Issue 1 | Display until April | 30th 2013

Africa Dances | Bribery on Roads | Corporate Responsibility | Maintaining Vitality French Version THE UPSPRING OF Inside THE EAST AFRICAN SECURITIES MARKETS in 2012.

We Share Lake Victoria | We share Swahili Language | Now we share The Exchange 2013 I Issue 1 1 2 2013 I Issue 1 Publisher EXCHANGE TEAM CONTENTS Chief Editor Carol Karugu [email protected]

Sub Editors 9 | Regional Analysis Waithera Mwai [email protected] The quarterly trends on the EAC markets Fanon Mwenda and their likely impact on other markets. [email protected]

French Translation 17 | Africa Dances to the Beat Emma Wenani [email protected] While the world shakes and stumbles, Africa dances to a different beat The Exchange Committee Members Joseph Kitamirike (Chairman, CEO - USE) Peter Mwangi (Member, CEO - NSE) 19 | Bribery on Roads Donald Ouma (Member - NSE) Jonathan Bushara (Member - USE) Survey shows regulatory authorities in Emanuel Nyalali (Member - DSE) East Africa are the most corrupt as bribery Celestin Rwabukumba (Member - RSE) drives up the cost of commodities

Contributors 23 | Corporate Responsibility Evelyne Ogutu Dr Issac Rutenberg For many companies environmental, social and Kinoti Gatobu governance issues have a significant impact Cathy Mputhia on their ability to operate and generate profit Sammy K. Waweru David Mugwe Moses Munene 26 | Maintaining Vitality Maryanne Muchui Waithera Mwai Maintaining robust growth even in the face of uncertainty Design Kichimbi Brand Solution 30 | Corporate Image [email protected]

Weathering a posive corporate Photography Shutterstock, Image Library image in the stom Advertising Sales 32 | Cross Listing across East Africa [email protected] Waithera Mwai Entrance of cross listed companies, in the [email protected] EAC has boosted the trading activities TEL: 254 (020) 2831000 in some otherwise slow exchanges

Distributed in , , Why we cant wait & Since i got Listed and .

BRITAM and UAP Holdings Limited

The Exchange Magazine is owned by Securities Exchange, Uganda Securities Exchange, Rwanda Stock Exchange and All rights reserved. Reproduction in whole or in part without written permission of the editor is strictly Dar es Salaam Stock Exchange. prohibited. The greatest care has been taken in compiling this magazine publication. However, no responsibility can be accepted by the publishers or compilers for accuracy of the information presented.

2013 I Issue 1 3 Chairman’s Note

We as securities exchanges need to collectively work towards improving the liquidity of our markets. I have some suggestions; stimulate the four Ps that characterize the Exchange space (Products, Players, Participants and Partnership. Products such as exchange traded funds (ETFs) – listed securities that share the characteristics of a unit trust and stocks, and track the performance of market indices; real estate investment trusts - a listed entity that owns – and typically operates – income- producing real estate or real estate-related assets. REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership – without actually having to go out and buy commercial real estate. Building the capacity and competence of our Players and Participants so that they can execute transactions and just as importantly, our investors have confidence in their integrity. Lastly, closer partnerships that reflect our aspirations as East Africans - stronger linkages with each other and partnerships with Asian Exchanges; as reflected by Chairman’s Note our need to diversify our trade linkages and to attract capital from the regions currently bouying the global economy. Benimadhu challenged participants to discuss his issue seeks to highlight the better what was needed to double Africa’s GDP On December 14 2012, Ltd., which than expected performance of East growth and bring it to double-digit levels. began trading on the Uganda Securities Africa’s securities markets in 2012 Exchange on November 30 2012, became and the underlying factors driving He noted “African economies have so far built the first East African company following the thisT success. I would like to speak to the their growth as suppliers of raw materials incorporation of EASEA to have a secondary opportunities going forward and what we as and low value-added goods. There is now listing on the Nairobi Securities Exchange. East African exchanges need to do as a region a substantial need for African economies Previously, companies listed on the NSE have to harness some of these opportunities. to power themselves to move up the value sought secondary listings on the Uganda chain of products to become over time Securities Exchange (USE), Dar-es-Salaam African capital markets and regulatory the supplier of high value-added products Stock Exchange (DSE) and the Rwanda environments are evolving rapidly. This is to the rest of the world.” Mr. Benimadhu Stock Exchange (RSE). It was gratifying to shown by the fact that at the 15th African also noted, “Substantial improvements are note the speed with which the Capital Securities Exchanges Association (ASEA) needed in infrastructure (roads, railway, Markets Regulators approved the listing Annual General Meeting, held on December ports, airports) linking African markets”. Our of Umeme. . In 2013, as the East African 2 2012 in Cairo, Egypt, a resolution to amend EAC securities exchanges need to get the Exchanges, working through the East African the Association’s Memorandum and Articles message across to our entrepreneurs that Securities Exchanges (EASEA) will cooperate to broaden the definition of a Full Member a listing on their home markets in order to ensure an increase in cross listings to include entities that trade alternative to grow their businesses to continental and to encourage approving authorities financial securities such as derivatives and players, should be a cornerstone of their to play their role more aggressively. commodities, was unanimously approved. strategy. In addition to tapping concessional funds from international development It also reflects the fact that commodities partners,our public markets should facilitate – agricultural and minerals are a huge the regional governments in raising of component of Africa’s economy. For East capital for investments in infrastructure. JOSEPH S. KITAMIRIKE Africa, with the discovery of potentially, We believe this message is now filtering CHAIRMAN commercially viable energy and other natural through major insititutions and policy resources; capital markets must move to makers in the region. The Secretary General provide a platform for alternative financial of the East African Community recently, EAST AFRICAN SECURITIES securities, otherwise someone else will. At the at the last Summit in Nairobi, announced EXCHANGES ASSOCIATION 15th Annual ASEA Conference, the President that the East African Development Bank of the Association, Mr. Sunil Benimadhu made was due to float a large regional bond, some pertinent observations, which are whose proceeds would be availed for use relevant for our region. In his presentation, Mr. inter alia in infrastructure development.

4 2013 I Issue 1 East Africa MEMBERS

Nairobi Securities Exchange Dyer & Blair Investment Bank Ltd Member Firms , 10th floor, CFC Stanbic Financial Services P.O. Box 45396 - 00100 CFC Stanbic Centre, Francis Drummond and Co. Ltd Nairobi P.O. Box 47198 – 00100 Hughes Building, 2nd floor, Tel: 3240000/2227803/4/5 Nairobi P.O. Box 45465, 00100 Fax: 2218633 Tel: 3638900 Nairobi. E-mail: [email protected] Fax: 3752950 Tel: 318690/318689 Web: www.dyerandblair.com E-mail: [email protected] Fax: 2223061 Web: www.csfs.co.ke E-mail: [email protected] Old Mutual Securities Ltd. Web: www.drummond.co.ke IPS Building, 6th Floor ABC Capital Ltd P.O BOX 50338 - 00200 IPS Building, 5th Floor Kingdom Securities Ltd Nairobi P.O. Box 34137- 00100 Co-operative Bank House,5th Floor, Tel: 2241379/2241408 Nairobi P.O. Box 48231 00100 Fax: 2241392 Tel: 2246036/2245971 Nairobi E-mail: [email protected] Fax: 2245971 Tel: 3276000 www.oldmutual.co.ke E-mail: [email protected] Fax: 3276156 [email protected] A I B Capital Ltd. Faida Investment Bank Ltd. Finance House, 9th Floor. Windsor House, 1st floor, NIC Securities Limited P. O. Box 11019-00100 P.O. Box 45236-00100 Ground Floor, NIC House, Masaba Road Nairobi Nairobi P.O. Box 63046 – 00200, Tel: 2210178/2212989 Tel: 2243811/2/3 Nairobi Fax: 2210500 Fax: 2243814 Tel:2888 444 / 0711 041 444 E-mail: [email protected] E-mail: [email protected] Fax: 2888 544 Web: www.afrikainvestmentbank.com Web: www.faidastocks.com E-mail: [email protected] African Alliance Kenya Investment Bank Kestrel Capital (EA) Limited Suntra Investment Bank Ltd 1st Floor, Trans-national Plaza ICEA Building, 5th floor, Nation Centre, 7th floor, P.O. Box 27639 - 00506 P.O Box 40005-00100 P. O. Box 74016-00200 Nairobi Nairobi Nairobi Tel: 2762000/2762557/0733333140 Tel: 251758/2251893,2251815,2250082 Tel: 2870000/247530/2223330/2211846 Fax: 2731162 Fax: 2243264 0724- 257024, 0733-222216 E-mail: [email protected] E-mail: [email protected] Fax: 2224327 Web: www.africanalliance.com Web: www.kestrelcapital.com E-mail: [email protected] Web:www.suntra.co.ke ApexAfrica Capital Ltd Renaissance Capital (Kenya) Ltd Rehani House, 4th floor Purshottam Place, 6th floor, Discount Securities Ltd. P.O. Box 43676 - 00100 Westland , Chiromo Road (Under Statutory management) Tel: 242170/2220517 P.O. Box 40560-00100 NHIF Building Fax: 2215554 Nairobi P.O. Box 42489-00100 E-mail: [email protected] Tel: 3682000/3754422 Nairobi Website: www.www.apexafrica.com Fax: 3632339 Tel: 2219552/38, 2773000 E-mail:[email protected] Fax: 2230987 Standard Investment Bank Ltd Web: rencap.com E-mail: [email protected] ICEA Building, 16th floor Web: www.dsl.co.ke P.O. Box 13714- 00800 Sterling Capital Ltd Nairobi Barclays Plaza, 5th floor, Genghis Capital Ltd. Tel: 2228963/2228967/2228969 P.O. Box 45080- 00100 Prudential Building, 5th Floor Fax: 240297 Nairobi P.O. Box 1670-00100 E-mail: inf Tel: 2244077/244077/316414 Nairobi [email protected] 0723153219/0734219146 Tel: 2337535/36, Fax: 2218261 8008561, 2373984/968/969 Ngenye Kariuki & Co. Ltd. E-mail:[email protected] Fax: 246334 (Under Statutory Management) Web : www.sterlingstocks.com E-mail: [email protected] Corner House, 8th floor, P.O. Box 12185-00400 Nairobi Tel: 224333/2220052/2220141 Fax: 2217199/241825 E-mail: [email protected] Web: www.ngenyestockbrokers.co.ke

2013 I Issue 1 5 Uganda Securities Exchange

Baroda Capital Markets (U) Ltd. P.O. Box: 7197 Tel: +256-414 233680/3 Fax: +256-414 258263 Email: [email protected] MEMBERS UAP Financial Services 1st Floor, Communication House P. O. Box 1610, Kampala Tel: +256 414 332 743, 312 332 743 Dar-Es-salaam E-mail: [email protected] Stock Exchange E-mail: [email protected] CORE securities Ltd Crane Financial Services (U) Ltd. Ground Floor, Twiga House Plot 20/38 Kampala Road Samora Avenue, DSM P.O. Box: 22572 Kampala CMAC MEMBERS Tel: +255 22 212 3103 Tel: +256-414 341414/ 345345 Fax: +255 22 218 2521 FAIDA Securities Rwanda Ltd Fax: +256-414 231578 [email protected] Rue de I’Akagera Tel:+254722522724 Equity Stock Brokers (U) Ltd. Orbit Securities Co. Ltd E mail:[email protected] Orient Plaza Plot 6/6A Kampala Road 3rd Floor, Twiga house P.O Box 6679 P.O. Box: 3072 Kampala Samora Avenue, DSM KIGALI Tel: +256-414 236012/3/4/5 Tel: +255 22 211 1758 Fax: +256-414 348039 Fax: +255 22 211 3067 African Alliance Rwanda Ltd Email: [email protected] [email protected] 6th Floor,Centenary House Contact Person: Mr. P.O Box 6368, Edward Ruyonga Rasilimali Ltd KIGALI. Former TACOSHILI Offices Office: +250 785 694 490 MBEA Brokerage Services (U) Ltd. [email protected] Sokoine Drive, DSM Lumumba Avenue, Tel: +255 22 211 1708 Fax: 256-414-342045 Continental Discount House Fax: +255 22 212 2883 P.O. Box: 24613 Kampala 5th Floor Ecobank building [email protected] Tel: +256-312-260011 / +256- [email protected] 414 341448/231960 Tel:+250-570785 Solomon Stock Brokers Ltd Email: [email protected] P.O. Box 6237 Ground Floor, PPF House Website: www.mbea.net KIGALI Samora Avenue/ Morogoro Contact Person: Mr. Andrew Owiny Road, DSM DALLAS Securities Brokerage Tel: +255 22 211 2874 Dyer & Blair (Uganda) Ltd Mrs. Immy Kamarade Fax: +255 22 213 1969 Rwenzori House Ground Floor E-Mail :[email protected] [email protected] P.O. Box: 36620 Tel:+250 08-302113 Tel: +256-414-233050 P.O. Box 1028, KIGALI Tanzania Securities Ltd Fax: +256 -414 231813 7th Floor, IPS Building Email: [email protected] Samora Avenue/ Azikiwe MBEA Brokerage Services Rwanda Str, DSM S.A & MBEA Financial Services Sarl African Aliance (Uganda) Ltd Tel: +255 22 211 2807 [email protected] Workers’ House, 6th Floor Fax: +255 22 211 2809 +0783 0203745 Plot 1 Pilkington Road [email protected] P.O Box 92, Tel: +256 414 235 577 KIGALI Avenue de la paix Fax: +256- 414 235575 Vertex International Securities Ltd E-mail: [email protected] Annex Building – Zambia Dyer and Blair Contact Person: Mr. Kenneth Kitariko High Commission Simon Kalenzi Sokoine Drive / Ohio Street, DSM +250 08-308080 Renaissance Capital Ltd Tel: +255 22 211 0392 Chadel Building, Avenue ReNaissance Capital Limited, Fax: +255 22 211 0387 des milles collines, Unit 3, Plot 15 Kitante Close [email protected] P.O Box 5292, KIGALI Lower Tel: +250570390 P.O.Box 893 Kampala, Uganda Tel: +256 312 264 775/6 +256 414 340 018/9 Fax : +256 414 340 016 E-mail: [email protected]

Crested Stocks and Securities Limited 6th Floor Impala House Plot 13-15, Kimathi Avenue P.O. Box 31736, Kampala, Uganda Tel: +256 41 4 230900 Fax: +256 41 4 230612 Email: [email protected] Website: www.crestedsecurities.com Contact Person Mr. Robert Baldwin

6 2013 I Issue 1 Regional Analysis | Market Movement Kenya Market Performance The NSE 20 Share Index and the FTSE 15 index closed the year at 4,133.02 and 125.75 points respectively, gaining 28.95 percent and 39.24 percent from its opening level in January 2012-reflecting the increase in share prices and gains made by investors in our market. Also our market capitalization increased by Kshs 403 billion during the year to close at Kshs 1.3 trillion, a mark once realized in 2008 when Safaricom was listed. New listings such as Longhorn Pulishers, CIC Insurance and Umeme and five rights issues (worth Kshs 27 billion) helped to increase the total market capitalization.

“How the EAC markets and their economies are doing, the quarterly trends on each market and their likely impact on other markets.”

End year data compiled by FTSE Group, the international index and data provider, shows that NSE FTSE 15 and 25 indices outperformed other emerging market indices provided by the firm during their first full year from the launch of these indices in November 2011.

Foreign investors’ participation has been on an upward scale in 2012 accounting averagely 49% of total traded equity value. They made net purchase worth Kshs 21.73 billion at NSE in last year, defying previous trends where they have been net sellers in general election years. Their strong participation was motivated by the strong gains in the market due to relatively low valuations. Also, there was a switch back to equities by local investors as money market yields reduced with the decline in short term interest rates.

2013 I Issue 1 7 Regional Analysis | Market Movement

Averagely, NSE recorded Kshs 7.2 billion traded equity value and Kshs 47 billion for bonds per month.

Fig 4: Equity turnover trend (Kshs.Bn)

“How the EAC markets and their economies are doing, the quarterly trends on each market and their likely impact on other markets.”

New listings In January-October 2012, NSE received two (2) equity listings via introduction from CIC Insurance (2.1 billion shares listed at a price of Kshs 3.50) and Longhorn Publishers which floated 58.9 million shares at an introductory price of Kshs 14.00. Also corporate bond listings were received from Consolidated Bank ( Kshs 4.0 billion bond) and Housing Finance whose bond (Second Tranche) was worth Kshs 2.969 billion. Lastly, five (5) equity listed companies raised additional capital (Kshs 27.1 billion) via rights issues. Details on this see fig 6 below.

Company No. of shares oated( millions) Amount raised (Kshs. billion) Kenya Airways Limited Rights Issue 1,477.55 14.50 Diamond Trust Bank Kenya Limited Rights 24.45 3.36 Issue NIC Bank Rights Issue 98.72 2.00 CFC Stanbic Bank Rights Issue 121.64 4.00 Standard Chartered Bank Rights Issue 22.08 million 3.20

8 2013 I Issue 1 Regional Analysis | Market Movement Tanzania Developments on Inflation Annual headline inflation rate eased to 12.1 percent in November 2012 compared to 12.9 percent in October 2012. The change was driven by a decline in prices of items under food and communication. Month-to-month headline inflation increased to 0.7 percent in November 2012 from 0.3 percent in October 2012.

Annual Headline Food and Non- food Inflation

Developments on Interest Rates In November 2012, the overall time deposit rate increased to 8.40 percent, from 8.29 percent in October 2012 and 6.74 percent registered in November 2011, partly reflecting deposits mobilization efforts and increased competition among commercial banks. Development in lending rates was divergent across different maturities. The overall weighted average lending rate was 16.05 percent in November 2012, compared to 16.44 percent in October 2012 and 14.13 percent recorded in the corresponding period in 2011.

“How the EAC markets Commercial and their economies Banks are doing, the quarterly Interest Rates trends on each market and their likely impact on other markets.” Developments on Exchange Rates The shilling depreciated slightly to an average rate of TZS 1,580.51 per USD in November 2012 from an average rate of TZS 1,577.6 per USD in October 2012.

Financial Markets Treasury Bills In November 2012, the Bank auctioned Treasury bills worth TZS 270.0 billion, compared to TZS 220.0 billion auctioned in October 2012. Demand stood at TZS 444.5 billion, and the Bank accepted bids worth TZS 328.6 billion. In line with high demand, the weighted average yield declined to 12.43 percent from 12.88 percent recorded in the preceding month

2013 I Issue 1 9

Regional Analysis | Market Movement

Treasury Bonds During November 2012, the Bank offered 7-year and 10-year Treasury bonds amounting to TZS 55.0 billion in each auction. Demand was TZS 76.9 billion and TZS 54.6 billion, respectively. The Bank accepted Treasury bonds worth TZS 55.0 billion for 7-year Treasury bonds and TZS 50.0 billion for 10-year Treasury bonds. The weighted average yields for 7- year and 10-year Treasury bonds edged up from 15.06 percent and 15.28 percent in October 2012 to 15.25 percent and 15.82 percent in November 2012, respectively.

Secondary Market Performance January to November 2012 Listing Activities Equity Segment During the period DSE had no fresh IPO on equity board. However, the Tanzania Breweries Limited (TBL) had min IPO and Kenya Airways (KA) undertook a right issue. Following these two events and a good performance by most stocks, both market capitalization and All “How the EAC markets Share Index increased by 13.14% during the period – the market capitalization moving from TZS 11,577 billion in January 2012 to TZS 13,099 billion in November 2012 and the and their economies All Share Index moved from 1,303.23 points to 1,474.59 points. See the graph below. are doing, the quarterly trends on each market and their likely impact on other markets.”

Fixed Income Market Segment Government bonds issuance for the period of January to November 2012 on average have surpassed the government bonds issuance of the same period of year 2011. See chart below.

10 2013 I Issue 1 Trading Activities Regional Analysis | Market Movement Equity Turnover January to November Though on month to month basis, with the exception of January, July and November, monthly turnover in year 2012 was below to that of year 2011, in total the turnover for the period of January to November, 2012 increased by 2.14% compared to the same period in year 2011 ( from TZS 47.82 to TZS 48.85 billion). See chart below showing monthly turnover trend.

Fixed Income Turnover January to November On month to month basis, with the exception of period of March to July monthly turnover in year 2012 was above to that of year 2011, however in total the turnover for the period of January to November, 2012 declined by 20% compared to the same period in year 2011 ( from TZS 399.53 billion to TZS 334.02 billion). See chart below showing monthly turnover trend.

“How the EAC markets and their economies are doing, the quarterly trends on each market and their likely impact on other markets.”

Public Awareness Activities During the period several educational and awareness programmes were carried out as shown below;

• DSE jointly with IFC and NIC Capital (Kenyan investment bank) organized a one day forum themed “Deepening Capital Market in Tanzania”. During the forum 5 different papers on capital markets issues were presented by the organizers. More than 70 participants attended the forum. • During the period under review DSE hosted 164 students from Secondary Schools who visited the Exchange to learn on stock market operations. DSE also hosted students from higher learning institutions on their research undertakings. During the period DSE hosted 9 research students. • From January 2013 DSE will conduct a country wide Public Education Programme to sensitize investors and issuers about a new window for small and medium companies – Enterprise Growth Market (EGM). The biggest public education campaign ever will be financed by the Financial Sector Deepening Trust (FSDT).

Membership Issues DSE approved an application by CRDB Bank Plc (CRDB) to operate as a Custodian of securities with the Central Depository of Securities. CRDB become a third bank to be admitted as a Custodian of securities. The other two banks are Stanbic (T) Ltd and Standard Chartered Bank (T) Ltd.

2013 I Issue 1 11 Regional Analysis | Market Movement Uganda ECONOMIC & FINANCIAL DEVELOPMENTS The (BoU) started the year to a slow ease to tighten monetary policy that had been adopted for most of 2011. During the year, the BoU reduced the Central Bank Rate (CBR) from 21 per cent in March to 20 per cent in June 2012 and eventually to 12 per cent in December 2012. This was motivated by the decline in inflation and the need to boost economic activity. The lowering of the CBR thus reflected efforts by the BoU to encourage commercial banks to reduce their lending rates in order to increase the growth of their lending to the private sector which has remained weak since September 2011 due to high lending rates. In response, the commercial banks reduced their lending rates marginally from 27.6 per cent in March to 27 per cent in June and 23.2 per cent in December 2012.

Inflation – Domestic and Global Developments Inflationary pressures continued to ease throughout the year under review and eventually hit the single digit mark at the end of the year. Headline inflation fell consistently from 21.2 per cent in March 2012 to 18 per cent in June and 5.5 per cent in December 2012, while core inflation also declined from 23.6 per cent to 4.6 per cent in the same period. Food inflation continued the downward trend that began in March, and ended at 7.3 per cent in December reflecting improved supplies with the onset of the rainy season. The most spectacular decline, however, was inflation in Electricity, Fuel and Utilities (EFU) in which the rate fell by 8.3 percentage points to end at 12.9 per cent in December 2012. This mainly reflected a decline in oil prices that had risen early in the first quarter but have been steadily falling since April to an 18 month low in June.

Foreign Exchange Rates – Shilling steady The shilling remained volatile against the US dollar to trade at UGX 2,484. 36 in June 2012 from UGX 2,485.02 in March 2012. By December 2012, the shilling had settled at “How the EAC markets UGX 2,688.17. This marked a reversal in the trend as the shilling, on an average basis had steadily appreciated since October 2011. This points to a recovery in capital inflows and their economies and a reduction in demand for foreign exchange from the major sectors (energy are doing, the quarterly and telecommunications) that made it possible to meet the available supply. trends on each market and their likely impact on other markets.”

EQUITY MARKET PERFORMANCE Secondary market activity this year performed slower than the previous year, with turnover in 2012 registering Ushs 26.4bn from Ushs 41bn of the previous year – representing a daily average of approx. Ushs 110m. Number of shares traded rose to 345 million shares compared to 168 million traded in 2011. While the total number of deals recorded were 3,668 down from 4,748 in 2011.

Turnover performance per counter The newly listed UMEME Limited dominated turnover activity in the last quarter of the year, with the counter posting 47.5 per cent of the total turnover. Stanbic Bank Uganda Ltd in second position closed at 31.4% per cent while Limited,

12 2013 I Issue 1 Bank of Baroda Uganda, DFCU Group and Uganda Clays Limited accounted for 7.4 per cent, 5.8 per cent, 3.9 per cent and 2.9 per cent respectively. British American Regional Analysis | Market Movement Tobacco Uganda, National Insurance Corporation and Nation Media Group had minimal activity which resulted into 0.8 per cent, 0.4 per cent and 0.02 per cent.

Volume traded per counter Stanbic Bank Uganda Ltd remained the most active counter with the highest record of volume traded and this was mainly due to the second bonus issue that was declared to shareholders. The counter accounted for 76.9 per cent of the volume, followed by UMEME with 13.2 per cent and Uganda Clays Limited at 5.7 per cent. Bank of Baroda Uganda, National Insurance Corporation and New Vision Limited posted 1.9 per cent, 0.93 per cent and 0.91 per cent, while DFCU Group and BATU scooped 0.3 per cent and 0.03 per cent respectively.

Annual Volume Comparison (Calender Years) 2007 - 2012

Turnover (Ushs) Volume Deals 2007 85,203,921,340 484,112,529 14,338 2008 89,770,590,595 216,938,311 15,659 2009 19,739,110,145 123,231,889 5,698 2010 42,047,148,495 226,537,341 4,960 2011 40,784,908,620 168,299,763 4,748 2012 26,440,318,825 345,054,996 3,668

Source: USE Product Markets Department

TRADING VOLUMES AND ACTIVITY ON A QUARTELY BASIS: January – December 2012

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Volume Traded 30,822,478 19,929,235 54,808,456 239,494,827 Turnover (Ushs) 3,514,954,340 2,109,456,550 2,513,658,510 18,302,249,425 No. of Deals 850 848 873 1,097 Trading Days 61 60 62 57 “How the EAC markets Daily Avg.Turnover 57,622,202 35,157,609 40,542,879 321,092,095 (Ushs) and their economies Daily Avg. no. of 13.9 14.1 14.1 19.3 trades are doing, the quarterly Market Capitaliza- 12,116.6 12,830.5 13,971.4 15,948.5 tion (Ushs. bn) trends on each market USE All Share 993.8 1046.5 1139.6 1203.4 Index and their likely impact LCI 195.1 215.3 222.4 193.5 Source USE Product Markets Department on other markets.” USE Index Performance The All share index in year 2012 maintained a stable outlook in the first quarter of the year despite the increased participation on the equities segment. The ALSI opened at 832.59 in January and further to 992.32 in March. In the second quarter the Index was sustained at an average mark of 1,071.85 before rising to 1,134.73 in September, and 1,186.58 in October respectively. The ALSI crossed the 1,200 mark in November due to price appreciation across all the listed stocks as well as the introduction of the Umeme listing which pushed the Index to 1,203.42 at the end of the year. The Local Company Index (LCI) had declining positions compared with the previous year. The first quarter posted 190.97 and 200.16 in the second quarter. In the third and fourth quarter the LCI oscillated at between 193.65 and 222.43 before closing the year at 193.5.

2013 I Issue 1 13 FIXED INCOME MARKET PERFORMANCE Regional Analysis | Market Movement Treasury Bonds Secondary Market Activity: Trading on the government bond secondary market recorded a turnover of Ushs 373,645,100,000 up from Ushs 105,350,900,000 that was recorded in the pervious year.

Corporate Bond Secondary Market Activity: Activity was recorded on the Corporate Bond Segment with HFB, SBU, EADB and PTA bonds recording a total turnover of Ushs. 98.1billion. Refer to breakdown below. Corporate Bond Activity – Year To-date January – December 2011/2012

NEW DEVELOPMENTS “How the EAC markets UMEME Listing UMEME Limited commenced trading on the secondary market on 30th November 2012. The trading activity was officially opened by the ringing of the bell by the and their economies Chairman UMEME Limited Mr. Patrick Bitature, who was accompanied by senior staff of the are doing, the quarterly organization. Also present at the function were key officials from the Capital Markets Industry, Institutional Investor fraternity, private sector and government. UMEME Limited becomes trends on each market the 8th local listing on the market and 1st entity from the energy sector to go public. and their likely impact African Development Bank Bond listing on other markets.” The African Development Bank issued a currency bond on the USE’s fixed income securities market segment, the currency bond becomes the first of its kind in the region, and the bank intends to issue more of such bond across the region. Stanbic Uganda issued additional shares on the USE On August 9, 2012, Stanbic Bank Uganda (SBU) listed additional shares on the USE as its second bonus offer after the previous one done in 2011. The second offer is as a result of deliberations that were concluded at the SBU Annual General Meeting (AGM) in May 2012, where shareholders agreed to increase the authorized share capital of the company from 10.2bn to 51.2bn shares. The shareholders also approved the 4:1 ratio which was credited to the investors’ accounts to coincide with the listing of the bonus.

Treasury Bond Listings Twelve Treasury bonds with a total value of Ushs 1,035bn were listed on the bourse, although secondary market trading was mainly effected by the primary dealers.

GEMS Rules The GEM (Growth Enterprise Market Segment) Rules were introduced in the market to govern/regulate those companies with a potential to list on the Market. The rules will be applicable to issuers/companies intending to seek approval to issue securities on a segment other than the main investment market segment. These rules replace the AIMS (Alternative Investment Market Segment) rules.

USE Shifts to new premises During the last quarter of the year, the USE moved offices to 4th floor PRISM building, located on Kampala road.

14 2013 I Issue 1 Rwanda Regional Analysis | Market Movement

Primary Market Activity Bond Market On July 12th, 2012 The Government of Rwanda issued Treasury Bills with the following characteristics: • Negotiable Treasury bills worth 3.0 billion Rwandan Francs, having 28 days maturity period renewable, expiring on Thursday, August 09, 2012. • Negotiable Treasury bills worth 2.5 billion Rwandan Francs, having 91 days maturity period renewable, expiring on Thursday, October 11, 2012. • Negotiable Treasury bills worth 1.0 billion Rwandan Francs, having 182 days maturity period renewable, expiring on Thursday, January 10, 2013. • Negotiable Treasury bills worth 0.5 billion Rwandan Francs, having 364 days maturity period renewable, expiring on Thursday, July 11, 2013.

Equity Market The equity market remained unchanged for the period under review. Secondary Market Activity Bond Market “How the EAC markets The bond secondary market was quiet during the period under review. and their economies Equity trading activities are doing, the quarterly The equity market recorded a total turnover of Rfw 6,929,305,700 Billion from 39,583,600 trends on each market million shares in 566 deals. The most active counters were those of Bank of Kigali and Bralirwa. and their likely impact MONTHLY TRADING STATISTICS FROM JULLY UP OCTOBER 2012 on other markets.” Month Turnover(RWF) Volume No of deals

JULY 3,351,438,400 20,719,100 138 AUGUST 2,663,354,100 14,067,200 177 SEPTEMBER 360,509,500 1,875,700 107 OCTOBER 554,003,700 2,921,600 144 TOTAL 6,929,305,700 39,583,600 566

Monthly Volume trend (July 2012 - October 2012)

2013 I Issue 1 15 Africa Dances to a Different Beat people not what they want, as is done in other markets, but what they desperately need. Investments in agriculture, water, pharmaceutical and related industries in the region promote food security, access to clean water and sanitation, and access to medication in the regions populations.

Collier and Jean-Louis Warnholz, in a study published by the Harvard Business Review, found that Africa based publicly traded companies were highly profitable due to lower labor costs and greater operational efficiency. They found that the average annual return on capital of the companies studied was 65% - 70% higher than that of comparable firms in China, India, Indonesia and Vietnam. Additionally, the median profit margin was 11% better than the comparable figures for Africa Dances to a Asia and South America. Away from all the statistics, the performance and profitability DIFFERENT BEAT of companies in the East African region such as Equity Bank Group, The Madhvani Group, Ruparelia Group, MIDROC, Grain The Coca-Cola Company currently has a marketing campaign dubbed Bulk Handlers, Safaricom Limited, Bralirwa ‘A billion reasons to believe in Africa’. In the television advertisement Limited and Bakhresa Group of Companies one of the captions displayed on the screen reads “While the and numerous others serve as a testament to the possibilities in this region. world shakes and stumbles, Africa dances to a different beat”. Some of the region’s most successful sectors By: Maryanne Muchui are those that are based on exploiting natural resources, these are mining, destinations. Investors are discovering the his is certainly an apt description agriculture and tourism. Despite centuries hitherto untapped potential in the region of the investment climate currently of exploration and exploitation, many parts and are investing billions, not just to diversify prevailing in the East African of Africa remain unexplored and to date their portfolios, but to enjoy superior returns. region. While the rest of the world new discoveries of natural resources are still isT grappling with recessionary pressures, According to Naoyuki Shinohara, the Deputy taking place. The recent discovery of natural investors in the region are dancing all the Managing Director of the International gas in Tanzania, and oil deposits in Kenya, way to the Bank. East Africa is prime hunting Monetary Fund, Africa is projected to be one Uganda and are evidence. ground for aggressive investors. McKinsey of the world’s strongest-growing regions According to the United Nations, in order to Global Institute in 2010 reported that the in the next few years. Since 2005, average feed to world’s population, food production rate of return on foreign investment was per capita income growth in East African must rise by 70% over the next 40 years. higher in Africa than any other developing countries was 3.7% compared to 3.2% for The continent of Africa represents 60% region, further, according to McKinsey, sub-Saharan Africa as a whole. Foreign direct or the available cropland on the globe. though Asia’s tiger economies continue to investment in the five East African countries With proper planning, investment and expand rapidly, there is real potential for the has also been strong, more than doubling trade agreements, the continent could rise of economic lions in Africa’s future. to $1.7 billion over the past decade. Strong become the world’s bread basket. This The region’s market has been described growth in the region reflects factors such as represents huge opportunities for the as a Lion Market as opposed to a Bear or improved macroeconomic fundamentals, continent and indeed for East Africa. Bull Market because of the high risk, high increasing commodity exports, growing return climate in the region. This region consumer demand and regional integration. The tourism sector in East Africa is has its share of risk ranging from liquidity Kenya, Rwanda, Tanzania, and Uganda are on experiencing steady growth with industry risk to currency risk and geopolitical risk. a growth momentum. According to the World players targeting more tourists from the East However for bearing this risk, the region Bank, all four countries have the potential in addition to the traditional markets in the provides high risk adjusted returns. to reach middle income status within the West. Domestic tourism in the region is also next ten years. Poverty remains high in the steadily increasing with tour companies and In the past, investing in Africa was advocated region but it is now trending downwards. resorts in the region deliberately marketing due to its low correlation to developed However, lack of access to basic amenities to locals, and introducing resident rates markets - Africa was, and still is, a leading such as quality healthcare and clean water in order to encourage local tourism. target for investors who wish to diversify in the region still remains a challenge. A Other sectors that are performing their global portfolios. However, the noble reason to invest in the region is Social exceptionally well in the region continent is now emerging to take its pride Investment, to alleviate poverty. Wealth include banking, brewing, cement and of place among the preferred investment can be created by providing to the region’s telecommunications. In these sectors, there

16 2013 I Issue 1 will be found either a discreet monopoly or banks which can assist investors get access representing an average of 22.6% of the a stable oligopoly which implies companies to credit and other banking facilities such population. In Kenya, this represents 44.9% in those industries are able to use their as Standard Chartered, Barclays Bank, Equity of the population, 18,7% in Uganda 12.1% in pricing power to produce huge profits. Bank, Citibank, Bank of Africa and many others. Tanzania, 7.7% in Rwanda and 5.3% in Burundi. According to the World Population Report Africa is the fastest growing market for mobile the East African region currently has 141.8 usage. The mobile phone has become the million people. The East African Region has a A growing middle class is good for any most accessible platform for information combined GDP of over $ 70 billion (USD), this economy or region. Long term economic sharing and interactive communication in represents a colossal market for any business. growth in the region is linked to rising the region. Thus in just a few years, mobile consumer spending by the middleclass. phones have transformed East Africa culturally Thus companies targeting the middleclass and economically. Mobile phones are used by consumers will experience a boom, farmers to get access to market prices; young In 2010 the East African especially those that operate in sectors people use the mobile phone to access social such as consumer goods, retail, banking, media sites such as Twitter, My Space and region launched its own telecommunications and housing. Facebook; urbanites and rural folk now all common market for goods, Dependence on foreign aid is being use mobile phones to transfer money to one questioned by African scholars, professionals another; and news can be disseminated using labour and capital. Larger and politicians. The region is increasingly the mobile phones. With the introduction of markets allow companies looking within to solve its own issues. Foreign the Eastern African Submarine Cable System aid is no longer the preferred option as it (EASSy), the East African region is connected enjoy economies of scale, is seen to create a culture of dependency to the rest of the world. Broad band access produce large quantities of and encourage corruption. The region now and network connectivity have greatly promotes sound fiscal policies and improved improved. There remains untapped potential goods and thus variety and revenue collection from its own citizens, in the Telecommunications and Information ultimately lead to a reduction export promotion and foreign investment Technology sector in the region as evidenced as opposed to foreign aid. Kenya has issued by tech-business incubators like m:lab and in prices of products. Public Infrastructure Bonds to reinforce iHub springing up across the region. financing of capital projects. President Paul Banking sector reforms introduced at the According to the Society for International Kagame of Rwanda in his article “Why the beginning of the last decade contributed Development State of East Africa 2012 U.S. Needs Africa” in the Washington Post in to acceleration in credit to the private Report, 80% of the East African Population 2009, stated that the partnership between sector across the East African region. State- is made up of young people and young Africa and the United States should be one controlled banking systems, restructuring families. This represents a young and of shared ideas, vision and investments and loss-making institutions, and improved energetic workforce. Moreover countries in no longer on dependency and aid. All these governance and financial sector supervision the region have not reached a stage where measures go a long way in strengthening have been successfully implemented. significant amounts of the country’s resources macroeconomic variables in the region. The annual growth in credit to the private are dedicated to care of senior citizens sector during 2002-2010 averaged between because the regions traditions and cultures A good indicator of the prevailing investment 15% - 32% in the region. However there is dictate care of the elderly by the younger climate is the level of interest Private Equity still more ground to be gained as the level of generations, and thus, this responsibility is firms have shown in the region. In the financial intermediation and access to financial shouldered by younger family members, the 2011 East Africa Private Equity Confidence services is lower than the levels in some government’s direct role in this is limited. Survey released by Deloitte & Touche, it middle-income emerging market economies. In 2010 the East African region launched its is reported that East Africa experienced a own common market for goods, labour and significant influx of Private Equity interest A large segment of the population in the capital. Larger markets allow companies in 2011. Further, many investors see East region still utilize informal financial services, enjoy economies of scale, produce large Africa’s strong growth potential as a driver this is due to lack of access to formal quantities of goods and thus variety and of better investment performance than financial systems. Thus there is still room for ultimately lead to a reduction in prices of South Africa. This represents a huge shift expansion for existing banks and opportunity products. Domestic demand is set to rise as in private equity attitudes towards Africa for new entrants into this industry. more and more East Africans move up the which historically focused on South Africa. It is predicted that the region will become a economic ladder. It is projected that African The survey respondents who invested across major economic and trading powerhouse in consumers as a class will spend about 1.4 Africa confirmed that relative expectations for the coming years. Also, trade in the region is trillion (USD) in 2020. McKinsey Institute East Africa were rising. Further they expected growing fast with exports to the Common projects that the number of households with that investments in East Africa will perform Market for Eastern and Southern Africa discretionary income could rise by 50% in the better than or similar to their Southern (COMESA) Region continually rising. Bank next decade in Africa and could reach 128 African and West African counterparts. clients will seek to expand their business million households. The African Development The risk of investing in East Africa remains, but from their home countries to the regional Bank has reported that while it is difficult the region has strong growth fundamentals, neighbours. Banks have the opportunity to define who exactly falls into the ‘Middle high business confidence and the East African to focus on products and services that class’ group and even harder to establish how Community is now one of Africa’s strongest will facilitate and ease intranational, and many middle class people there are in Africa; economic trading blocks. The future is indeed international trade in the region for both retail The size of the middle class defined as those bright. East Africa is beating its drum, the and corporate clients. Currently the region spending between $2 - $20 a day in East drum of opportunity, progress and prosperity is served by various local and international Africa is estimated to be about 29.3 million, and the world is responding to the beat.

2013 I Issue 1 17 Bribery on Roads

Bribery on ROADS Survey shows regulatory authorities along Northern and Central transport corridors in East Africa are the most corrupt as bribery drives up the cost of commodities in region A survey by Transparency International Kenya and Trade Mark East Africa (TMEA) reveals that regulatory authorities in East Africa demand the highest amount of bribes from transporters and drivers along the transport corridors. By: Evelyne Ogutu

ccording to the report Bribery as a non tariff barrier up services at various points, avoid full verification of goods to trade; a case study of East African trade corridors, and to avoid paying full tax and other charges payable. Bribes Tanzania’s regulatory authorities ranked worst at USD are also offered to avoid investigation especially on fraud attempts, 12, 640, or Kshs. 1,074,400 followed by Kenya at USD contraband and illegal goods or excess weight carried by the trucks, 6,A 715 or Kshs. 570,775, Uganda was third at USD 3, 672 or Kshs. expired import licenses and speeding or parking offences.” 312, 120 while Rwanda ranked fourth at USD 679 or Kshs. 57,715 The report recommends that the EAC Secretariat should facilitate and Burundi had the lowest at USD 293 or Kshs. 24,905. speedy harmonization of weighbridge regulations or specifications amongst EAC countries, reduce the number of weighbridges to The survey, conducted in collaboration with Transparency International two along major transport corridors particularly for transit goods, chapters in Burundi, Rwanda and Uganda, and the Transparency standardize the weighbridges measuring equipment to avoid Forum in Tanzania, further indicates that bribery costs in Tanzania variances in weights recorded by various stations, ensure regular per year consisted of about 18.6% of the value of goods transported. calibration and maintenance of the weighing scales and introduce T he value of goods moved through the EAC region totaled USD modern weighing technology including the weigh-in-motion system 54.84 million per month or Kshs. 4.69 billion per month — an to achieve faster transport and transit of goods in the region. average of USD 553,914 or Kshs. 47.37 million per company per The six organizations advised regulatory authorities to month. When expressed as a percentage of the total value of encourage drivers and transporters to report cases of bribery goods handled by transport companies per month in 2011, bribery practices experienced during the course of transporting costs per month stood at 18.6% of the value of goods transported goods within the region by ensuring actions are taken in Tanzania; 1.4% in Kenya, 0.5% in Rwanda while in Uganda and on such reports without exposing those who report. Burundi it stood at 0.1% each. However, if the bribe amounts were to be set against the net profits or the other operating costs of Methodology: The survey was conducted in the five East African transport companies, the proportions would be much higher. States among 1,731 respondents between August and November 2011 and focused on establishing personal, first-hand experiences The survey notes that truck drivers operating in the region have of bribery practices in 2011. It targeted key players involved in devised various means of accounting for bribery expenses to their transport activities along the Northern and Central corridors in EAC. employers, with the most common being road trip expense as a result The respondents included 19 transporters, 1,185 drivers, and 190 East Africans are paying more for goods and services as bribes paid clearing and forwarding agents and regulatory bodies covering 98 along transport corridors are mainstreamed into business expenses. customs authorities and 68 police authorities. The survey also sought The survey reveals that the likelihood of unnecessary delays is to compare the findings with those that have emerged from similar the major reason that prompts bribery payments along the East African transport corridors. “Bribes are mainly demanded to speed

18 2013 I Issue 1 ones, particularly the 2011 Business Climate Index (2011 BCI) survey. Responses from clearing and Forwarding Agents (CFAs): KEY FINDINGS 34% of Clearing and Forwarding Agents (CFAs) pay bribes because Responses from transporters: of the slow pace of services ,29% bribe to avoid unnecessary delays, Frequency of Transporting Goods: An average of 82% of transporters 16% bribe to evade high taxes and 14% pay bribes to speed up either make daily, weekly or 2-5 trips per week. This shows that most tedious documentation processes. The remaining 7% of CFAs drivers who participated in the survey were involved in long-haul cited poor understanding of the administrative procedures. trade (journeys taking up-to a week). An average 80% of the drivers Two-thirds (65%) of clearing and forwarding agents (CFAs) who responded make either weekly or monthly trips an indication had offered or were asked to give a bribe in 2011. Kenya is that the two groups frequently had to deal with the regulatory at the top of the list with 82% having given or having been authorities, thereby raising the chances of being engaged in bribery. asked to give a bribe, followed by Tanzania with 76% and The survey findings show that bribery practices are more Uganda with 54%. Only 30% and 26% of CFAs in Burundi and severe at weighbridge stations and police roadblocks. 46% Rwanda respectively, had given or been asked to give a bribe. of the transporters cited the likelihood of unnecessary delays as the major reason for having to pay bribes, followed by Bribes were paid to speed up document processing, to avoid tedious documentation (20%), the slow pace of services (14%), investigation, to change tax codes in order to lower the tax burden and poor understanding of clearing procedures (9%), and high to ensure improper verification in order to guarantee speedy clearance. tax levels (8%). The regional picture is much similar to the On average, the Uganda CFAs indicated that they paid USD country responses, except in the case of Rwanda where 14,683 as bribes to regulatory authorities (in Uganda and during all (100%) of the transporters cited unnecessary delays as transit through other EAC countries) in 2011 while Kenyan CFAs the major reason for prompting bribery payments. paid USD 4, 972 during the same period. In Burundi and Tanzania, While negotiations were the key factor determining the size of the bribes amounted to USD 389 and USD 318 respectively, while a bribe, other factors included the value of the consignment Rwandan CFAs paid the least bribery amounts of USD 183 (23%), urgency of the consignment (17%), expected penalties 19% of CFAs were explicitly requested to pay a bribe while 27% (14%), number of public officers involved in the ‘bribery deal’ received an implicit request. Of the remainder, 11% received the ( 5%), and a fixed bribery amount per consignment (4%). request through a third party while 12% indicated they were not asked for a bribe which they nevertheless gave “since it is normal Reporting bribery: Very few drivers and transporters reported bribery to give an extra payment to officials,” probably to guarantee that incidents. All Ugandan, Rwandan and Burundian transporters sampled future clearances are given without undue delays. At country level , never reported bribery incidences. In Kenya, 83% and in Tanzania, Uganda has the highest percent age of CFAs indicating that officials 93% indicated that they didn’t report bribery incidences. Almost from the Regulatory Authorities explicitly requested for bribes all of the drivers did not report such incidences. Those who did with a rating of 39%, followed by Kenya (29%). Tanzania leads in not report bribery stood at 99% of the drivers in Ugandan drivers, officials who ask for bribes implicitly with 47%. A huge proportion of 92% of the drivers in Tanzania, 89% of the drivers in Kenya, 87% Kenyan CFAs offered bribes because they believed bribing is normal. of the drivers in Burundi, and 83% of the drivers in Rwanda. The point of bribe payment: The survey found that 45% of all Only 29% of all drivers indicated they reported bribery to CFAs interviewed paid the bribery before t he service was the management authorities where such incidences took delivered, while 27% paid after service delivery. At least 16% place, 27% reported to the police while 7% reported to the paid at the time the service was delivered, while 12% claimed regulator’s oversight office. At least 24% of drivers reported to have paid partly before and after the service was delivered. such incidences to the employer. Only 11% of the drivers reported the incidences to anti-corruption authorities. Consequences of failure to pay bribes: Failure to pay bribes can lead Reasons for not reporting bribery: At least half (52%) of EAC to dire consequences; from delays in getting services (48%) and transporters indicated that bribery was a normal and acceptable disruption of clients’ operations to bad service and high administrative practice in the region, while 28% stated that they knew no action taxes (13%). Unfriendly customer service would inevitably translate would be taken against the wrong-doers. In addition, 21% said such to business loss for the importers/exporters. Failure to pay bribes incidents would be self-incriminating, while 20% did not see the could also result in harassment by custom officials and to denial need to report. This is similar to country-level responses. In Kenya, of services as indicated by 5% and 6% of the respondent s 65% of the transporters did not report corruption because to respectively. Other consequences include payment of fines at them, the vice was a normal and almost acceptable practice. 8% and loss of business according to 7% of the respondents.

Transporters are rarely engaged by regulatory authorities in Reporting bribery incidences: the policy-making process relevant to issues in the sector. 17% of the transporters said they have been engaged. The rest have never 94% of the Clearing and Forwarding Agents interviewed been engaged and also do not know of any transporters who have indicated that they had not reported the bribery incidences, ever been engaged. Uganda is the only country where majority while only 6% stated they had reported such incidences. In of transporters were involved in policy-making as indicated cases where bribery incidences were reported, an average by 82% of respondents giving an affirmative response. 69% of the respondents reported such cases to the Only 10% of the transporters have ever complained about management of the institution where bribery took place challenges encountered while transporting goods across the while the rest of the incidences were reported to police officers. EAC borders. Despite experiencing transportation challenges, Expectation for year 2012 on corruption levels at customs: 39% 74% of transporters indicated that they did not complain while of the clearing and forwarding agents expect corruption levels the rest indicated they did not have a reason to complain. to remain the same as before, while 27% expect an increase in corruption levels. Only 22% respondents expect a decrease.

2013 I Issue 1 19 Investors Gain as Activity at the NSE

Investors gain as activity at the NSE Recovers Investors, who accumulated a select number of stocks last year when the market was on a downward trend at the Nairobi Securities Exchange (NSE) are happy lot. Over the past eleven months of 2012 the tide has turned and as at mid-October, investors had recovered the entire value of investor wealth that had been lost over the twelve months of 2011. By: David Mugwe

arket capitalization, which dollar and then to make the business through the roof and are still continuing is the value of all the listed environment even tougher, the Central to rise and total returns on some stocks companies at a stock market Bank adopted a tightening monetary is also much more than what fixed and which is the measure policy stance by pushing up the cash income investments are offering. Mof investor wealth stood at Ksh1.23 trillion ratio and hiking interest rates. “Market capitalization has risen 41 per cent ($14.52 billion) as at the end of trading These factors not only affected economic to Ksh1.23 trillion. We are confident that this on November 16 compared to Ksh868.24 growth and the performance of listed bullish trend will continue as we draw closer billion ($10.21 billion) as at the close companies which were starved of cheap to the end of the year,” said Peter Mwangi, of the last day of trading last year. funds but they also pushed investors chief executive officer NSE during the official Last year, investor wealth had dropped into money market and fixed income launch of the trading of 121.63 million CfC from Ksh1.166 trillion ($13.73 billion) securities and investments which Stanbic Holdings new shares mid-November. which was the market capitalization as offered better returns than equities. Market capitalization - or the value of at the close of the last day of trading in However, the tide has changed this year investor wealth - has this year been lifted December 2010 as share prices dropped following the Central Bank’s move to allow by share prices which have recovered affected by expectations of poor results more money to flow into the economy, from last year’s slump and to a smaller due to adverse economic conditions. albeit at a much more measured pace and extent by two new listings and five Last year, the Kenyan shilling was investors who had picked the right stocks companies that have issued additional depreciating, at one point touching are now laughing all the way to the bank. shares through rights issues this year. a low of Sh107 to the United States Capital gains on select stocks have shot As at the close of business on November

20 2013 I Issue 1 16, when CfC Stanbic Holdings officially Standard Chartered Bank, majority whose launched the trading of the new shares, but shares have been on an upward trend has which actually stared trading on November also helped lift the value of the market. 9, market capitalization was up by Sh365.81 billion ($4.3 million) year-to-date. The flow of funds into the equity market started at the beginning of the year when The NSE 20 Share Index, which tracks share the Central Bank of Kenya started cutting price movement of 20 select stocks closed at its benchmark rate creating a demand 4,155.99 points, 29.67 per cent up from 3,205.02 for shares hence the price increases. points where it closed at the end of last year. In November the banking regulator cut its Other indices such as the NSE All Share Index benchmark rate for the third consecutive time closed at 92.59 points, 36.1 per cent up from to 11 per cent, meaning that this rate has now 68.03 points, where it closed at the end of 2011 been reduced by a total seven percentage while the FTSE 15 and FTSE 25 Indices closed points this year, and the exchange is expecting at 123.21 and 125.78 points, 36.43 per cent and that this will continue to encourage more 35.77 per cent up from 90.31 and 92.64 points investors to put more money into the market. at the end of December last year respectively. “We anticipate that the November 7, 2012 Shares of almost half of the listed firms, had seen Monetary Policy Committee decision to reduce their prices go up by between 10 and 149 per cent the Central Bank Rate by 200 basis points to 11 as of the close of trading on November 16 buoyed per cent, should stimulate further flow of funds by positive results, payment of dividends and into the capital markets,” said Eddy Njoroge, positive investor sentiment towards the market. chairman NSE during the launch of trading of the 2nd tranche of Housing Finance’s bond. This means that investors who had The Central Bank has been bringing the invested in these stocks as at the end of rate down following a steady fall in the rate last year should have seen the value of of the increase of the cost of basic goods their portfolios go up quite significantly. and services which stood at 4.14 per cent However, a number of companies in October this year compared to its peak have not performed as well and some of 19.72 per cent in November last year. have even issued profit warnings. Foreign investors seeking higher returns Uchumi Supermarkets has been the best than what they can make in their home performing stock so far in terms of share price countries have continued to pump in gains, having closed at Ksh19.20 ($0.23) from money into the market throughout this Ksh7.70 ($0.09) as at the close of business in year, and this seems to have accelerated December last year, a 149.35 per cent appreciation. in the second and third quarters. The second and third best performing stocks as at November 16, in terms of capital gains In the first ten months of this year, foreign only, which are not included in the NSE 20 investors pumped in Ksh15.27 billion ($179.5 Share Index were Pan African Insurance whose million), having made purchases worth Ksh41.69 stock closed at Ksh40 ($0.47), up 92.77 per cent billion ($490.48 million) against sales of Ksh26.42 from its close of Sh20.75 ($0.24) at the end of billion ($310.84 million) but Ksh9.67 billion of last year and Crown Paints whose stock was up this came in between April and September. 90.24 per cent and closed at Ksh39 compared “Prospects of additional monetary policy to Sh20.50 over the same time period. easing continue to spur interest in equities. Sustained inflows from foreign and institutional This was then followed by British American investors will help hold prices. Stable macro- Tobacco, KCB Group and Nation Media economic variables will support the market,” Group which are included in the benchmark said Stanlib Kenya, a local fund manager in NSE 20 Share Index and which closed at their latest monthly economic update. Ksh450 ($5.29), Ksh30.25 ($0.36) and Ksh237 The fund manager however said that ($2.79) meaning that they were up 82.93, political uncertainty, as the country’s 79.53 and 69.29 per cent respectively. approaches the general elections, is a key NIC Bank, Kenya Re which are not tracked by risk to sustaining the upward momentum. the NSE 20 Share Index and Safaricom which Foreign investor participation has remained is included in the index were up 66.67, 66.44 between 43 and 55.23 per cent each month and 57.63 per cent and closed at Ksh40 ($0.47), this year and indicating that local investors Ksh12.15 ($0.14) and Ksh4.65 ($0.05) respectively. have also been very active in the market The introduction of 1.3 billion new shares and as the close of the market nears, it is through rights issues by Kenya Airways, Diamond now expected that the market will close Trust Bank, NIC Bank, CfC Stanbic Holdings and on a high note as was the case in 2010.

2013 I Issue 1 21 Making your Corporate Responsibility Making Your Corporate Responsibility Report Relevant

Corporate RESPONSIBILITY

By:David Leahy

The reality for many companies is that environmental, social and governance issues are having an increasing impact on their ability to operate and generate a profit as part of its overall objectives. Integrated Reporting recognizes that shareholders have a valid interest in understanding how these issues are being managed and the impact they have on the value and sustainability of the business.

This is not a call for more Corporate Responsibility reporting - it’s a call for more relevant Corporate Responsibility reporting. Companies themselves have recognized this, and many can now tick the Corporate Responsibility reporting box. They can point to reports that illustrate the significant efforts they’ve made to limit their environmental footprint and benefit the societies in which they operate. So, it should be straightforward to incorporate Corporate

22 2013 I Issue 1 Responsibility reporting into an Integrated have a direct operational implication. Investors need to make judgments over the Report? Not quite. Integrated Reporting is impact of each Corporate Responsibility about more than the physical integration of For example, corporate ethics are relevant issue on the business and the steps being different corporate reporting components. across the whole organization but investors’ taken to address it. This requires a balanced Integrated Reporting requires the alignment specific interest may lie in the ability of the perspective with analysis that is comparable of business reporting with business strategy, business to compete in specific markets while to past reporting and targets, and also presenting an opportunity to demonstrate also operating within an ethical framework. wider industry practice. For some, this will the linkage between sustainability Although a few leading organizations are mean a shift from thinking of Corporate performance and business value. addressing this, the distinction is lost in Responsibility reporting as a public relations many Corporate Responsibility reports. As a exercise, to recognizing the role it plays in This is an area where many Corporate result they risk being seen by investors as an investor decision making and governance. Responsibility reports have been lacking, irrelevance – a discussion of worthy causes giving the impression that the preparation of with no apparent link to business value. The same standards of corporate reporting the report – and sometimes the underlying should apply here as to any other issue. Corporate Responsibility activities – are Provide a clear link between The underlying quality of information is conducted in isolation from the rest of strategy, action, and value a particular challenge for what is still a the business. The scale of the challenge relatively new area of reporting. Developing is reflected in a number of common Like any other business issue, investors will systems, processes, and controls to ensure frustrations for investors when they look to expect management to have a strategy for the accuracy and completeness of non- understand Corporate Responsibility risks each Corporate Responsibility issue that financial information streams are central to and opportunities. The qualities they need in preserves or enhances the value of the the effective reporting (and management) their Corporate Responsibility reporting are business. Each strategy should itself be an of the issues. This cannot be achieved little different from any other business issues. integral part of the core business strategy. immediately but there is a clear opportunity Within the business one would expect to for companies to begin to address this. Focus on the issues that see clear objectives with actions monitored matter to the business against targets and expectations. Reports We should welcome the renewed focus need to demonstrate this too – strategies that the International Integrated Reporting In today’s environment, businesses are should translate into actions and those initiative can bring. After more than fifteen finding that a select number of Corporate actions will have measurable outcomes. years of exploring and developing Corporate Responsibility issues go right to the heart Responsibility Reporting the time has of their long-term viability. The particular The difference between reporting come to link it to the core business. issues may be to do with environmental on Sustainability and reporting on The current information gap is not helpful. impact, corporate ethics, employee the sustainability of the business It leads investors to price in risks that may safety, or others. Their potential impact well be adequately managed, and it leaves may be remote but their scale is such To reach this point, Corporate Responsibility Corporate Responsibility issues that should that they have major consequences for reporting needs to move away from its be central to the business strategy on the business value - positive or negative. specialist roots, and become like any management and reporting sidelines. This does not mean that every sustainability other aspect of operational reporting. Ultimately though, this is not a reporting issue or stakeholder interest should be Reports written by operations directors issue; it’s a question of governance. reported to investors. Only some will have with specialist support will reflect business Companies that have a clear view of the potential to affect value in this way. objectives better than those written how their Corporate Responsibility risks Identifying these issues is the first challenge by Corporate Responsibility specialists. and opportunities affect their overall for producing a focused report. Those remaining companies that simply strategy will welcome the opportunity to provide a list of Corporate Responsibility explain what they are doing to investors. The second challenge is recognizing achievements give the impression that Others will need to take a hard look at the difference between reporting on they regard their Corporate Responsibility how their Corporate Responsibility ‘good sustainability and reporting on the activity as charitable acts – philanthropic deeds’ relate to their business strategy. sustainability of the business. Investors want gestures paid for by shareholders rather and need to understand that the business than a routine investment in the viability model they have bought into is sustainable in of the business. Issues which can affect the long term – and managed in a way that the long-term viability of the business are secures long term value. This means focusing too important to be treated in this way. on those specific aspects of the issue that

Companies that have a clear view of how their Corporate Responsibility risks and opportunities affect their overall strategy will welcome the opportunity to explain what they are doing to investors. Others will need to take a hard look at how their Corporate Responsibility ‘good deeds’ relate to their business strategy.

2013 I Issue 1 23 Expansion of the EAC Membership

Expansion of the EAC Membership: Status of the Application by South Sudan

Upon receipt of the application by the Republic of South Sudan to join the East African Community (EAC) on 11th November 2011, Summit of the Heads of State directed the Council of Ministers to handle the matter in accordance with the Treaty for the Establishment of the EAC and submit a report on the same for consideration by the Summit.

By: Evelyne Ogutu

o comply with the Summit directive, the Council of Ministers the border with Uganda and Republic of Sudan. It meanders established a verification team comprising members from the through a large flat land ripe for irrigated agriculture. five EAC Partner States and the Secretariat with the mandate As the country recently celebrated its first independence anniversary, of undertaking verification of South Sudan’s application almost all consumer products were imported including food onT the bases of the provision of Article 3 of the EAC Treaty. products. The Government is therefore putting in place a plan In carrying out the exercise, the verification team held several of action to promote local production of consumer products. meetings with the Government of South Sudan officials In addition, as more and more citizens in the Diaspora stream back to including, Ministers, Deputy Ministers, Undersecretaries their motherland, there is a very high demand for accommodation, (equivalent of Permanent Secretaries) and Director Generals, hospitality and transport facilities. The construction industry is Members of the National Legislative Assembly, the Judiciary, one of the sectors that are witnessing significantly high growth. Civil Society and Private Sector representatives. On infrastructure, the only tarmac road runs from Nimule, a town on the country’s border with Uganda, to the capital city of Juba. In its report, the Verification Team advised the Council to note Tthat South Sudan meets some of the criteria for admission to A number of roads within Juba are currently being upgraded to the EAC. It further advised the Council to note the nascence of bitumen. However, inter-state roads are yet to be constructed. South Sudan’s Institutional and Legal Framework while deciding The Government has therefore developed an elaborate network on the next stage of consideration of the application. of roads covering multinational, inter-state as well as county roads During the last meeting of the Council of Ministers in August 2012 whose implementation has commenced. The plan of action also and upon request by some of the Partner States, it was decided that includes construction of five new airports, a railway network, oil the findings of the Verification Team would be considered during the pipelines as well as five new refineries. These projects are meant 26th meeting of the Council set for November 19-26, 2012 in Nairobi. to address the existing gaps as the country enters into the stage of In considering the application by South Sudan, it may be rapid economic growth fuelled by the abundant natural resources. noted that out of the country’s total landmass of 660,000 km2, 35 per cent is under forest cover while only 4 per cent of Across most sectors, the economy of South Sudan has the land is utilised for agricultural activities despite the vast engaged a large number of citizens of the EAC Partner expanse of arable land. The agricultural activities are mainly States. In addition, more government officials have been subsistence small-holdings with a few varieties of crops. undergoing capacity building programmes in the EAC. The livestock population is estimated to be between 10-15 While the application is being considered, it is notable million with a similar number of sheep and goats. The River that South Sudan has, on one hand, a lot to gain from Nile traverses through the country for over a 1,000 km between EAC even as it offers a lot more to the Community.

24 2013 I Issue 1 Maintaining Vitality large amount of new legislation, some of sector should be monitoring and taking a which is well vetted prior to enactment great interest in the progress of the Freedom and others of which seem to be passed of Information Bill, the Data Protection Bill, hastily. Regardless of whether legislation is the Science Technology and Innovation Maintaining ultimately good or bad for business, it has Bill, and others. These pieces of legislation an element of uncertainty while pending will influence the way government spends enactment and this can cause unnatural money, the way businesses treat data, the VITALITY fluctuations in the securities market. data that is available to businesses and private citizens, et cetera. They may impact whether Pending Legislation in Kenya foreign companies are likely to set up data Intellectual Property features prominently centers in Kenya, or create partnerships in several pieces of pending legislation with local ICT companies, or open branch in Kenya, and these have the potential offices in Kenya. For some companies, the The Kenyan securities to influence businesses and therefore, new legislation will open new opportunities securities markets. For example, the for creating products and generating new market has maintained Freedom of Information Bill and the intellectual property based on data. Whether Data Protection Bill are supported by the the laws effectively handle the innovations robust growth even in Ministry of Information and will, if enacted, of modern society (e.g., SMS, mobile money influence how businesses deal with data. transfer, browser cookies, online identities the face of economic The Freedom of Information bill, for and online purchases, etc.) remains to be example, may require all government seen but is a critical question that Kenyan and some private organizations to release businesses should be interested in tracking. stagnation elsewhere. substantial amounts of data for public inspection and consumption. The exact The Uncertainty Outlook Kenyan growth rates wording of the bill will determine whether The outlook for Kenya’s securities market, Freedom of Information access applies from the perspective of uncertainty due to only to government, or whether it also pending legislation, is reasonably rosy. The are enviable to many applies to businesses that interact with flood of new laws that has accompanied government (e.g., by providing services implementation of the 2010 Constitution will economies, from Greece to government, or by providing public eventually subside, and will be replaced with services, or by getting grants or contracts a steady trickle of legislation proposed on and Spain to the United from government). The scope of that access an as-needed basis. Legislative uncertainty will certainly influence the operations of will not be eliminated, and in fact may States and Japan. organizations subject to the law, and in merely shift to judicial uncertainty as the particular their ability to monetize data that judiciary gets ever increasing opportunities is sometimes gathered at great expense. to interpret the new laws. Judicial actions and the uncertainty that comes with such By: Dr. Isaac Rutenberg Generally, over the past decade, freedom actions are difficult to account for in business, of information bills and data protection bills although relatively simple to monitor. have featured prominently in progressive Judicial interpretation of new legislation is legislatures around the world. Europe only available when law suits are filed and Securities markets respond positively and generally has the most well established are carried through to completion, which negatively to a variety of factors in an regimes for regulating data. The Swiss data is a relatively rare occurrence. The recent economy. Some of those factors, such as protection regime is considered a standard appointment of a significant number of new natural disasters and regional peace, are upon which other countries measure judges is also likely to create uncertainty. largely beyond the control of a government their own legislation. The United States Although new judges tend to follow prior and the organizations represented in the has a Freedom of Information Act but no case law, their interpretation of such case market. Other factors, such as economic specific Act to deal with data protection. law is difficult to predict until they have policy and political will, are largely On this continent, South Africa recently decided a reasonable number of cases. within the control of a government. The passed a Data Protection Act and also has Kenya’s securities market has thrived importance of all of these factors to the a provision for access to information. This is despite the fundamental changes that behavior of a securities market can be not yet universal, and some African countries have been taking place in the legal sphere. summarized with one word: Uncertainty. have yet to pass legislation in this area. The The rate of passage of new legislation Perhaps more than any other factor, lack of data policies creates uncertainty and appointment of new judges is likely uncertainty is damaging to an economy, within businesses in terms of how data is to slow in the coming months, and such and specifically to a securities market. treated and how it will be treated in the signs of stabilization can only be good for Uncertainty can apply in a number of areas future. The lack of a data privacy act in India the securities market. The completion of – from political leadership to supply chain is frequently cited as hindering the growth of elections in March, 2013 will also remove an security – but always causes investors to be industries that monetize personalized data, element of uncertainty, and should prove more cautious than they would be otherwise. and the same can be said for African nations. to be good for the securities market. The One factor that has the potential to reduce Although lawmaking is, theoretically, the challenges that lay ahead are largely in the growth in Kenya is uncertainty over pending exclusive territory of government, in practice area of adapting to the new legal and political legislation. The implementation of the 2010 it tends to be influenced by interventions environment, and only time will tell the Constitution has required an unusually from the private sector. The Kenyan private impact of such adaptation on businesses.

2013 I Issue 1 25 Superbrands Overthrown

Superbrands Overthrown as Shopping Survey Reveals Multiple Surprises

By: Ndirangu wa Maina,

The REJA Shopper study always carries a eading the pack is Soko maize meal, whose leading 24pc share of the market represents a big overthrow surprise, and last year’s was no exception. of Jogoo, the longtime incumbent. This lift is no doubt Drawn from a sample of 1305 nationwide, driven by heavy advertising, largely unanswered by its rival.L Following the advertise-and-win strategy closely is Ariel this study typically lays Kenyan shoppers detergent, which has done a similar replacement at the top to OMO, a venerable icon. Overall, the new entrants have clearly habits bare. Take the top findings demonstrated how targeted advertising resonates and wins market-share. Even in the competitive dairy category, dominated from the latest 2012 study; revealed in as it were by Brookside brands, Molo milk ('Sema Ngombe') it are a parade of upstart brands that seems to be enjoying an ad-supported surge in market share. have emerged and overthrown long Despite the rise of these newcomers, quite a number of the old guards were found to be going strong. Three of this group – Mumias established titans in their categories. And sugar, Always pads and Royco curry – carry an almost unmatched 68pc, 65pc and 42pc share of their markets respectively; more than just who are these new mavericks? double their nearest competitors. For the commodity product categories, these three display the rewards of branding a product

26 2013 I Issue 1 Insight, the company that conducts the study, “and the trend looks like it's just getting started,” he concludes. So if the preferred destination is now the supermarket, what draws shoppers in? Shoppers admitted that convenience (86pc) and prices (43pc) attracted them, but the new factor to watch is the availability of facilities; 22pc admitted that good facilities kept them coming. Other shopping-lifestyle habits revealed by the study include the tendency for lower income shoppers to shop alone, while their better-off compatriots preferred to shop with others – whether family or helpers. Here, low volume-high frequency purchases contrast with the 'infrequent-but-large' volume shopping enabled by higher incomes. The study also revealed that the most common impulse purchases were snacks (mostly biscuits) and drinks (mostly chemical-base juices). Unusually too, no clear preferences for foreign or local brands was apparent. Alternating tastes were observed in wildly divergent categories. For rice, body lotion and baby diapers, shoppers leaned towards imported brands. But for bathing soap, tissue paper and facial lotions, local brands made a good showing. In others, such as ballpoint pens, a good balance was maintained between local and international brands.

Preferences for healthier shopping were just as obscured: while the more affluent shopper said they preferred (the healthier) cooking oil over fat they maintained a loyalty to Blue Band margarine, unwilling to switch it for the same reason they replaced cooking fat. A good number of these findings may seem to reflect a random market. But only when we consider who the average shopper is, do we gain perspective. Overall, the picture is that of fairly a young market: 64pc of shopping Kenyans are between the ages of 25 and 40. As the most active age-group of the population, and with incomes, they form the bulk of those found at every supermarket in the country. Excitable and still curious, they drive the shifts and unexpected dynamics of the Kenyan shopping scene. Indeed, they form almost a third (30pc) of the total population – no doubt a critical target for any business or brand owner.

A good example of this power and unexpected results of a young market is seen in brand awareness. When asked how they became aware about the brands they bought, most shoppers admitted to learning about brands in-store. While TV, the leading traditional media channel, boasted 37pc of share in creating awareness, it was in-store advertising activities (combination of POS and POP displays and advertising) that created most brand awareness, accounting for a joint 49pc. This basically means that, in the emerging shopping landscape, in-store channels are equal or even more influential than TV. Unbelievable? Believe it. Overall, amidst the sea of change right. Whether challengers will succeed in dethroning them remains in shopping habits, one thing has remained distinctly Kenyan: to be seen; for all their strength, their 'number-one' positions are no shoppers still pay for their purchases using notes and coins (95pc). longer 'off limits' to challengers. Others leaders that retain similar Only a paltry 4pc said they used credit cards or alternatives when but more closely contested positions in their categories are the hot shopping. Even amongst the more affluent, less than a fifth opted beverage brands Ketepa, Cadbury's and Nescafe - but only amongst for plastic, cash was how they paid at the till. Those fearing a total the older population. They'll need relevance with the youth to stay overhaul of the shopping experience can console themselves hot. Also in the breakfast category is Superloaf bread. Its dominance with the knowledge that, in our market, cash is still king. over the supermarket owned 'house brands' tastefully demonstrates the power of a brand. EXE wheat flour also enjoys a similar position: a 28pc lead over the nearest competitor lifts it to superbrand status. About Reja Shopper Research Study But while brand loyalty is a Kenyan trait – with over 88pc admitting to buying the same brands every time – it has been demonstrated that The Reja Shopper study of 1305 supermarket shoppers from leading brands had best keep their game up, or be overthrown. The all major towns of Kenya and is conducted twice a year, study also revealed another overthrow taking place simultaneously; with data collection effected through use of structured supermarkets are slowly driving kiosks into extinction. Of the shoppers questionnaires. It is unique in the market in that it is the sampled, 66pc admitted to regular shopping (at least once a week) only study specifically designed to capture shopper (rather at a supermarket, not a duka. “Kiosks are threatened by the growth in than consumer) behavior, beliefs and practices. supermarkets,” says Anthony Ndirangu, Research Manager at Consumer

2013 I Issue 1 27 Weathering a Positive Corporate Image in the Storm

Weathering a Positive Corporate Image By: Waithera Mwai The East African securities market has seen heightened activity and all rounded positive performance in 2012. As is expected in any business or industry this has not always been the case in the recent past. Once news of poor market performance became public, the corporate image of the capital markets as a whole went down, which is difficult to recover from.

28 2013 I Issue 1 the perception of that organization and Looking at another local example, Equity its performance, products and services.” bank- one of the leading commercial banks in the region, it is evident that they use Corporate image accounts for a significant public relations to consistently engage their measure of the successes and failures of employees, investors or shareholders and organizations, it is a known fact that people the public at large through media relations, do business with a given firm or buy its corporate social responsibility, corporate products for more than the quality of the events and newsletters. Public relations is goods or services. To ensure the longevity a key management function that should of a positive corporate image all your not be overlooked by any organization or stakeholders both internal and external as seen only as a crisis management tool. must be reading from the same script, which the organization must ensure through Advertising is defined by the American continuous positive communication. Marketing Association as any paid form of Building a positive corporate image non-personal presentation and promotion requires dexterous long-term planning. of ideas, goods or services by an identifiable For the internal stakeholders, for example sponsor. Advertising an organization, its employees of an organization; it is imperative products and or services allows the company to ensure a complete understanding of to drive consumer behavior. Use of emotive the firm’s long term goals, the corporate advertisements at low seasons of business, to objectives and overall direction of the firm. counter negative publicity or launch a new product strengthens the corporate image The internal stakeholders are ideally the of an organization. A tactical and timely brand ambassadors of the organization; the advertising strategy has a direct impact public’s interaction with your employees on sales, brand recognition and creates an can build or ruin the corporate image. opportunity for consumer feedback. Small Content, productive employees are a and medium sized organization shy away powerful market influence and firms must from advertising due to the high costs ensure that the internal stakeholders have associated with it, however there are several a sense of ownership for the company. cost effective methods of advertising for The external stakeholders which include example social media, e-mail advertising, your customers, suppliers, media, hosting a website among others which can competitors and the public at large need effortlessly target your specific market. continuous positive re-enforcement, to What is in a name or logo? Many people ensure affirmative top of mind awareness associate your corporate image as your of your organization, products or services. company name, logo or tagline. Your This is done through strategic branding, brand is an element of the corporate advertising and public relations which image and needs to be conceptualized to subsequently ascertains brand loyalty. communicate your core business, values and Let us take a look at a local company personality. Through proper and professional which has managed to maintain a strong branding an organization can establish and corporate image both in good and bad differentiate itself from its competitors. times; Safaricom is one of the leading communication companies in the region, The brand identity an organization is our trust in Safaricom is in its quality, associated with can strengthen or stifle it’s variety and availability. The availability corporate image. Take for example Barclays of any of their products or services is Bank which for a long time has been assertively pushed by its marketers. identified as bank for the elite in our society. This brand identity built their corporate The company spares no resource in image in the past, but as the middle class advertising. Thousands of shops around group grew over the years, this perceived It is therefore imperative for an organization the country have huge adverts on their identity worked against them as this growing to exude a positive corporate or public frontage for Safaricom. Their advertisements class was not elitist. Branding can be summed image throughout its business life cycle. are emotive and cut across all forms of up as the experiences your public enjoys with It is definitely harder to enjoy a positive media, to ensure they talk to their various your organization, it therefore needs to be corporate image when the company is stakeholders at their point of convenience. consistent and recurrent to have a positive going through dwindling performance, or Public relations strategies guide the impact on the overall corporate image. is caught up in a scandal albeit it is possible. organization on developing and maintaining A company’s ability to communicate an Each and every person who comes into a strong, positive corporate image among affirmative and progressive image to its contact with your service, product or all your stakeholders. Carefully planned myriad of stakeholders in a consistent manner, organization will form an opinion about it. and executed communications programs places it in good position to enjoy a positive Steven Howard of Howard Marketing Services garner the support of your customers corporate image in light of difficult situations. abides by the principle that “everything an and ensures positive endorsement of organization does, and does not do, affects your brand(s) throughout their life cycle.

2013 I Issue 1 29 Cross Listing Across East African

Cross Listing Across East African Securities Exchange Beneficial To The Region

By: Cathy Mputhia

From around the year 2000 many East African listed companies are undertaking cross listing with the latest being the cross listing of Umeme Limited. According to analysts, the cross listings being done in various East African Securities exchanges have increased trading activities in some bourses. Entrance of foreign cross listed companies, have boosted the trading activities in some otherwise slow exchanges. Taking the example of Kenyan companies cross listed in the Ugandan Stock Exchange, between the year 2000-2012 these are Kenyan companies listed on the Exchange. East Africa Breweries Limited ( EABL), Kenya Airways, Jubilee Holdings, Equity Bank, Kenya Commercial bank, Nation Media Group, Centum Investments and Umeme Limited.

30 2013 I Issue 1 profile in a foreign country as capital markets are in the public realm. n Rwanda there are two listed Kenyan companies and that is, Kenya Commercial Bank and Nation Media Group. Therefore cross listing will enable companies market their brand With the integration of the East African Community to other countries. This benefit of cross listing is something that and inclusion of Rwanda and Burundi as part of the market leaders within the East African region should consider Icommunity, more cross listings are taking place and it is doing. Investor appetite would be mostly welcome for the shares expected that the trend will continue to increase. of a foreign company especially among risk taking investors and Cross listing occurs when one company lists on multiple exchanges investors who would like to diversify their portfolio. Cross listing simultaneously such that the said shares are traded on more than allows foreign investors to invest in a foreign entity without one bourse at the same time. Though cross listing can be a costly the hustle and bustle of foreign investment rules. Before any affair there are several advantages and reasons why East African listing is done, a lot of advertisement and marketing is done by companies that meet the requirement and threshold of cross the company and a lot of investor education is also carried out listing across the East African Securities Market, should aim to by the Company such that cross listing will give a company a cross list. The benefits of cross listing are enjoyed by the company, platform to market its goods and services to the foreign market. the securities markets and the overall East African community. A lot of general inquisitiveness and curiosity by the public follows Financial Benefits to the Company any company that is listed therefore cross listing raises your company’s public profile in a foreign market, at no cost to the Cross listing allows companies to take advantage of less stringent company. The fact that it is listed is enough to raise its profile. listing rules contained in foreign exchanges other than the Cross listing can also be used as a good expansion strategy for a exchange of primary listing. Cross listing enables companies take listed company that wishes to undertake an expansion into other advantage of less costly listing expenses in other jurisdictions. East African countries. Before establishing regional presence the There are some countries whose economic policy is all geared listed company could consider cross listing on the various exchanges to encouraging foreign investment and listings, and therefore as a strategy. While cross listing and establishment or setting up of the listing costs may even be less than that of the country of operations in a foreign market are two different things, cross listing primary listing. The financial benefit of cross listing to a company may make expansion easier for the company. Many foreign investors is to enable it get much needed capital from foreign markets would be more comfortable to trade with the company if they have from less. Cross listing increases the options that a company has also been given an opportunity to own a piece of it. Listing gives for accessing capital as it is spread out over several countries. investors some sort of assurance about the financial performance Cross listing allows a company to access foreign investment of the company and also its corporate governance structure as the without being bogged down by international investment regulators oversee compliance. It is therefore easier for a cross listed barriers. All the company has to do to access foreign investment company to expand regionally than a company that is not listed. in a secondary market is meet the listing rules in the secondary A cross listed company maintains a competitive edge over its market. Cross listing enables a company to access foreign competition even in the foreign market. For example in my view, investment easily. Most laws and regulations on accessing Nation Media Group has been able to maintain a competitive edge foreign investment are very stringent as a macro-economic tool over its competitors in the region as it has established regional to discourage emigration of capital resources from a country. presence and also is cross listed on several East African Exchanges. Cross listing can be the best option to access foreign funds. With cross listing there is an advantage of currency savings Macro-economic advantages as the trading is done in a lot of different currencies at the With increased cross listings regionally, opportunities are created same time. This is cheaper for the company in the long for regional investors to invest in different companies and run as it hedges against foreign exchange losses. diversify their portfolios to include owning of foreign companies. Wealth is therefore increased for investors across East Africa Legal Benefits as cross listing gives East African citizens an opportunity for Cross listing helps the company take advantage of favourable investment and making capital gains. Cross listing increases listing rules. Cross listing has been used as a strategy by companies equitable investment opportunities in all countries in East Africa listed on more developed securities exchanges to take advantage as opposed to all the listing being concentrated in a more of less stringent listing rules in smaller securities markets. developed East African country, to the exclusion of others. As cross listing means easier access to capital, then this means Strategy that with increased cross listings there shall be economical Cross listing can be used by companies as tools for implementation of growth for a company. Cross listing ensures survival of a various strategies. For starters, cross listing can be used by a company company because in the event of economic and political as a marketing strategy. Listing raises a company’s profile and instability, the company is able to still access capital despite comes with the additional benefit of increasing publicity for a listed the turbulent environment in the country of primary listing. company. Cross listing can enable a company boost its image and

A benefit of cross listing to the East African Exchanges is that cross listing would lead to increased activity on the exchanges therefore attracting more non-regional investors. Non-regional investors are attracted by high trading levels and with increased cross listing increased regional trading on the exchanges is witnessed. One of the indicators of a thriving economy is increased trading on the securities market. Therefore with more cross listing the region will be able to attract foreign investors in the economy at large.

2013 I Issue 1 31 Since Why we i got Listed can’t wait

From Britak UAP Public to Britam: Offer:

Keeping Regional Focus and Dominance Relentlessly Growing

Mr. Dominic Kiarie

32 2013 I Issue 1 Since i got Listed Britam From Britak to Britam: Keeping Focus and Relentlessly Growing The entry of British-American Investments Company, (Britam) into the securities market in Kenya on the 8th of September 2011 was surely a breath of fresh air for market. This after a dry season of inactivity in the initial public offers scene, the last one, (Co-operative Bank IPO) having come up almost 3 years prior to it and expectations were high among the remnants at the exchange given the lackluster performance of the economy then.

he British-American Investments Company IPO Secondly, running a public company is very different from subscription was at 60 per cent or 3.5 billion against running a private company because you have a larger a total target of Sh5.8 billion. This forced the leading base of investors and with it comes increased governance, insurer to scale down projects earmarked during reporting and scrutiny. So we have had to adjust to that. theT share sale, Real Estate being key among them. Third, while we are still committed to the long-term and we do take But with a resolve to venture into Real Estate the firm has begun a long-term view to all our businesses and to our commitment to to reallocate its assets and is putting money in real estate this region, we have to have a keener attention to the short-term projects to cut its reliance on securities. It is seeking to create because we must report to the public every six months. So the a Property Fund in which it will put its money along with cash balance between the short and long-term becomes more important. from wealthy individuals and institutional investors for long-term However, with every challenge lies an opportunity, and for us investments in the property market (source: The Business Daily). the opportunities and benefits that come with our public listing Expectedly with time, new things a dawn, from Britak to Britam are certainly worth managing through these challenges. ahead of its accelerated regional expansion plans and other strategic initiatives in the East African region, The Exchange’s Sammy K. The Exchange: How have you managed to stay at the Waweru had an opportunity to interview Mr. Benson Wairegi, the top of your game? Mr. Benson Wairegi: Three things have been Britam CEO on the journey that has been ‘Since I Got Listed’. critical to getting and staying at the top: our people, our products and our customers. First, we hire the very best people we can and try to The Exchange: How did BRITAM start and what was create a high performing work culture. Secondly, the high performance the vision of its founders? Mr. Benson Wairegi: Britam’s story leads to relevant products and services that are useful to our clients. in Kenya started in 1965 as a small life insurance company, but with a And when you have relevant products and services, your clients stay goal to establishing itself as a brand in the region with a diversified set and growth with you; and that is really what got us to be a market of products. Almost 50 years later, our brand is now recognized and we leader and is what we have to keep doing to stay a market leader. have a wider range of products. We are now an established brand in Kenya and neighboring countries like Uganda and South Sudan. And The Exchange: How is your corporate governance we have also since grown our businesses to include Life Insurance, and how have you been able to manage shareholder Pensions, General Insurance, Asset Management and Property. expectations and industry demands? Mr. Benson Wairegi: We have best of class corporate governance and we are The Exchange: Why did BRITAM decide to get listed constantly working to improve. Each of our operating companies and how has the journey been to date? Mr. Benson Wairegi: has their own board, chaired by their own chairman and managed A company, like a person, has a life cycle. As discussed, we started as a by their own managing director or principal officer. We have the small company, but have now grown into a regional brand with several typical board committees that meet periodically and handle products. As we grow, we need more capital, we need a stronger their respective mandates. We have strong internal audit and risk brand, a more qualified workforce. All these are easier to do as a public management functions that keep the businesses on the right track. company because we can now access public capital, stakeholders get to know us more because we are public and for us, we also thought The Exchange: The insurance industry in Kenya it made sense to give the Kenyan public an opportunity to share in is quite underdeveloped as compared to the our growth story when they buy our shares and become investors. commercial banking industry. What is your view on this current state of the insurance industry? Mr. The Exchange: What are the challenges you Benson Wairegi: The penetration rate of insurance is very low; have had to go through as a recent entrant in currently at about 1% of GDP for life insurance and 2% of GDP the quoted companies list? Mr. Benson Wairegi: Several for general insurance. This portends enormous growth potential main challenges: First, it is managing expectations. As a public for the insurance business. The drivers for growth going forward company, the share price is subject to market fluctuations are new markets, new products, especially for the bottom of that may not necessarily be directly correlated to what is the pyramid, and new distribution models. The industry and the happening inside the company. We have to continually manage regulator are working hand in hand to develop the industry. expectations relating to these share price fluctuations.

2013 I Issue 1 33 Britam captures all that we do. So we believe that being in all The Exchange: Has Bancassurance been aviable our markets with one brand is very compelling. It simplifies the business model and how has it benefited the way we do business and the way we are seen in the markets. shareholders? Mr. Benson Wairegi: We have been partnering with a wide range of banks and micro-finance institutions to build The Exchange: What is the future of Britam going our bancassurance business. The business has grown tremendously forward? Mr. Benson Wairegi: The future of Britam is very much since 2008 when we started the business and we have insured tied up to the future of the markets we operate in currently or well in excess of 2 million borrowers. That obviously has added that we aspire to enter in the future. We are currently in Kenya, to our financial performance, which is ultimately beneficial to our Uganda and South Sudan, and we expect to be in Rwanda and shareholders. It is an important part of our insurance business Tanzania in the near future. The future of these markets are very and we are very focused on growing it. This has also diversified promising, hence we view our future to be very promising – we our distribution channels and taken us to new market segments expect to grow our profitability by about 25% to 30% per annum which were not captured in the insurance industry before. over the new five year, we expect that growth to reflect in our share price. So we are very bullish about the future of Britam The Exchange: From Britak to Britam, what is the idea behind the new marketing campaign? Mr. Benson The Exchange: Any advice on companies that Wairegi: [Britak to Britam in terms of regional] We have put a lot can’t wait to get listed? Mr. Benson Wairegi: Take your of effort into building our brand. Whether it is our people, our time to grow your franchise, your story, your products and products or our processes, we strive to deliver to promise in all our your people. And when that time comes when there is a businesses – life insurance, general insurance and asset management. compelling business reason to go public, then just do it.

34 2013 I Issue 1 Why we Cant Wait UAP Public Offer: Regional Dominance with Mr. Dominic Kiarie UAP Holdings Limited is offering for subscription, 12.5m Shares with apar value of KES 5.00 each at a subscription price of KES 60.00 per share to raise approximately KES 750m (before expenses) (Gross Proceeds). Mr. Dominic Kiarie is not only a veteran in the Investment business in Kenya he also has the know how to see UAP emerge into a successful futuristic company and with his recent appointment as Managing Director of the Insurance and Investment heavyweight we can only expect better things with this new kid on the block. The Exchange: Tell us a little bit about UAP Mr. given that we have been there longer than any other insurance Kiarie: UAP is a Pan-African financial services company and also the prospects of our property business there. group with interests in Insurance, Investment Management, Property Investments, Financial Our regional business going forward is on track, with expansion into Tanzania and Rwanda in our sights as well as DR Congo. This will no Advisory and Securities Brokerage. doubt give us a better profit in the next five years going forward. The Group comprises of 10 operational companies providing insurance and related financial services in Kenya, Uganda, The Exchange: The Insurance Industry in the South Sudan and Rwanda. The Group plans to enter the region has been quite volatile with insurance D R Congo and Tanzania markets by end of 2012. penetration into the market still at single digits, yet UAP has managed to stay at the top of its game The Exchange: How long has UAP been in existence (The Company’s strong prospects as a leading and how has the journey been to date. insurance company in Kenya (3rd in terms of non- Mr. Kiarie: UAP has a long history dating back in the seventeenth life insurance market share), Uganda (2nd largest hundred. But in Kenya it all began in 1978 with the Provincial insurer by market share), what is the secret? Insurance Company of East Africa which was a subsidiary of the Mr. Kiarie: We recognized that to achieve leadership we have to UK holdings company. In 1994, Union of France merged with be revolutionary, customer focused and inclusive. As such, we Provincial in the UK and thereafter the new company decided to continuously seek to innovate and set the pace for the market. divest from Africa so in the year 2000, Kenya shareholders acquired Our vision is to provide leadership in the markets we serve. UAP Kenya and made it a fully owned Kenyan company. UAP is proud to be the first insurance company in Kenya to be Growth has been steady from the year 2004 when we formulated awarded the ISO 9001: 2000 certification, as well as a Global Credit our expansion strategy program. In the year 2006 for example we Rating of AA+, the highest credit rating. UAP has also consistently ventured into South Sudan as the 1st Insurance company in the region. received the Financial Reporting (“FiRe”) award for the past In 2011 we ventured into Uganda where we are doing pretty well nine years. Recently, our Kenya Insurance subsidiary earned the and now we are in the last stages of setting our foot in Tanzania with General Insurer of the Year 2012 Award, the ICT Award, the Medical Rwanda in our sights and DR Congo very well in foreseeable future. Underwriter of the year 2012 award, as well as the Distribution Innovator of the year award. We also scooped the most coveted The Exchange: UAP has impressive financial 2012 International Finance Corporation/ Financial Times Award highlights, can you please outline them for us. for Technology in Sustainable Finance award in the UK.

Mr. Kiarie: Our financials are strong, as reported, the results for The Exchange: Why is UAP desirous of this public Full year 2011 was Kshs. 1 Billion, making UAP one of the few offer and why do you think its such a great buy? insurance companies to cross this mark. Half Year 2012 looks very promising and we expect to do better than 2011. Mr. Kiarie: The key benefits of investing in UAP can be summarized as: Our Kenyan subsidiary which is mainly insurance, life and general Strong operating results: existing stakeholders have business has been strong this year with our subsidiary in Uganda also benefitted from a more than doubling of operational cash on a steady rise as well as South Sudan showing plenty of promise flows from KES 450 million in 2007 to KES 962 million in

2013 I Issue 1 35 2011, in turn supporting a stable dividend payout. Estate portfolio has witnessed tremendous growth as evidenced in recent property developments situated within growth hubs as Efficiency gains: a restructuring process to implement a shared outlined below. Property developments completed include:- Union services centre through a new Enterprise Resource Planning system House & Equity Centre, located in Upper Hill in Nairobi, Telkom Plaza, will drive efficiency gains by eliminating cost duplications. located in the Central Business District of Nairobi. UAP Insurance High growth and return opportunities: UAP has identified high Building, located in the CBD of Kampala and House, a business growth and return opportunities in existing and new geographical park located in Kampala offering bespoke office accommodation. markets and has successfully embarked on a capital raising exercise to facilitate their execution. As a result, investors will We intend to grow this portfolio further with upcoming landmark gain exposure to new growth opportunities in Rwanda, DRC and projects (cumulative 685,000 square feet of lettable space) planned Tanzania, some of the fastest growing economies in the region. for Nairobi’s Upper Hill area, as well as Juba in South Sudan. Strong pipeline of proposed property projects: UAP has already initiated KES 9 billion worth of commercial real The Exchange: The requirements by the estate projects in Kenya, Uganda and South Sudan to exploit regulators on public offerings are usually quite emerging trends of macroeconomic stability, a growing high and companies that wish to take this route middle class & diversified economies in the region. see this as a challenge. Has UAP encountered Diversification: UAP has already built a regional footprint across East any challenges in its pre offer period? Africa, with presence in Kenya, Uganda and South Sudan. UAP is currently in the advanced stages of setting up operations in Tanzania, Mr. Kiarie: Not at all, UAP has found the public offerings by the Rwanda and DRC, actions which offer geographical diversification, market regulator as very fair given the fact that UAP has always while lowering our risk profile. We are also diversifying our business kept the highest standards in terms of financial reporting and lines to include complementary financial services including asset best practices. The listing requirements are there for a particular management, property development and investment, financial purpose and we were glad to sail through them at ease. They advisory and securities brokerage to better serve our customers. did however delay the share offering a bit maybe because of the processes and procedures but generally the requirements are okay. The Exchange: Your pricing strategy (@ KES 60.00 per share) appears to be very The Exchange: Corporate governance is a key issue for companies in high, what informs of this decision. Kenya. Has UAP contended with its corporate governance structure. Mr. Kiarie: As UAP, we view corporate governance as a key Mr. Kiarie: The Public Offer is of 12,500,000 shares at a subscription tool in our market leadership and we have embraced the price of KES 60.00 per share to raise approximately KES 750 highest level of corporate governance. We understand the Million (before expenses). The capital being raised by UAP importance of doing this and what the purpose of having from the Public Offer will be used in conjunction with the KES the proper governance structures do and that is to ensure 4,552,099,000 from private equity investors, to pursue growth/ the company runs effectively and remains profitable. expansion opportunities, property development, Group re- organization to enhance efficiency & increase investments The Exchange: Has UAP set aside part of shares for its employees (which has become very The Exchange: How much then are you popular among listed companies) and is this an planning to raise from the IPO and what indicator of how much you value your staff. plans do you have for the raised amount. Mr. Kiarie: Sure thing, we have set aside around 5 per cent of the total Mr. Kiarie: This public offer will not involve a listing of securities shares on offer to our staff as a way of keeping them incentivized and at the Nairobi Securities Exchange. However, it is intended motivated as shareholders. It’s a growing trend in the corporate scene that the shares of the UAP will be listed on the NSE within and it is only better that as employee owners they get to not only feel a period of 12 to 18 months. In the interim, UAP shares will as a part of it, but they get to be part of this great company that is UAP. trade through an over the counter (OTC) market. We have already raised close to 90 percent of the The Exchange: This is a very exciting period but money we need and this is how we intend to spend also a bit tasking, Do you have any advice for a the money at the end of the Public Offer: corporate wishing to offer their shares to the public. 1. Kshs 1.9 Billion will be used in our expansion efforts; 2. Kshs. 2.1 Billion will be taken up in our property investments; Mr. Kiarie: The only advice I have for companies that wish 3. Kshs. 200 Million will be taken up in ERP; to offer their shares to the public or list at the NSE is to 4. Kshs. 1 Billion will be used up in restructuring, go ahead and do it. It is beneficial for any companies something that will see the company become strategic and long term plans to go ahead and do it. stronger and more competitive. The Exchange: Please give us a sneak The Exchange: You are currently in pursuit of some preview of where UAP is headed Real Estate projects and you have also said that some of the money will be used in the projects Mr. Kiarie: The future of UAP is brighter than it has ever that are coming up. Give us a break down of this. been, we are a progressive company and we sure will get to where we are going. Since we launched our expansion Mr. Kiarie: Our Property Investment arm is just one example where strategy in 2004, we have not relented in our pursuit of our vision has allowed us to make a positive contribution to our greatness and we look forward to better years ahead. investors, while diversifying our revenue streams. Indeed, the Real

36 2013 I Issue 1 La Lettre du Président Africaine était due à flotter une importante caution régionale, dont le produit serait disponible pour une utilisation notamment dans le développement des infrastructures. Nous, les bourses de valeurs mobilières doivent travailler collectivement à l’amélioration de la liquidité de nos marchés. J’ai quelques suggestions; stimuler les quatre Ps qui caractérisent l’espace d’échange (produits, des joueurs, des participants et du Partenariat produits comme les fonds négociés en bourse (FNB) - Valeurs mobilières cotées qui partagent les caractéristiques d’un fonds commun de placement et les stocks, et de suivre la performance. des indices de marché;. fiducies de placement immobilier - une entité cotée qui détient - et fonctionne normalement - productifs de revenu immobilier ou immobilier des actifs liés FPI constituent un moyen pour les investisseurs individuels à gagner une part des revenus produits par le biais de l’immobilier commercial partenariats sans avoir à sortir et d’acheter de l’immobilier commercial renforcement de la capacité et de la compétence de nos joueurs et les participants afin qu’ils puissent exécuter La Lettre du Président des transactions et aussi important, nos investisseurs ont confiance en leur intégrité Cette question cherche à mettre en évidence sa présentation, M. Benimadhu a invité Enfin, le rapprochement qui reflètent nos la performance meilleure que prévu des les participants à discuter de ce qui était aspirations - la propriété.. comme Africains de marchés de valeurs mobilières Afrique de nécessaire pour doubler la croissance du l’Est - le renforcement des liens entre eux et l’Est en 2012 et les facteurs sous-jacents de PIB en Afrique et l’amener à deux chiffres. les partenariats avec les échanges asiatiques, ce succès. Je voudrais parler des possibilités Il a noté “Les économies africaines ont comme en témoigne notre besoin de pour l’avenir et ce que nous en Afrique jusqu’ici construit leur croissance en tant que diversifier nos liens commerciaux et d’attirer de l’Est échanges devez faire en tant fournisseurs de matières premières et à faible des capitaux dans les régions actuellement que région à exploiter certaines de ces valeur ajoutée des biens. Il y a maintenant de balisage de l’économie mondiale. possibilités. Marchés de capitaux africains un besoin important pour les économies et des environnements réglementaires africaines à se déplacer vers le haut pouvoir Le 14 Décembre 2012, Umeme Ltd, qui a évoluent rapidement. Ceci est illustré par le de la chaîne de valeur des produits pour débuté à la Bourse de valeurs de l’Ouganda fait que lors de la 15e échanges Securities devenir au fil du temps le fournisseur de le 30 Novembre 2012, est devenue la Association africaine (ASEA) Assemblée haute valeur ajoutée pour le reste du monde. première entreprise de l’Afrique suite générale annuelle, qui s’est tenue le 2 “M. Benimadhu a également noté, « des à l’incorporation d’EASEA d’avoir une Décembre 2012 à Le Caire, Égypte, une améliorations substantielles sont nécessaires cotation secondaire à la Bourse de Nairobi. résolution visant à modifier Mémorandum dans les infrastructures (routes, chemins Auparavant, les sociétés cotées à la NSE ont de l’Association et des articles d’élargir la de fer, ports, aéroports) reliant les marchés cherché cotations secondaires à la bourse définition de membre à part entière d’inclure africains “. Nos CAE bourses doivent faire de valeurs de l’Ouganda (USE), Dar-es- entités qui négocient des titres alternatifs passer le message à nos entrepreneurs qui Salaam Stock Exchange (DSE) et le Rwanda financiers tels que les dérivés et les produits une fiche sur leurs marchés domestiques, afin Stock Exchange (RSE). Il est réconfortant de base, a été approuvé à l’unanimité. Elle de développer leurs activités à des joueurs de constater la rapidité avec laquelle les reflète également le fait que les produits du continent, devrait être la pierre angulaire marchés de capitaux régulateurs approuvé agricoles et minéraux - sont une composante de leur stratégie. En plus de taraudage l’inscription des Umeme. En 2013, les importante de l’économie africaine. Pour fonds concessionnels des partenaires au échanges de l’Afrique de travail, par le biais l’Afrique, avec la découverte de l’énergie développement internationaux, les marchés des Bourses de Valeurs Afrique de l’Est potentiellement, commercialement viables publics doivent faciliter les gouvernements (EASEA) vont coopérer pour assurer une et d’autres ressources naturelles, les marchés régionaux dans la mobilisation de augmentation des inscriptions croisées et de capitaux doit se déplacer pour fournir une capitaux pour les investissements dans d’encourager l’approbation des autorités plate-forme pour d’autres titres financiers, les infrastructures. Nous croyons que ce de jouer leur rôle de façon plus agressive. sinon quelqu’un d’autre le fera. Lors de la message est maintenant filtrant à travers conférence ASEA 15e édition, le président les grandes institutions et les décideurs de l’Association, M. Sunil Benimadhu a fait de la région. Le Secrétaire général de la quelques observations pertinentes, qui Communauté Est Africaine récemment, lors JOSEPH S. KITAMIRIKE sont pertinentes pour notre région. Dans du dernier sommet à Nairobi, a annoncé PRÉSIDENT que la banque de développement Est

2013 I Issue 1 37 Africa Dances to a Different Beat

Afrique danse à un rythme différent Coca-Cola dispose actuellement d’une campagne de marketing baptisée «Un milliard de raisons de croire en Afrique. Dans la publicité à la télévision l’un des sous-titres affichés à l’écran indique «Alors que le monde tremble et chancelle, l’Afrique danse sur un rythme différent”. C’est certainement une bonne description du climat d’investissement qui prévaut actuellement dans la région Afrique de l’Est.

Per: Maryanne Muchui

lors que le reste du monde est lions économiques futur de l’Afrique. plan pour les investisseurs qui souhaitent aux prises avec les pressions de Marché de la région a été décrit comme un diversifier leurs portefeuilles globaux. récession, les investisseurs de marché Lion, par opposition à un ours ou Toutefois, le continent est en train d’émerger la région sont dansaient tout le marché haussier en raison du risque élevé, pour prendre sa place de choix parmi les cheminA à la banque. Afrique de l’Est terrain le climat rendement élevé dans la région. destinations préférées des investissements. de chasse privilégié pour les investisseurs Cette région a sa part de risque allant de Les investisseurs découvrent le potentiel agressifs. McKinsey Global Institute en risque de liquidité à un risque de change jusqu’ici inexploité dans la région et 2010 a indiqué que le taux de rendement et le risque géopolitique. Cependant, investissent des milliards, et pas seulement sur l’investissement étranger a été plus pour palier ce risque, la région offre des de diversifier leurs portefeuilles, mais pour élevé en Afrique que dans toute autre rendements ajustés à haut risque. profiter de rendements supérieurs. région en développement, en outre, selon Dans le passé, investir en Afrique a été Selon Naoyuki Shinohara, Directeur Général McKinsey, si les économies de l’Asie de tigres préconisée en raison de sa faible corrélation adjoint du Fonds monétaire international, continuent à se développer rapidement, avec les marchés développés - l’Afrique l’Afrique devrait être l’une des plus fortes il ya un réel potentiel pour la montée des était, et est toujours, un objectif de premier croissances les régions du monde dans

38 2013 I Issue 1 cela se fait dans d’autres marchés, mais délibérément à la population locale, ce dont ils ont désespérément besoin. et l’introduction de taux de résidents Les investissements dans l’agriculture, les afin d’encourager le tourisme local. industries de l’eau, pharmaceutiques et connexes dans la région de promouvoir la Les autres secteurs qui effectuent sécurité alimentaire, l’accès à l’eau potable et exceptionnellement bien dans la région, à l’assainissement, et l’accès aux médicaments notamment les banques, les brasseries, le dans les populations des régions. ciment et les télécommunications. Dans ces secteurs, on trouvera soit un monopole Collier et Jean-Louis Warnholz, dans une ou un oligopole discret stable qui implique étude publiée par la Revue de Harvard les entreprises dans ces industries sont Business, a constaté que l’Afrique sur la capables d’utiliser leur pouvoir de fixation base des sociétés cotées en bourse ont des prix afin de produire d’énormes profits. été très profitables en raison des coûts de L’Afrique est le marché le plus dynamique main-d’œuvre moins élevés et une plus pour un usage mobile. Le téléphone grande efficacité opérationnelle. Ils ont mobile est devenu la plate-forme la plus constaté que le rendement annuel moyen accessible pour le partage de l’information sur le capital des entreprises étudiées et de la communication interactive dans est de 65% - 70% plus élevée que celle la région. Ainsi, en quelques années, les des entreprises comparables en Chine, téléphones mobiles ont transformé l’Afrique en Inde, en Indonésie et au Vietnam. culturellement et économiquement. Les En outre, la marge bénéficiaire médiane était téléphones mobiles sont utilisés par les de 11% supérieur aux chiffres comparables agriculteurs d’avoir accès aux prix du marché, pour l’Asie et l’Amérique du Sud. Loin de les jeunes d’utiliser le téléphone mobile toutes les statistiques, la performance et la pour accéder à des sites de médias sociaux rentabilité des entreprises de la région Afrique tels que Twitter, My Space et Facebook, les de l’Est tels que la Banque Equity, le Groupe citadins et les campagnards maintenant Madhvani, Ruparelia Groupe, MIDROC, tous utiliser les téléphones portables pour gestionnaires du grain en vrac, Safaricom, transférer de l’argent les unes aux autres, et Bralirwa et Groupe Bakhresa des sociétés nouvelles peuvent être diffusés en utilisant et de nombreux autres servent comme un les téléphones mobiles. Avec l’introduction témoignage de possibilités dans cette région. de l’Est africain système de câble sous-marin Certains des secteurs les plus prospères la région Afrique de l’Est est connectée au les prochaines années. Depuis 2005, la de la région sont celles qui sont basées sur reste du monde. L’accès à large bande et croissance du revenu moyen par habitant l’exploitation des ressources naturelles, celles- la connectivité réseau sont grandement dans les pays d’Afrique orientale a été ci sont l’exploitation minière, l’agriculture et améliorées. Il reste un potentiel inexploité de 3,7% comparativement à 3,2% pour le tourisme. Malgré des siècles d’exploration dans le secteur des technologies des l’Afrique subsaharienne dans son ensemble. et d’exploitation, de nombreuses régions télécommunications et de l’information L’investissement direct étranger dans d’Afrique restent encore inexplorées à ce jour, dans la région comme en témoignent les les cinq pays d’Afrique a également été et de nouvelles découvertes de ressources tech- entreprises pépinières comme m: fort, a plus que doublé pour atteindre 1,7 naturelles sont toujours en cours. La récente lab et iHub surgissent à travers la région. milliards de dollars au cours de la dernière découverte de gaz naturel en Tanzanie, décennie. Forte croissance dans la région et les gisements de pétrole au Kenya, en Réformes du secteur bancaire introduites au reflète des facteurs tels que l’amélioration Ouganda et au Sud-Soudan sont la preuve. début de la dernière décennie ont contribué des fondamentaux macroéconomiques, à l’accélération du crédit au secteur privé dans les exportations de marchandises Selon les Nations Unies, afin de nourrir la région Afrique de l’Est. Systèmes bancaires augmenter, la demande croissante des la population mondiale, la production contrôlés par l’Etat, la restructuration des consommateurs et l’intégration régionale. alimentaire doit augmenter de 70% au cours institutions déficitaires, ainsi qu’une meilleure des 40 prochaines années. Le continent gouvernance et la supervision du secteur Kenya, le Rwanda, la Tanzanie et l’Ouganda africain représente 60% des terres cultivables financier ont été mis en œuvre avec succès. sont sur une dynamique de croissance. disponibles sur le globe. Avec les accords La croissance annuelle des crédits au secteur Selon la Banque mondiale, les quatre pays bons planification, d’investissement et de privé au cours de 2002-2010 en moyenne ont le potentiel d’atteindre le statut de commerce, le continent pourrait devenir entre 15% - 32% dans la région. Cependant, revenu intermédiaire dans les dix prochaines le grenier du monde. Cela représente il y a encore plus de terrain à gagner que années. La pauvreté demeure élevée dans d’énormes opportunités pour le continent le niveau de l’intermédiation financière et la région, mais il est maintenant à la baisse. et ailleurs en Afrique orientale. l’accès aux services financiers est inférieure Cependant, le manque d’accès aux services Le secteur du tourisme en Afrique de l’Est aux niveaux de certains pays à revenu de base tels que les soins de santé de connaît une croissance régulière avec les intermédiaire de marché émergent. Une qualité et d’eau potable dans la région acteurs de l’industrie ciblant plus de touristes grande partie de la population de la région demeure un défi. Un noble raison d’investir de l’Est, en plus des marchés traditionnels de utilisent encore des services financiers dans la région est l’investissement social, l’Ouest. Le tourisme intérieur dans la région informels, cela est dû au manque d’accès à lutter contre la pauvreté. La richesse ne est également en augmentation constante aux systèmes financiers formels. Ainsi, il y peut être créée en offrant aux gens de la avec les entreprises touristiques et les a encore de la place pour l’expansion des région n’est pas ce qu’ils veulent, comme stations de la région de la commercialisation banques existantes et la possibilité pour les

2013 I Issue 1 39 nouveaux venus dans cette industrie. Il est prévu que la région deviendra une puissance économique majeure et le commerce dans les années à venir. En outre, le commerce dans la région est en croissance rapide des exportations vers le Marché commun de l’Afrique orientale et australe (COMESA) cesse d’augmenter. Clients de la Banque cherchera à étendre leurs activités à partir de leur pays d’origine pour les pays voisins. Les banques ont la possibilité de se concentrer sur les produits et services susceptibles de faciliter et alléger intranational, et le commerce international dans la région pour les clients particuliers et entreprises. Actuellement, la région est desservie par diverses banques locales et internationales qui peuvent aider les investisseurs obtiennent l’accès au crédit et à d’autres facilités bancaires comme Standard Chartered, Barclays Bank, Equity Bank, Citibank, Bank of Africa et beaucoup d’autres.

Selon le Rapport mondial sur la population de la région Afrique de l’Est a actuellement 141,8 millions de personnes. La Région Afrique de l’Est a un PIB combiné de plus de $ 70 milliards (USD), ce qui représente un marché colossal pour toute entreprise. Selon la Société pour le développement international État de l’Afrique orientale Rapport 2012, 80% de la population est-africaine est composée des jeunes et des jeunes familles. Cela représente une main-d’œuvre jeune et énergique. Par ailleurs les pays de la région n’ont pas atteint un stade où des quantités importantes de ressources du pays sont consacrés aux soins des personnes âgées parce que les traditions des régions et des cultures dicter les soins des personnes âgées par les jeunes générations, et donc, cette responsabilité est assumé par le jeune de la famille membres, rôle direct de l’État dans cette possibilité est limitée. En 2010, la région de l’Afrique a lancé son propre marché commun des biens, du travail et du capital. Les grands marchés permettent aux entreprises bénéficient d’économies d’échelle, produisent de grandes quantités de biens et donc la variété et finalement conduire à une réduction des prix des produits. La demande intérieure devrait augmenter à mesure que de plus en plus d’Africains-Orient déplacer vers le haut de l’échelle économique. Il est prévu que les consommateurs africains en tant que classe va passer d’environ 1,4 milliards de dollars (USD) en 2020. McKinsey projets de l’Institut que le nombre de ménages ayant un revenu discrétionnaire pourrait augmenter de 50% dans la prochaine décennie en Afrique et pourrait atteindre 128 millions de foyers. La Banque africaine de développement a indiqué que, même s’il est difficile de définir qui tombe exactement dans le groupe «classe moyenne» et encore plus difficile d’établir combien de personnes de la classe moyenne là-bas sont en Afrique; La taille de la classe moyenne définie comme ceux qui ont passé entre 2 $ - 20 $ par jour en Afrique de l’Est est estimée à environ 29,3 millions, soit une moyenne de 22,6% de la population. Au Kenya, ce qui représente 44,9% de la population, 18,7% en Ouganda, en Tanzanie 12,1%, 7,7% au Rwanda et au Burundi 5,3%. Une classe moyenne en pleine expansion qui est bon pour toute l’économie ou de la région. La croissance à long terme de l’économie de la région est liée à la hausse des dépenses de consommation par la classe moyenne. Ainsi, les entreprises ciblant les consommateurs de classe moyenne vont connaître un essor, en particulier celles qui opèrent dans des secteurs comme les biens de consommation, commerce de détail, de la banque, des télécommunications et du logement. Dépendance de l’aide étrangère est remise en question par les pays africains universitaires, des professionnels et des politiciens. La région est de plus en plus regardant à l’intérieur de résoudre ses propres problèmes. L’aide étrangère n’est plus l’option privilégiée, car elle est perçue à créer une culture de dépendance et d’encourager la corruption. La région fait maintenant la promotion des politiques budgétaires saines et l’amélioration de la perception des recettes provenant de ses propres citoyens, la promotion des exportations et des investissements étrangers, par opposition à l’aide étrangère. Le Kenya a émis des Obligations d’infrastructure publique pour renforcer le financement des projets d’immobilisations. Le président Paul Kagame du Rwanda dans son article «Pourquoi les Etats-Unis a besoin l’Afrique” dans le Washington Post en 2009, a déclaré que le partenariat entre l’Afrique et les Etats-Unis devrait être l’une des idées partagées, vision et des investissements et non plus sur la dépendance et de l’aide. Toutes ces mesures vont un long chemin dans le renforcement des variables macro-économiques de la région.

Un bon indicateur du climat d’investissement qui prévaut est le niveau d’intérêt des sociétés d’équité privéont montré dans la région. Dans le 2011 East Africa Equity Confidence Survey privé publié par Deloitte & Touche, il est indiqué que l’Afrique a connu un afflux important d’intérêt équité privé en 2011. En outre, de nombreux investisseurs voient le potentiel de l’Afrique de forte croissance comme moteur de la performance de meilleur investissement que l’Afrique du Sud. Cela représente un énorme changement dans les attitudes d’équité privé vers l’Afrique, qui a toujours été axée sur l’Afrique du Sud. Les répondants qui ont investi à travers l’Afrique ont confirmé que les attentes relatives à l’Afrique orientale étaient à la hausse. En outre, ils prévu que les investissements en Afrique sera plus efficace que ou similaires à leurs Afrique australe et de l’Ouest homologues africains. Le risque d’investir en Afrique demeure, mais la région bénéficie de fondamentaux forte croissance, la confiance des entreprises de haute et de la Communauté de l’Afrique est aujourd’hui l’une des plus fortes de l’Afrique blocs commerciaux et économiques. L’avenir est en effet prometteur. Afrique de l’Est bat son tambour, le tambour des chances, progrès et la prospérité et le monde réagit à la battre.

40 2013 I Issue 1 Investors Gain as Activity at the NSE ILes investisseurs acquérir le plus d’activité à la bourse de Nairobi récupère

Investors GAIN Les investisseurs, qui ont accumulé un certain nombre de stocks de l’année dernière lorsque le marché était sur une tendance à la baisse à la Bourse de Nairobi (NSE) sont heureux sort. Au cours des onze derniers mois de 2012, le vent a tourné et à la mi- Octobre, les investisseurs ont récupéré toute la valeur de la richesse des investisseurs qui avait été perdu au cours des douze mois de 2011.

Par: David Mugwe

a capitalisation boursière, qui est conditions économiques défavorables. meilleurs rendements que les actions. la valeur de toutes les sociétés L’année dernière, la dépréciation du shilling Cependant, la marée a changé cette année cotées sur un marché boursier et kenyan a été, à un moment touché un plus après le départ de la Banque centrale afin qui est la mesure de la richesse des bas de Sh107 au dollar des États-Unis, puis de permettre plus d’argent à circuler dans investisseursL s’établit à Ksh1.23 milliards (14,52 de rendre l’environnement des affaires l’économie, mais à un rythme beaucoup milliards de dollars) à la fin de la négociation encore plus difficile, la Banque centrale a plus mesurée et les investisseurs qui le 16 Novembre par rapport à Ksh868.24 adopté une orientation de la politique de avaient ramassé les bonnes actions sont milliards d’euros (10,21 $ milliards) à la fin du resserrement monétaire en relevant le ratio maintenant rire tout le chemin à la banque. dernier jour de cotation année dernière. de trésorerie et des intérêts randonnée taux. Les plus-values sur les stocks sélectionnés L’année dernière, la richesse des investisseurs Ces facteurs non seulement sur la ont tiré à travers le toit et sont toujours a chuté de Ksh1.166 milliards (13,73 milliards croissance économique et la performance continue d’augmenter et totalisera retours sur de dollars), qui était la capitalisation boursière des sociétés cotées qui ont été affamés certains stocks est aussi beaucoup plus que à la clôture du dernier jour de négociation de fonds bon marché, mais ils ont aussi ce que les placements à revenu fixe offrent. en Décembre 2010 que les cours des actions poussé les investisseurs vers le marché “La capitalisation boursière a augmenté ont chuté affectées par les anticipations monétaire et des titres à revenu fixe de 41 pour cent à Ksh1.23 milliards de résultats médiocres en raison de et les investissements qui offraient de de dollars. Nous sommes convaincus que cette tendance haussière se

2013 I Issue 1 41 poursuivra comme nous nous rapprochons de la fin de l’année d’actions nouvelles à travers les questions des droits de Kenya Airways, », a déclaré Peter Mwangi, chef de la direction àla boursede Diamond Trust Bank, NIC Bank, CFC Stanbic Holdings et Standard Nairobi lors du lancement officiel de la négociation d’actions Chartered Bank, la majorité dont les actions ont été sur une tendance CFC Stanbic Holdings 121.63 million nouveaux mi-novembre. à la hausse a également contribué à sortir la valeur du marché. Capitalisation boursière - soit la valeur de la richesse des investisseurs La circulation des fonds dans le marché des actions a - a cette année été levée par les cours des actions qui ont guéri commencé au début de l’année où la Banque centrale du d’une récession de l’année dernière et dans une moindre mesure par Kenya a commencé à réduire son taux de référence de créer deux nouvelles inscriptions et cinq sociétés qui ont émis des actions une demande pour les actions d’où les hausses de prix. supplémentaires à travers les questions des droits de cette année. À la fermeture des bureaux le 16 Novembre lors de CFC Stanbic En Novembre, le régulateur bancaire a réduit son taux de Holdings a officiellement lancé la cotation des actions nouvelles, référence pour la troisième fois consécutive à 11 pour cent, ce mais qui en réalité regardait la négociation sur Novembre 9, qui signifie que ce taux a été réduit par un total de sept points la capitalisation boursière a augmenté de Sh365.81 milliards de pourcentage cette année, et l’échange s’attend à ce que de dollars (4,3 millions de dollars) pour l’exercice à ce jour. cette tendance se poursuivra afin d’encourager davantage L’indice de la bourse de Nairobi Partager 20 qui suit le d’investisseurs à mettre plus d’argent dans le marché. mouvement de prix de l’action de 20 actions sélectionnez “Nous prévoyons que du 7 Novembre, 2012 la décision comité de fermé à 4,155.99 points, 29,67 pour cent comparativement à politique monétaire pour réduire le taux de la Banque centrale de 3,205.02 points où il clôturés à la fin de l’année dernière. 200 points de base pour s’établir à 11 pour cent, devrait stimuler la D’autres indices tels que la bourse de Nairobi All Share Index a clôturé circulation de plus de fonds sur les marchés financiers”, a déclaré à 92,59 points, 36,1 pour cent contre 68,03 points, où il a clôturé à la Eddy Njoroge, président de la bourse de Nairobi lors du lancement fin de 2011, tandis que les FTSE 15 et FTSE 25 a clôturé à 123,21 Indices de négociation de la 2ème tranche de la liaison Logement Finances. et 125,78 points, 36,43 pour cent et 35,77 pour cent contre 90,31 et La Banque centrale a été ramenant le taux baisse à la suite d’une chute 92,64 points à la fin de Décembre l’année dernière, respectivement. régulière du taux de l’augmentation du coût des biens et services Actions de près de la moitié des entreprises cotées en de base qui était de 4,14 pour cent en Octobre de cette année par bourse, ont vu leurs prix monter de 10 à 149 pour cent à rapport à son pic de 19,72 pour cent en Novembre l’année dernière. compter de la clôture des marchés le 16 Novembre soutenue par des résultats positifs, le paiement des dividendes et le Les investisseurs étrangers qui cherchent des rendements supérieurs sentiment des investisseurs positive à l’égard du marché. à ce qu’ils peuvent faire dans leur pays d’origine ont continué à Cela signifie que les investisseurs qui avaient investi dans pomper de l’argent dans le marché tout au long de cette année, ce ces stocks à la fin de l’année dernière aurait vu la valeur de qui semble avoir accéléré dans les deuxième et troisième trimestres. leurs portefeuilles de monter de façon significative. Au cours des dix premiers mois de cette année, les investisseurs étrangers pompé dans Ksh15.27 milliards d’euros (179,5 millions Cependant, un certain nombre d’entreprises n’ont pas obtenu d’aussi de dollars), après avoir effectué des achats vaut Ksh41.69 milliards bons et certains ont même émis des avertissements sur résultats. d’euros (490,48 millions de dollars) contre la vente de Ksh26.42 Supermarchés Uchumi a été le meilleur stock performant à ce milliards d’euros (310,84 millions de dollars), mais Ksh9.67 jour en termes de gains de cours des actions, après avoir clôturé à milliards de cette s’interposèrent entre Avril et Septembre. Ksh19.20 (0,23 $) de Ksh7.70 (0,09 $) à la fermeture des bureaux en Décembre l’année dernière, une appréciation 149,35 pour cent. «Les perspectives d’assouplissement de la politique monétaire Les deuxième et troisième meilleurs actions les moins supplémentaire continué à susciter de l’intérêt dans les actions. Des performantes que dans Novembre 16, en termes de gains en flux continus d’investisseurs étrangers et institutionnelsaideront capital seulement, qui ne sont pas compris dans l’indice NSE les prix des cales. Macro-économiques stables variables soutenir Partager 20 étaient panafricain d’assurance dont le titre a clôturé le marché “, a déclaré Stanlib Kenya, un gestionnaire de fonds au à Ksh40 (0,47 $), en hausse de 92,77 pour cent de sa fin de Sh20.75 niveau local, dans leur dernière mise à jour économique mensuelle. (0,24 $) à la fin de l’année dernière et peintures de la Couronne Le gestionnaire de fonds a toutefois indiqué que l’incertitude dont le stock est en hausse de 90,24 pour cent pour clôturer à politique, à l’approche du pays aux élections générales, est un Ksh39 par rapport à Sh20.50 au cours de la même période. risque majeur pour le maintien de la tendance à la hausse. Elle a ensuite été suivie par British American Tobacco, groupe Participation des investisseurs étrangers est restée entre 43 et 55,23 KCB et le Nation Media Group, qui sont inclus dans l’indice pour cent chaque mois de cette année et en indiquant que les de référence NSE Partager 20 et qui a clôturé à Ksh450 (5,29 investisseurs locaux ont également été très actifs sur le marché et que $), Ksh30.25 (0,36 $) et Ksh237 (2,79 $) ce qui signifie qu’ils ont la clôture du marché se rapproche, on s’attend maintenant à ce que le augmenté 82,93, à 79,53 et 69,29 pour cent, respectivement. marché va terminer sur une bonne note comme ce fut le cas en 2010.

NIC Bank, Kenya Re qui ne sont pas suivies par l’Indice NSE Partager 20 et Safaricom, qui est inclus dans l’indice ont augmenté de 66,67, 66,44 et 57,63 pour cent pour clôturer à Ksh40 (0,47 $), Ksh12.15 (0,14 $) et Ksh4.65 (0,05 $), respectivement.L’introduction de 1,3 milliard

42 2013 I Issue 1 Making your Corporate Responsibility Faire votre rapport sur la responsabilité d’entreprise pertinente

Corporate RESPONSIBILITY

Per:David Leahy

La réalité pour de nombreuses entreprises, c’est que les enjeux environnementaux, sociaux et de gouvernance ont un impact croissant sur leur capacité à fonctionner et générer un profit dans le cadre de ses objectifs généraux. Rapports intégrée reconnaît que les actionnaires ont un intérêt légitime à comprendre comment ces problèmes sont gérés et l’impact qu’ils ont sur la valeur et la viabilité de l’entreprise.

Ce n’est pas un appel à des rapports plus responsabilité d’entreprise - c’est un appel pour plus d’information pertinente responsabilité d’entreprise. Entreprises elles-mêmes ont reconnu ce fait, et beaucoup peuvent maintenant cocher la case responsabilité d’entreprise rapports. Ils peuvent pointer vers des rapports qui illustrent les efforts considérables qu’ils ont déployés pour limiter leur empreinte environnementale et bénéficier les sociétés dans lesquelles elles opèrent. Donc, il devrait être simple à intégrer les

2013 I Issue 1 43 rapports de responsabilité d’entreprise les aspects spécifiques de la question qui pour être traités de cette façon. dans un rapport intégré? Pas tout à ont une implication opérationnelle directe. fait. Rapports intégrée, c’est plus que l’intégration physique des différents Les investisseurs ont besoin de porter des composants de rapports d’entreprise. Par exemple, l’éthique d’entreprise jugements sur l’impact de chaque problème Rapports intégrée nécessite l’alignement de estpertinente dans toute l’organisation, de responsabilité d’entreprise sur l’entreprise l’entreprise des rapports avec la stratégie mais l’intérêt des investisseurs spécifique et les mesures prises pour y remédier. Cela d’entreprise, présentant une occasion de réside peut-être dans la capacité de nécessite une perspective équilibrée avec démontrer le lien entre la performance l’entreprise à la concurrence sur des l’analyse qui est comparable à la déclaration environnementale et la valeur commerciale. marchés spécifiques, tout en opérant passé et des objectifs, et la pratique de dans un cadre éthique. Bien que quelques l’industrie aussi vaste. Pour certains, cela C’est un domaine où de organisations de premier plan font face à se traduira par un changement de penser nombreux rapports de ce, la distinction se perd dans de nombreux les rapports de responsabilité d’entreprise responsabilité d’entreprise rapports de responsabilité d’entreprise. En comme un exercice de relations publiques, de ont fait défaut, ce qui donne l’impression conséquence, ils risquent d’être perçus par reconnaître le rôle qu’elle joue dans la prise de que la préparation de ce rapport - et les investisseurs comme une impertinence décision des investisseurs et la gouvernance. parfois les sous-jacents des activités de - une discussion des causes valables sans Les mêmes normes de présentation des responsabilité d’entreprise - sont menées lien apparent avec la valeur commerciale. entreprises devraient s’appliquer à toute indépendamment du reste de l’entreprise. Établir un lien clair entre la autre question. La qualité sous-jacente de L’ampleur du défi est reflétée dans un certain stratégie, l’action et la valeur l’information est un défi particulier pour ce nombre de frustrations communes pour Comme toute question autre entreprise, qui est encore un domaine relativement les investisseurs quand ils regardent pour les investisseurs s’attendent à la direction nouveau des rapports. Développer des comprendre les risques et les opportunités d’avoir une stratégie pour chaque question systèmes, des processus et des contrôles de responsabilité d’entreprise. Les qualités de responsabilité d’entreprise qui préserve pour assurer l’exactitude et l’exhaustivité dont ils ont besoin dans leur rapport de ou améliore la valeur de l’entreprise. Chaque des flux d’informations non financières responsabilité d’entreprise sont un peu stratégie devrait lui-même être une partie sont au cœur de la communication efficace différents des autres questions commerciales. intégrante de la stratégie d’entreprise. (et la gestion) des questions. Cela ne peut Concentrer sur les questions qui sont Sein de l’entreprise, on s’attendrait à voir pas être atteint immédiatement, mais il y a importantes pour l’entreprise avec des objectifs clairs actions surveillées une bonne occasion pour les entreprises par rapport aux objectifs et attentes. Les de commencer à résoudre ce problème. Dans le contexte actuel, les entreprises se rapports doivent démontrer aussi - stratégies rendent compte que d’un certain nombre devraient se traduire par des actions et ces Nous devrions nous réjouir du regain d’intérêt de questions de responsabilité d’entreprise actions auront des résultats mesurables. que l’initiative internationale d’information vont droit au cœur de leur viabilité à long intégrée peut apporter. Après plus de quinze terme. Les questions particulières peut être à La différence entre les rapports années d’exploration et le développement voir avec l’impact environnemental, éthique sur la durabilité et de rapports de rapports de responsabilité d’entreprise le de l’entreprise, la sécurité des employés, sur la durabilité de l’entreprise temps est venu de le lier à l’activité de base. ou autres. Leur impact potentiel peut être Pour atteindre ce point, les rapports de Le manque d’information actuel n’est pas éloigné, mais leur ampleur est telle qu’elles responsabilité d’entreprise a besoin de utile. Elle conduit les investisseurs à anticiper ont des conséquences majeures pour la s’éloigner de ses racines spécialisées, et les risques qui peuvent ainsi être gérés de valeur commerciale - positive ou négative. devenir comme tout autre aspect des façon adéquate, et il laisse les questions de Cela ne signifie pas que chaque question rapports opérationnels. Rapports rédigés responsabilité d’entreprise qui devraient de la durabilité ou de l’intérêt des parties par les directeurs des opérations avec le être au cœur de la stratégie de l’entreprise prenantes doit être signalée aux investisseurs. soutien de spécialistes refléteront les objectifs sur la touche de gestion et de rapports. Seuls quelques-uns auront le potentiel d’affaires meilleurs que ceux rédigés par des En fin de compte, ce n’est pas une d’affecter la valeur de cette manière. spécialistes de responsabilité d’entreprise. question de rapports, c’est une question L’identification de ces problèmes est le Les autres sociétés qui se contentent de gouvernance. Les entreprises qui ont premier défi de produire un rapport centré. de fournir une liste des réalisations de une vision claire de la façon dont leurs responsabilité d’entreprise de donner risques de responsabilité d’entreprise et les Le deuxième défi consiste à reconnaître la l’impression qu’ils considèrent leur activité opportunités affecter leur stratégie globale différence entre les rapports sur la durabilité responsabilité sociale des entreprises félicite de l’occasion pour expliquer ce et les rapports sur la durabilité de l’entreprise. comme des actes de bienfaisance - gestes qu’ils font pour les investisseurs. D’autres Les investisseurs veulent et ont besoin de philanthropiques versés par les actionnaires auront besoin de prendre un regard comprendre que le modèle d’affaires qu’ils plutôt qu’un investissement de routine dans critique sur la façon dont «bonnes actions» ont acheté en est viable à long terme - et la viabilité de l’entreprise. Les questions de leur responsabilité d’entreprise se gérés d’une manière qui garantisse la valeur qui peuvent influer sur la viabilité à long rapportent à leur stratégie d’entreprise. à long terme. Cela signifie se concentrer sur terme de l’entreprise sont trop importantes

44 2013 I Issue 1 Intellectual Property Le maintien de la vitalité dans le marché des valeurs mobilières

Maintaining VITALITY Par: Dr. Isaac Rutenberg

Le marché kenyan des valeurs mobilières a maintenu une croissance robuste, même face à la stagnation économique ailleurs. Taux de croissance du Kenya sont enviable pour de nombreuses économies, de la Grèce et de l’Espagne aux États-Unis et le Japon.

archés des valeurs mobilières répondre positivement précisément, à un marché des valeurs mobilières. L’incertitude peut et négativement à une variété de facteurs dans s’appliquer dans un certain nombre de domaines - de la direction une économie. Certains de ces facteurs, tels que les politique de sécurité d’approvisionnement de la chaîne - mais catastrophes naturelles et la paix régionale, sont en provoque toujours les investisseurs à être plus prudents qu’ils ne Mgrande partie indépendantes de la volonté d’un gouvernement et les le seraient autrement. Un facteur qui a le potentiel de réduire la organisations représentées au sein du marché. D’autres facteurs, tels croissance au Kenya est l’incertitude sur la législation en cours. La que la politique économique et la volonté politique, sont en grande mise en œuvre de la Constitution de 2010 a nécessité un montant partie sous le contrôle d’un gouvernement. L’importance de tous ces exceptionnellement élevé de nouvelles législations, dont certaines facteurs sur le comportement d’un marché des valeurs mobilières sont bien contrôlés avant leur adoption et d’autres qui semblent peut se résumer en un seul mot: l’incertitude. Peut-être plus que être passés à la hâte. Indépendamment du fait que la législation est tout autre facteur, l’incertitude est préjudiciable à l’économie et, plus finalement bonne ou mauvais pour les affaires, il dispose d’un élément

2013 I Issue 1 45 la consommation. Le libellé exact du projet ou des succursales ouvertes au Kenya. Pour de loi permettra de déterminer si la liberté certaines entreprises, la nouvelle législation d’accès à l’information s’applique seulement va ouvrir de nouvelles opportunités pour au gouvernement, ou si elle s’applique la création de produits et de générer une également aux entreprises qui interagissent nouvelle propriété intellectuelle sur la base de avec le gouvernement (par exemple, en données. Que les lois de gérer efficacement fournissant des services au gouvernement, les innovations de la société moderne (par ou en fournissant des services publics, ou en exemple, SMS, transfert d’argent mobile, les obtenant des subventions ou des contrats cookies de votre navigateur, identités en ligne du gouvernement). La portée de cet accès et les achats en ligne, etc.) reste à voir, mais va certainement influencer les activités des c’est une question cruciale que les entreprises organismes assujettis à la loi, et en particulier kényanes devraient être intéressé par le suivi. leur capacité à monétiser les données qui sont parfois rassemblés à grands frais. Les perspectives d’incertitude Les perspectives pour le marché des valeurs En général, au cours de la dernière décennie, mobilières du Kenya, du point de vue de la liberté de factures de protection des l’incertitude en raison de la législation en informations et des données ont figuré en instance, est raisonnablement optimiste. Le bonne place dans les assemblées législatives flot de nouvelles lois qui ont accompagné progressistes du monde entier. L’Europe a la mise en œuvre de la Constitution de 2010 généralement des régimes les plus bien finira par s’apaiser, et sera remplacé par un établies de régulation de données. Le flot continu de la législation proposée sur régime de protection des données en une base comme-nécessaire. L’incertitude Suisse est considéré comme une norme législative ne sera pas éliminé, et en fait à laquelle d’autres pays de mesurer leur peut simplement passer à l’incertitude propre législation. Les Etats-Unis ont un judiciaire que le pouvoir judiciaire se de acte de liberté d’informationmais pas de plus en plus les possibilités d’interpréter les loi unique pour faire face à la protection nouvelles lois. Les actions judiciaires et de des données. Sur ce continent, l’Afrique l’incertitude qui accompagne ces actions du Sud a récemment adopté une loi sur sont difficiles à expliquer dans les affaires, la protection des données et contient bien que relativement simple à suivre. également une disposition pour l’accès à L’interprétation judiciaire d’une nouvelle l’information. Ce n’est pas encore universelle, législation est uniquement disponible lorsque et dans certains pays africains n’ont pas poursuites judiciaires ont été déposés et encore de légiférer dans ce domaine. sont menées à terme, ce qui est relativement L’absence de politiques de données crée rare. La récente nomination d’un nombre de l’incertitude au sein des entreprises en important de nouveaux juges est également termes de la façon dont les données sont susceptible de créer de l’incertitude. Bien (et seront à l’avenir) traités. L’absence d’une que de nouveaux juges aient tendance Loi sur la protection des données en Inde à suivre la jurisprudence antérieure, leur est souvent citée comme un obstacle à la interprétation de cette jurisprudence est croissance des industries qui monétiser des difficile de prédire jusqu’à ce qu’ils aient données personnalisées, et la même chose décidé d’un nombre raisonnable de cas. peut être dite pour les pays africains. Marché des valeurs mobilières du Kenya d’incertitude tout en attendant l’adoption, ce Bien que la législation soit, théoriquement, a prospéré malgré les changements qui peut causer des fluctuations anormales le territoire exclusif de gouvernement, dans fondamentaux qui ont eu lieu dans le sur le marché des valeurs mobilières. la pratique, il a tendance à être influencés domaine juridique. Le taux de passage de Législation en attente au Kenya par les interventions du secteur privé. Le la nouvelle législation et la nomination Chiffres de propriété intellectuelle en secteur privé kenyan devrait surveiller et de de nouveaux juges est susceptible de bonne place dans plusieurs textes de loi en prendre un grand intérêt dans le progrès ralentir dans les prochains mois, et ces instance au Kenya, et ceux-ci ont le potentiel de la liberté d’information du projet de loi, signes de stabilisation ne peut être que d’influencer les entreprises et donc de le projet de loi de protection des données, bon pour le marché des valeurs mobilières. marchés de valeurs mobilières. Par exemple, la science, la technologie et l’innovation du La réalisation des élections en Mars 2013, la liberté d’information et le projet de loi de projet de loi, et d’autres. Ces textes de loi va va également supprimer un élément la loi sur la protection des données sont pris influencer la façon dont le gouvernement d’incertitude, et devrait se révéler bénéfique en charge par le Ministère de l’information dépense de l’argent, de la façon dont les pour le marché des valeurs mobilières. Les et, s’il est adopté, influencer la façon dont entreprises traitent les données, les données défis qui nous attendent sont en grande les entreprises traitent avec des données. qui sont à la disposition des entreprises et partie dans le domaine de l’adaptation La liberté de la facture de l’information, des citoyens privés, etc. Ils peuvent avoir une au nouvel environnement juridique et par exemple, peut exiger que tous les incidence si les entreprises étrangères sont politique, et seul le temps dira l’impact gouvernements et certains organismes susceptibles de créer des centres de données de cette adaptation sur les entreprises. privés de libérer des quantités importantes au Kenya, ou créer des partenariats avec de données à l’inspection publique et de des entreprises locales en matière de TIC,

46 2013 I Issue 1 Previous Issues

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2013 I Issue 1 47 48 2013 I Issue 1