November 27, 2020 - 5 minutes read

27th November 2020 Trade & Financial Services Round Up

By The Vellum Team
KENYA

KCB Group PLC and Atlas Mara Limited Sign Acquisition Deal for Rwanda, Tanzania Banking Businesses.
The Proposed transaction will see KCB acquire Banque Populaire du Rwanda Plc (BPR) and African Banking Corporation Tanzania (BancABC). KCB Group Plc (KCB) and Atlas Mara (ATMA) have signed a definitive agreement which will see East Africa’s biggest Bank by assets increase its footprint within the region. This is through the acquisition of a 62.06% stake in Banque Populaire du Rwanda Plc (BPR) and a 100% stake in African Banking Corporation Tanzania Limited (BancABC) from ATMA in Rwanda and Tanzania, respectively. The successful completion of the transaction is subject to obtaining shareholder approval and to obtaining regulatory approvals in the respective countries. Pending completion of the Rwanda Transaction and the Tanzania Transaction, the shareholders of KCB Group PLC and other investors are advised to exercise caution when dealing in the shares of KCB Group PLC on the Nairobi Securities Exchange, the Uganda Securities Exchange, the Rwanda Stock Exchange and the Dar es Salaam Stock Exchange.

CARBACID INVESTMENTS PLC SEEKS TO ACQUIRE BOC KENYA IN A KSHS 1.2 BILLION TAKEOVER BID

On 26th November, listed local investment firm Carbacid Investments Limited (CIL) (NSE: CARB) in collaboration with Aksaya Investments LLP confirmed the placing of a Kshs 1.2 billion takeover bid for 100% shares of BOC Kenya (NSE: BOC) as part of its market expansion plans, subject to regulatory approvals. BOC Kenya is a leading supplier of industrial, medical and special gases in Kenya.

Carbacid Investments Plc is an investment holding company invested in carbon dioxide gas production processing and marketing through its main operating subsidiary, Carbacid (CO2) Limited. The firm also has investments in property, in shares in other listed companies, investments in bonds and financial assets. Aksaya Investments LLP is a local investment firm wholly owned by veteran local entrepreneur Mr. B. C. Patel, who also holds, jointly with Mrs A.B. Patel, a 40.38% shareholding in CIL.
CIL and Aksaya have made an offer price of Kshs 63.50 per one ordinary share of BOC which represents a premium, of KES 4.67 (7.94%) over the 30-day volume-weighted average price per ordinary share; and KES 6.62 (11.64%) over the 90-day volume-weighted average price per ordinary share as at Tuesday this week.

Speaking on behalf of CIL and Aksaya, the CIL Chairman Amb. Dennis Awori said the acquisition would make BOC locally owned and thus better positioned to take advantage of market opportunities in Kenya and the region.
He described the proposed acquisition of BOC Kenya as an excellent match that will position the enlarged group to become the leading regional supplier of choice for industrial, medical and special gases and related equipment and services.

While BOC Kenya produces and supplies industrial, medical and special gases, CIL’s main operating subsidiary Carbacid (CO2) Limited is the region’s leading producer of food-grade carbon dioxide extracted from natural underground reservoirs in Kenya“ CIL will bring its effective business and strategic acumen and deep knowledge and experience of the local industrial gas market, which can generate significant synergies between the two businesses,” Amb. Awori said, adding that, “this structure will lead to swifter decision making. The enlarged group will also provide greater opportunities for employee development, advancement and growth for staff of CIL and BOC. The Co-Offerors (CIL and Aksaya) believe in the underlying business of BOC and believe that they are well placed on improving the business performance of BOC.”

The Co-offerors have secured an irrevocable undertaking from BOC’s single largest shareholder, United Kingdom based BOC Holdings, (which holds 12,765,582 ordinary shares in BOC, constituting 65.38% of the issued and fully paid-up share capital of BOC Kenya) to sell the BOC Holdings shares to the Co-Offerors once the offer is made. CIL, Amb. Awori said, is a well-governed and managed business that has the extensive knowledge of the local and regional carbon dioxide market, demonstrated focus on performance and growth, and has a strong governance framework to enable efficient and commercially-focused decision-making to improve the performance of BOC. •

CBK MPC Update:

The Monetary Policy Committee (MPC) met on November 26, 2020, against a backdrop of the continuing global Covid-19 (coronavirus) pandemic, and measures taken by authorities around the world to contain its spread and impact. The MPC assessed the outcomes of its policy measures deployed since March to mitigate the adverse economic effects and financial disruptions from the pandemic.

  • The Committee noted that the package of policy measures implemented since March were having the intended effect on the economy, and are being augmented by implementation of the announced fiscal measures in the FY2020/21 Budget. The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 percent.
  • Kenya Airways has started direct cargo flights between Mombasa and United Arab Emirates as the airline enhances freight business in the wake of low demand for passenger travel.
  • Kenya Ports Authority has got a reprieve after the court dismissed a petition challenging sea sand harvesting in South Coast to facilitate a KES 56 billion (approx. USD 510 million) project for the construction of a container terminal and relocation of an oil terminal.
  • Kenya is banking on a new e-commerce platform to drive its exports through linkage of local traders with buyers abroad amid restrictions on physical travel on Covid-19. The Kenya Export Promotion and Branding Agency said it targets grow the country’s annual exports by about 6.5 per cent over the next two years, aided by more efficient virtual transactions. Kenya’s exports receipts grew by six per cent to Sh479.7 billion in the nine months to September, defying the economic knocks of the Covid-19 pandemic, data by the Kenya National Bureau of Statistics shows.
  • The strong earnings performance was linked to foods and beverages exports, which accounted for 47 per cent of total export receipts. Over the same period of last year exports earnings were booked at Sh449.6 billion.
  • Banks have cut the cost of credit to levels last seen in the early 1980s and reduced appetite to extend credit to high-risk borrowers in the wake of the Covid-19 pandemic that has raised defaults to a 13year high. CBK data shows that lending rates fell to an average of 11.75 percent in September following a consistent drop in the regulator’s benchmark lending rate.
  • This is the lowest average lending rate since the CBK started disclosing the rate in July 1991 during the reign of the then Moi-era governor Eric Kotut and matches annual borrowing costs disclosed by the World Bank in 1980. Top banks such as KCB and Equity Group are expecting repeat requests for loan restructurings and are projecting up to three years for the Covid-19 economic difficulties to clear out.
  • Coffee prices at the Nairobi auction increased by four percent on high demand as traders stocked up ahead of the Christmas break. Data from the Nairobi Coffee Exchange (NCE) indicates that a 50-kilogramme bag was sold at Sh28,512 up from Sh27,432 in the previous sale.
  • The NCE said there had been a high demand of the beverage at the auction ahead of the festive season.The jump in value has also been occasioned by quality coffee that farmers are bringing to the auction following the onset of the main season
  • British firm, Tullow Oil is restructuring activities at its Kenyan project site in Turkana to limit costs amid suppressed crude prices.
ETHIOPIA

Fighting between Ethiopia’s military and regional forces from the northern Tigray region is seriously affecting stability in the East African and Horn region and the EU Foreign Policy Chief calls for a halt of hostilities. Hundreds of people have been killed since fighting began on Nov. 4, more than 41,000 refugees have fled to Sudan and there are reports of militias targeting civilians.

“I expressed my great concern regarding increasing ethnic-targeted violence, numerous casualties and violations of human rights and of international humanitarian law,” Josep Borrell said late on Tuesday after speaking to Ethiopia’s foreign minister. Ethiopia has described the fighting as an internal law enforcement matter, a position Prime Minister Abiy Ahmed reiterated in a statement on Wednesday. “We reject any interference in our internal affairs,” he said.

The EU supports the African Union (AU) bloc’s attempts to mediate. “That is the only way forward to avoid further destabilisation.” Three AU envoys – former presidents Joaquim Chissano of Mozambique, Ellen Johnson Sirleaf of Liberia and Kgalema Motlanthe of South Africa – were due to arrive in Addis Ababa to mediate. With global alarm rising fast, European nations raised the conflict at a closed-doors meeting of the United Nations Security Council on Tuesday, diplomats said. Members of the council expressed concern, diplomats said, but South Africa, Niger and Tunisia urged more time for regional mediation efforts before the council considers action.

RWANDA

Rwanda is now home to the Centre for the Fourth Industrial Revolution, thanks to the collaboration between the government through the Ministry of ICT and Innovation, and the World Economic Forum. Alain Ndayishimiye, a Project Lead at the Centre says the country seeks to promote to reap more from such technologies. The centre, he says, is an affiliate of the World Economic Forum’s Centre for the Fourth Industrial Revolution Network – there are some 13 centres so far across the world. The aim is to develop and implement technology governance and policy protocols that will accelerate the benefits of adopting emerging technologies such as artificial intelligence.

TANZANIA
  • Tanga Cement has said lack of Tanzania Railway Corporation locomotives for transporting cement to the northern regions is likely to increase production costs.
  • Tanzania Breweries will join other stakeholders in the fight against gender based violence during this year’s 16 days of activism through its ‘IsiweSababu platform’.
  • CRDB Bank has continued to empower women by providing loans issuance in its bid to raise their social and economic wellbeing.
  • Azania Bank launched the Bank Visa Card as it marks 25 years of offering services in the country. Azania bank has labelled the 25th Anniversary as the year of the Rhino, symbolizing stability, steadfastness and charge to go forward as is embodied in the new innovation
MALAWI

The Malawi Revenue Authority (MRA) has said that broadening the country’s tax base by bringing the informal sector into the formal tax net is not easy. MRA Director of Policy and Research Waziona Ligomeka said unless players in the informal sector are organized into associations or something like that, taxing the informal sector will continue to be a challenge as the cost of revenue administration from that segment is so high versus small collections made.

Malawi and Mozambique have pledged to rehabilitate railway lines connecting them as one way of revamping that mode of transport.

A National Payment Systems report which the Reserve Bank of Malawi published on Friday shows an increase in digital payments uptake among Malawians in the third quarter of 2020.

The government has partially gazetted the Cannabis Regulations which seek to guide licensing, production, and marketing of cannabis for medicinal and industrial use.

The Reserve bank of Malawi figures indicates that between July and September the number of registered mobile agents rose by 9.7 percent to 75,773 but the geographical distribution of agents remains a challenge as the majority are located in urban and semi-urban areas.

SOUTH AFRICA

Data from Statistics South Africa showed that headline inflation ticked up slightly to 3.3 percent in October, the biggest annual rise since March when the rate was 4.1 percent.

Provincial and national government authorities are increasingly looking at legislation to limit the hiring of foreigners in South Africa, as anti-immigrant tensions flare-up across the country.

The State Diamond Trader plans to establish a diamond and jewelry manufacturing hub to address the decline in diamond manufacturing.

Business liquidations rose by 20.8 percent year-on-year in October as 215 more companies went under due to the crippling impact of the COVID-19 pandemic on economic activity.

GHANA

The Monetary Policy Committee of the Bank of Ghana has noted that macroeconomic conditions have generally improved relative to conditions at the time of the last MPC meeting in September 2020.

Chief Executive Officer of FBNBank Ghana, Victor Yaw Asante, says banks must reshape their products and services by providing a consolidated offering to meet shifting customer expectations. He believes the shift in customer preferences will drive their demand for seamless banking transactions across different channels; instant payment on all transactions that are reliable and secure without any delay or interruptions; and digital payment products that are tailored to their needs and produces instant satisfaction for them.
Speaking on the topic: The Future of Banking Post the Global Pandemic at the 2020 Virtual Digital Banking Summit, Victor Yaw Asante highlighted the need for banks to embrace emerging technologies in the banking sector as that would drive changes in processes, products and service offerings and Customer Expectations, Emerging Technologies and Optimal Business Model.

Mr. Asante suggested that banks need to focus on how to use data and insights to deliver a more customized, individual experience from content and insights, to the value proposition that a customer receives from their bank.
Shedding light on emerging technologies, Victor Yaw Asante stated that the fourth industrial revolution technologies will drive higher levels of customer experience and productivity in the banking industry engagement with customers.

The Petroleum Hub Development Corporation, whose law was passed by Parliament in October, is expected to facilitate the establishment of industrial parks aimed at promoting the manufacture of downstream petrochemical and chemical products.

The Bank of Ghana’s latest business confidence survey has shown that business sentiments continued to improve in October, driven by improved company prospects and gradual recovery in demand for goods and services.

NIGERIA

The Financial Technology payment space in Nigeria grew by about 800 percent despite the pandemic.

A cross-section of economic experts has called on the Federal Government to take urgent action to re-strategize and reengineer the economy to primarily respond to challenges, as Nigeria enters into the second round of recession in five years. The Nigeria Liquefied Petroleum Gas Association has said it will examine how to accelerate economic recovery through gas at its forthcoming 10 International Annual LPG Conference next week.

The Monetary Policy Committee of the Central Bank of Nigeria has retained the Monetary Policy Rate at 11.5 percent.

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