Items filtered by date: Tuesday, 16 October 2018
A Kenyan Telecommunications firm Safaricom #ticker:SCOM lost 1.6 percent of its subscribers’ market share in the quarter ended June as rival Airtel added more users to its network, fresh data from the industry regulator shows.
 
This marked the third straight quarterly drop for the country’s biggest operator, which had 29.7 million subscribers during the period, according to the Communications Authority of Kenya (CA).
 
While Safaricom subscribers rose 0.7 percent from the previous quarter's 29.5 million, its rivals led by Airtel added more users, resulting in the company’s reduced market share.
 
Airtel’s subscribers rose 11.9 per cent from 8.7 million to 9.7 million to secure a market share of 21.4 percent. Safaricom subscribers’ market share has plunged to 65.4 percent from 72.6 percent in June last year.
 
“During the quarter under review, Safaricom PLC lost its market share by 1.6 percentage points, Airtel Ltd and Telkom Kenya gained by 1.7 and 0.2 percentage points respectively. Finserve Africa lost by 0.1 percentage points whereas the market shares for Sema Mobile and Mobile Pay Ltd remained unchanged,” said the report.
 
As at June 30, the total number of mobile service subscriptions in the country stood at 45.5 million up from 44.1 million reported in March 2018.
 
CA’s report comes against the backdrop of an ongoing row between the sector watchdog and Safaricom over claims that the telco is abusing its dominance in a 2015 report before changing its tune.
 
In January, for instance, the CA revised its position on a controversial proposal for the splitting of Safaricom into separate business units.
 
A draft report from consultancy firm Analysys Mason leaked to the media last year had recommended designation of Safaricom as a dominant operator, which would have seen its voice and mobile money units split into stand-alone businesses.
 
Another regulator, the Competition Authority of Kenya (CAK), however warned against punishing Safaricom saying it was unnecessary and would have ripple effects on the entire economy.
 
 
Source: Daily Nation
Published in Telecoms
The Federal Government  of Nigeria on Tuesday said the solid minerals sector in the country is set to receive $3.3 billion foreign investment.
 
The Minister of State in the Ministry of Mines and Solid Minerals, Abubakar Bwari, stated this in Abuja at the Third Nigeria Mining Week.
 
According to him, private investors have expressed their readiness to commit the money to fund some projects in the mining sector.
 
The mining week, a three-day event, was organised by the Miners Association of Nigeria in partnership with PricewaterhouseCoopers and Spintelligent.
 
Speaking further, Bwari said the fund will be used to finance gold mining and refining, foundry works, lead/zinc exploration and production, tin, tantalite and columbite mining and processing.
 
The minister also gave hints of the efforts of the ministry to focus on tackling challenges hindering the formal exploitation of gold, tin and lead-zinc as well stop indiscriminate exports of these mineral commodities to foreign smelters, adding that the ministry had also developed a new Export Guidelines for the Export of Mineral Commodities to ease challenges in the granting of export permits and other licensing issues.
 
 
Source: The Vanguard
Published in Economy
All KPMG partners - even those who have jumped ship - could be held liable for a potential claim of R1.89 billion following the firm's disastrous audit of VBS.
The firm has indemnity insurance, but it may not pay out in case fraud was committed.
Meanwhile, KPMG International will send foreign execs to South Africa to prop up the firm.
The already deeply troubled KPMG South Africa could be liable to pay a claim exceeding R2 billion because of its work on VBS Mutual Bank – and its individual partners could be personally liable for the money.
 
Last week, advocate Terry Motau recommended that the SA Reserve Bank and VBS' curators launch "an auditor's liability claim" against KPMG for damages. The same report found that at least R1.89 billion in "gratuitous payments" from VBS went to 53 individuals – not counting legal and other costs that have been mounting since the bank was placed in curatorship.
 
And much of that money, experts agree, could be sought from KPMG, which signed off on the VBS books.
 
While there is a limit on liability for advice work – an audit firm typically may have to pay back twice their fee – there is no limit on how much could be claimed back for losses due to audit work, a senior partner at one of the biggest audit firms in South Africa confirmed to Business Insider South Africa, on condition of anonymity.
 
And because KPMG is a partnership, everyone who was a KPMG partner at the time of the audit would be liable for the amount. This means that the many KPMG partners who have jumped ship in recent months could still face a claim.
 
KPMG South Africa has professional indemnity insurance to cover the liability. However, depending on the terms of the contract, the policy may not pay out if it was found that the KPMG partner committed fraud – and that is unequivocally alleged.
 
"I accordingly find that Malaba committed fraud," Motau summarised one of his findings, referring to former KPMG senior partner Sipho Malaba, alleged to have received more than R33 million from VBS irregularly. Malaba has slammed the report and may take legal action. 
 
Business Insider asked KPMG if its global parent company would fund a legal claim against it.
 
"KPMG South Africa has appropriate professional indemnity insurance to support the firm in the event a claim is made," said spokesperson Nqubeko Sibiya.
 
Asked if that insurance covers fraud by a partner, Sibiya simply referred to the same answer again.
 
If all the partners at a firm are involved in fraud, professional indemnity (PI) insurance will not cover a claim, Russell Kayton, of specialist professional indemnity insurance broker Picara, told Business Insider.
 
"The insured should always try and ensure that their PI insurance policy provides cover for fraudulent and dishonest acts by a partner / director of the practice which ensures that the innocent partners / directors are protected. Some policies, however, do not provide this cover while others may only provide cover for an employee, not a partner or director."
 
By law, auditors are protected from liability claims up to the point where they are proven negligent. After that, say if a firm was involved in brazen and large-scale fraud by way of its senior partner, various legal and auditing experts concur, a claim against an audit firm becomes a normal civil matter – and the size of the claim is unlimited.
 
There have been various attempts to set limits to that liability, including by KPMG itself. In 2005, in comments on what was then the Auditing Profession Bill, KPMG South Africa warned that it was "becoming increasingly difficult for auditors of major corporations to fully insure against their exposures".
 
"Unlimited liability results in auditors being the easy target to sue even when corporate failures are unrelated to any audit failure.," it said.
 
KPMG argued that an audit company's liability should be limited to "an agreed multiple of fees" or by way of "ring fencing of liability to a corporate entity as appropriate" – which would protect individual partners.
 
KPMG's future:
The VBS report findings, and the recommendation that National Treasury, the curator of VBS and the Prudential Authority should claim damages from KPMG, may be the “death knell” of KPMG South Africa as we currently know it, one senior audit professional predicted.
 
The person said that it may make sense for KPMG to completely dissolve the partnership of KPMG South Africa, and constitute it anew, with new partners and new staff.
 
Sibiya confirmed to Business Insider that KPMG International will nominate a number of senior KPMG partners from across the international network to serve on the KPMG South Africa board and in executive positions, as well as in senior client service roles.
 
Asked if KPMG was contemplating exiting South Africa, or closing down its current partnership to create a new one, spokesperson Sibiya said: "KPMG is firmly committed to South Africa and still has much to offer the country and the business community."
 
 
Source: Business Insider
Published in Business

Alphabet Inc's Google on Monday became the latest company to drop out of a business conference in Saudi Arabia.

Pressure has mounted on Saudi Arabia since prominent Saudi journalist Jamal Khashoggi, a U.S. resident, Washington Post columnist and critic of Saudi policies, went missing. He was last seen entering the Saudi consulate in Istanbul on Oct. 2.

Google said in a statement that Google Cloud Chief Executive Diane Greene would not attend the Future Investment Initiative Summit scheduled to be held in Riyadh starting Oct. 23.

Google's Greene did not offer a reason for her action, and a spokesman declined to elaborate.

Other business leaders who have said they would not attend the conference, including Uber Chief Executive Dara Khosrowshahi, said they were concerned about Khashoggi's disappearance.

Earlier this year Google announced that it would work with a Saudi agency to open five innovation hubs in the country to train aspiring technologists.

 

Published in Telecoms

British American Tobacco cut its full-year revenue target for cigarette alternatives such as vaping pens and tobacco heating devices, citing a flat market in Japan and a product recall in the United States.

The world's second-biggest international tobacco company by revenue is pinning its hopes for volume growth on next-generation products, as demand for traditional cigarettes wanes.

But regulators are closely watching the new products. Advocates say they can be used to wean lifelong smokers onto less harmful nicotine products, but critics warn they risk drawing a new generation to nicotine addiction.

The company said on Tuesday it expected revenue from next-generation products to reach 900 million pounds this year, down from a previous target of 1 billion pounds.

It said the cut was due to flat growth in Japan, the most developed market for tobacco-heating devices, and the recall in the United States of its Vuse Vibe e-cigarette.

BAT's Finance Chief Ben Stevens said that tobacco heating devices, such as its glo product and Philip Morris International IQOS, can still reach one-third of Japan's tobacco market, up from about a quarter now. The slowness, he said, is due to more conservative consumers taking longer to adopt the new product.

He said that many consumers are using both, conventional cigarettes and tobacco-heating devices - which heat tobacco enough to create a vapour, rather than burning it - whereas initial expectations were that once consumers started using the devices they would switch altogether.

The maker of Lucky Strike and Dunhill cigarettes also warned that currency fluctuations would hurt its full-year adjusted earnings per share growth by 7 percent, assuming rates were unchanged for the rest of the year. Its previous guidance was for a 6 percent hit.

On a constant currency basis, BAT expects to exceed its target for high single-digit adjusted earnings per share growth. In cigarettes, BAT said it was gaining share in an overall market whose volume is expected to shrink about 3.5 percent this year, as more people quit smoking.

In the United States, industry volume is expected to fall 4 to 4.5 percent this year, with a slight improvement in the second half.

BAT's Stevens said the company had no plans to enter the cannabis market at this stage.

"We're making sure we understand the market, we're studying it in detail but we're not planning at the moment to sign any alliances or marketing arrangements," he said.

BAT shares were down 1.2 percent by 0823 GMT, underperforming a blue-chip index <.FTSE> down 0.2 percent.

 

Published in World

East African economies have in the past 10 years borrowed $29.42 billion to grow their transport, communication, manufacturing and energy sectors.

The region's economies are now spending almost eight per cent of their revenues to service these loans, which analysts say are becoming a burden, especially given that their impact is yet to be seen on the growth.

The latest data from the China-Africa Research Initiative (Cari) at John Hopkins University shows that Ethiopia owes Beijing $13.73 billion, followed by Kenya at $9.8 billion. Uganda owes $2.96 billion and Tanzania $2.34 billion.

Rwanda, South Sudan and Burundi owe China the least amounts -- $289 million, $182 million and $99 million respectively.

Cari director Deborah Brautigam said that the risk for the African borrowers relates to the projects' profitability.

"It is always important to look at whether these projects will generate enough economic activity to repay these loans, as opposed to being seen as merely ribbon-cutting opportunities," Ms Brautigam said.

Mega projects

The bulk of the monies, according to research by The EastAfrican, went into the transport sector, followed by power, communications and manufacturing.

Ethiopia's biggest intake of the Beijing loans was in 2013, coinciding with the launch of its joint standard gauge railway project with Djibouti. Addis took up more than $6.62 billion from Beijing for its mega projects, which also included the setting up of manufacturing zones. 

The data also shows Kenya's new railways line accounted for the highest debt intake from Beijing at $3.7 billion in 2014. 

China Exim Bank has been the go-to financier for the region's governments, giving out more than $16.3 billion. The China Development Bank advanced East African economies more than $6.9 billion, while other Chinese lenders are currently owed $6.1 billion, data shows. In terms of sector funding, Ethiopia invested the bulk of its funds in the transport sector ($4.37 billion), which was used for both the Addis Ababa light railway project and the Addis-Djibouti 700km railway. This was followed by communications at $3.16 billion and power projects at $2.54 billion.

Its manufacturing sector, which supports its fledging special industrial zones, including the Eastern Industry Zone and Huajian International Shoe City, received $2.02 billion.

"China gave priority to infrastructure and has promoted Africa's sustainable development through these loans, which have been used for infrastructure construction, energy and the manufacturing industry," said Liu Qinghai, a visiting researcher at Cari and head of the Centre for African Economic Studies at the Institute of African Studies at Zhejiang Normal University.

Kenya's transport sector took in $5.55 billion, largely driven by the new railway line from Mombasa to Naivasha.

Nairobi also took a $597 million loan for its power projects, including the $135 million for the 55 MW solar power plant in Garissa funded by the China Exim Bank.

South Sudan has received $158 million for its transport sector to date, and a further $24 million for its energy projects. 

Tanzania's energy sector remains the top financed sector funded by Chinese money, at $1.16 billion.

Dar es Salaam, which has not taken up any Chinese debt under President John Magufuli, has received $552 million for its communications sector.

Uganda, on the other hand, has seen its energy sector receive the highest funding from Beijing, at $1.92 billion, while its transport sector has absorbed $762 million.

Rwanda's China debt for transport amounts to $151 million.

But the region's countries seem to have slowed down bingeing on Chinese debt, with only Kenya and Ethiopia going to Beijing for loans.

Ethiopia borrowed $652 million last year, down from $926 million in 2016, while Kenya took $64 million, down from $1.09 billion in 2016.

In 2016, Kigali took $70 million and Kampala $85 million.

Debt roll over

Last month, Ethiopia became the first country to get its Chinese debt rolled over announcing that Beijing had agreed to restructure its $4 billion loan on the railway linking its capital Addis with neighbouring Djibouti.

Ethiopia's Prime Minister Abiy Ahmed said that the country's loans will now receive a further 20-year extension, which will see its annual repayments narrow to an affordable level.

"In conversations with our Chinese partners, we had the opportunity to enact limited restructuring of some of our loans.

"In particular, the loan for the Addis Ababa-Djibouti railway, which was meant to be paid over 10 years, has now been extended to 30 years. Its maturity period has also been extended," Dr Abiy said. 

Kenya also sought to get a grant as part of the package for its $3.8 billion loan for its continuing railway projects, as it seeks to manage its debt burden.

"The Naivasha-Kisumu phase of the SGR will cost $3.8 billion. And owing to its regional significance, I would request that 50 per cent of its cost be provided as part of grant financing," President Uhuru Kenyatta said at the Forum on China-Africa Co-operation in Beijing in August. This request was not granted.

Tim Jones, an economist at the Jubilee Debt Campaign, said that the continent debt problem could worsen, especially given the opaque nature in which they are signed.

"Debt problems are worsening and many lenders bear responsibility, not just China. We need new rules to make all lenders publicly disclose loans to governments at the time they are given. We also need to see these lenders made to restructure and reduce debts," Mr Jones said.

Burden

Last month, China' s special envoy to Africa, Xu Jinghu, denied claims that Beijing was burdening Africa with debt, noting that China was Africa's main creditor.

Indeed, data shows that the continent owes more to private lenders than to China.

"It is baseless to shift the blame onto China for these African countries debt problems. Their debt position has 'been built over time even before we came in.

"We have to look at the fluctuations in the international economic situation vis-a-vis the price of minerals, their key exports. This is where the problem is, and not Chinese loans," Mr Xu said.

 

Credit: Daily Nation

Published in Economy

African Philanthropy is entering a new era. A hotbed of innovation, it can make a decisive contribution to addressing the continent’s challenges, and also inspire work in other parts of the world. 

Aligned with the general formalisation and greater impact orientation of philanthropy, African self-made entrepreneurs are now also engaging in structured giving and are promoting the discourse of “giving back” to the benefit of individuals, communities and countries.

While African Ultra High and High Net Worth Individuals ((U)HNWIs) have a deep desire to contribute towards socio-economic empowerment and many also want to leave a legacy, it should be noted that their giving is not on a similar level to their counterparts across several other markets.  The African Grantmakers Network Sizing the Field Report suggests that HNWIs in Europe, for example, allocate 9% of their wealth towards philanthropic efforts while the estimated 145,000 African HNWIs holding wealth of approximately $800 billion1, give only 1% of their wealth. 

Adapting philanthropic models to the local context

There is also a powerful, observable trend among African philanthropists to select elements of established models of philanthropy, and then adapt them to on-the-ground needs, structures and preferences, realising results in the local context.  This mirrors what is happening in private sector projects too – a recognition that while global methodologies can offer best practices for incorporation, their assumptions do not always apply in Africa.

The co-joining of the two approaches is however, regularly at the root of commercial successes.

Therefore, it is no surprise that given the multi-faceted nature of African philanthropy, these efforts often co-exist with philanthropic action on the ground by foreign philanthropists, international organisations and national governments’ to fast-track socio-economic development.  In turn, these all increasingly converge under the shared social impact framework of the Sustainable Development Goals.

All in all, this makes for an exciting environment for philanthropy, but also one that is challenging, requiring sound analysis, humility, and the expertise of the right partners to sustainably translate aspirations into action across the full spectrum of philanthropic opportunities.

Key trends and opportunities

African philanthropy is a powerful way to express African humanism. This spirit of Ubuntu and the universal bond of sharing that connects all humanity has all the potential to be instrumental in helping translate the tremendous opportunities associated with scientific progress and advances in technology to help solve many of the continent’s challenges and create opportunity for all.

Three key trends in particular can distinctly shape the trajectory of African philanthropy, and help it drive impact:

  1. Africa can be an innovative hub for philanthropy. The need for sustainable philanthropic efforts in Africa is critical. Combined with the strides made using mobile payment technology, such as M-Pesa, this could see the continent rise as an innovator and early adopter.  Another example is Safaricom, which in partnership with UNHCR, launched Bamba Chakula enables people to turn leftover data into cash donations towards refugees or event to top up refugee accounts.
  2. African philanthropy will increasingly integrate the continent’s rich cultural heritage in its twenty-first century approach to giving. As the numbers of (U)HNWIs multiply, this will influence the philanthropic identities African (U)HNWIs want to build. They will draw on their rich history, culture and the needs intrinsic to their countries/ regions. Equally, these contributors will desire to incorporate their own aspirations, family dynamics and preferences for a specific type of philanthropic infrastructure and will require the flexibility and access to expertise in order to ensure these needs are met.
  3. African Philanthropy is at the forefront of leveraging technology for good. Already, the global nature of technology is increasingly enabling access to expertise, infrastructure and other essential resources. CodersTrust, a Bangladeshi company, provides opportunities to young Kenyans to become ‘rockstar freelancers.’ Learning an IT skill enables them to make a living anytime, anywhere in the online IT labour market. This also helps fill the growing global programming skills gap, create much-needed high-value youth employment opportunities and build the local expertise.  Ultimately, philanthropic investment in initiatives such as this will meaningfully enable the country to seize the possibilities of the digital revolution.

Driving development today and tomorrow

Philanthropy around the world is itself in the middle of an impact/ effectiveness revolution and in Africa, this is equally relevant.  The Sustainable Development Goals are gradually becoming a new frame of reference and experimentation with new forms of financing is moving mainstream. As the rigour demanded of measurement methodologies increases, the process of incorporating the use of data to create transparency and accountability is becoming more sophisticated.

While much of what is highlighted within global philanthropy is consistent across the world, the African continent has a distinct identity and set of challenges.  Illiteracy, poverty, poor sanitation and a myriad of other challenges persist, creating a strong need for philanthropy to be relevant on the ground now, while also making a strong contribution tomorrow in a continent that will undergo deep transformation. 

This means that a “one-size-fits-all” approach is not meaningful in Africa. The combination of different perspectives and modes of intervention ultimately render African Philanthropy extraordinarily multi-faceted and innovative.  Surely no one is better qualified to consider how to address these than the philanthropists who call Africa home?

 

- Dr Maximilian Martin, Global Head of Philanthropy at Lombard Odier

Published in Opinion & Analysis

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