February 21st, 2010 by Tom Minney
The Kenyan Government’s Privatisation Commission is taking the next step towards selling a portion of Consolidated Bank of Kenya Ltd (www.consolidated-bank.com) by appointing PricewaterhouseCoopers as transaction advisers, according to the Daily Nation newspaper (www.nation.co.ke). It is on the list of 23 State-owned enterprises to be privatized, including National Bank of Kenya and Kenya Wine Agencies, 5 sugar factories and 11 hotels.
David Wachira, the bank’s Managing Director said the Government aims to raise KSh5 billion (US$65 million) by selling a portion of the shares to the public. Due diligence is to start in April and the share sale could come in the next two years.
The bank mainly finances small and medium-sized enterprises. It has 11 branches, mainly in Eastern, Central, Nairobi and Coast regions and aims to use some of the funds raised through privatization to expand to fast-growing areas such as Kisumu, Nakuru and Eldoret towns.
According to its website, the bank is 100% Government-owned with the majority shareholding (51%) held by the Treasury through the Deposit Protection Fund. The remaining shareholding is spread over 25 parastatals and other government related organizations.
The news report quotes Mr Wachira: “The bank has a risk-based pricing on its loans, which determines whether the lending rate is above or below 13%.”
Although the privatization exercise has been going slowly, Solomon Kitungu, of the Privatisation Commission, says they have submitted proposals on how to proceed to the Treasury late in 2009 and are working on final details of remaining companies before presenting details to the Treasury.
He is reported as saying: “We are on course with the plans, it is only that there is a lot of work to be done to ensure transparency and accountability. We do not want to rush it since we would not be creating any value for Kenyans.”
The budget for the 2009/2010 fiscal year does not depend on proceeds from privatisation sales, unlike the budget for the previous year, says the paper.
February 2nd, 2010 by Tom Minney
The Rwandan capital markets are set for growth in 2010, including plans for a first local initial public offer (IPO) and developing the Rwandan stock exchange. In an interview with East Africa Business Week (www.busiweek.com), the Executive Director of the Rwanda Capital Market Advisory Council (www.cmac.org.rw) Mr. Robert Mathu outlined what to expect.
The first public offering of shares could come “very soon”, he said: “We are working on BRALIRWA and it will come very soon because it is a big company and it will meet all requirements. However, with small companies, I am looking at two years.” Brasseries et Limonaderies du Rwanda (www.bralirwa.com) is the only brewer and estimated to have 95% market share, as well as the Coca Cola franchise. It is owned 70% by international Heineken Group and 30% by the Rwandan Government. According to previous reports, the Government wants to sell 25% to the public and 5% to Heineken, but was examining applications to be the transaction adviser and sponsoring broker.
Other future transactions could include Government selling shares in cellphone company MTN Rwanda (www.mtn.co.rw) and insurance company Sonarwa (www.sonarwa.co.rw), which is estimated by Government to have 75% of all insurance premiums.
The Rwandan Government has also said that it wants to sell off its shares in other profitable firms but Mr Mathu says these companies are not in a hurry to go public: “Many of them may not have all the requirements because they have not bothered. They have had no reason in the past to try to meet the requirements. For example, one of the basic requirements is that a company must provide audited financial statements. In Rwanda, companies used to prepare accounts only to convince the taxman that they are fine. However, this is not enough for us; we have to see what accounting system they are using, the quality of accountancy and their corporate social responsibility.
Rwanda is framing the capital market through 3 pieces of legislation: 1) The law establishing the future Capital Market Authority; 2) A law regulating capital markets; and 3) A law regulating the Collective Investment Schemes (CIS). The market is waiting for a law to split the Rwanda Stock Exchange from CMAC, which established the Rwandan Over-The-Counter market 2 years ago and will continue to be involved, but would also seek to recruit energetic people to develop and run the future RSE.
Mr Mathu says that collective investment schemes (normally pension funds, insurance funds and collective savings plans such as mutual funds and unit trusts) as critical to market development: “CIS contribute a very significant proportion in the development and deepening of the capital market because without a collective investment scheme every investor would invest directly in the market. We needed the law to make sure that investment managers handling the money has the right qualification and that they have to disclose their investment strategies and policies to the public.”
He adds that Rwanda has benefited from membership of the East Africa Securities Regulatory Association (EASRA) and East Africa Stock Exchanges Association (EASEA). It is part of plans to develop an integrated East African capital market and also part of an agreement with the International Finance Corporation to develop this. Mr Mathu said the dual listing of Kenya Commercial Bank shares is a learning opportunity: “KCB cross listing has helped us to assess our system in terms of being able to serve investors by accessing and buying shares. Therefore, it has given us a lesson, we are working on it, and very soon, you will see us conducting our equities business more effectively.” Eventually Rwanda will introduce electronic trading in securities, which is the route for integration with the regional securities market.
December 9th, 2009 by Tom Minney
Kenya is considering speeding up plans to privatize the Nairobi Stock Exchange (www.nse.co.ke), the biggest market in East Africa. The aim is initially that stockbrokers would acquire the large majority of the shares.
The NSE is already relatively advanced, with an Automated Trading System that also handles bonds. It is linked to the central depositories of the Central Depository and Settlement Corporation (CDSC) and the Central Bank of Kenya (CBK), which could lead to automated trading of treasury bills and other debt instruments.
Kenya’s Finance Permanent Secretary Joseph Kinyua was reported in local media recently as saying privatization could come earlier than expected as the Government moves to improve the country’s capital markets. First step would be to turn the stock exchange into a company via demutualization, separating its ownership from management to foster transparency.
Previously investor confidence had been hit by collapse of a number of some stockbroker firms, but regulators and others have since been taking some action.