.

In a 2012 interview, Mubarak spoke about Hype Century’s remarkable success in the startup period: “By May after our first financial year we had about 1,800 domains which represented clients in Kenya, Uganda, Tanzania, South Sudan and some in the RC (Republic of the Congo). That was something that I can say is the biggest achievement, in terms of where the company is today.”

It was during this early period that Kenyan multi-millionaire Chris Kirudi realized Mubarak’s great potential. Through his contacts he recommended Mubarak for a scholarship to one of the world’s most prestigious universities, Harvard. Incredibly, Mubarak turned down the scholarship in order to focus on his business ventures, demonstrating extreme belief in his own talents and entrepreneurial ability. He is a man who knows his own mind. He gave insight into his tenacious business philosophy, saying, “If you are in a society with intelligent people who have a plan and a strategy, you need a plan, a strategy, speed and aggression. That is the only way to succeed in Africa.”

Soon, Mubarak’s business attracted heavyweight attention. International tech investor Jignesh Patel teamed up with the rising star, buying a 25% stake in the company. This proved to be a shrewd move, as Patel’s connections and experience propelled the firm to even higher heights.

A Bright Future

Zagace platform

Zagace platform

However, Mubarak soon felt the itch to challenge himself further; he clarified his decision to move on from Hype Century saying, “I had the feeling that I was not maximizing my potential. I opted to sell my shares and develop a new venture.”

In 2013, he settled a deal netting himself a cool six figure settlement for his 60% stake. Astonishingly, Mubarak was still only 19 years old.

His newest venture, ZAGACE is both ambitious and innovative. His firm offers a unique service providing a completely integrated, online business management toolkit for small and medium sized companies. ZAGACE allows users to manage human resources, inventory, accounting and communications all through a series of well designed, instanced apps. The concept has been lauded as ingenious and effective.

Eager to feed his business with the best talent available, Mubarak has recently moved his operations to Silicon Valley, USA. The young Kenyan means serious business, and the world has noticed. In 2015, he was named one of Africa’s most promising entrepreneurs in Forbes 30 under 30, while Yahoo named him one of nine “Mark Zuckerbergs” of other countries. With his talent, resilience and determination, Mubarak Muyika is setting the tech scene ablaze. We will no doubt be hearing more about him, very soon.

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Kenyan Geothermal power continues its expansion

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Kenya Geothermal Energy Project

Kenya continues to attract interest with its extensive geothermal energy schemes.

In the space of only a few years, Kenya has shifted its entire focus on energy, and created unprecedented growth in geothermal production. While hydro-electricity has long been the nation’s main source of power, the Kenyan government now hopes that by 2030 only 4% of the country’s energy will be hydro-electric. The notoriously unreliable rains of East Africa make a shift to geothermal power a sensible choice, and Kenya’s Great Rift Valley is proving to be a giant source of energy.

Power from within

It was back in the 1950’s when the first exploratory wells were dug in the Rift Valley. The Olkaria region of the area was quickly ascertained to have serious potential for energy creation. Under the surface there is a seething mass of geothermal activity that blanketsthe area with hot springs and bubbling, sulfuric fissures. It is no surprise that the national park in which Olkaria is found is known as “Hell’s Gate.”

Within 10 years of the first drilling, the Kenyan government, working alongside the UN, began more in-depth assessments of the energy potential that bubbled beneath the ground. By 1981, the first geothermal power plant had opened in Olkaria, with an initial output of 45 MW.

Kenya geothermal energy

Kenya geothermal energy

Harnessing this natural energy became a large project, with over $1 billion of investment over the next 20 years. However, it was an investment worth making, as Kenya’s energy demands have rocketed as the nation develops. Considering that in 2008 only 25% of the population had access to electricity, this demand was only going to increase. As such, the government developed its Vision 2030 program.

A bolder vision

Vision 2030 was launched in 2008 to outline Kenya’s plans for energy expansion that would facilitate rapid economic growth. However, droughts highlighted the unreliable nature of Kenya’s hydro-electric dependency, and in 2013 the project was updated with Olkaria’s geothermal plants the priority.

Olkaria expanded rapidly in the 21st century, with Olkaria II opening in 2003 and expanding its production in 2013. Olkaria III hosts a 110 MW generator to add to the combined power of 290 MW coming from Olkaria sites I and II.

As recently as 2014, Olkaria opened up site IV that hosts a further 140 MW of power, as the company KenGen has worked closely with multinational companies to further its production.

KenGen is the company responsible for Kenya’s geothermal production, and as a majority government owned body it has made massive inroads into expanding the energy supplied by the Rift Valley’s activity. Alongside companies like Toyota and Toshiba, KenGen has created a huge increase in the energy produced from Olkaria.

The financiers supporting its growth include the World Bank and the European Investment Bank, which hope that affordable, green energy will have even more far reaching effects. Diarietou Gaye, the World Bank’s country director for Kenya, said, “That’s why we are investing in the energy sector… [it] is a key infrastructure investment in the fight against poverty.”

This is borne out by figures quoted from KenGen CEO, Albert Mugo, who stated that the increased production from Olkaria had seen a 30% drop in energy costs for consumers since 2014.

Continued Growth

The expansion of Kenya’s geothermal power base is far from complete. The development of Olkaria V is already underway, and there are plans for an Olkaria VI site. Moreover, the fact that Kenya is now the 8th largest producer of geothermal energy in the world has attracted interest from neighboring nations. Ethiopian president Hailemariam Desalegn recently visited Olkaria, and the two nations have agreed to work side by side in the development of renewable energy.

Geothermal energy looks set to be at the forefront of Kenya’s energy revolution, and will surely play a vital role in the country’s continuing development.

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Kenya’s bourse scales back its derivatives ambitions

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NAIROBI (Reuters) – Kenya’s Nairobi Securities Exchange will launch trading of derivatives by the end of 2016, after a series of delays, but plans to start with fewer instruments than originally planned, its chief executive said.

The bourse, which is a key entry point for foreign funds looking for exposure to fast-growing East Africa economies, initially planned to roll out trading in the first half of last year with more products including currency futures.

“We are now at a very close point. Certainly this year we should be able to get the market up,” Geoffrey Odundo told Reuters in his office on Wednesday.

Trading would start with a futures contract on the NSE-25 share index, a tool used to hedge investment risk. Trading in single stock futures and currency futures, originally expected to start at the same time, would begin at a date still to be determined, he said.

Odundo attributed the delays in launch of trading to the slower-than-expected pace in setting up the infrastructure to trade derivatives and educate the market about its benefits.

Kenya will be the second in Sub-Saharan Africa to start trading of derivatives after South Africa, he said.

“Futures contracts are a bit sophisticated. It is not like spot trading. You really have to know what you are trading,” Odundo said.

 

DIVERSE ECONOMY

The NSE is also considering the possibility of offering agriculture contracts, once the derivatives market takes off, but those plans were at an embryonic stage, he said.

He said the recent commodity price drop had curbed equity trading volumes at the bourse this year, with daily volume averaging $3-4 million, half of the daily levels seen at the same time last year.

But Kenya’s diverse economy, which does not rely on a particular commodity, has helped the situation a little, he added.

“Our decline has not been as rapid as the other markets which have got commodity trades like Nigeria and Angola,” he said about volumes, without offering details.

Valuations of listed firms, as measured by price to earnings ratio, had however fallen, which together with a stable currency, could boost interest among foreigners.

“Most of them are at 8-10 (PE ratio) and historically they have been as high as 15. These are good entry points for them,” Odundo said.

On the other hand the bond market was booming, with monthly volumes more than doubling last month from the same period last year, and on course to more than triple in June, thanks to falling yields on government debt.

The yield on the benchmark 91-day Treasury bill has fallen by more than 300 basis points in recent weeks.

 

(By Duncan Miriri. Editing by Edmund Blair and Gareth Jones)

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Kenya’s NIC Bank appointed to assess assets of closed Imperial Bank

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NAIROBI (Reuters) – Kenya’s NIC Bank has been appointed as a consultant to assess the assets and liabilities of Imperial Bank, which was put into receivership in October after fraud was uncovered, the central bank said on Tuesday.

The appointment of NIC Bank, a mid-tier bank, would ensure customers receive more of their deposits after the closed bank’s shareholders failed to support a proposal for swiftly reopening Imperial, the central bank said in a statement.

Three small or medium-sized banks in Kenya have been closed in less than a year, unnerving investors. The central bank has said financial issues were specific to the banks concerned and did not pose a systemic risk to the economy of the East African nation, which is a regional financial centre.

Earlier this year, the central bank said clients with deposits of up to 1 million shillings ($9,886.31) would receive funds in full, while those with larger deposits would have to wait for investigations to end to determine the fate of their funds.

NIC, appointed by state receiver Kenya Deposit Insurance Corporation (KDIC), would oversee disbursement of a maximum of 1.5 million shillings to remaining depositors once a court rules, likely on July 4, to lift the suspension of payments.

More deposit payments could be made after that following the completion of due diligence by NIC, which would assume a portion of the remaining deposits and other assets and liabilities, including a majority of Imperial’s staff and branches.

Central Bank of Kenya Governor Patrick Njoroge told a news conference that NIC was not acquiring Imperial Bank, and also said a moratorium on new bank licences remained in place.

 

($1 = 101.1500 Kenyan shillings)

 

(Reporting by George Obulutsa; Writing by Edmund Blair; Editing by Louise Heavens)

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World Bank to loan Kenya $1.1 bln for northern region, bank VP says

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NAIROBI (Reuters) – Kenya will get a World Bank loan of $1.1 billion for infrastructure projects in the country’s arid northern region, the bank’s vice president for Africa said.

The loan is the latest in series to Kenya, which amount to $5.5 billion, excluding the new package.

“It is an unprecedented financial commitment to this part of Kenya,” Makhtar Diop told Reuters in Nairobi over the weekend.

The funds will be used to build roads, improve water and energy supplies and support livestock keeping. They will have a maturity of 50 years and an interest rate of less than 1 percent. The package was prepared at the request of Kenyan President Uhuru Kenyatta, Diop said.

He did not say when the full disbursement of the funds would take place, but technical work on some projects has already started. Projects to be funded with the facility included a modern road linking Isiolo, a town in the lower eastern region, with Mandera, a town close to the border with Somalia.

Diop said the World Bank expected Kenya’s economy to expand by 5.9 percent this year, close to the government’s forecast of 6 percent. It grew 5.6 percent last year.

“Kenya is doing pretty well in the Africa context and in the global context, but the ambition of the government is to sustain that growth rate and accelerate it,” he said.

To attain faster growth, the country needed to increase efficiency in state-owned firms and improve competitiveness, through investments in infrastructure.

Last week, the government forecast a higher budget deficit of 9.3 percent of gross domestic product for the fiscal year starting next month as it increases public investments.

“Overall the fiscal deficit is financeable,” Diop said, adding total debt was increasing but remained sustainable at about 50 percent of GDP.

The World Bank cut its average growth forecast for sub-Saharan Africa to 2.5 percent this year because of lower commodity prices.

Diop said the continent could attract investment because of higher returns than other regions of the world, but he said some African nations needed to avoid building up their dollar-denominated debt.

 

 

(By Duncan Miriri. Editing by Larry King)

 

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Kenya’s Safaricom to launch local rival to Uber

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s biggest telecoms company Safaricom is joining up with a local software firm to launch a ride-hailing company to take on Uber [UBER.UL] as it seeks new sources of revenue, its chief executive said.

Safaricom, which is 40 percent owned by Britain’s Vodafone, and Nairobi-based software developer Craft Silicon will launch the app called Littlecabs in the next three weeks, Safaricom CEO Bob Collymore told Reuters in an interview.

“It is effectively a rival for Uber,” he said. “It is a local competitor which will be cheaper and better for the local community.”

Uber operates in several African countries, including Kenya where it launched in early 2015, drawing customers by offering lower prices and cutting out haggling over fares. But regular taxi drivers have complained about its impact on business.

In March, the Kenyan authorities charged six men with attempted murder and malicious damage to property over an attack on an Uber taxi driver in February. [nL5N1713UX]

Safaricom will help develop the application, offer the network connectivity, put Wi-Fi in vehicles that will be signed up on Littlecabs, and use its mobile-phone based financial service M-Pesa to process payments, Collymore said.

Safaricom remains focused on its core businesses of offering calls, texts, Internet access and M-pesa but Collymore said it was seeking new sources of revenue.

“The direction of the company is to become a platform,” he said, citing partnerships with local banks that use M-pesa to lend money on mobile phones.

Safaricom has had a three-year partnership with M-Kopa, a company that connects customers to solar electricity, and is about to invest in a firm involved in education and another that helps jobseekers, Collymore said.

“When M-Pesa was launched it wasn’t launched as a big thing. It was just launched as a thing that was right in the edge. Now it is 20 percent of (Safaricom’s) revenue,” he said.

Littlecabs is unlikely to grow to that level but would offer a new revenue source and develop skills in the local community, he said.

Safaricom expects its earnings to rise in the financial year to next March on the back of increased data usage driven by the youth segment and higher sales of smart phones. [nL5N188101]

Revenue from calls rose 4 percent in the financial year ending March 2016, bucking the trend in other markets where voice revenues are falling.

Collymore said political protests, which have led to clashes between demonstrators and police, could dampen the outlook.

“It is not a question of who is right and who is wrong; these pictures are not helpful for investments,” he said.

 

(By Duncan Miriri. Editing by Edmund Blair and Susan Fenton)

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