TCCIA News and Events Blog

Public companies are promising shareholders greater value from money saved in the ongoing shift to electronic communication.

The firms that have taken to sending shareholders electronic copies of financial statements via e-mail and using mobile money transfers to pay dividends are saving millions of shillings in investor relations budgets which they say is being ploughed back into the businesses to grow profits.

Safaricom, Kenya’s top mobile operator with the highest number of shareholders blazed the trail last year when it held a no-frills annual general meeting in Nairobi and used its popular mobile money transfer platform M-Pesa to pay dividends.

The shift has been made possible by a 2007 repeal of the laws governing investor relations following the roll-out of Kenya’s biggest initial public offering (IPO) – Safaricom.

A number of large listed companies at the Nairobi Stock Exchange have been moving to the electronic communication platform following in the footstep of Safaricom that has twice used its wide M-Pesa network to pay dividends and published its financial report on the internet.

KenGen, Mumias Sugar and Scangroup are among the listed firms that have amended their articles of association and gone electronic reducing their investor relations budgets by millions of shillings.

KenGen is one of NSE’s companies with the largest number of shareholder and has in the past spent more than Sh25 million on annual reports alone, and a further Sh17 million on postage to 250,000 shareholders.

Though the company has had its version of the cost-cutting measures, the search for cheaper and more efficient means of holding AGMs, communicating with investors and paying dividends remains the cross-cutting theme.

But even as listed firms wallow in the huge savings they have been able to make using the new methods of communication, the NSE’s estimated four million investors – used to receiving hard copies of the annual financial reports and dividend pay cheques from the post office — have been asking what is in it for them.

“Savings made from this and other investor relations functions are ploughed back into the business to grow profits and increase shareholder value,” said Les Baillie, the chief officer in charge of Investor Relations at Safaricom.

Kenya Airways last week jumped into the cost-cutting pool with publication in the print media of an abridged version of its annual report and announcement to shareholders that it will use electronic funds transfers, including mobile money to pay dividends for the financial year ended March 2010.

This means that the airline will significantly cut its printing budget and the millions of shillings it had set aside for posting the annual reports to investors.

Use of mobile money transfers to pay dividends also means that KQ saves part of the costs it incurred writing and posting cheques to the more than 100,000 investors in its register.

“Companies with large registries of more than 100,000 shareholders are particularly keen on cutting costs,” said Zena Ahmed, a share registrar at Image Registrars that serves more than 63 per cent of all shareholders of companies listed at the Nairobi Stock Exchange.

“This trend began with Safaricom last year and is now spreading to other big firms after amending their articles of association,” she said.
Company registrars say the new methods of communication will also help companies reduce wastage they incur every year with the return through the post office of thousands of annual reports and other documents sent to the wrong shareholder addresses.

As the listed companies count their gains, analysts warn that these new methods of managing investor relations are squeezing life out of auxiliary businesses that depend on the old model for revenue and profits.

“The change from heavy to thrift spending on investor relations means companies that benefitted from the supply of services and goods to the listed firms must change strategy to remain in business,” said Eric Musau, an analyst at African Alliance Investment Bank.

Top in the list of losers is the Postal Corporation of Kenya and other courier companies that earned millions of shillings from physical transportation of financial reports and dividend cheques to local and foreign investors.

The number of letters sent by courier services in the first quarter this year dropped by 35.7 per cent to 73,162 compared to the fourth quarter of 2009 while the volume of letters that the postal corporation handled fell to 23 million from 25 million last year, according to the Communications Commission of Kenya (CCK).

Former Finance minister Amos Kimunya repealed the regulations governing investor relations in his 2007 budget speech citing the then rapid expansion of the retail investor pool that would signalled huge growth in investor relations budgets and eroding the value of dividends.

Safaricom, for instance, has the highest number of shareholders, comprising of more than 700,000 local individual investors earning less than Sh200 in annual dividends.

Since last year, the company has used its mobile money transfer M-Pesa to pay dividends worth less than Sh35,000 saving investors part of the losses they incur in cheque based transactions.

The Central Bank last year deepened this shift from cheque based transactions with the publication of new regulations that provide for mandatory use of electronic payments for any transactions exceeding Sh1 million, piling revenue pressure on cheque printers.

The number of electronic money transactions jumped from 24,552 in September to 55,440 a month after the new rule came into force while the value of transactions rose to Sh1.4 billion from Sh1.1 billion.

Source – The Citizen

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African airlines registered a record performance in passenger traffic in July, says the International Air Transport Association (Iata).

The continent is said to have recorded a 13 per cent growth in passenger demand during the month — consistent with the year-to-date improvement of 13.1 per cent.

However, the growth was lower than the 21.3 per cent increase in the previous month’s traffic when the World Cup competition took place in South Africa.

Generally, the industry saw increases in freight and the number of passengers in Asia and Middle East.

Statistics indicates that passenger demand rose by 9.2 per cent compared to the same period last year, while freight traffic grew by 22.7 per cent. The July growth, however, was at a slower pace than in June where growth data indicates an 11.6 per cent and 26.6 per cent increases for passenger and cargo traffic respectively.

“The recovery in demand has been faster than anticipated. But, as we look towards the end of the year, the pace of recovery will likely slow,” Iata director-general Giovanni Bisignani, said in a recent statement.

Although the industry has continued to recover faster than expected after the global economic slowdown, there still exists sharp regional differences in demand growth.

Latin American carriers for instance, recorded a high of 14.2 per cent growth in passenger demand during the month and 10.9 per cent for the first seven months of the year.

Asia-Pacific carriers posted a 10.9 per cent growth during the month while Middle Eastern carriers, which registered the highest growth in June (18 per cent), posted a growth rate of 12.8 per cent.

North American carriers recorded a 7.9 per cent improvement in passenger demand in July over the same month in the previous year. Passenger demand for European airlines grew by 6.2 per cent during the month, over the same month in 2009, the weakest demand performance among all regions. In June, Europe recorded a growth rate of 7.8 per cent.

The low performance in Europe is attributed to the region’s stalling economy due to the slow start in the recovery process.Mr Bisignani said the jobless economic recovery is keeping consumer confidence fragile especially in North America and Europe, which is affecting leisure markets and cargo traffic.

“Following the boost of cargo demand from inventory re-stocking, further growth will be largely determined by consumer spending which remains weak,” he added.
The industry also suffered a dip in April due to the volcanic ash crisis centred in Europe, which saw international passenger demand reduce tremendously.

Mr Bisignani was optimistic that 2010 will be a great year. IATA represents some 230 airlines operating 93 per cent of all global traffic.

Source – The Citizen

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A Kigoma producer cooperative union will set up a plant for grinding and packing coffee.
Its officials say the Kanyovu Coffee Curing Joint Enterprise will process coffee for local and foreign markets.

Its chairman, Mr Yahya Mahwisa, said the coffee brand would be named Gombe after the famous Gombe Stream National Park in the region. “The coffee will be marketed internationally alongside the Gombe National Park.”

“We have already secured a market in Germany in addition to our markets in the US, Switzerland and South Africa. The objective is to export directly to those markets,” Mr Mahwisa told farmers and cooperative officials from Singida, Lindi and Coast regions who were on a tour of Kigoma.

Kigoma exported 90 tonnes of cured specialty grade coffee last year and plans to export 144 tonnes this year.The union had orders to export more coffee but it was unable to do so because a crop disease cut production.

The union started in 2003 and has become one of best examples of how farmers can add values of their produce and market and sells products.

Kanyovu Coffee Curing Joint Enterprise encompasses 11 primary cooperative societies of Kigoma, Kibondo and Kasulu districts.

It has a plant that has a capacity for curing 20 tonnes of coffee a day.
It has also set up five coffee collecting centres for peeling 1.5 tonnes of coffee berries a day.
Kigoma sells its specialty coffee at around Sh3,000 a kilo while home processed coffee fetches Sh2,500 a kilo.

“It is almost impossible for an individual farmer to adhere to all set benchmarks for producing specialty coffee, but we encourage them to join the union to be able to produce high quality coffee for international markets,” Mr Mahwisa said.

To produce specialty coffee, a farmer is required to adhere to standards in farming and processing chain to have the requisite taste and aroma.

The union’s secretary, Mr Saidi Bijenge, said inadequate capital was hindering the cooperative from meeting its goals.

Tanzania is the fourth largest coffee producer in Africa after Ethiopia, Uganda and Ivory Coast.
The country’s major coffee-producing regions are Kilimanjaro, Kagera, Ruvuma and Kigoma.
Meanwhile, ActionAid Tanzania organised a trip of 12 Kigoma coffee farmers and government officials to Rwanda to learn best practices of producing specialty grade coffee.

The non-governmental organsation is implementing a two-year project on strengthening rural agricultural cooperative societies in Kilwa, Mafia and Singida Rural districts.

Source – the Citizen

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BOA Bank Tanzania Limited has a new name. It is Bank of Africa Tanzania Ltd.
Bank chairman Fulgence Kazaura (pictured) said in a statement in Dar es Salaam yesterday that the change had started immediately.

“The change was necessary because the initial fears that trading as Bank of Africa Tanzania Ltd will create confusion on the market are no longer warranted,” read the statement.

After three years as a member of Bank of Africa Group, the brand had been well integrated and accepted in the Tanzanian financial market and could fully adopt the name of the group, he said.

“Adopting the name will further upscale group synergies, especially within the East African market. The Bank of Africa is present in all countries of East Africa, with exception of Rwanda,” he noted.

However, the structure of the bank management will remain the same and there will be no variation in the strategies as set out in the 2010-12-business plan of the bank.
The bank has been operational in the country since 2007 after acquiring Eurafrican Bank Ltd and has been posting profits.

Its number of branches increased from four to 14.
It has grown its balance sheet by 160 per cent, deposits by 275 per cent, loans and advances by 320 per cent and shareholders’ fund by 250 per cent.

Source – the Citizen

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he Common Market for Eastern and Southern Africa (Comesa) will roll out a $50 million (Sh70 billion) initiative to support carbon trade projects.

Governments, the private sector and farmers wishing to involve themselves in carbon trade investments in forestry and other related land uses will get grants.

Comesa climate change coordinator Chikakula Miti told The Citizen on Friday in Dar es Salaam that the bloc’s member states had decided to increase anti-pollution campaigns.

“In line with response to climate change impacts in the region, we will start with $50 million, but we hope to have $1 billion in the next three years. We are establishing an organisation that will guide the initiative, which should be operational before the end of this year,” said Mr Miti.

Carbon trading is an administrative approach used to control pollution by providing economic incentives for achieving reductions in pollutant emissions.

There are many similar projects by African countries, but they are not well developed partly due to lack of funding.

Certification and verification processes usually need technical experts from abroad that most indigenous farmers wishing to invest in carbon trade cannot hire.

According to Mr Miti, the initiative will assist investors aspiring to enter into the lucrative carbon trade projects by developing them, provide them with technical assistance and later on link them to the carbon market.

Farmers have been complaining about unsuitable mitigation programmes such as the carbon financing schemes that include the Clean Development Mechanism and the voluntary carbon markets for being for failing to support smallholder farming and pastoral systems.

“This is mainly because these programmes entail complex qualification requirements, ” Eastern Africa Farmers Federation president Philip Kiriro told journalists recently in Dar es Salaam.
“In the second commitment period, we call for their reform to be responsive to African realities and to have a business sense for smallholder farmers.”

Source – The Citizen

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Zanzibar’s current account balance registered a surplus of $31.9 million in the year ending June 2010, compared to a surplus of $2.8 million registered in a corresponding period last year, the Central bank has said.

“The increase in surplus was mainly associated with a rise in current transfers and export proceeds,” the Bank of Tanzania (BoT) reported in its monthly economic review for July.

Current transfers rose to $61.0 million from $55.5 million, while export of goods and services increased to $123.5 million from $117.8 million.

In the same period, trade account narrowed to a deficit of $67.2 million, compared to a deficit of $79.9 million.

“The improvement in the trade account was associated with a surge in goods exports by 11.9 per cent, coupled with a decline in goods imports by 10.2 per cent,” the BoT said.

The improvement in export of goods and services was largely on account of a rise in export of cloves that shot to $12.0 million from $8.8 million, following the increase in volume from 2,400 tonnes to 3,300 tonnes.

Seaweed exports increased to $2.5 million from $2.3 million.

Total imports of goods and services declined to $151.7 million in the year ending June 2010, from $167.0 million realised during the year ending June 2009, largely attributed to decrease in imports of goods.

During the year ending June 2010, total goods imports declined to $99.6 million, from $110.9 million registered in the corresponding period a year earlier.

Oil import bill was $29.2 million, up from $29.1 million, while capital goods imports fell to $40.8 million, from $48.2 million in the same period.

During the year ending June 2010, services account registered a surplus of $38.7 million from $30.7 million recorded in the year ending June 2009.

Total services receipts amounted to $100 million, from $96.7 million, whereas services payments amounted to $61million, from $66.1 million.

Source the Citizen

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Zanzibar’s current account balance registered a surplus of $31.9 million in the year ending June 2010, compared to a surplus of $2.8 million registered in a corresponding period last year, the Central bank has said.

“The increase in surplus was mainly associated with a rise in current transfers and export proceeds,” the Bank of Tanzania (BoT) reported in its monthly economic review for July.

Current transfers rose to $61.0 million from $55.5 million, while export of goods and services increased to $123.5 million from $117.8 million.

In the same period, trade account narrowed to a deficit of $67.2 million, compared to a deficit of $79.9 million.

“The improvement in the trade account was associated with a surge in goods exports by 11.9 per cent, coupled with a decline in goods imports by 10.2 per cent,” the BoT said.

The improvement in export of goods and services was largely on account of a rise in export of cloves that shot to $12.0 million from $8.8 million, following the increase in volume from 2,400 tonnes to 3,300 tonnes.

Seaweed exports increased to $2.5 million from $2.3 million.

Total imports of goods and services declined to $151.7 million in the year ending June 2010, from $167.0 million realised during the year ending June 2009, largely attributed to decrease in imports of goods.

During the year ending June 2010, total goods imports declined to $99.6 million, from $110.9 million registered in the corresponding period a year earlier.

Oil import bill was $29.2 million, up from $29.1 million, while capital goods imports fell to $40.8 million, from $48.2 million in the same period.

During the year ending June 2010, services account registered a surplus of $38.7 million from $30.7 million recorded in the year ending June 2009.

Total services receipts amounted to $100 million, from $96.7 million, whereas services payments amounted to $61million, from $66.1 million.

Source – the Citizen

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Tanzanian firms are among 2000 companies from 15 African countries that are contesting for the 2010 Africa Awards for Entrepreneurship that seek to promote commerce as a driving force in Africa’s economic growth.

A statement released in Dar es Salaam yesterday said the awards,
organised by Legatum, a privately owned international investment group, in conjunction with Omidyar Network, a philanthropic investment firm, also focus on celebrating the standards of business excellence within Africa and building a strong network of African entrepreneurs as a source of learning and shared best practices.

“To date the total number of entries have exceeded previous years by 40 per cent, with more than 2,000 companies submitting entries to compete for the grand prize of $100,000 and five other prizes of $50,000 each,” the statement said.

Other countries that have fielded entrepreneurs for the awards include Botswana, Ivory Coast, Ethiopia, Cameroon, Ghana, Kenya, Uganda, Mozambique and Namibia. Also included are those from Nigeria, Rwanda, Sierra Leone, South Africa and Zambia.

According to the statement, a total of $350,000 will be awarded to the winners, with the funds directed towards growth and strategic reinvestment within the respective companies. Firms that qualify include all profitable businesses that have been in existence for a minimum of three years and have annual revenues between of $2-$25 million.

The managing director of Omidyar Network, Mr Matt Bannick, was quoted in the statement as saying: “Omidyar Network and Legatum share the conviction that entrepreneurs are vital to creating new opportunities in Africa.

As we approach the final weeks of the entry period, we encourage dynamic business leaders to share how they are driving innovation, economic growth and opportunity across the continent.”

Winners of the awards will be awarded at a gala in Ghana later in the year. The deadline for the submission of the applications is August 31, this year.

Source the citizen

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East African farmers want developed countries to compensate them for damages and lost opportunities due to impacts of climate change.

The Eastern Africa Farmers Federation (EAFF) declared on Friday that farmers were adversely experiencing the effects of climate change such as crop and livestock losses.

“African farmers are suffering from problems that they did not cause…. developed countries should compensate them,” EAFF president Phillip Kiriro told a news conference in Dar es Salaam.

The declaration was reached at the end of their four-day conference on Friday.

“We recognise that the impacts across Africa, and particularly in the agricultural sector, indicate that climate change is proceeding faster than earlier predicated,” he said.

He told industrialised countries to adhere to commitments to halve their greenhouse gas emissions by 2017 as agreed in the Kyoto protocol.

EAFF is the umbrella platform of over 20 million farmers from Djibouti, Eritrea, Ethiopia, the Democratic Republic of Congo, Kenya, South Sudan, Rwanda, Tanzania and Uganda.

The federation lamented that the climate change mechanisms either excluded agriculture or provided insignificant benefits to farmers and pastoralists.

They called on the provision of anti-climate change financing from the public sources of the developed countries and not through a market-based mechanism.

“This finance must be predictable and the disbursement must be fast tracked. And it must be in form of grants, and not loans,” said EAFF chief executive Stephen Muchiri.

He bemoaned that the governance of climate change finance was not transparent and democratic.

Farmer organisations would like to play a role in the tracking, monitoring and evaluating effectiveness of the funds.

Source the citizen

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The cattle supply to Pugu market in Dar es Salaam from upcountry has decreased by 5.5 per cent.

But meat prices has remained at between Sh3,000 and Sh4,800 a kilo. A ministry of Trade, Industry and Marketing report shows that 970 animals on the average were received a day at the Pugu terminal market last week, fewer than 1,011 the previous week.

It shows that 520 head of cattle were on the average supplied daily last week, fewer than 550 the previous week. The average price of a mature grade two cow was Sh370,000 compared with Sh400,000 the preceding week while that of a grade three animal declined to Sh218,000 from Sh220,000.

The average price of a mature male grade two animal was Sh504,000 last week, lower than Sh550,000 the previous week. A mature grade three male animal was sold for Sh400,000 against Sh410,000 over the period.

The report indicates that 300 goats were delivered to the market a day last week compared with 341 the previous week.

A mature female grade two goat was traded at an average of Sh55,000 last week versus Sh60,000 the preceding week. A grade three female goat was sold for Sh41,000 compared with Sh30,000 over the period.

A mature male grade two goat was traded at an average of Sh60,000 last week from Sh70,000 during the period while a grade three male goat was sold for Sh45,000 from Sh40,000.

The sheep supply increased to an average of 150 a day last week from 120 the previous week.The average price of a mature grade two female sheep was Sh44,500 last week compared with Sh44,000 a week earlier while that of a grade three animal rose to Sh27,000 from Sh24,000 before.

A mature grade two male sheep was sold for an average of Sh49,000 last week compared with Sh50,000 the preceding week. A mature grade three male sheep was sold for Sh30,000 as before.

Source – The citizen

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